On October 27, 2014, the prestigious International Transport Forum (ITF) kicked off its P3 Renegotiation roundtable at Mason’s campus in Arlington, Virginia. The forum, called Private Partnerships for Transport Infrastructure: Renegotiations, How to Approach Them and Economic Outcomes, was hosted by George Mason University in collaboration with ITF and the World Bank. Center Director, Professor Jonathan Gifford, led the Center’s team in presenting a paper entitled PPP Renegotiation Experiences in the U.S.
Renegotiation of P3s is a common occurrence and can have a significant impact on value for money on a project. Since P3s are complex, substantial and costly financial structures, with legal documentation alone often stretching to several hundred pages, the process is challenging at best. Those who argue against renegotiation of P3s on any grounds and those who believe renegotiations are unavoidable and useful contribute to an ongoing debate on the topic.
The ITF Roundtable sought to review:
- the outcomes and risks most often associated with renegotiation in practice,
- the alternatives available for addressing uncertainty and incompleteness in contracts,
- elements for maximizing the chance that renegotiation will deliver net welfare benefits, and
- economic welfare impacts when termination and bankruptcy is preferred to renegotiation.
Other key presentations at the ITF roundtable include:
- Marian Moszoro, Mr. Gonzalo Araya, Ms. Fernanda Ruiz-Nuñez, and Mr. Jordan Schwartz, University of Berkeley, USA and Kozminski University, Poland; Ministry of Transport and Telecommunications, Chile; World Bank, USA. Paper title: Institutional and Political Determinants of Private Participation in Infrastructure.
- Jose Luis Guasch, Mr. Daniel Benitez, Ms. Irene Portabales, and Mr. Lincoln Flor; World Bank, USA. Paper title: Lessons learned from the experience in transport contract renegotiations in Latin America.
To see video of Professor Gifford’s presentation, click here.