PRIVATE FINANCING OF PUBLIC-SECTOR INFRASTRUCTURE

This paper examines the use of private finance for public transit infrastructure using as an example an investment in new passenger rail infrastructure. The paper analyses different costs involved, compares private versus public costs, opportunity cost of investment, operating costs, renewal costs, as well as cost of risks associated with providing the service. After combining all the costs of the transit agency and the private operator, the paper determines that private companies can build and operate rail transit infrastructure at a cost equivalent or less than those incurred by public agencies.