The public-private partnerships used to finance roads, ports, hospitals and dozens of other infrastructure projects could be affected by the pandemic-induced financial crisis. Here’s how to avoid that.
The economic downturn caused by Covid-19 is the greatest economic calamity since the Great Depression and is disrupting the construction, operation and maintenance of infrastructure services globally. Throughout Asia and the Pacific, this could cause serious delays in the construction of roads, schools, hospitals, ports, airports, and other critical pieces of infrastructure financed by public-private partnerships (PPPs).
|The financial crisis caused by the pandemic could delay or halt construction projects across Asia. Photo: Glenn Hansen|
Avoiding worst-case scenarios will likely require good use of contract renegotiation, and other contractual adjustment mechanisms and insurance provisions, in order to achieve the intended development outcomes. Governments and private contractors will benefit from understanding good policy and practices for conducting these negotiations. Hanif Rahemtulla is Senior Public Management Specialist, ADB.
Srinivas Sampath is Chief of the PPP Thematic Group, ADB.
Colin Gin is Assistant General Counsel, Office of the General Counsel, ADB.