SESSION FOUR: RISKY BUSINESS – CRAFTING THE CONCESSION AGREEMENT IN FOREIGN LANDS
Approaches to Public-Private-Partnerships and privatization models used depends both on government objectives and the requirements of the private operator/investor(s) the government hopes to attract. A balance needs to exist between transferring the risk of financing large capital expenditures from governments and taxpayers to private sector investors, on one hand; and private sector requirements to recover the costs of operating airports and generate risk proportionate returns on investment, on the other. An inherent traffic risk exists in the airport business. This must be factored in when considering and designing privatization and regulatory frameworks. In some cases, the airport economic regulatory framework is unclear, or is amended unexpectedly after privatization occurs. This creates uncertainty for investors and is an additional barrier to financing infrastructure sustainably.
How are risks assessed when investing in the airport sector? As many airport infrastructure investments are over long-time horizons with huge immediate outlays, have airport projects adequately captured and priced the risk accordingly? What incentives should governments ensure are in place to adequately strike a balance between national objectives and investor requirements?
Chair:Stefano Barconi, Director, Economics, ACI World
Gabriel de la Rica, Commercial Director, Ferrovial
Simon Morris, Vice President, Airport Advisory, ICF
Sidharath Kapur, Executive Director and Member of the Board, GMR Airports
Shyamali Rajivan, Director Global Infrastructure Group, Fitch Ratings