NEW YORK--(BUSINESS WIRE)--In oral and written testimony today before the U.S. Congressional Transportation & Infrastructure Committee, Cherian George, Managing Director and Head of Global Infrastructure & Project Finance for the Americas, showed how Public Private Partnerships (PPPs) are a useful tool for governments to deliver necessary public infrastructure.
Despite a mixed track record, PPPs can facilitate progress in closing the infrastructure deficit faced by many governments if they are carefully crafted to address all stakeholder concerns.
'The large number of issues with PPPs isn't necessarily an indictment of them,' Mr. George told lawmakers. 'Instead, it's a reflection of the fact that their complex assets and services present challenges in finding the right public policy balance within the business, legal and financial framework to bring best value to all parties, most importantly citizens.'
Mr. George reminded lawmakers that most risks with PPPs can be anticipated and mitigated, and that governments and the market have learned from prior missteps. When PPPs have failed, the issue is often inappropriate transaction design and application.
A key tenet of a PPP is that responsibility and risk sit equally between both parties. A well-structured grantor team and a competent concessionaire are better positioned to respond and minimize the adverse effects to both parties.
In addition, careful planning and projections to avoid the risks of over-leverage can help avoid insolvency in periods of extreme economic or financial stress.
'PPPs can be viewed as a glass half full or a glass half empty,' said Mr. George. 'Fitch believes that the former is the better perspective.'
The Transportation and Infrastructure Committee has jurisdiction over all modes of transportation: aviation, maritime and waterborne transportation, highways, bridges, mass transit, and railroads. The Committee also has jurisdiction over other aspects of national infrastructure, such as clean water and waste water management, the transport of resources by pipeline, flood damage reduction, the management of federally owned real estate and public buildings, the development of economically depressed rural and urban areas, disaster preparedness and response, and hazardous materials transportation.
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