Private sector participation in public infrastructure

There are a wide variety of arrangements in operation globally whereby government or government agencies enter into contractual service arrangements to attract private sector participation in the development, financing, operation and maintenance of infrastructure for public services.

IFRIC 12 is concerned with the accounting by private sector operators for “public-to-private” service concession arrangements (which are also know by a variety of other titles, including “service concession” “build-operate-transfer” or “rehabilitate-operate-transfer” arrangements). These arrangements typically involve a private sector operator constructing (or upgrading) the infrastructure used to provide the public service, and then operating and maintaining the infrastructure for a specified period of time.

However, the Interpretation does not apply to all such arrangements. Its scope is limited to public-to-private service concession Read more

Service Concession Arrangements

Illustrative examples

These examples accompany, but are not part of, IFRIC 12.

Example 1: The grantor gives the operator a financial asset

Arrangement terms Service Concession Arrangements

IE1 The terms of the arrangement require an operator to construct a road—completing construction within two years—and maintain and operate the road to a specified standard for eight years (ie years 3–10). The terms of the arrangement also require the operator to resurface the road at the end of year 8—the resurfacing activity is revenue-generating. At the end of year 10, the arrangement will end. The operator estimates that the costs it will incur to fulfil its obligations will be:

Table 1.1 Contract costs Service Concession Arrangements

IE2 The terms of the Read more