Division 2.2.3 Financial analysis in Public Private Partnership (PPP)

The following aspects shall be taken into consideration when the financial analysis is carried out for major projects implemented as PPPs:

1. (1)

   The financial discount rate may be increased above the standard rate set out in Section III (Method for calculation of the discounted net revenue of operations generating net revenue after completion) of the Commission Delegated Regulation to reflect a higher opportunity cost of capital to the private investor. This higher opportunity cost should be justified by the beneficiary on a case-by-case basis, providing evidence, where possible, of the private partner's past returns on similar projects, or other relevant factual evidence.

2. (2)

   In case of PPP schemes where the owner of the infrastructure is different from the operator a consolidated financial analysis, covering both the owner and operator, must be carried out.

3. (3)

   Unless private partner is chosen in a fair, transparent and open competitive procedure assuring the best ‘value for money’ for public partner^f1, in order to check the financial profitability of the private capital and avoid unduly high profit generated by EU support an indicator measuring the financial profitability of the invested capital to the private investor (FRR(Kp)) shall be calculated^f2, comparing the net revenues accrued by the private partner with the resources provided during investment (either through equity or loans). The resulting FRR(Kp) shall be compared with national or international benchmarks on expected profitability in the given sector.