A Study On Public-Private Partnership In Highway Infrastructure Financing For The Republic Of Belarus

Capital raising process plays a crucial role as it directly affects the amount of the costs of capital of a public-private partnership (PPP) project. Therefore, the purpose of this study was to develop an efficient methodology to raise capital for PPP projects in the field of highway infrastructure and its adaptation to the economy of the Republic of Belarus.The framework of PPP and up-to-date fundraising processes for PPP projects were determined in the literature review. In order to achieve the research objectives, we developed a financial strategy for raising funds for the project and assigned tools which assist in the application of the financial strategy.In the first step, we identified the influence of highway infrastructure projects features and conditions of PPP for raising capital. We also determined the need for capital and possibility to generate cash flows in the course three life-cycle stages of a PPP highway infrastructure project. Furthermore, we defined the principles of raising capital for a PPP project of highway infrastructure. The proposed financial strategy for raising funds was developed on the basis of diversification of sources of funds and financing instruments with regard to requiring capital costs needs and abilities of the project company to attract capital throughout the project life cycle. The capital market is not stable; therefore, in addition, we proposed an algorithm for more precise selection of sources of financial resources.In the second step, we determined the key sources of financing for which the debt defined in the form of a bank loan dominates. According to this, we proposed a scheme of interactions between project financing participants in which a state partner of the agreement acts as a borrower’s guarantor to the creditors. In order to rationalize the fund raising process from the key sources of the strategy, we developed a special optimization model.Finally, the empirical study of the PPP phenomenon within its real-life context was carried out in the case study of a PPP project in Belarus (BelToll). The results allow us to use successful experience of the project and avoid shortcomings in the implementation of future PPP projects. They will also help to establish and spread PPP in the Belarusian economy. Another objective of the case study was the test of efficiency of the strategy and tools developed in this thesis. They were efficient as evidenced by the values of financial indexes of the BelToll project.Findings of this research will be provided to the Ministry of Economy of the Republic of Belarus. They can be used as a source for bylaws and departmental regulations related with the issues of PPP project financing in the field of highway infrastructure and other industries.