Project finance
There are two financing systems:
- a. Public – Private Partnership (PPP).
It allows a wide range of solutions such as:
- Direct users' payments: i.e.: construction of a highway and then recovering the investment by collecting a toll from users for several years or construction of water infrastructures and recovering the investment through the water bill.
- A fee from the public authority's revenue budget. i.e.: construction of a hospital with private capital that is then rented with an option to buy from the health authority. The employer acts as a landlord, providing general maintenance of the building and other non-medical services, while medical services are provided by the Health System.
b. Private Finance Initiative (PFI).
It is the name given to PPP projects in the United Kingdom where payment for the use of the good or service falls on the public contractor and not directly on the user, which increases public risk. For example, in the case of a bridge, the toll is paid by the Public Administration that hired it instead of the user, which is called “shadow toll”.
Its main characteristic is that the concessionaire company is usually constituted as a consortium, company, or Special Purpose Vehicle in the form of a limited liability company. It usually includes the construction company, the concessionaires of maintenance and management services and the providers of financing, in the form of debt or equity.