Interests of Public-Private Partnership Participants Adjustment

Economic Annals-ХХI: Volume 148, Issue 1-2(2), Pages: 47-50

Citation information:
Budnyk, V. (2015). Interests of Public-Private Partnership Participants Adjustment. Economic Annals-XXI, 1-2(2), 47-50. https://ea21journal.world/index.php/ea-v148-12/

Victoriya Budnyk
PhD (Economics),
Associate Professor,
Kyiv State Maritime Academy named after Hetman Petro Konashevych-Sahaydachnyi
9 Frunze Str., Kyiv, 04071, Ukraine
alexdbuddom@mail.ru

Interests of Public-Private Partnership Participants Adjustment

Abstract. Introduction. Public-private partnership (PPP) introducing in Ukrainian economy is connected with answering to the question whether such projects realization is economically and financially grounded, as well as working out approaches of financial and contractual relations regulation between the participants of PPP. Purpose of the article is to work out methodic approach to the interests of public and private partners’ adjustment in PPP projects development and realization.

Results. Coordination of PPP participants’ economic interests is proposed to realize according to criterion of PPP project’s internal value maximization from the position of a state, as well as an enterprise, which is calculated by the method of financial flows generated during the project realization discounting. The worked out approach covers multivariate calculations of the PPP project’s internal value, consideration of contractual conditions and such contract parameters choosing which result in maximum internal value of the project from both public and private partners’ point of view. Proposed methodic approach was fully approbated while grounding the conditions of PPP under a concession contract of fleet support facilities construction and exploitation in Izmail seaport of Odesa region (Ukraine) for the port’s ecologic security preservation. The contractual conditions consideration allowed proposing the most suitable project variant among three possible. It was concluded that the maximum project value would be achieved when the private partner’s input was 75% of the total financing costs.

Conclusion. Application of the author methodic approach leads to flexible mechanism implementation for the partner relationships stipulating between public and private partners in their mutual projects and finding of agreeable variants for such projects financing.

Keywords: Public-Private Partnership; Coordination of Interests; Internal Project Value; Concession Agreement; Izmail Seaport

JEL Classіfіcatіon: H89; L33

References

1. Verkhovna Rada of Ukraine (2010). On Public and Private Partnership (Law of Ukraine).
   Retrieved from http://zakon1.rada.gov.ua/laws/show/2404-17 (in Ukr.)
2. Fischer, K., & Alfen, H. (2009). Incentive and payment mechanisms as part of risk management in PPP contracts. Journal of Interdisciplinary Property Research, 1, 5-25.
3. Iyer, K., & Sagheer, M. (2010). Hierarchical Structuring of Public Private Partnerships Risks Using Interpretative Structural Modelling. Journal of Construction Engineering and Management, 136(2), 151-159.
4. Akintoye, A., Li, B., Edwards, P., & Hardcastlea, C. (2005). The allocation of risk in PPP/PFI construction projects in the UK. International Journal of Project Management, 23, 25-35.
5. Zapatrina, I. V. (2010). Public and private partnership in Ukraine: prospects of implementation for realization of infrastructure projects and performance of public services. Ekonomika i prohnozuvannia (Economy and Forecasting), 4, 62-86.
   Retrieved from http://nbuv.gov.ua/j-pdf/econprog_2010_4_8.pdf (in Ukr.)
6. European PPP Expertise Centre (2014). Review of the European PPP Market in 2013.
   Retrieved from http://www.eib.org/epec/resources/publications/epec_market_update_2013_en.pdf
7. The National Institute for Strategic Studies (2012). On the development of public-private partnerships as a mechanism for enhancing the investment activity in Ukraine.
   Retrieved from http://www.niss.gov.ua/articles/816 (in Ukr.)
8. Brailovskyi, І. A. (2013). Public and private partnership as an agreement of mutual benefits. Naukovi zapysky Natsionalnoho universytetu «Ostrozka akademiya». Seriya «Ekonomika»: zbirnyk naukovykh prats (Ostroh Academy Scientific Notes), 24, 15-18.
   Retrieved from http://nbuv.gov.ua/j-pdf/Nznuoa_ 2013_24_5.pdf (in Ukr.)
9. Graham, J., & Harvey, C. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 2-3, 187-243.
10. Bruner, R., Eades, K., Harris, R., & Higgins, R. (1998). Best practices in estimating the cost of capital: Survey and synthesis. Financial Management, 27, 13-28.
11. Shevchuk, N. V. (2014). Value as a criterion for enterprise management effectiveness. Ekonomicnij Casopis-XXI (Economic Annals-XXI), 5-6, 68-71.
    Retrieved from https://ea21journal.world/index.php/ea-v141-17/ (in Ukr.)
12. Teplova, Т. V. (2006). Investment leverages of company’s value maximization. Practice of Russian enterprises. Мoscow: Vershyna (in Russ.).
13. The Ministry of Economic Development and Trade of Ukraine (2012). Methods of public and private partnership performance efficiency analysis.
    Retrieved from http://zakon4.rada.gov.ua/laws/show/z0399-12/page (in Ukr.)
14. Development plan of Izmail seaport on the short (up to 2018), medium (up to 2023) and long (up to 2038) perspective.
    Retrieved from http://www.uspa.gov.ua/images/ports-development-plans-and-scheme/Izmail-ports-development-plans.pdf (in Ukr.)

Received 10.10.2014