Assessing and allocating the financial viability risk factors in public-private partnership wastewater treatment plant projects

Purpose

This research investigates the financial viability risk factors that threaten the private investor's economic scheme in the public private partnership (PPP) wastewater treatment plant (WWTP) projects in Egypt. The aims of this study are to: (1) illustrate and cluster the financial viability risk factors in accordance with the PPP WWTP projects' nature, (2) assess the risk factors' criticality degrees according to their severity and frequency levels of the financial viability, and (3) pinpoint the suited allocation of the financial viability risk factors between the public and private parties.

Design/methodology/approach

Relying on the previous analysts' endeavors, the questionnaire method, the fuzzy synthetic evaluation approach and the hypothetical normal distribution curve model; the severity, frequency, criticality and allocation preference of 32 financial viability risk factors were assessed from 12 Egyptian PPP experts.

Findings

The data analysis yielded that foreign exchange risk, currency risk/inflation, license risk, construction cost-overrun and late site handover are the key factors in arising the financial viability risk issue in the PPP WWTP projects. Considering the discussion of these key risks, the study summarized that the financial viability's key risk factors are notably be affected by the economic, political and administrative circumstances of the host county. Additionally, the inflation lesion was found to be the core reason of most of the key risk factors.

Originality/value

This research originality stems from its contribution to address the gab in the PPP risk assessment literature of the concessionaire's financial viability in the WWTP projects in a country of developing economy as Egypt. This, first, enriches the scholarly based knowledge of the PPP projects' risk analysts of the developing countries. Accordingly, it moves the current PPP risk assessment research further to deeply apprehend these markets' risks. Second, it equips the policymakers in the public and private sectors of such projects with a map that clarifies their assigned risk factors and the responsibilities that each party should bear to generate a mutual stable investment environment for achieving their aims successfully. This, indeed, paves the way for more private investments to be involved in the developing markets' PPP projects with a profitable satisfactory level for the private concessionaire. In the same vein, more WWTP projects, which are highly needed for the public sector and its people, are executed.