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One question, eight experts, part four: Richard Abadie

Richard Abadie's picture
Photo: Wikimedia Commons

To gain a better understanding of how innovation in public-private partnerships (PPPs) builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process. This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our fourth response in this eight-part series comes from Richard Abadie, who leads the Capital Projects and Infrastructure Group at PwC

Having worked in the infrastructure sector for nearly 20 years, I’ve had time to reflect on what success and failure look like in infrastructure PPPs. Mistakes have been, do, and will continue to be made when using PPPs. It is not perfect — nor is its application — but what in life is?

There are so many horror stories around non-PPP construction cost overruns, delays in completion, poorly specified contracts, weak tender management, corruption, failure to run transparent competitive processes, lack of project readiness, significant post-contract variations, and sporadic asset maintenance and management. PPPs eliminate many of the above structural weaknesses, which rightfully earns it its place as a challenging but effective procurement approach.

The chief criticisms of PPP — that it takes longer to procure and is less flexible than conventional procurement — have some validity. Getting price certainty does take time and requires clear contractual risk allocation through the life of the contract.

Improving Public Investment Management: Spotlight on Ethiopia

Mario Marcel's picture
 
Overview of Addis Ababa, Ethiopia. Photo - Arne Hoel / World Bank
Overview of Addis Ababa, Ethiopia. Photo: Arne Hoel / World Bank


Last month I met with ministers and local officials in Addis Ababa to explore areas where we, at the World Bank, can help build institutional capability in Ethiopia. The trip was an enriching experience, both personally and professionally. It was gratifying to see first-hand the good work and commitment to development exhibited by our staff in the country.

We have had a decade-long engagement with Ethiopia with a successful track-record. Ethiopia has one of the largest World Bank portfolios in the Africa Region (US$6.1 billion in 2014) and the partnership is strong, with a robust future.

During my visit, I gave a lecture at Addis Ababa University on Public Investment Management before an audience of faculty, students, civil society organizations and donors. I shared with them how much public infrastructure investment has done for the country. Ethiopia has the third-largest public investment rate in the world and three times the average for Sub Saharan Africa.

This effort has contributed to growth that has averaged 10.9 percent since 2004—a figure higher than that of their neighbors or low-income countries on average. Infrastructure investment has also been helpful in expanding access to services and in gaining competitiveness, being a large landlocked country. 

Obrigado, Brasil!

Clive Harris's picture
Paving a highway in Brazil. In 2014, Brazil's
 infrastructure investment commitments
​drove an overall global increase.
In March we released the update from the Private Participation in Infrastructure (PPI) Database for the first six months of 2014, covering investment activity in energy, transport, and water and sanitation. The good news of a rebound of investment commitment from a decline in 2013 was noteworthy, alongside the heavy concentration of activity in Brazil.
 
The PPI Database’s 2014 full year update for these sectors has just been released, and it confirms the trends we began tracking for the first six months. Total investment in infrastructure commitments for projects with private participation in the energy, transport, and water and sanitation sectors increased six percent to $107.5 billion in 2014 from levels in the previous year. The total for 2014 is 91 percent of the five-year average for the period 2009-13, which is the fourth-highest level of investment commitment recorded – exceeded only by levels seen from 2010 through 2012. 
 
This increase over 2013 was driven largely by activity in Brazil. Without Brazil, total investment commitments would have fallen by 18 percent, from $77.2 billion in 2013 to $63.4 billion in 2014.  Although this is lower than H1 2014 (57%), Brazil’s large stake is a continuation of a recent trend.
 
The Latin America and the Caribbean (LAC) region saw $69 billion of investment commitments, or nearly 70 percent of the total for 2014. Three of the top five countries by investment commitments in 2014 were from LAC.  The top five, in order, were Brazil, Turkey, Peru, Colombia, and India. 

PPPs: Making a real difference in delivering public services in Bangladesh

Syed Afsor H Uddin's picture
Who first introduced Public-Private Partnerships (PPPs)? This is a question that often leads to endless discussions, provides an opportunity for one-upmanship and is an entertaining diversion for practitioners on the margins of international PPP conferences.

During these debates many examples are quoted – the early 20th century oil concessions in the Persian Gulf, the late 19th century cross continental railway in the USA and the İzmir-Aydın railway concession in present-day Turkey, the Rhine river concession granted in 1438[1] and so on.
 
Photo: Rezwan/flickr

As debate on the origin of PPP continues, the modern-day popularity of PPPs is more commonly acknowledged to have emerged from the United Kingdom, following the introduction of Private Finance Initiatives in 1992’s autumn budget statement by RH Norman Lamont, then Chancellor under John Major’s Conservative government.[2]

In the intervening years, many developed and developing nations have started PPP programs of their own. Indeed, the growth of PPPs in developing countries is nothing short of phenomenal, with the mechanism being used in more than 134 developing countries and contributing to 15–20 percent of total infrastructure investment[3].

This is also true of Bangladesh. In 2009, the Government of Bangladesh announced the introduction of a revised PPP program[4] in the 2009/10 Budget Session, and then introduced a new PPP policy in August 2010 (PPP Policy 2010[5]).

Where is our road? Taking Politics out of Regional Transport Infrastructure Planning

Charles Kunaka's picture

Africa’s infrastructure deficit is no secret. Several recent studies by the World Bank and others have confirmed that across the continent, roads are inadequate, railways in poor condition and waterways limited. While the problems are most obvious at the national level, they are more acute along routes connecting countries. Lack of resources contributes to the patchy state of infrastructure connectivity between African countries.  But it is not the only hurdle. A key question is: given limited resources, how should infrastructure be planned, prioritized and financed?

Sixteen countries in Sub-Saharan Africa are landlocked. To trade goods in overseas markets, they must cooperate with their coastal neighbors, working together to plan roads, transport goods to port and keep borders open. This is harder than it sounds. While numerous regional organizations exist to coordinate infrastructure planning in Africa, in practice they are made up of representatives with interests rooted in their own countries. Decisions by these bodies are often political and driven by members’ desire to see projects in their home territories.

 

The Land of Large Abandoned Objects

Chris Bennett's picture

The book ‘Stories I Stole’ was written by the English author Wendell Steavenson, who lived in the South Caucasus’ – mainly Georgia – from 1998 to 2001. This was a turbulent time, with great hardship and limited law-and-order. It makes for a fascinating read, since so much has changed in Georgia in these ten years. But one thing has not changed in the region – landscapes littered with ‘Large Abandoned Objects’ (LAOs).