IntroductionThe United Kingdom pioneered the concept and practice of shadow tolls mechanism in 1990s through its implementation of the Private Finance Initiative (PFI). It is a strategic economic policy that authorized financing of public infrastructure projects to the private sector. In Europe the conventional Design, Built, Finance and Operate (DBFO) model of Public private partnership has taken the form of Shadow toll mechanism where the Per Vehicle amount paid to a Private Party from a sponsoring governmental entity and not by facility users. Shadow toll amounts paid to a facility operator would be based upon the number of vehicles using the road. It is a payment structure where the road user does not pay any toll.
The Shadow tolls are annual payments to a private party over a concession period. In Shadow toll mechanism the private operators are responsible for Initial financing of projects rather than government sector. Shadow tolls are not a financing source but a payment approach which consist range of payment methods and viable financing structure that well fits with the needs and characteristics of certain projects. In general the public sector provides the incentive to the private party for timely completion of work as well as management.
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