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Whether an infrastructure project should be pursued through government funding, official development assistance (ODA), a Public-Private Partnership (PPP), or a hybrid, is a matter of finding the solution that best meets a government’s objective given a set of constraints and the risks presented by each option.
Photo: Ashim D'silva | Unsplash
From “Billions to Trillions”, to the Hamburg Principles and Ambitions, to Maximizing Finance for Development (MFD), Realizing that constrained public and multilateral development bank (MDB) funding cannot fully address the critical challenges that developing nations face, the World Bank Group is pursuing private sector solutions whenever they can help achieve development goals, in order to reserve scarce public finance for when it’s needed most. This is especially true in the delivery of infrastructure.
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When the Manila Light Rail Transit (LRT) extension project reached financial close in March 2016 it was a landmark event for the Philippines and for Southeast Asia. It is an achievement for an enormous project worth some US$1.1 billion to go ahead in a region with not much of a track record of large-scale transport Public-Private Partnerships (PPPs). The project’s winning formula is a combination of at-times difficult ingredients: government responsiveness, a balanced risk profile, and project bankability.
Translations available in Chinese and Spanish.
Many of you are already familiar with the PPP (Public-Private Partnerships) Group’s Private Participation in Infrastructure (PPI) Database. As a reminder for those who aren’t, the PPI Database is a comprehensive resource of over 8,000 projects with private participation across 139 low- and middle-income economies from the period of 1990-2015, in the water, energy, transport and telecoms sectors.
We recently released the 2015 full year data showing that global private infrastructure investment remains steady when compared to the previous year (US$111.6 billion compared with US$111.7 the previous year), largely due to a couple of mega-deals in Turkey (including Istanbul’s $35.6 billion IGA Airport (which includes a $29.1 billion concession fee to the government). When compared to the previous five-year average, however, global private infrastructure investment in 2015 was 10 percent lower, mainly due to dwindling commitments in China, Brazil, and India. Brazil in particular saw only $4.5 billion in investments, sharply declining from $47.2 billion in 2014 and reversing a trend of growing investments over the last five years.
- private sector
- Private Sector Development
- Global Economy
- Financial Sector
- The World Region
- South Asia
- Middle East and North Africa
- Latin America & Caribbean
- Europe and Central Asia
- East Asia and Pacific
- El Salvador
The Philippines has one of the best performing Public-Private Partnership (PPP) programs in Asia. According to the Philippines PPP Center, much more will be done to further improve the country's ambitious PPP program.
Infrastructure building in most countries is driven by the government. China has been the most remarkable infrastructure builder in the world over the last 30 years, and this progress has been driven almost entirely by the government. In the case of the Philippines, government is also in the driver’s seat when it comes to infrastructure development, bringing in the private sector for expertise, capacity, and relevant experience. In most PPPs, project efficiencies increase and sustainability is strengthened with private participation. Though PPPs are not a panacea, and the transactions themselves are complex, the Philippines has chosen to incorporate private sector expertise and resources in various ways. The challenge is to balance public objectives with private need for a return on investment. There has to be appropriate sharing of risks between government and the private sector.
One of the most salient features of a public-private partnership (PPP) arrangement is the flexibility to use out-of-the-box solutions in resolving the many challenges in day-to-day operations. As a result, the PPP setup gives operators the liberty to come up with innovative solutions for more effective and efficient delivery of the most basic services.
In the Philippines, Laguna Water — a joint venture company formed as a result of a PPP between the Provincial Government and Manila Water Philippine Ventures formerly known AAA Water Corporation — is benefitting immensely from that flexibility since it took over the operations of the province-run water system in 2009. Although primarily tasked to improve the provision of water and wastewater in the three cities of Biñan, Sta. Rosa and Cabuyao — collectively known as concession area — Laguna Water’s sustainable business model allows it to participate on matters related to community development (including job generation), as well as programs centered on health, safety and environmental protection.
As a staunch advocate of sustainability, Laguna Water takes pride in having significantly improved access to piped, clean and affordable water to 62 percent of the population of the concession area— a far cry from the 14 percent when it started its operations in 2009. The joint venture’s PPP framework has been instrumental in putting in place water infrastructure that provides easier access and better services to customers. Today, Laguna Water is the biggest water service provider in the entire province, and is also ahead in its service-level targets on coverage, water quality and water loss reduction.
Here are some details about our PPP-empowered approach.
- drinking water
- clean water
- Environmental Protection
- Community Empowerment
- water access
- partenariats public-privé
- public-private dialogue
- public-private partnership
- public-private partnerships
- Social Development
- Private Sector Development
- East Asia and Pacific