Evaluating the Bilateral Government Guarantee Value in PPP Highway Projects

摘要

Governments around the world are increasingly focusing on private investment in the infrastructure sector through PPP framework, and are no exception in the area of transport infrastructure. To reduce the risk to the investors, governments used to provide guarantees and other forms of support. These guarantees can be analyzed by some real options, and it is very valuable but easy to be overlooked. In this paper, PPP project's value contain not only the project's NPV, but also real options value implied in the project. Models about government guarantees in PPP highway projects have been proposed: a minimum traffic guarantee and a maximum traffic guarantee. The game theory approach has also been introduced to help the distribution of risks between government and private investors. It is necessary to use methodology to value the project investments and dig the potential value.