It has been asserted that private sponsors will normally agree to bear risks that are familiar to them, such as most of the development, construction, commissioning and operating risks, but will hesitate to agree to bear uninsurable risks that are unquantifiable and outside their control, such as some political risks and country commercial risks, indeterminate demand risks, and uninsurable force majeure risks (Asian Development Bank, 2006). To some extent, the survey findings seem to confirm this normal practice, especially for project risk allocation on which both regulators and operators moderately agree. It has also been presumed that the regulators would be tempted to transfer as many project risks as possible, while the operators were expected to accept as few project risks as possible.
The survey findings, however, do not provide strong evidence in support of this assumption. Both intra- and inter-group agreements highlight a clear disagreement between the two contracting parties when dealing with the issue of who assumes what risk? especially for critical risk factors. For any PPP arrangement to succeed, it is important that project risks be optimally allocated. Even so, it is certainly not less important to unambiguously define the party required to assume a particular risk, irrespective of whether the allocation is optimal or not. A potential dispute often stems from the incomprehensible contractual risk allocation. Sometimes, such a dispute invites mixed comments from a non-contracting party claiming to represent the public interest.