Impact on Discount Rate

The initial assessment of the inflation risk transfer will need to be reconsidered in the light of bids received.  Where bidders fully accept the Payment Mechanism, there will be no requirement to adjust the PPP Discount Rate.  However, where the Payment Mechanism has been amended the evaluator will need to consider whether:

•  Bidders are taking more risk than the initial assessment of inflation risk transferred - in this case, the Systematic Risk adjustment reflected in the PPP Discount Rate will need to be increased

•  Bidders are taking less risk than the initial assessment of inflation risk transferred - in this case, the Systematic Risk adjustment reflected in the PPP Discount Rate will need to be decreased