Journal of the Eastern Asia Society for Transportation Studies, Vol.8, 2009 The Revenue-Beta Model for Private Participation in Infrastructure

Abstract: Private Participation in Infrastructure is a concept which involves the public and the private sectors working in cooperation and partnership to provide infrastructure and public services. The purpose of this study is to propose the Revenue-Beta Model of obtaining a financial discount rate for PPI projects, especially road-related projects implemented by a BTO scheme with the following assumption: The Korean government can be considered as a risk-averse investor that can build a portfolio with each toll plaza on the Korean expressways. The most significant issue in this research is whether it is reasonable and practical to apply the Capital Asset Pricing Model to get an appropriate financial discount rate for PPI projects. As an example, the model is applied to a real BTO project: the CN Expressway project