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Government guarantee decisions in ppp wastewater treatment expansion projects

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Version 2 2024-06-04, 11:03
Version 1 2020-11-30, 14:48
journal contribution
posted on 2024-06-04, 11:03 authored by L Wang, Asheem ShresthaAsheem Shrestha, W Zhang, G Wang
Public private partnership (PPP) models are often used in delivering wastewater treatment (WWT) projects. When existing PPP projects need expansion due to higher demand for WWT, in many cases, the expansion may involve a new PPP contract involving a new concessionaire. Expansion PPPs have unique challenges as the sharing of responsibilities and risks can become complex. The complexities are further exacerbated when there are government guarantees involved. Structuring inappropriate guarantees can often lead to high costs for the government. This study focused on the choice of government guarantee in PPP expansion projects in the WWT sector by examining two popular guarantee mechanisms: minimum revenue guarantee and exclusive right. A decision model was developed and applied in a real WWT expansion PPP project in China to illustrate the optimal guarantee under varying circumstances related to service demand, expected unit price, and the existing guarantees in the existing PPP project. The contribution of the study lies in the applicability of the model to facilitate better decisions for the government in selecting the optimal guarantee mechanism in PPP expansion projects.

History

Journal

Water (Switzerland)

Volume

12

Article number

ARTN 3352

Pagination

1 - 21

Location

Basel, Switzerland

Open access

  • Yes

eISSN

2073-4441

Language

English

Publication classification

C1 Refereed article in a scholarly journal

Issue

12

Publisher

MDPI