D. UNDERSTANDING THE PRIVATE SECTOR’S REQUIREMENTS AND CAPACITY IN THE GOVERNMENT TO IMPLEMENT THE PROJECT The private sector has certain requirements that a project must meet in order
to be considered as a viable project. Often the term “bankability” is used in the
industry to refer to the viability of a PPP project. The term, however, may mean
different things to different parties in a PPP. But, generally, it means if the project is
financially viable, legally tenable, and administratively implementable.
Some of the typical requirements of the private sector are:
• Private investment is feasible in size and manageable considering the
technical managerial and financial capacity of the private sector;
• A fair return on investment taking into account the level of involvement and
assumption of risks;
• Security of the private investment;
• Political and social comfort in cost recovery pricing of the services;
• Government policy continuity; and
• Predictable timeframe in administrative and regulatory processes.
The implementing agency possibly will also have to consider other specific
requirements that the private sector should have for specific projects.
Concerning the capacity in the government, the implementing agency should
take into consideration the following matters before considering further work on the
project development:
• Whether there is any PPP unit in government or any agency that can help
in project development and implementation;
• What previous experience exists within the government and how much
capacity does the agency have in implementing the project;
• How much fund is available for project development and, if needed, how
more funds can be obtained.
The agency should make a realistic assessment of the capacity in the
government, the likely need of resources for project development and resources
A Guidebook on Public-Private Partnership in Infrastructure 19
available for this purpose. This assessment is needed to establish the terms of
reference for the appointment of a transaction advisor, if needed.
