Project finance risk management for public-private partnership

  • Received October 25, 2017;
    Accepted December 22, 2017;
    Published December 25, 2017
  • Author(s)
  • DOI
  • Article Info
    Volume 14 2017, Issue #4, pp. 171-180
  • Cited by
    9 articles

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This work is licensed under a Creative Commons Attribution 4.0 International License

The development of public-private partnership in Ukraine in recent years has become very important as an instrument of anti-crisis orientation. The real economic situation objectively creates the preconditions for more effective use of this mechanism and institutes of public-private partnerships in order to ensure sustainable economic development, obtain new ones and improve the quality of public services provided to the population.
The objective of the research is to identify the components of project finance risk management and to provide justification of effective and balanced sharing of risks between public and private partners as the prerequisite and the main principle of effective implementation of public-private partnership.
The authors used the following research methods: systemic approach, theoretical and empirical methods of scientific knowledge.
This paper examines types of investment project financing by banks based on public-private partnership. It defines the structure of public-private partnership according to sources of capital investment in the project vehicle. The paper identifies components of the risk management process in project finance. It proves that a balanced distribution of risks between the private and public partners is the key requirement and the primary principle of effective public-private partnership. In this way, the need for mobilization of additional financial resources for implementation of investment projects calls for extended cooperation of state agencies and banks as a part of the effort of economic crisis management.

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    • Figure 1. Forms of public-private partnership financing, compiled by authors
    • Figure 2. Project finance risk management for public-private partnership
    • Table 1. Rating of availability of funding from different sources in some countries in 2014
    • Table 2. An outline of PPP structure according to sources of project vehicle capital