Law Commons^™

Infrastructure Privatization Contracts And Their Effects On Governance, Ellen Dannin

Ellen Dannin

For all but those who have an ideological commitment to privatization, the issue driving privatization is how to fund public infrastructure. Thus, arguments for privatizing infrastructure are (1) to provide money so cash-strapped governments can fix crumbling infrastructure and (2) to shift future financial risk to the private contractor, as well as, of course, the financial rewards.

The reality, though, is far different. Provisions commonly found in infrastructure privatization contracts actually make the public the insurer of private contractors’ return on investment. Indeed, were it not for the lengthy provisions that protect contractors from diminution of their expected returns, the …