The global financial crisis restricted the supply of equity and debt capital and increased their cost, making public-private partnerships (PPPs) more difficult to implement. Recent changes in financial sector regulation, designed to reinforce the resilience of financial institutions, amplify these effects. Although much of the world is now in a process of economic recovery, there remains a greater level of risk-aversion in the market for infrastructure finance. At the same time, policy-makers are seeking to diversify the range of providers from which equity and debt capital are to be sources, bringing new (and relatively inexperienced) players into the financing market. In combination, these changes require a sophisticated approach to risk management to enhance bankability.
This white paper explains the role of an integrated payment mechanism in identifying and managing risk, giving assurance to investors that these can and will be mitigated efficiently. It outlines how specialised PPP management software enables the transparent monitoring of service provider performance in the operational phase of a contract, through the use of remote monitoring and running of abatement and performance reports.
Offering detailed guidance for all stakeholders, the white paper provides a series of recommendations to improve the quality of information available pre- and post-contractually and ensure consistent, auditable and transparent management of real-time data, in order to mitigate risk and deliver maximum value from PPP contracts.