Ranasinghe, M (1999) Private sector participation in infrastructure projects: A methodology to analyse viability of BOT. Construction Management and Economics, 17(5), pp. 613-623. ISSN 01446193
Abstract
Many developing countries are now attempting to finance new infrastructure projects through private sector participation. This paper outlines a methodology based on financial and risk analyses that a government or a government utility can use to analyse the viability of private sector participation in new infrastructure projects. The water supply projects in Sri Lanka are used for the case study to outline the methodology. Financial analyses of a bulk water supply project and a water distribution project are carried out to estimate subsidy percentages that are required to make the projects viable, using a model developed for the investment analysis of all types of infrastructure project. This analysis looks at four pricing options for the bulk supply project, and sixteen procurement options for the distribution project, from the view point of the utility, for three cases of non-revenue water (35% as base case, 50% and 25% as extreme cases). The risk analysis takes into account the risk and uncertainty in non-revenue water, cost and demand estimates, rate of debt and forecasts of escalation. These analyses show that the best option for the utility is to obtain both bulk supply and distribution projects through private sector participation using BOT arrangements.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bot; developing countries; financial analysis; infrastructure; investments; risk analysis; utility; water supply |
| Index terms: | developing country, water supply, private sector participation, financial analysis, revenue, methodology, risk analysis, subsidy, pricing, case study, investment analysis, water distribution, Sri Lanka, infrastructure project, estimate, option |
| Subjects: | development economics, Geography, research methods, financial analysis, environmental hazards, infrastructure and transport systems, decision analysis, data collection methods, economic analysis, design economy, financial and cost management, stakeholder participation |
| Topics: | Design Practice, International Construction, Cost Management, Business Strategy, Engineering Principles, Geographical Context, Research Practice, Stakeholder Management, Risk Management, Sustainability |
| Descriptive scope: | 4 PCTE |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here