Mel'nikov R.M.Russian Presidential Academy of National Economy and Public Administration, Moscow, Russian Federation rmmel@mail.ru
Importance The article evaluates methodological approaches used in Russia to choose an optimal investment mechanism for road construction within the framework of public-private partnership, and compares them in terms of their compliance with the best global practices.The article reviews international experience in evaluation of similar projects, implying an adjustment of cash flows to competitive neutrality per each of alternative investment mechanisms, risks assumed and transferred by a public partner, and difference in non-financial conditions. I explain why it is reasonable to rely upon the experience and expertise in the Russian practices. Objectives The article analyzes methodological approaches developed by the Federal Road Agency to make a comparative evaluation of the efficiency of the public procurement mechanism and public-private partnership mechanisms for free roads or toll roads. The research proves that budgetary and economic efficiency criteria defined in the Federal Road Agency's methodology do not allow to exclude inefficient projects and mechanisms out of consideration, and the financial efficiency criterion may lead to the unreasonable exclusion of mechanisms in progress that ensure significant benefits for the public as a whole. I can note that procedures are insufficiently elaborated to carry out comprehensive feasibility (public) studies of investment mechanisms, and the Federal Road Agency fails to pay enough attention to specific costs and benefits typical of transportation and infrastructure projects (first of all, reduction of aggregate transportation costs for road users). Results The research indicates that the optimality criterion of the road construction mechanism set forth by the Federal Road Agency fails to allow choosing a project implementation option that would meet the public interests as a whole as much as possible. Conclusions and Relevance I suggest that an optimal mechanism should imply an investment mechanism for project implementation that would demonstrate maximum NPV as a result of the feasibility study of all the mechanisms meeting the criteria of financial viability and commercial potential for the public partner.
Keywords: public-private partnership, value for money, evaluation, analysis, costs, benefits, transportation, infrastructure, projects, toll roads
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