Over the last 25 years, 27 public-private partnerships (PPPs) have been awarded in the rail sector. Rail PPPs however are controversial. Some argue that they allowed to fund and build projects that otherwise would have been impossible to launch, or that they fostered innovative systems. Others think that PPPs are a costly way to bypass budget constraints that cost more to the taxpayer at the end of the day.
The objective of this paper is to conduct the first comprehensive review of all rail PPPs in order to reach conclusions on the conditions of success of rail PPPs, based on quantitative evidence. More precisely, the paper focuses on three specific questions: what are the common features and the differences among rail PPPs and how did they evolve in the last two decades? What are the specific features of rail PPPs compared to other PPPs? Why do so many PPPs fail and need public support, especially among traffic-based concessions?
This paper restricts its analysis to public-private partnerships in the rail sector that include significant investment by concessionaires. It thus excludes other modes of public transportation like light rail, metro, people movers, as well as a wide variety of other kinds of public-private arrangements like operating concessions, divesture, joint ventures, private infrastructure, etc.
This paper is structured as follows. Section 2 describes the current situation of PPPs in the rail sector and the diversity in scope and risk sharing among them. A comprehensive list of rail PPPs and their main features is provided in an appendix to this paper. Section 3 provides an analysis of the outcomes and the specific risks of rail PPPs. Sections 4 focuses on traffic-based concessions and demonstrates that those should best be avoided.