Investment in private participation in infrastructure projects in developing countries in 2004 and 2005 increased sharply. Meanwhile, the distribution of investment across sectors and regions, and the allocation of risks between public and private parties, were shifting. Private sponsors started putting more emphasis on risk mitigation strategies. To take advantage of private sponsors' renewed interest in infrastructure projects, governments need to create risk sharing arrangements that attract private operators while also benefiting governments, taxpayers, and users.
Governments have long recognized the vital role that modern infrastructure services play in economic growth and poverty alleviation. For much of the post-Second World War period, most governments entrusted delivery of these services to state-owned monopolies. But in many developing countries, the results were disappointing. Public sector monopolies were plagued by inefficiency. Many were strapped for resources because governments succumbed to populist pressures to hold prices below costs. Fiscal pressures, and the success of the pioneers of the privatization of infrastructure services, provided governments with a new paradigm. Many governments sought to involve the private sector in the provision and financing of infrastructure services. The shift to the private provision that occurred during the 1990s was much more rapid and widespread than had been anticipated at the start of the decade. By 2001, developing countries had seen over $755 billion of investment flows in nearly 2500 infrastructure projects. However, these flows peaked in 1997, and have fallen more or less steadily ever since. These declines have been accompanied by high profile cancellations or renegotiations of some projects, a reduction in investor appetite for these activities and, in some parts of the world, a shift in public opinion against the private provision of infrastructure services. The current sense of disillusionment stands in stark contrast to what should in retrospect be surprise at the spectacular growth of private infrastructure during the 1990s.
"Many of the problems are related to difficulties in sustaining cost-covering user fees for these sectors. This study aims to distill the experience over the last 15 years. The main factors in the growth and subsequent decline are examined. The report assesses the impact that the private provision of infrastructure has had on service delivery and analyzes the consequences for other important goals. Main policy lessons are provided for governments that seek to ensure that the supply of infrastructure services does not become a bottleneck to growth."--BOOK JACKET.
Infrastructure plays a key role in fostering growth and productivity and has been linked to improved earnings, health, and education levels for the poor. Yet Latin America and the Caribbean are currently faced with a dangerous combination of relatively low public and private infrastructure investment. Those investment levels must increase, and it can be done. If Latin American and Caribbean governments are to increase infrastructure investment in politically feasible ways, it is critical that they learn from experience and have an accurate idea of future impacts. This book contributes to this aim by producing what is arguably the most comprehensive privatization impact analysis in the region to date, drawing on an extremely comprehensive dataset.
Drawing on data from the World Bank's Private Participation in Infrastructure (PPI) database, this publication examines trends in private infrastructure projects implemented between the years 1990-2001 in 132 developing countries, in global terms and in particular sectors and regions. Projects covered include those in the transport, energy (electricity and gas), telecoms, water and sewerage sectors that received private investment through management and lease contracts, concessions, greenfield projects, or divestitures.
Examining innovative ways to address Africa’s infrastructure deficit is at the heart of this analysis. Africa’s infrastructure stock and quality is among the least developed in the world, a challenge that significantly hinders economic development. It is estimated that the finance required to raise infrastructure in Sub Saharan Africa (SSA) to a reasonable level within the next decade is at US$93 billion per year, with two-thirds of this amount needed for capital expenditures. With the existing spending on infrastructure being estimated at US$45 billion per annum and after accounting for potential efficiency gains that could amount to US$17 billion, Africa’s infrastructure funding gap remains around US$31 billion a year. One approach to address this challenge is by facilitating the increase of private provision of public infrastructure services through public-private partnerships (PPPs). This approach, which is a relatively new arrangement in SSA is multifaceted and requires strong consensus and collaboration across both public and private sectors. There are several defined models of PPPs. Each type differs in terms of government participation levels, risk allocations, investment responsibilities, operational requirements, and incentives for operators. Our definition of PPPs assumes transactions where the private sector retains a considerable portion of commercial and financial risks associated with a project. In more descriptive terms, among the elements defining the notion of PPPs discussed in this study are: a long-term contract between a public and private sector party; the design, construction, financing, and operation of public infrastructure by the private sector; payment over the life of the PPP contract to the private sector party for the services delivered from the asset; and the facility remaining in public ownership or reverting to public sector ownership at the end of the PPP contract. The observations and policy recommendations that follow draw on ongoing World Bank Group PPP engagements in these countries, including extensive consultations with key public and private sector stakeholders involved in designing, financing, and implementing PPPs. The study is structured around the most inhibiting constraints to developing PPPs, as shared by all six countries.
Annotation "In recent years, the countries of the Europe and Central Asia (ECA) Region have experienced a marked decline in the interest of international private operators and investors in municipal infrastructure projects, in line with the trend experienced in other emerging markets. The objective of this paper is to explore the possible innovative elements of a Public-Private Partnership (PPP) in an effort to rekindle the sagging private finance interest in municipal infrastructure in the ECA Region. The contemplated PPP model would involve government, municipalities, Local Infrastructure Investment Trusts, private equity funds and/or turnaround advisors, and International Financial Institutions."
This path-breaking book considers the recent trend for governments to look increasingly to private sector finance, provided by private enterprises constructing and managing public infrastructure facilities in partnership with government bodies. One outstanding feature of the book is that it brings together an academic assessment of this phenomenon with practitioner-based experience of organizing partnerships and advising government bodies in Australia, Canada, Continental Europe, Hong Kong and the UK. While the volume, as a whole, draws on this extensive experience of the market, there are also a number of specific case studies. Developments in the major advanced countries are covered, along with the potential for public private partnerships in developing countries and transition economies. Combining practitioner knowledge and academic perspective and integrating engineering, economics and finance literature, Public Private Partnerships will be of great interest to economists, engineers, investment banks and government bodies.
