public-private partnerships (ppp) in highways international experience and lessons for success...
TRANSCRIPT
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Public-Private Partnerships (PPP) in Highways
International Experience and Lessons for Success
Transport Learning Week, April 3, 2006Jose Luis IrigoyenSector Manager LCSFT
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Source: Public Works Financing-Major Project Survey 1995-2004PPPs becoming a global business across developed & emerging markets
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yet anchored in selected group of OECD and developing countriesSource: PWF Major Project Survey October, 2004
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and highly influenced by few global concessionaires or sponsorsTop 10 Transportation Developers 2004Active ownership role in PPPs 1985-2004Source: PWF Major Project Survey October, 2004
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Rise & fall in developing countries shows vulnerability in era of financial shocksTotal Investment in Road Projects with Private Sector Participation 1988-2003 Total InvestmentNumber of ProjectsSource: PPI DatabaseMexico Peso CrisisAsian CrisisArgentinaRussia/BrazilTurkey
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but also reflects impact of project activity within key countries
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Source: PPI Database with most of the investment going to Middle Income Countries
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-1,0002,0003,0004,0005,0006,0007,00019881989199019911992199319941995199619971998199920002001200220032003 US$ millionMexicoBrazilChileTotal Investment in Road Projects with Private Participation. Source: PPI DatabaseMexicoBrazilChileInsights on performance of few programs
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PPP projects in highways have suffered from optimism biasForecasting errors from inability to obtain good data or incorrect assumptions in modelsprice elasticity of traffic to tolls;substitute services/intensified competition;
Chart18
4.483333333338.82.16.57
3.73333333335.711.393.86
4.97142857141.612.1-0.88.27.7
6.44285714292.814-4.97.96.7
1.31428571435.592.55.85.7
0.114285714305.2-11.45.72.2
4.8428571429-29.83.44.44.8
3.32857142866.94.68.73.44.1
4.0571428571-4.53.27.598.5
4.085714285710.26.88.79.75.4
1.11428571434.29.18.19.24.1
1.3714285714-5.7-4.44.78.82.3
0.3428571429-50.6-10.3-0.60.9
2.57142857143.9-3.4-3.8-4.21.6
3.82.25.383.63.4
3.4714285714-7.67.97.12.63.1
2.94285714297.985.6-3.85.8
3.37142857142.93.66.61.95.4
4.7142857143-2.6-0.17.31.24.1
3.4142857143-7.53.310.64.23.4
2.2428571429-2.4-4.33.75.14
0.628571428612.71.384.22.4
1.357142857111.9-0.512.33.63.9
0.68571428575.94.9725.4
2.97142857145.85.95.74.45.8
2.3-2.84.210.6-6.25.2
2.02857142865.52.77.35.22.1
2.78571428578.13.37.56.83.4
2.35714285713.90.23.950.6
2.5857142857-3.40.8-1.13.6-4.1
3.3142857143-0.54.55.46.62.6
1.2714285714-3.71.52.9-0.31.6
Average G-7
Argentina
Brazil
Chile
Mexico
Colombia
Year
Annual growth rate (%)
Average annual GDP growth rate for selected LAC countries compared with G-7 countries (1970-2001)
LAC Countries
GDP growth (annual %)
Country name196019611962196319641965196619671968196919701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920-year average40-year average
Antigua and Barbuda....................................4.27.38.64.10.24.79.88.012.78.35.45.82.52.00.85.46.3-4.26.65.24.2..5.15.1
Argentina..5.4-0.9-5.310.110.6-0.73.24.89.73.05.71.62.85.5-0.0-2.06.9-4.510.24.2-5.7-5.03.92.2-7.67.92.9-2.6-7.5-2.412.711.95.95.8-2.85.58.13.9-3.51.92.7
Aruba........................................................17.09.012.04.04.04.06.0..........8.08.0
Bahamas, The..10.710.510.510.510.49.19.68.49.0-5.61.6-3.57.6-16.8-14.85.29.214.226.16.5-9.26.73.614.24.81.83.02.32.31.1-2.7-2.01.90.3-0.3........2.14.2
Barbados..7.79.1-5.15.011.44.010.66.97.59.53.91.31.3-4.74.0-0.14.46.17.74.7-3.2-5.00.23.40.59.41.06.35.0-4.8-2.9-5.01.04.50.55.23.04.4..1.53.1
Belize..4.94.95.05.04.94.84.97.45.14.84.010.25.413.63.6-0.06.57.97.515.21.3-0.3-2.12.01.14.611.29.213.110.63.69.33.31.83.32.03.54.02.55.05.4
Bermuda..4.74.51.111.14.814.413.32.13.46.33.41.81.50.93.88.95.91.52.17.92.4-5.32.00.5-2.06.73.84.10.40.0-3.5-0.13.00.64.42.63.1....1.73.4
Bolivia..2.15.66.44.85.66.56.9-12.23.1-0.54.95.86.75.16.66.14.23.4-0.0-0.90.2-4.5-4.10.3-1.7-2.62.52.93.84.65.31.64.34.74.74.44.44.72.51.92.8
Brazil..10.35.20.93.53.14.24.911.49.78.811.312.114.09.05.29.84.63.26.89.1-4.40.6-3.45.37.98.03.6-0.13.3-4.31.3-0.54.95.94.22.83.20.20.02.44.8
Chile..4.05.26.12.70.410.03.63.83.52.19.0-0.8-4.92.5-11.43.48.77.58.78.14.7-10.3-3.88.07.15.66.67.310.63.78.012.37.05.710.67.47.63.4-1.05.44.4
Colombia..5.35.52.96.63.05.34.26.46.57.06.07.76.75.72.24.84.18.55.44.12.30.91.63.43.15.85.44.13.44.02.43.95.45.85.22.12.80.6-4.53.14.2
Costa Rica..-1.08.14.84.19.87.95.78.55.57.56.88.27.75.52.15.58.96.34.90.8-2.3-7.32.98.00.75.54.83.45.73.62.37.76.34.52.4-0.63.76.28.03.34.7
Cuba................................................................................
Dominica....................................11.8-18.414.312.14.12.75.41.37.17.58.6-0.25.30.62.01.71.41.72.82.13.5..4.43.7
Dominican Republic..-2.317.06.56.8-12.513.53.30.210.918.210.910.412.96.05.26.75.02.14.56.14.11.64.60.31.03.610.02.24.8-5.81.08.03.04.34.87.38.27.37.34.25.4
Ecuador..1.54.63.97.83.22.46.94.02.36.56.315.624.06.45.69.26.56.65.34.93.91.2-2.84.24.33.1-6.010.50.33.05.03.62.04.32.32.03.40.6-7.52.14.4
El Salvador..3.512.04.39.35.47.25.43.23.53.03.96.14.95.32.95.06.85.3-4.2-11.8-10.5-6.31.51.30.60.22.51.91.04.83.67.57.46.06.41.84.13.22.01.43.1
Grenada....................................5.46.0-0.40.94.92.94.88.18.211.23.46.15.22.3-0.3-2.62.82.54.36.84.8..4.04.1
Guatemala..4.33.59.54.64.45.54.18.84.75.75.67.36.86.42.07.47.85.04.73.80.6-3.5-2.60.5-0.60.13.53.93.93.13.74.83.94.04.93.04.45.13.62.54.1
Guyana..4.71.1-12.311.410.55.24.31.07.04.33.1-3.31.27.78.51.5-2.6-1.8-1.81.71.5-13.2-6.8-5.02.4-0.90.9-3.7-4.9-3.06.07.88.28.55.07.96.2-1.51.80.91.8
Haiti..-4.59.5-2.7-2.22.10.7-4.01.82.9-0.38.41.41.26.3-2.38.60.54.87.37.6-2.7-3.40.80.30.2-0.1-0.70.81.1-0.14.2-13.2-2.4-8.34.42.71.43.1..-0.20.9
Honduras..1.95.83.65.49.05.46.06.60.73.64.05.87.9-1.22.110.510.410.04.70.62.6-1.4-0.94.34.20.76.04.64.30.13.35.66.2-1.34.13.75.13.0-3.02.63.9
Jamaica..2.61.33.27.68.03.31.35.14.511.73.116.4-5.8-3.6-0.3-6.5-2.40.6-1.8-5.82.51.32.3-0.9-4.61.67.82.96.85.50.71.51.41.10.5-1.8-2.40.10.41.11.8
Mexico..5.04.78.111.96.66.15.99.43.46.53.88.27.95.85.74.43.49.09.79.28.8-0.6-4.23.62.6-3.81.91.24.25.14.23.62.04.4-6.25.26.84.83.42.84.7
Nicaragua..7.411.79.911.19.03.37.01.36.21.43.32.26.414.2-0.25.28.4-7.8-26.54.65.4-0.84.6-1.6-4.1-1.0-0.7-12.5-1.7-0.1-0.20.4-0.43.34.34.75.14.06.31.02.4
Panama..10.88.48.44.59.17.58.66.98.56.49.64.65.42.41.61.61.29.74.51.19.25.3-4.52.74.93.6-1.8-13.41.68.19.48.25.52.91.82.84.54.13.53.04.6
Paraguay..7.11.33.93.95.41.28.53.14.14.95.46.47.28.26.37.010.911.411.414.88.5-3.7-3.03.14.00.04.36.45.83.12.51.84.13.14.71.32.6-0.4-0.83.14.6
Peru..7.48.33.76.64.98.43.80.43.85.84.22.95.49.33.42.00.40.35.83.17.2-0.4-12.64.12.39.28.5-8.3-11.7-5.47.0-1.86.413.17.52.56.80.32.32.03.2
Puerto Rico..9.57.510.47.19.17.16.34.88.98.76.37.46.00.1-2.55.36.56.66.11.51.1-3.00.57.32.18.24.96.54.93.82.33.23.22.53.43.33.2....3.34.9
St. Kitts and Nevis..0.81.70.9-0.3-1.13.415.5-14.65.4................7.61.615.12.6-1.40.09.75.59.07.88.58.32.12.04.07.04.83.86.37.03.62.05.44.2
St. Lucia..........................................3.5-10.84.323.5-5.814.91.912.29.123.52.77.02.61.43.31.11.82.93.15.45.4
St. Vincent and the Grenadines....................................11.93.42.06.14.84.45.96.16.74.514.62.55.00.67.50.2-2.47.53.63.75.24.04.64.9
Suriname......................3.90.90.34.62.02.18.17.8-7.5-7.47.6-5.9-4.1-3.0-0.9-2.4-15.411.811.10.12.94.3-3.0-2.34.0........-0.20.8
Trinidad and Tobago..14.02.75.67.60.74.14.47.46.01.4-2.113.00.86.15.311.44.712.47.36.23.911.3-5.26.1-4.1-3.3-4.6-3.9-0.81.514.4-11.7-1.43.63.83.53.54.14.21.63.7
Tunisia....4.812.04.92.63.50.210.44.74.710.617.7-0.78.17.27.93.46.46.67.45.5-0.54.75.75.6-1.46.70.11.78.03.97.82.23.32.37.15.45.06.24.35.3
Uruguay..2.5-1.60.22.41.03.1-3.71.95.92.3-0.3-1.30.32.96.13.91.55.46.25.81.6-9.8-10.3-1.11.58.88.00.01.30.93.27.93.06.3-1.85.35.14.5-2.01.92.0
Venezuela, RB..3.28.53.911.14.21.52.87.30.77.71.51.37.12.12.97.76.32.30.8-4.4-0.4-2.1-3.81.40.26.53.55.8-8.66.59.76.10.3-2.33.7-0.56.5-0.7-6.01.12.7
Latin America & the Caribbean (Average)2.873.86
Source: IMF: Global Development Finance & World Development Indicators (for GDP per capita growth)
Macro analysis
GDP growth (annual %)
Source
Country name19601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120-year avg40-yr. Avg
Argentina..5.4-0.9-5.310.110.6-0.73.24.89.73.05.71.62.85.5-0.0-2.06.9-4.510.24.2-5.7-5.03.92.2-7.67.92.9-2.6-7.5-2.412.711.95.95.8-2.85.58.13.9-3.51.82.7
Bahamas, The..10.710.510.510.510.49.19.68.49.0-5.61.6-3.57.6-16.8-14.85.29.214.226.16.5-9.26.73.614.24.81.83.02.32.31.1-2.7-2.01.90.3-0.3........1.94.2
Barbados..7.79.1-5.15.011.44.010.66.97.59.53.91.31.3-4.74.0-0.14.46.17.74.7-3.2-5.00.23.40.59.41.06.35.0-4.8-2.9-5.01.04.50.55.23.04.4..1.33.1
Belize..4.94.95.05.04.94.84.97.45.14.84.010.25.413.63.6-0.06.57.97.515.21.3-0.3-2.12.01.14.611.29.213.110.63.69.33.31.83.32.03.54.02.54.45.4
Benin..3.1-3.44.76.75.33.61.13.82.92.1-1.56.43.73.3-4.90.95.01.36.56.810.02.2-4.37.97.52.2-1.53.4-2.93.24.74.03.54.44.65.55.74.55.03.73.3
Bermuda..4.74.51.111.14.814.413.32.13.46.33.41.81.50.93.88.95.91.52.17.92.4-5.32.00.5-2.06.73.84.10.40.0-3.5-0.13.00.64.42.63.1....1.33.4
Bolivia..2.15.66.44.85.66.56.9-12.23.1-0.54.95.86.75.16.66.14.23.4-0.0-0.90.2-4.5-4.10.3-1.7-2.62.52.93.84.65.31.64.34.74.74.44.44.72.52.02.8
Brazil..10.35.20.93.53.14.24.911.49.78.811.312.114.09.05.29.84.63.26.89.1-4.40.6-3.45.37.98.03.6-0.13.3-4.31.3-0.54.95.94.22.83.20.20.02.04.8
Chile..4.05.26.12.70.410.03.63.83.52.19.0-0.8-4.92.5-11.43.48.77.58.78.14.7-10.3-3.88.07.15.66.67.310.63.78.012.37.05.710.67.47.63.4-1.05.34.4
Colombia..5.35.52.96.63.05.34.26.46.57.06.07.76.75.72.24.84.18.55.44.12.30.91.63.43.15.85.44.13.44.02.43.95.45.85.22.12.80.6-4.53.04.2
Costa Rica..-1.08.14.84.19.87.95.78.55.57.56.88.27.75.52.15.58.96.34.90.8-2.3-7.32.98.00.75.54.83.45.73.62.37.76.34.52.4-0.63.76.28.03.54.7
Dominican Republic..-2.317.06.56.8-12.513.53.30.210.918.210.910.412.96.05.26.75.02.14.56.14.11.64.60.31.03.610.02.24.8-5.81.08.03.04.34.87.38.27.37.34.15.4
Ecuador..1.54.63.97.83.22.46.94.02.36.56.315.624.06.45.69.26.56.65.34.93.91.2-2.84.24.33.1-6.010.50.33.05.03.62.04.32.32.03.40.6-7.52.04.4
El Salvador..3.512.04.39.35.47.25.43.23.53.03.96.14.95.32.95.06.85.3-4.2-11.8-10.5-6.31.51.30.60.22.51.91.04.83.67.57.46.06.41.84.13.22.02.13.1
Guatemala..4.33.59.54.64.45.54.18.84.75.75.67.36.86.42.07.47.85.04.73.80.6-3.5-2.60.5-0.60.13.53.93.93.13.74.83.94.04.93.04.45.13.62.54.1
Guyana..4.71.1-12.311.410.55.24.31.07.04.33.1-3.31.27.78.51.5-2.6-1.8-1.81.71.5-13.2-6.8-5.02.4-0.90.9-3.7-4.9-3.06.07.88.28.55.07.96.2-1.51.80.91.8
Haiti..-4.59.5-2.7-2.22.10.7-4.01.82.9-0.38.41.41.26.3-2.38.60.54.87.37.6-2.7-3.40.80.30.2-0.1-0.70.81.1-0.14.2-13.2-2.4-8.34.42.71.43.1..-0.70.9
Honduras..1.95.83.65.49.05.46.06.60.73.64.05.87.9-1.22.110.510.410.04.70.62.6-1.4-0.94.34.20.76.04.64.30.13.35.66.2-1.34.13.75.13.0-3.02.73.9
Jamaica..2.61.33.27.68.03.31.35.14.511.73.116.4-5.8-3.6-0.3-6.5-2.40.6-1.8-5.82.51.32.3-0.9-4.61.67.82.96.85.50.71.51.41.10.5-1.8-2.40.10.41.41.8
Mexico..5.04.78.111.96.66.15.99.43.46.53.88.27.95.85.74.43.49.09.79.28.8-0.6-4.23.62.6-3.81.91.24.25.14.23.62.04.4-6.25.26.84.83.42.54.7
Nicaragua..7.411.79.911.19.03.37.01.36.21.43.32.26.414.2-0.25.28.4-7.8-26.54.65.4-0.84.6-1.6-4.1-1.0-0.7-12.5-1.7-0.1-0.20.4-0.43.34.34.75.14.06.30.82.4
Panama..10.88.48.44.59.17.58.66.98.56.49.64.65.42.41.61.61.29.74.51.19.25.3-4.52.74.93.6-1.8-13.41.68.19.48.25.52.91.82.84.54.13.53.14.6
Paraguay..7.11.33.93.95.41.28.53.14.14.95.46.47.28.26.37.010.911.411.414.88.5-3.7-3.03.14.00.04.36.45.83.12.51.84.13.14.71.32.6-0.4-0.82.54.6
Peru..7.48.33.76.64.98.43.80.43.85.84.22.95.49.33.42.00.40.35.83.17.2-0.4-12.64.12.39.28.5-8.3-11.7-5.47.0-1.86.413.17.52.56.80.32.31.93.2
Puerto Rico..9.57.510.47.19.17.16.34.88.98.76.37.46.00.1-2.55.36.56.66.11.51.1-3.00.57.32.18.24.96.54.93.82.33.23.22.53.43.33.2....3.44.9
Trinidad and Tobago..14.02.75.67.60.74.14.47.46.01.4-2.113.00.86.15.311.44.712.47.36.23.911.3-5.26.1-4.1-3.3-4.6-3.9-0.81.514.4-11.7-1.43.63.83.53.54.14.21.33.7
Uruguay..2.5-1.60.22.41.03.1-3.71.95.92.3-0.3-1.30.32.96.13.91.55.46.25.81.6-9.8-10.3-1.11.58.88.00.01.30.93.27.93.06.3-1.85.35.14.5-2.01.72.0
Venezuela, RB..3.28.53.911.14.21.52.87.30.77.71.51.37.12.12.97.76.32.30.8-4.4-0.4-2.1-3.81.40.26.53.55.8-8.66.59.76.10.3-2.33.7-0.56.5-0.7-6.01.42.7
Average LAC Region4.85.73.66.75.35.55.04.55.45.14.75.55.44.11.74.85.14.94.64.11.5-2.0-1.63.11.43.33.31.61.81.84.03.13.53.63.23.44.42.91.1
2.33.6
Canada..3.16.85.16.66.56.62.95.35.32.65.65.37.24.12.35.53.44.04.21.33.1-3.02.95.75.42.64.14.92.40.2-1.90.92.34.72.71.54.43.34.64.51.52.73.7
France..5.56.75.36.54.85.24.74.37.05.74.84.45.43.1-0.34.23.23.43.31.61.22.61.51.61.52.42.54.64.22.61.01.5-0.92.11.71.11.93.42.93.12.02.13.3
Germany........................4.34.80.2-1.35.32.83.04.21.00.5-0.62.13.02.42.51.73.73.53.22.82.2-1.12.31.70.81.42.11.63.00.61.92.1
Italy..8.26.25.62.83.36.07.26.56.15.31.93.26.55.3-2.06.52.43.75.53.50.80.61.22.83.02.53.03.92.92.01.40.8-0.92.22.91.12.01.81.62.91.81.93.3
Japan..12.08.98.511.75.810.611.112.912.510.74.78.48.0-1.23.14.04.45.35.52.82.83.12.33.84.43.04.56.55.35.33.10.90.41.01.63.51.8-1.10.82.4-0.42.85.2
United Kingdom..2.61.34.05.02.82.02.34.02.12.42.03.67.3-1.7-0.72.82.43.42.7-2.2-1.31.83.72.43.84.24.45.22.10.7-1.50.12.34.42.82.63.52.62.33.12.22.42.4
United States..2.55.24.05.65.65.92.74.22.70.23.45.65.9-0.6-0.35.64.75.63.2-0.22.5-2.14.37.33.83.43.44.23.51.7-0.53.12.74.12.73.64.54.44.34.21.23.23.4
Average G-75.75.95.46.44.86.15.16.25.94.53.75.06.41.30.14.83.34.14.11.11.40.32.63.83.52.93.44.73.42.20.61.40.73.02.32.02.82.42.63.31.3
19701971197219731974197519761977197819791980198119821983198419851986198719881989199019911992199319941995199619971998199920002001
Argentina..5.4-0.9-5.310.110.6-0.73.24.89.73.05.71.62.85.50.0-2.06.9-4.510.24.2-5.7-5.03.92.2-7.67.92.9-2.6-7.5-2.412.711.95.95.8-2.85.58.13.9-3.4-0.5-3.7
Brazil..10.35.20.93.53.14.24.911.49.78.811.312.114.09.05.29.84.63.26.89.1-4.40.6-3.45.37.98.03.6-0.13.3-4.31.3-0.54.95.94.22.73.30.20.84.51.5
Chile..4.05.26.12.70.410.03.63.83.52.19.0-0.8-4.92.5-11.43.48.77.58.78.14.7-10.3-3.88.07.15.66.67.310.63.78.012.37.05.710.67.37.53.9-1.15.42.9
Mexico..5.04.78.111.96.66.15.99.43.46.53.88.27.95.85.74.43.49.09.79.28.8-0.6-4.23.62.6-3.81.91.24.25.14.23.62.04.4-6.25.26.85.03.66.6-0.3
Colombia..5.35.52.96.63.05.34.26.46.57.06.07.76.75.72.24.84.18.55.44.12.30.91.63.43.15.85.44.13.44.02.43.95.45.85.22.13.40.6-4.12.61.6
Average LAC Region6.03.92.57.04.75.04.47.26.65.57.25.85.35.70.34.15.54.78.26.91.1-2.9-1.24.52.64.74.12.02.81.25.76.25.05.52.24.65.82.7-0.83.7
Source: GDP_WDI
Macro analysis
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Average G-7
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Average Annual GDP Growth Rate for Argentina compared to the G-7 (1970-2001)
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Average Annual GDP Growth Rate for Brazil compared to G-7 (1970-2001)
Average G-7
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Year
% Growth
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Average Annual GDP Growth Rate: Chile compared to G-7 (1970-2001)
Average G-7
Chile ..
Year
% Growth
Sheet8
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Average Annual GDP Growth Rate for Mexico compared to G-7 (1970-2001)
Average G-7
Mexico ..
Year
% Growth
Sheet9
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Average Annual GDP Growth Rate: Colombia compared to G-7 (1970-2001)
Average G-7
Colombia ..
Year
% Growth
Sheet4
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Average G-7
Argentina
Brazil
Chile
Mexico
Colombia
Year
% Growth
Average Annual GDP Growth Rate for Selected LAC Countries Compared with the G-7 (1970-2001)
Sheet5
Sheet6
-
PPP projects in highways have suffered from optimism biasPolitical commitment at too early a stagebefore appraisal at sufficient depth to allow graceful exit project timelines inconsistent w/sound bidding practices Downplaying vulnerability of PPP projects to changing political, financial, economic contextfailure to identify/value political and social costs (eg., toll increases)Forecasting errors from inability to obtain good data or incorrect assumptions in modelsprice elasticity of traffic to tolls;substitute services/intensified competition;
-
PPP projects are becoming smaller reflecting financial constraints and also that bigger projects already done in more active countriesSource: PPI Database
-
Structured project finance has come a long way, but not yet for all ... Fashioning the finance to specific project needs --with risks and returns borne not by sponsor alone but by different types of investors-- is buzzwordmezzanine finance; monoline insurance broadens access to capital marketsinterest rate and foreign exchange hedging increasingly critical as projects become more finely balancedbut available only for certain projects/countriesmostly projects with investment grade credit rating;no realistic opportunities for hedging in many countries;contractual complexity/financial rigidity not always favored by sponsors/allowed by project economics
-
Financing tights suddenly in emerging markets due to crisesThe financing dilemma for developing countries*
Sheet1
Poblacion, area y flujos capital a infraestructura de paises en desarrollo como porcentaje del mundo
Poblacion84.4
Area (km2)76.2
Flujos capital a infraestructura2.1
Grupo de paisesNuevaMantenimientoTotal
por nivel ingresoUS$bn%GDPUS$bn%GDPUS$bn%GDP
Ingreso bajo50.03.258.63.7108.66.9
Ingreso medio183.22.6173.02.5356.25.1
Ingreso alto136.00.4248.00.8383.91.2
Paises en desarrollo por Region
EAP99.93.779.02.9178.96.6
SA28.13.135.03.863.16.9
ECA39.12.858.94.297.96.9
MENA14.92.413.32.128.24.5
SSA13.32.812.62.725.95.6
LAC37.91.632.91.470.83.0
Todos233.12.7231.62.7464.75.5
Deuda en mercados emergentes (volumen en mercado secundario)
199419951996199719981999200020012002
Volumen Total276627395297591641742185284734843068
Instr. Mercado Local52459312741506117659999315171411
Acceso a infraestructura por grupo de ingreso - 2000
GeneracionTelecom por 1000 pers.CarreterasFFCCAguaSaneamiento
Grupo paisesGDP perElectricidadFijasMoviles(km/1000(km/1000(% hogares(% hogares
por nivel ingresocapita(kw p/pers.)(lineas)(suscrip.)personas)personas)conectados)conectados)
Paises Ingreso Bajo475116285.81.060.0776.345.6
Paises Ingreso Medio1,91940612783.71.100.1381.861.9
Paises Ingreso Alto29,8082,031582526.010.540.4499.698.1
Ratio Ingreso Alto/Bajo63182191.010.006.001.32.2
Grupo paisesGasto ActualNecesidadesInversion Adicional
por nivel ingreso%GDP%GDPUS$bn
Paises Ingreso Bajo4.06.921
Paise Ingreso Medio2.95.172
Subsidios por tarifas debajo costo123
Costos por ineficiencias tecnicas55
Inversion anual en infraestructura200
Efecto Privatizacion/Concesion (US$millones)
FF.CC.De Subsidio AnualA "Canon" Gobierno
Argentina800173
Brazil (Fed)5001,700
Mexico4002,400
International Infrastructure Bonds in emerging economies
FeaturesAvgStd.Dev..MinMax
Spread o/US Treasury (bps)298.0173.810.0802.2
Amount (US$m)278.0201.623.01000.0
Maturity (years)11.810.52.9100.0
Rating (Moody/S&P)BBB/BBB-3 notchesBAAA
Source: Dailami & Hauswald, 2003 - Sample of 105 infra bonds in 20 countries
Sheet1
84.4
76.2
2.1
Porcentaje
Poblacion, area y flujo capitales a infraestructura en paises en desarrollo como porcentaje del total mundial
Sheet2
2766524
2739593
52971274
59161506
41741176
2185599
2847993
34841517
30681411
Volumen Total
Instr. Mercado Local
US$bn
Deuda mercados emergentes
Sheet3
0
0
0
US$bn
Sheet4
Efecto Privatizacion/Concesion (US$millon)
FF.CC
De Subsidio Anual
A "Canon" Gobierno
Argentina
800
173
Brazil (Fed)
500
1,700
Mexico
400
2,400
Sheet5
Sheet6
-
Financing tights suddenly in emerging markets due to crisesIn a global business, financial crises led to:increase in cost of capital, sovereign risks/spreadsreduction in projects IRRincrease in uncertainty with regards to both... exposing weaknesses in both project finance structures and regulatory frameworks:high tariffs attract political interventionism drop in demand increases pressure for renegotiationmismatch between risks and returns exacerbated by currency volatility and reliance on hard currency debtgovernments left with costly contingent liabilities they cant honor on time*
-
Worsening of regulatory environment during crises erodes support for PPPspass through formulas that transfer exchange risk to users fail in midst of abrupt devaluations --and turn exchange risk into political or regulatory riskDistressing results of crises:Governments breach contracts, affecting access to capital markets.Users must cope with steep increases in tolls eroding long-term support for PPPs.
Currency depreciation against the US Dollar in 174 countries
(1976-2001)
Current average depreciation rate (%)
Volatility
(%)1
All Developimg Countries
16
22
East Asia and Pacific
10
20
Europe and Central Asia
23
31
Latin America and the Caribbean
23
33
Miiddle East and North Africa
6
14
South Asia
8
13
Sub-saharan Africa
16
27
OECD
2
11
Measured as the Standard deviation of current depreciation
-
Approaches to traffic risk mitigation --no conclusive evidence of whats bestSource: Jose Vasallo, 2005 Traffic Risk Mitigation in highway concession projects: the experience of Chile
-
Approaches to traffic risk mitigation --no conclusive evidence of whats bestSource: Jose Vasallo, 2005 Traffic Risk Mitigation in highway concession projects: the experience of ChileMinimum Income Guarantee Approach
-
Approaches to traffic risk mitigation --no conclusive evidence of whats bestSource: Jose Vasallo, 2005 Traffic Risk Mitigation in highway concession projects: the experience of Chileduration
-
Stronger alignment between PPP objective & compensation mechanismNew thinking about the transfer of volume risk and whether the premium paid outweighs benefitsUK from shadow tolls to payments based on combination of service availability and performanceavailability payment, 2000; active management payment, 2002NAO critical of shadow tolls given operator is unable to influence demandcurrent trend to focus the compensation mechanism on establishing degree of risk allocation in project needed to induce appropriate performance by private sector
-
A mix of foreign and local sponsors compete aggressively to win contractsSource: Developing Country Investors and Operators in Infrastructure Phase 1 Report, PPIAF, 2005often overly aggressive concessionaires bid too low with expectation to renegotiate contract conditions as soon as possible
-
Bottom line, few cancellations but opportunistic renegotiations the ruleStatistics mask high incidence of renegotiationsLarger projects more prone to cancellation or distress
-
Despite slowdown, PPPs remain an attractive option for many governmentstools to bring legitimacy to PPP approaches and project selection and make informed decisions about risk allocation at both policy and project levelimpact of PPP programs on road sector dev. & fundingproper accounting, management and funding of contingent liabilities to effectively address public riskpragmatic approaches to building institutional and regulatory capacity to better deliver on third Pinstruments to address financial market constraints (w/ due attention to two sides of creative financing coin) Some key areas for WB attention:
-
Many [email protected]
Change in paradigm regarding the role of the State in the sector even countries with strong public finance tradition are embracing some forms of PPPs in developed worldWhile the trend is positive, yet: the pace of implementation is far from desirable. Altogether, 52% of proposed transport infrastructure projects unable to reach financing (42% in the case of road projects). Suggest a high level of difficulty in structuring projects robust enough to attract private investors the activity is still too much concentrated in a few countries. How many in 1993? In 2004?
Investment in PPP projects in roads reached a peak in 1997, recovered somewhat in 2001 and fell to about 17 percent of its annual average since 1990 in 2003Mansoor Dailami, June 2005. Crisis in one country should be associated with higher spreads in other markets, if they both are a result of a changed attitude to risk or liquidity
Six countries have concentrated 80 % of the total investment and the participation of other countries remains small.
Forecasting errors resulting from incorrect assumptions in models and/or inability/unwillingness to obtain good data. we all are aware of the studies by Standard and Poor and others about overestimating trafficNeed to pay more attention to price elasticity of traffic to tollsBut also failure to consider substitute services/consequences of intensified competition from rival transport operatorsOr benefits counted twice in different parts of appraisal when secondary impacts are really ramifications of primary impact excessive focus on appraisal of individual projects in isolation, overlooking consequences for network as wholeFailure from outset to clarify objectives and address potential conflicts between stated and actual objectivesPolitical commitment at too early a stagebefore an appraisal at sufficient depth to allow graceful exitproject timelines inconsistent with bid preparationFailure to identify and value political and social costsDownplaying risks associated with long gestation and operation periods which make PPP projects vulnerable to changing political, financial and economic circumstances. Great support to a PPP initiative may fade away latter as administration shifts attention to other burning or no so burning priorities.Forecasting errors resulting from incorrect assumptions in models and/or inability/unwillingness to obtain good data. we all are aware of the studies by Standard and Poor and others about overestimating trafficNeed to pay more attention to price elasticity of traffic to tollsBut also failure to consider substitute services/consequences of intensified competition from rival transport operatorsOr benefits counted twice in different parts of appraisal when secondary impacts are really ramifications of primary impact excessive focus on appraisal of individual projects in isolation, overlooking consequences for network as wholeFailure from outset to clarify objectives and address potential conflicts between stated and actual objectivesPolitical commitment at too early a stagebefore an appraisal at sufficient depth to allow graceful exitproject timelines inconsistent with bid preparationFailure to identify and value political and social costsDownplaying risks associated with long gestation and operation periods which make PPP projects vulnerable to changing political, financial and economic circumstances. Great support to a PPP initiative may fade away latter as administration shifts attention to other burning or no so burning priorities.Myriad of investors and with a variety of instruments that blur the distinction between equity holders and equity investors, and add a third layer of funding complementing the traditional two-tier equity and debt structure. mezzanine finance (subordinated and convertible debt, preferred equity, equity warrants) add third layer Mezzanine finance is so called because it describes the level lying between the ground floor of the structure (equity) and the first floor (senior debt). It also refers to financing that is raised soon after start-up funding from investors but prior to floating on the stock exchange after the venture has established an operating track record. Debt subordination instruments provide different levels of return on debt in exchange for taking on different ordering in paying out liabilities from defaulting companies. Debt is classified into senior and junior levels, with junior level debt receiving higher returns than senior level finance in exchange for absorbing the first losses. Mezzanine finance is distinguished by: i) having a differing priority of claim to cashflow and assets in the event of liquidation, a lower priority than senior debt but higher than equity; ii) often having a conversion option for the holder to transform the instrument from one form such as debt to another such as equity; and iii) being most attractive when the spread is significant between expected senior debt and equity returns. monolines broaden access to institutional investors and capital markets (with their index-linked and annuity profiles)Interest rate and foreign exchange hedging increasingly critical as projects become more finely balanced
Developing country currencies are twice as volatile as OECD country currencies. Higher volatility means higher cost to governments/users of providing forex guarantees compared to OECD countries