Governance of infrastructure megaprojects : the role of the special purpose entities

Following on from the EU Megaproject COST-Action research, which suggests a correlation between SPE’s and Megaproject performance, this thesis focuses on the roles played by SPEs for the Formal Governance of Infrastructure Megaprojects (FGIM). The financial and accounting aspects are the primary focus of the of the explicit knowledge on SPEs. Governance is under-investigated and often implied by expert negotiators and designers of SPEs. This research focused on the critical role of SPEs for the FGIM. The thesis makes explicit the complex governance mechanisms under which infrastructure megaprojects operate. The first part of the research describes what SPEs are and what are they for. The existing knowledge about SPEs is scattered in different knowledge domains, e.g. the understanding of what is an SPE in the real estate is different to the one in infrastructure megaprojects, or in transfer pricing. The thesis provides a universal definition of SPEs integrating different perspectives and uses: “The Special Purpose Entity is a fenced organisation having limited pre-defined purposes and a legal personality.” The thesis distinguishes between various types of SPEs, and it focuses on the ones that are most relevant to the FGIM: the project companies and the industrial vehicles. The second part of the research extends the unit of analysis, from the SPE toward the extended contracting network in megaprojects. SPEs are part of a wider governance architecture involving critical megaproject stakeholders, including sponsors, lenders, off-takers, key supplier and contractors. Consistently, the SPE’s influence on FGIM cannot be instigated in a vacuum, but it requires a systemic consideration of several formal instruments complementing the SPEs. The research gives consideration to the systemic contracting structure to highlights how investors control SPEs, and how SPEs govern a relevant portion of the contracting network in megaprojects.