Managing Contingent Liabilities Arising From Public Private Partnership Projects

Abstract

All public infrastructure projects, irrespective of how they are procured,
managed and financed, generate future liabilities. This becomes even more
apparent under the Public Private Partnership arrangement. A number of
these liabilities are subject to a high degree of uncertainty regarding when
they will arise and the financial exposure involved when they do, and are
therefore said to be contingent. Contingent liabilities have the potential to
undermine national macroeconomic policy and cause significant economic
harm when they crystalize. This article examines the legal and institutional
mechanisms available in Nigeria to manage these liabilities and suggests
ways for designing a PPP delivery process with inbuilt mechanisms for
identifying, mitigating, tracking, and managing them.