Changing perceptions on PPP games: Demand risk in Irish roads

Richard Burke, Istemi Demirag

Research output: Contribution to journalArticlepeer-review

40 Citations (Scopus)

Abstract

This study is based on three Irish operational toll road public private partnership (PPP) case studies, including interviews with 38 key stakeholders. Our findings show that the Irish Government's treatment of risk and its transfer to the private partner in PPPs are changing over time. Regulatory changes, which have led to increased finance costs, coupled with a severe global economic crisis, have exacerbated the difficulties in funding PPPs. The goalposts in Irish PPPs appear to be changing in favour of the private partner at the expense of the taxpayers, who are the losers in the PPP game. The Government are also suggesting that they may potentially step in, if projects experienced financial difficulty and the special purpose vehicle (SPV) may require specific guarantees in order to participate in future PPP projects. Pricing of demand risk also differs from the Government's rhetoric that it is being priced realistically. In practice, we find that it is priced aggressively by the SPV in order to win PPP contracts. The paper discusses the possible implications of these findings for value for money (VFM) and, ultimately, taxpayers.

Original languageEnglish
Pages (from-to)189-208
Number of pages20
JournalCritical Perspectives on Accounting
Volume27
DOIs
Publication statusPublished - 01 Mar 2015

Keywords

  • Change in perceptions
  • Demand risk allocation and transfer
  • Estimating demand risk
  • Public private partnerships
  • Toll roads
  • Value for money

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