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Public interest and early termination of PPP contracts. Can fair and reasonable compensations be determined?

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  • Marques, Rui Cunha

Abstract

This article analyzes the different ways to terminate public-private-partnership (PPP) contracts early. It discusses how early terminations should be addressed to mitigate the consequences in terms of attractiveness, bankability, unfairness and litigation. The different ways to compensate private partners are examined. A new methodology for calculating the due compensation is proposed whenever governments voluntarily terminate a PPP contract based on the public interest. We posit that early termination clauses of contracts that comprise fair and reasonable compensations are required to provide meaningful incentives and contestability to acceptable returns on essential public services avoiding political and conflicting issues.

Suggested Citation

  • Marques, Rui Cunha, 2021. "Public interest and early termination of PPP contracts. Can fair and reasonable compensations be determined?," Utilities Policy, Elsevier, vol. 73(C).
    • Handle: RePEc:eee:juipol:v:73:y:2021:i:c:s0957178721001351
    DOI: 10.1016/j.jup.2021.101301
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    References listed on IDEAS

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    Cited by:

    1. Bonifaz, José L. & Saavedra, Eduardo H., 2023. "Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru," Utilities Policy, Elsevier, vol. 85(C).
    2. Nur, Suardi & Burton, Bruce & Bergmann, Ariel, 2023. "Evidence on optimal risk allocation models for Indonesian geothermal projects under PPP contracts," Utilities Policy, Elsevier, vol. 81(C).
    3. Bao, Fengyu & Martek, Igor & Chan, Albert P.C. & Chen, Chuan & Yang, Yang & Yu, Heng, 2023. "Assessing the public-private partnership handover: Experience from China's water sector," Utilities Policy, Elsevier, vol. 80(C).

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