Financial sustainability of the waste treatment projects that follow PPP contracts in Greece: a formula for the calculation of the profi t rate

Abstract

This paper examines the initial budget estimation process for the implementation of waste treatment projects through Public-Private Partnership (PPPs) in Greece. The study, having as strong theoretical foundation the project's financial analysis that is included in the cost benefit analysis methodology, evaluates the financial sustainability of a waste management project. Initially, the budget estimation process that is currently used under the conventional procurement of public projects in Greece is followed and the results demonstrate that the specific process, where the investor's Profit Rate (PR) takes specific values, cannot be used in the case of a PPP. Furthermore, a new formula is developed, which calculates the minimum value of the private sector's PR, in order to determine the existence of positive cash flows during the operational phase of the project and to ensure the partnership's financial sustainability. The new formula can be a useful tool to the public decision-makers in Greece, because it helps them to evaluate the financial sustainability of the waste treatment projects that follow PPP contracts, during the conceptual phase