Moral Hazard Issues in PPP Projects

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Joint Ventures in Construction 2: Contract, Governance, Performance and Risk

Edited by

ICE Publishing

DOI:

https://doi.org/10.1680/jvc2.57838

ISBN electronic:

978-0-7277-5784-5

ISBN print:

978-0-7277-5783-8

Publication date:

2012

Chapter 17

Moral Hazard Issues in PPP Projects

Lei Shi, Dalian University of Technology

Masamitsu Onishi, Kyoto University

Kiyoshi Kobayashi, Kyoto University

Introduction

Public-Private-Partnership (hereafter PPP) is an innovative scheme for the procurement

of public services with private participation. The main players in a PPP project are the SPC

(Special Purpose Company), the government, and the bank. In most PPP projects, a concession

contract between the government and the SPC is signed to establish the performance levels and

service fees that will rule the concession over its time framework. After the concession contract

is signed, the SPC may close a debt contract with the bank for the provision of capital. The

2012

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