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infrastructure

Breathing new life into power utilities through debt restructuring tools

Teuta Kaçaniku's picture


Photo: Raymond Ward | Flickr Creative Commons

Sector reform is a familiar concept for anyone working in the energy sector, particularly in developing countries. Typically, reforms involve measures such as building an institutional framework that allows for an independent regulator, improving the operational efficiency of utilities (for example, by unbundling vertically-integrated utilities), creating an environment for private sector participation, and last but not least, introducing tariffs that reflect costs. All these measures are designed with one goal in mind: to put the sector on a sustainable path and improve the quality of service for end-users.

While acknowledging the many benefits that sector reforms can bring, one issue we continue to face is the poor financial state of key power utilities. In other words, a lack of creditworthiness. Often, their lack of financial creditworthiness is the most critical obstacle to implementing investment programs. This makes utilities even more dependent on continuous government subsidies.

How an online platform helps drive infrastructure in developing countries

Catherine Workman's picture


Photo: Free-Photos / Pixabay Creative Commons

In order for investors to see the potential in developing long-term attractive infrastructure assets, projects must be well prepared. The lack of such primed projects is a major obstacle for ramping up global infrastructure, particularly in developing and emerging economies.

This is one of the priorities for the G20, as Argentinean President Mauricio Macri emphasized in December 2017: "Infrastructure for development" will be one of the key issues of focus during the country's G20 Presidency and it will "…seek to develop infrastructure as an asset class by improving project preparation."

Strategies that work: New South Wales leads infrastructure development in Australia

Mar Beltran's picture


Photo: Dylan's World / Flickr Creative Commons

A decade before the financial crisis, Australia was a bastion of infrastructure successes. The country’s four major airports (Melbourne, Perth, Brisbane and Sydney) were privatized. Numerous greenfield projects were also launched, for example, extensive highway construction, and new projects were continually added to the pipeline.
 
Some of these new projects, however, faced significant difficulties: some were constructed without robust performance data, leading to overambitious forecasting and overaggressive financial structures. In part, this led Australia to suffer multiple high-profile defaults and brought the country’s infrastructure project pipeline to a halt.
 
But, today, Australia is displaying signs of promise once again. And one state, in particular, is among the developed world’s GDP growth outliers: New South Wales (NSW). The state’s economic growth has reached 3.5%, outstripping the country’s average rate of 2.8%, and even the G20 average (which stands at 3%). As such, NSW’s infrastructure model has likely had a multiplier effect on economic activity—and has been identified as a potential playbook for other jurisdictions.

Offres spontanées dans l’infrastructure : parvenir à un juste équilibre entre incitations et concurrence

Philippe Neves's picture
Also available in: English | Español


Photo: kupicoo/ iStock

Promouvoir l’initiative et l’innovation du secteur privé tout en assurant une mise en concurrence : c’est le dilemme que doivent résoudre les pouvoirs publics qui souhaitent encadrer les offres spontanées dans l’infrastructure. Dans un précédent billet, nous avons souligné qu’il fallait considérer avec prudence les offres non sollicitées, à savoir comme une procédure exceptionnelle pour la passation des marchés publics. Une bonne politique de gestion des offres spontanées doit permettre de répondre aux principes de transparence et de prévisibilité, et de préserver l’intérêt public.
 
Un pays qui accepte la possibilité d’offres non sollicitées et qui adopte des mesures pour les traiter s’attend à être saisi de ce type de projet par les entreprises. En même temps, il doit s’assurer du juste prix et de la rentabilité du projet proposé. Mais qu’est-ce qui incitera le secteur privé à présenter des offres non sollicitées si l’État organise ensuite une mise en concurrence ? Comment une administration publique peut-elle encourager les offres spontanées, tout en attirant suffisamment de candidatures concurrentes?

Iniciativas privadas en proyectos de infraestructura: un desafío para encontrar el equilibrio entre incentivos y competencia

Philippe Neves's picture
Also available in: English | Français


Photo: kupicoo/ iStock

Un desafío clave a la hora de elaborar una política sobre gestión de “IPs” – iniciativas privadas (también llamadas propuestas no solicitadas o “unsolicited proposals” en inglés) en proyectos de infraestructura es lograr un equilibrio entre el hecho de generar interés de empresas privadas para someter IPs y el de crear un entorno que permita generar una tensión competitiva atrayendo a más postores. En un blog anterior, advertimos que las IPs deben utilizarse con cautela como una excepción a la regla general según la cual los proyectos de infraestructura deberían ser iniciativas del sector público, y sostuvimos que contar con una política adecuada para la gestión de las IPs puede ayudar a garantizar la transparencia y la previsibilidad, y a proteger el interés público.
 
Ciertamente, un Gobierno que decida considerar IPs y elabore una política para su gestión esperará recibir propuestas que cumplan los requisitos establecidos. Al mismo tiempo, el Gobierno debe asegurarse de que el proyecto represente un precio justo de mercado y optimice los recursos públicos. Pero, ¿qué incentivo tiene el sector privado para presentar una iniciativa privada si el Gobierno la toma y somete a un proceso de adquisición competitiva? ¿Qué puede hacer un Gobierno para que las IPs despierten el interés del sector privado y, al mismo tiempo, atraigan suficientes oferentes?

How PPIAF leveraged $17.1 billion for infrastructure by focusing on the critical upstream

François Bergere's picture


Photo: BrilliantEye | iStock

As the only global facility specifically dedicated to reinforcing the legal, institutional and policy underpinnings of private sector participation in infrastructure—which we call the critical upstream—we at the Public-Private Infrastructure Advisory Facility (PPIAF) realize we have a key responsibility to developing countries.

That responsibility is to help client governments unlock their potential by de-risking investments and creating an enabling environment for private sector participation, itself a condition to achieving the Sustainable Development Goals and climate-smart objectives. As such, PPIAF fits neatly into the new Maximizing Financing for Development (MFD) approach to crowd in the private sector, an initiative launched by the World Bank Group and other multilateral development banks last year.

Can Islamic finance unlock funds for development? It already is

Amadou Thierno Diallo's picture

Also available in  العربية | Français



Two years in the making, last week the Islamic Development Bank Group (IsDBG) and the World Bank Group officially launched the landmark report Mobilizing Islamic Finance for Infrastructure Public-Private Partnerships at a discussion broadcast online from Washington, D.C. We illustrated that, through partnerships, the power of Islamic finance can be instrumental in unlocking financial resources necessary to meet the tremendous demand for critical infrastructure.
 
In fact, infrastructure PPPs funded with Islamic finance have proliferated in the Middle East, and have flourished in other countries throughout Africa and Asia. Both of our institutions are committed to leverage our competitive advantages, achieve effective interventions, and yield measurable results in scaling up and broadening the use of Islamic finance.

Infrastructure & Africa’s development—the PPP imperative

Fida Rana's picture


Photo: CIFOR | Flickr Creative Commons 

Africa is a continent rich in natural resources and boasts a large young, ambitious, and entrepreneurial-minded population. Harnessed properly, these endowments and advantages could usher in a period of sustained economic growth and increased well-being for all Africans.
 
However, a lack of modern infrastructure is a major challenge to Africa’s economic development and constitutes a significant impediment to the achievement of the Sustainable Development Goals.
 
According to a recent report by the World Bank, there are varying trends in Africa’s infrastructure performance across key sectors and regions. In telecommunications, Sub-Saharan Africa has seen a dramatic improvement in the quantity and quality of infrastructure, and the gains are broad-based. Access to safe water has also risen, with 77% of the population having access to water in 2015, from 51% in 1990. In the power sector, by contrast, the region’s electricity-generating capacity has changed little in more than 20 years. At about 0.04 megawatts per 1,000 people, capacity is less than one-third of that of South Asia, and less than one-tenth of that of Latin America and the Caribbean.

Guarantees light the way for clean energy through renewable auctions

Arnaud Braud's picture


Photo: Scaling Solar project in Zambia

What is a common thread between Argentina, Maldives, and Zambia? In each of these countries, the World Bank provided guarantees to support transparent auctions for renewable energy. Through these, I have seen how the Bank’s involvement helped increase private investors’ confidence, attract world-class developers, and ultimately reduce tariffs.

Drawing on 10 years of diverse experience in the power sector in both public and private organizations, my role is to help bridge the divide between public and private parties and help each side better understand the other. The World Bank is ideally positioned for this. Both sides understand the World Bank carries out a detailed due diligence and ensures the auction meets international standards. Both sides appreciate the World Bank will be an honest broker if issues arise. Because of its long term and continuous involvement in our client countries, the World Bank can help identify and solve issues early on. As such, no World Bank project-based guarantee has ever been called.

Colombia: the roads more traveled

Philippe Neves's picture

Also available in Español​


Photo: Dominic Chavez / International Finance Corporation

In the early 1990s, Colombia’s road infrastructure was a maze of poorly maintained roads and bad highways. Difficult geography—the Pacific coast jungle and the Andes branching out into three chains—made it harder to improve road conditions and connect isolated communities. Conflict, corruption, and short-term political priorities contributed to the problems plaguing Colombia’s road system. But just as influential were the problems with the nation’s existing concession contracts that had wrong incentives, created opportunities for renegotiating signed contracts, and assigned unproportioned demand risk to the Government of Colombia.

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