Project Finance for Public Private Partnerships: Evidence from Australia

Abstract

© 2016 American Society of Civil Engineers. PPP projects are contractually complex and require the participation of many actors and a large number of tripartite and quad-partite agreements that connect the actors jointly and severally. Central to the PPP agreement is the role of project lenders, often syndicated and represented by a lead financier and a securities trustee. The party most exposed to project risk in financial terms is the financier. In most project finance arrangements, lenders play an important role in monitoring the consortium's performance under the contract which subsists in parallel to the performance monitoring of the government agency to ensure the services delivered by the consortium meet specification. This paper presents a study using a cross-sectional analysis of PPP financing in Australia with three case studies in Victoria, Queensland, and New South Wales (NSW), Australia. The object of the analyses is to discover common features in the way major infrastructure PPP projects are financed in Australia, identify differences to practices in overseas markets, and gain knowledge and lessons learnt that may inform future PPP policy and private finance in Australia and overseas.