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India’s Tryst with PPPs: The High, The Low… and The Revival?

Sri Kumar Tadimalla's picture
For a considerable period of time, on the score of mobilizing infrastructure investments through private participation among developing countries, India ranked 1st in Energy and Transport sectors.


In several economic infrastructure sectors, India enjoyed a strong track record of harnessing Public-Private Partnerships (PPPs). Private sector investments in infrastructure more than tripled from the 10th Plan Period (2002-07; INR 2 trillion) to the 11th Plan (2007-12; INR 7.3 trillion). Between these plan periods, private sector share in infra investments increased from 22% to 38%. For a considerable period of time, on the score of mobilizing infrastructure investments through private participation among developing countries, India ranked 1st in Energy and Transport sectors and 2nd in Telecom (behind Brazil).
 
This erstwhile success of India’s PPP program is attributable to well-crafted reform efforts by the government, and ably executed by the private sector, banks and other financial intermediaries. Following the economic liberalization initiated in the early 1990s, the government has created an enabling environment for private participation through several sector-specific and cross-sectoral initiatives, e.g., relaxing entry norms, tax concessions, independent regulation in telecom and power, mobilization of additional revenues through tolls and cess on fuel, establishment of a viability gap fund mechanism and India Infrastructure Financing Company Limited, etc.  The financial intermediaries, too, quickly moved up on a steep learning curve to cater to this new and challenging mode of delivering infrastructure services. Private sector responded enthusiastically and seized these opportunities to develop their own capabilities and progressively build larger and complex projects. Today, private sector operators are serving more than 90% of the mobile phone users, owning ~40% of the power generation capacity, built and operating a substantive portion of arterial network of national highways, besides world-class airports in four metros and container handling facilities at many ports.

What we have here is a failure to communicate...

John Kjorstad's picture


Photo Credit: Flickr user highwaysagency

Infrastructure often makes headlines – and the sentiment is not always positive. Major projects must navigate a minefield of potential problems. One that is frequently overlooked is how the local community will react to the physical and environmental disruption that comes with major construction projects.

Achieving consensus and winning the ‘hearts and minds’ of stakeholders and affected communities for the construction of major infrastructure schemes can be challenging, but it is essential to deliver a successful project that benefits everyone in the community.

Gary Sargent, an engagement director from CJ Associates, is involved in a two-year consultation program for a major highway scheme in the United Kingdom and helped the authority design an integrated stakeholder engagement, communications and consultation strategy.
 

Here is Sargent’s advice:

Forging partnerships for green growth

Jie-ae Sohn's picture
The capital city of Shimla is built on the mountain slopes of the Himachal Pradesh state
The capital city of Shimla is built on the mountain slopes of the state of Himachal Pradesh.


On the streets of Shimla, residents stare at a strange group of visitors. The group looks and acts different from other tourists to this hilly capital of India’s mountain state of Himachal Pradesh. 

Not Indian, and definitely not the usual European retirees. Oh, and even stranger, the group starts taking photos of parking lots, trash cans, and the tiny alleys that snake up and down the city.

That was how a group of global experts in a gamut of urban matters appeared to the citizens of Shimla. It was the group’s first day in a town they had never seen, nor ever imagined they would visit.

But here they were - experts at solid waste management, urban parking, public transportation, IT and city planning - at the request of the government of Himachal Pradesh (HP).  The state, named after the soaring Himalayas, is seeking to protect its natural heritage by growing in a green and sustainable manner. HP is renowned for its pleasant climes, verdant forests and snow-clad peaks that not only act as a carbon sink for India’s burgeoning economy but also serve as a source of five perennial rivers that sustain the lives of million in the teeming plains below. 

The inspiration for the experts’ visit came from the highest levels of the state government. Dr. Shrikant Baldi, the state’s additional chief secretary, had visited Korea to attend a global green growth conference sponsored by the World Bank. There he saw the real-life application of strategies that his government needed to take their own green growth agenda forward.

No movie, no map, no money: Local road financing innovations in the Philippines

Kai Kaiser's picture
Access to paradise? Photo by authors.

GoPro videos have become ubiquitous among mountain bikers. The more adventurous the journey the better. Go viral on social media, and you have a winner. You might even get a payout from YouTube. But we want to discuss another way to make money. Money for local roads in the Philippines. We want to discuss a way that officials and citizens could make a GoPro-type movie, convert it into a digital map, and possibly receive a payout from the Department of Budget and Management under a new program called Kalsada.
 
It’s More Fun in The Philippines!
 
The Philippines is a tropical archipelago of over seven thousand islands, making for many jewel destinations. The country’s tourism slogan “It’s More Fun in the Philippines” tries to capture the spirit of a friendly, welcoming and fun-loving people which the adventurous tourist will experience. Palawan was recently voted as the planet’s best island destination by a top travel magazine. In search of fun, we tried to visit one of its towns, Port Barton, two years ago. But chronic infrastructure means that sometimes you are in for a rough ride. Confronted with bad roads, we were only able to actually make it to this idyllic destination many months later.

How the Insurance Industry Can Make Our Roads Safer

Karla Gonzalez Carvajal's picture
Road crashes are a global health and development challenge with significant human and economic costs, especially in developing countries. The leading cause of death among people aged 15-29, road crashes kill 1.25 million people every year and injure another 50 million—more deaths than from malaria or tuberculosis. In low and middle-income countries, this is estimated to reduce GDP by 3 to 5%. The United Nations recognized the severity of this challenge by adopting specific road safety targets in the Sustainable Development Goals: to halve the number of global deaths and injuries from road crashes by 2020.
 
Photo: Carlos Felipe Pardo

This ambitious target can only be achieved through a concerted effort that involves all major stakeholders: national and local governments, multilateral development banks, bilateral donors, civil society, and the private sector. The latter, a key stakeholder in this agenda, can contribute the knowledge, resources, and innovations that are required to accelerate progress and decisively change existing trends.

The insurance industry is also a key part of this coalition. Already playing an important, if somewhat hidden, role in the road safety agenda, the industry insures almost 1 billion vehicles globally, helping to reduce the costs of road crashes to society and the economy.

Improvements in road safety benefit the public as well as the insurance industry. Broad-based insurance coverage makes sure that health and property costs for victims of road crashes are protected, but it also benefits insurance companies by expanding their market. In the same vein, reducing the number or severity of crashes benefits all of us, while it also reduces the volume of claims to insurance firms.

In fact a huge motivator to create good road safety practices lies in the sense of personal responsibility. A driver who wants to achieve a safe record is far more likely to avoid accidents than a driver who has no care for safety. If insurance is both well designed and implemented, it can have an enormous impact for improving road safety.

Doing development differently: what does it mean in the roads sector?

David Booth's picture



There is no sign that the revival of interest in adaptive and entrepreneurial approaches to development work is going tail off soon.

That’s why the demand is growing for indications of how the broad principles, as summarised in the Doing Development Differently Manifesto, apply to the various sectors where interested practitioners are found.
 
Fred Golooba-Mutebi and I have just published an ODI working paper that begins to fill that gap for one particular economic infrastructure sector, road construction and maintenance. The country is Uganda. The purpose of the study was to revisit a 2009 paper on the political economy of reform in the sector, which was followed by the launching of a DFID-funded programme called CrossRoads.
 

Empowering local women to build a more equitable future in Vietnam

Phuong Thi Minh Tran's picture


Vietnam’s economic emergence is perhaps best experienced along its rural roads: more than 175,000 kilometers of pavement, rubble and dirt track extend to two-thirds of the country’s population, including nearly all of the poorest people, who live among its productive farms, lush forests and meandering river valleys.

In recent years, road investments in Vietnam’s rural areas have improved socioeconomic development and promoted gender equity, social participation, improved school attendance, and more inclusive health services to impoverished regions. However, all but a few hundred communes remain off-grid, and infrastructural roadblocks and bureaucratic potholes have delayed the goal of a fully integrated road system.

The World Bank’s Third Rural Transport Project (RTP3) supported a win-win solution: employing ethnic minority women to sustainably manage road maintenance through an innovative participatory approach to local development. This blog entry describes the experience of improving the roads — and women’s lives — in rural Vietnam. Here are some of the lessons we’ve learned along the way:

Lesson 1: Solutions can come from unexpected sources.
The RTP3 task team’s investigation showed that up to a third of the population in Vietnam’s Northern Uplands provinces would be expected to contribute up to 10 percent of their total annual household expenditure to ensure safe passage along local roads — too much for most to afford. Furthermore, even when adequate resources are made available for maintenance, contractors have sometimes been unwilling to work in inaccessible regions for fear of mudslides during the rainy season.

PPPs in the Caribbean: Filling the gap

Brian Samuel's picture
Prior to about 2005, for many tourists their Jamaican vacation was ruined at the last minute, by the hot and overcrowded conditions inside Montego Bay’s Sangster International Airport. Fast forward 10 years, and waiting for a flight at Sangster is an altogether more pleasant experience. The air conditioning actually works, and the whole environment is infinitely less stress-inducing than before.
 
A new waiting area at Montego Bay's
Sangster International Airport.
Photo: Milton Correa/flickr

What’s the difference? The private sector.

In 2003, the Government of Jamaica finally succeeded in doing what it had been trying to do for a decade: privatize Montego Bay Airport. A private sector consortium, led by Vancouver International Airport, quickly invested millions of dollars in expanding the terminal building, doubling the airport’s capacity and opening dozens of new retail spaces. Since then, the consortium has invested more than US$200 million on expansions and improvements to the airport, all of which has been entirely off the government’s balance sheet.

Jamaica has gone on to implement several more public-private partnerships (PPPs), with mixed results. The second phase of its ambitious highway construction program — the Mount Rosser Bypass — was recently opened, cutting a swath through miles of virgin territory. However, early indications are that traffic levels are not living up to expectations, probably due to the Bypass’ steep eight percent gradient, which is beyond the means of most Jamaican trucks and buses.

In the energy sector, Jamaica is completing three PPPs with a total of 115 megawatts of renewable energy (RE) capacity, putting the country on track to meet its RE target of 12.5 percent of generating capacity by the end of 2015. Lastly, the government is currently completing formalities for the sale of Kingston Container Terminal (KCT) to a consortium of CMA/CGM and China Merchant Marine, a transaction that is expected to result in a US$600 million capital expenditure program by the port’s new owners.

Want dramatic road safety results? Look to South Korea.

Nak Moon Sung's picture
When looking to improve road safety for children around the world, it is clear that the experience of South Korea has valuable lessons to offer.

To start, the numbers speak for themselves. In 1992, 1,566 kids (14 years old and under) were killed in road crashes in South Korea. By 2014, children deaths dramatically decreased to only 53, the equivalent of an almost 97 percent reduction over that period of time. No other country that we know of has experienced such a remarkable reduction in only 22 years.
Decreasing road fatalities in South Korea, 1990-2015

What made this achievement possible?

Although there isn't a single answer, the evidence shows that comprehensive policies played a crucial role in reducing children deaths due to road and traffic injuries.

Changing lives along the road in Honduras

Marcela Silva's picture

We arrived in the village of La Redonda-El Aguila, Honduras at ten o’clock in the morning, when the temperature was already about 94 degrees Fahrenheit. We were warmly welcomed and invited to take a short walk to the place they had prepared specially for us to hold our meeting. We were offered bean tamales and coffee, and began the meeting with members of two road maintenance microenterprises that are supported through a World Bank-financed project.

The microenterprises program was launched in 2013 under the Second Roads Rehabilitation and Maintenance project with a goal of creating 10 microenterprises to maintain 310 kilometers (192 miles) of roads. The routine maintenance work includes cutting and clearing vegetation on both sides of the road to ensure good visibility, cleaning drainage systems, keeping the roads free of debris and occasionally patching holes in the road. Microenterprise members earn wages from their work, which they invest into their households and communities.

Each microenterprise is supported by a supervisor, usually a civil engineer, who teaches members how to do the road maintenance work efficiently and effectively. Additionally, members learn how to meet conservation standards, as well as gain understanding of why maintenance activities are so important to extend the life of the road. The supervisor performs a progressive evaluation and on-the-job training for all micro-entrepreneurs. Upon completion of the training, the microenterprise is granted a contract to carry out labor-intensive routine maintenance activities over a stretch of road (at a ratio of about three kilometers per partner) for a period of 12 months, which is renewable subject to satisfactory performance. 

Ultimately, the program empowers entrepreneurs to become permanent contributors to the conservation of their roads. 

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