Resource or input risk

Power transmission Power transmission

Description (What is the Risk)

The risk that the supply of inputs or resources required for the operation of the project is interrupted or the cost increases.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Private Partner bears the principal responsibility to ensure an uninterrupted supply of inputs/resources for the project and to manage the costs of those inputs

Mitigation Measures (What can be done to minimize the risk)

N/A

Government Support Arrangements (What other government measures may be needed to be taken)

The Contracting Authority is not expected to assist the Private Partner in mitigating such risks.

Comparison with Developed Market

Developed markets generally do not experience market volatility to the extent of emerging markets, and resource availability is less of a concern.

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Description (What is the Risk)

The risk that the supply of inputs or resources required for the operation of the project is interrupted or the cost increases.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Private Partner bears the principal responsibility to ensure an uninterrupted supply of inputs/resources for the project and to manage the costs of those inputs.

There may be specific instances where the Private Partner may need the share this risk with the Contracting Authority, such as reliance on local source materials where these may be affected by labour disputes, embargos or other political risks

Mitigation Measures (What can be done to minimize the risk)

N/A

Government Support Arrangements (What other government measures may be needed to be taken)

The Contracting Authority may need to stand behind the cost risk for certain inputs, or at least underwrite the Private Partner's financing for these costs.

Comparison with Developed Market

Emerging markets are generally more susceptible than developed markets to market volatility and major cost variations, and resource availability is more of a concern.

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