Why hybrids will thrive

Author: | Published: 1 Aug 2007

Motorway project development and funding has been a challenge for many central and eastern European (CEE) countries. A lack of available capital to develop motorway networks, coupled with limited sovereign borrowing capacity, has compelled CEE governments to consider funding mechanisms that differ from those traditionally used by them on motorway projects previously.

Many CEE governments have looked, albeit reluctantly, to PPP as an approach to solve these problems. But the traditional PPP approach of pure real tolls, shadow toll or availability payments has not appealed due to the significant risk and costs of each.

To address this situation, a new method of structuring and funding motorways has evolved, which relies on hybrid payment mechanisms within a public-private partnership (PPP) model. This approach of using a hybrid mechanism has been successfully applied in a number of projects including most recently the Istrian Motorway Project in Croatia and the Trakia Motorway Project...