Explanation:

Some typical scenarios that may lead to the termination of a PPP contract are:

1.default events (this could be the insolvency of a party or its material breach of the contract)
2.the impossibility for the parties to perform under the contract (for example, due to a prolonged force majeure event)
3.government voluntary termination due to public policy.

Termination can be particularly expensive for governments once construction is complete and operations have commenced, where the full costs of construction have been born by the project company. Where compensation due from the procuring authority is based on the repayment of some level of debt, this will be highest immediately after construction before any debt drawn down for construction has been repaid.  

Where a contract is terminated, possession of the public asset in question will often revert to the procuring authority. As a result, the procuring authority will be required to pay the private partner compensation agreed in the contract or prescribed by law, as the private partner will no longer have the project’s cash flows available to satisfy investors.