Open AccessThe applicability of public-private partnership contracts for infrastructure projects as a function of their specificity
Author(s) -
Ольга Юрьевна Патракеева,
Alexey Patrakeev
Publication year - 2020
Publication title -
vestnik sankt-peterburgskogo universiteta. seriâ 5, èkonomika/vestnik sankt-peterburgskogo universiteta. èkonomika
Language(s) - English
Resource type - Journals
eISSN - 2542-226X
pISSN - 1026-356X
DOI - 10.21638/spbu05.2020.403
Subject(s) - equity (law) , general partnership , public–private partnership , marginal cost , limiting , business , bridge (graph theory) , project finance , function (biology) , finance , actuarial science , budget constraint , economics , microeconomics , engineering , mechanical engineering , medicine , evolutionary biology , political science , law , biology
The Crimean bridge, as Russia’s largest infrastructure project, can be considered a marginal case of the relative effectiveness of public financing without the involvement of private partners. According to the formalization employed, the implementation of this project through market coordination leads to additional costs due to the rising level of specificity. The increase in these costs is not linear and is more intensive than growth in the level of specificity. Introduction of an NPV-efficiency assessment tool into the analysis allows us to prove a limiting reduction of this interval for considering the risk profile of the project under сonsideration. Reserves required due to the risk of rising budget expenditures due to the project’s scale actually does not exist according to these reasons: increases in the discount rate is more intensive than the rise of negative expectations; the rise of additional equity premiums is more intensive than the rise of the risk-free rate itself. Thus, the Crimean bridge project should be considered a marginal case of the relative effectiveness of direct state funding comparing PPP scheme.