PRIVATE FUNDING OF PUBLIC HIGHWAY PROJECTS

For the first time since the second half of the last century, private sector finance has been employed in the development of public sector transportation infrastructure works, both in the United Kingdom and elsewhere. This paper examines why this method of financing has been reintroduced, the benefits which can accrue in terms of earlier promotion, shorter design period, faster completion and reduction in the public funding burden, while also offering reasonable financial returns for the private sector investor. The characteristics of privately financed projects are considered and attention is drawn to the many factors which have been evaluated before the promoter, investor and government can be satisfied that a viable scheme exists. Four competitively tendered case studies are briefly reviewed. In the first two, The Queen Elizabeth II Bridge at Dartford and the Tate's Cairn Road Tunnel in Hong Kong, funding arrangements and the construction phases have already been completed, with each of the tolled facilities in public use under agreed concession contracts. For the Birmingham road, the concession agreement has already been signed, statutory procedures and preliminary design are in progress and, subject to a favourable outcome of the public inquiry, construction is scheduled to commence in 1995. For the Cikampek Padalarang toll road in Indonesia, detailed design is almost complete, the concession agreement negotiations are well advanced and, subject to their satisfactory conclusion, construction works will commence during 1993. Finally the paper reviews the key issues fundamental to the success of any privately funded public sector project, with particular reference to the role and responsibilities of both the government and the private sector promoter.