Private companies interested in participating in PPP projects should examine:
- The payment mechanism for the PPP project and the implications on their revenue and cashflow;
- The financing arrangements for the project, especially how to secure low private financing for the project; and
- The termination and compensation arrangements of a PPP project and the potential impact on the bankability of the PPP deal, i.e. whether the banks will be willing to lend to the company. For example, some private financiers might request for step-in rights in the PPP contract, so that they can take over operations in case the private provider fails.
When a public agency announces its intent to purchase services from the private sector through PPP, private companies are encouraged to give their views on how the PPP deal could be structured to enhance the financing of the project.