Model for negotiation of refinancing gain from public-private partnership

Abstract

Due to the long contract period, the uncertainty and risk level are very high at the very beginning of the project. However, when the project is successful on completion and operation, the uncertainty and risk level are greatly reduced. The private sector is more willing to refinance the project on better financial terms and benefit a lot from it. The aim of this paper is to study the sharing mechanism of the refinancing gain between the public and private sector. Bargaining-game theory based model for sharing negotiation between the two sectors has been established and the negotiation strategies have been derived from this model. A case study of a successful refinancing project has been done. The results of this paper may provide theoretic foundation and thinking logic for the public sector to negotiate with the private sector when refinancing happens.