Conclusion
The combination of pressing need for infrastructure investment as an economic and social priority and government budget pressure means that the private financing of infrastructure projects is more important than ever. With this urgency, it is imperative that the public and private sector work closely together to overcome any gaps in understanding and then implement this common vision to mobilize the massive amounts of private capital that are needed. Even as parties from the public and private sector address the exigencies of the current economic environment they must look ahead in defining sustainable long-term roles (for each of them) which maximize the value of private investment for all stakeholders in the decades to come. We believe that the framework and case studies presented in this Report are useful tools for promoting this process.
Paving the Way:
Maximizing the Value of Private Finance in Infrastructure
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UNDEVELOPED OR
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Part 1: Laying the Foundation
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Part 2: Building the Structure
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Part 3: Planning for the Future
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DEVELOPED OR
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Market Characteristics |
Market Characteristics |
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• Lack of political and public support • Under-developed procurement policy • Ad hoc approach to market • Infrastructure propositions not commercially viable; thus unable to attract private finance solution • Reliance on attracting foreign investment and investors • Lack of transaction capacity and know-how • Failure to recognize the wider benefits and risk transfer that can be achieved by involving private finance • Uncompetitive private finance proposals |
• Create political, legal, and financial environments that are conducive to private finance (Texas P3 roads, Lekki Toll Road, Highway 407) • Involve all stakeholders, including the public users, in the development and planning phases • Develop objective financial forecasts and practical debt repayment schedules (Cross City Tunnel, Mexico toll roads) • Analyze tradeoffs among commercial, contractual and financing approaches (Chicago Skyway, Chilean PPP program) • Determine the meaning and impact of failure and establish how to mitigate and manage such risks (Delhi International Airport) |
• Attract private finance with a program of prioritized investment opportunities (India's PPPs, Portuguese SCUT roads program) • Identify what is commercially achievable (Port of Miami Tunnel) • Increase collaboration between public and private parties (Florida 1-595, Seagirt Marine Terminal, Australia 's Future Fund, Canada Line) • Build and sustain transaction capacity (PPP Canada, Partnerships BC) • Leverage the financing and transactional skills of multilateral institutions (Doraleh Port) |
• Sustain the involvement of existing sources of private finance (UKTreasury
• Stimulate long-term capital markets • Respond to changes in the infrastructure finance offering as investor appetite, sectoral and geographic focus change • Explore the development of new sources of private finance (Viability Gap Funding, BRISConnections) • Propose new ways to increase the involvement of private finance in the infrastructure sector (IFC Crisis Facility) |
• Strong and transparent political and legal frameworks • Established program of opportunities • Close collaboration between public and private parties • Strong support from all stakeholders • Continuous innovation in procurement approaches • Developed local or regional financial capacity • Ability to attract new sources of finance markets • Improved transaction capacity and ability to sustain it |