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Appraising PPP Projects

411 Assessing Fiscal Feasibility (Affordability)

As discussed in chapter 2 (section 1.8), many PPP projects produce some sort of long-term fiscal consequences. These can be in the form of direct liabilities (when the project is partially or fully funded by the government) or contingent liabilities (when risks are allocated to the government either explicitly in the contract, in the debt agreements, or by the legal framework).

Affordability of the project (from the government perspective[34]) means its ability to be accommodated within the government’s current and future budget constraints. This analysis is key to an informed green light decision at the end of the Appraisal Phase.

[34]
Not to be confused with “user affordability” which assesses whether required
tariffs are viable for the target users in a “user-pays” project. This would
have been addressed earlier in the appraisal.

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