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Europe and Central Asia

What can we learn from public-private partnerships in the transport sector in Europe and Central Asia?

Vickram Cuttaree's picture
Private sector investment in Europe and Central Asia (ECA) is quite small, even accounting for the size of the individual countries’ economies. Despite integration within the European Union (EU), ECA countries have not attracted much private sector investment in the transport sector compared to other regions, such as Latin America or South Asia (four times more during 2009-13).
 
Mid-day traffic in Istanbul, Turkey
Mid-day traffic in Istanbul, Turkey

While public-private partnership (PPP) transport investment has been initially driven by countries (such as Poland, Croatia and Hungary) that implemented reforms to join the EU, most of them have not been able to close on transport PPP transactions in the past five years. Now Russia and Turkey are the leaders in the region, as explained below.

What can explain this situation?
A focus on off-balance sheet accounting of PPP projects has dominated transport PPP in EU-member ECA countries in recent years. Off-balance sheet accounting means PPP projects are structured in a way that only annual government payments are accounted for, instead of the total commitment (the assets and liabilities associated with the project). This means that PPP projects end up being large and greenfield (multi-billion dollar investment, typically in new highways), and tend to follow a separate path than for budget-financed projects, based on the assumption that the associated liabilities won’t be accounted for.

Risk allocation between the public and private sectors is driven by accounting treatment. This also results in limited support from governments and very rigid negotiations. It also means that projects are often not able to close or, as a former Minister of Transport said, “We do PPP to build off-balance sheet assets but, in order to reach financial close, assets has to be on our books.”

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Julie Babinard's picture

How relevant is ICT for transport? The emergence of low-cost open-source mapping tools; widespread cellular network coverage in developing countries; declining costs of mobile phone hardware; and increasing Internet use by public agencies have resulted in unprecedented opportunities to support transport planning and management in developing countries.

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A major constraint with developing and maintaining rural roads is the fact that they are, unfortunately, rural. The areas where they are needed are often difficult to access, logistics become complicated, local contracting capability is limited, engineers are few and far between, and younger engineers especially, are not keen to leave the urban environment.

Air Transportation – Quo Vadis?

Charles E. Schlumberger's picture

For several years, the World Bank, the International Civil Aviation Organization (ICAO), and the air transport industry met annually at a conference discussing issues concerning the air transport sector. The conclusions of these conferences are important as they guide the Bank’s aviation development agenda.

Reliable Supply Chains: An Answer to Competitiveness and Growth Challenges

Monica Alina Mustra's picture

In today’s interconnected world economy, efficient, reliable and cost-effective supply chains have become necessities in global trade. Trading in a timely manner with minimal transaction costs allows a country to expand to overseas markets and improve its overall economic competitiveness. For many countries, however, identifying bottlenecks along a supply chain and then determining which logistics procedures and infrastructure to upgrade can be a challenging feat.

New findings on social and physical mobility bring transport into the spotlight again

Julie Babinard's picture

For those of us anxiously awaiting the new edition of the World Bank’s leading publication, the World Development Report (WDR) each year, this year’s edition does not disappoint.  Credit should be given to the team of the ‘WDR2012: Gender Equality and Development’ team for successfully moving their analysis from skepticism to the elaboration of a sensible analytical framework focused on aspects of gender equa

A road crash changed my life. Join me now to save lives...

Casey Marenge's picture

On the 26th of September 2003 my best friend Jonathan was killed in a car crash in Nairobi, Kenya in East Africa. Jonathan was only 19 years old and had just joined University three weeks prior to the road crash to pursue a degree in information technology. A speeding drunk driver rammed into the vehicle Jonathan was in; causing the car to spin out of control severally. Jonathan along with another friend, were killed on the spot.

How to mainstream gender in transport? It should not be complicated for transport engineers

Julie Babinard's picture

The ambiguities surrounding the interpretation of the word gender and what it means to ‘mainstream gender’ in relation to transport could prove to be a significant obstacle to those who plan and provide transport infrastructure and services, especially in developing economies.

The necessity to ensure gender equality as a primary goal in all area(s) of social and economic development was highlighted at the United Nations Fourth World Conference held in Beijing, China in 1995 and the concept of gender mainstreaming was defined by the 1997 United Nations Economic and Social Council (ECOSOC) as 'a strategy for making women's as well as men’s concerns and experiences an integral dimension of […] the policies and programs in all political, economic and societal spheres so that women and men benefit equally and inequality is not perpetuated'.

The transport sector at the World Bank has been a leader in gender mainstreaming. The transport sector, as is the case in many other aspects of cross-sectoral interventions, has been leading the way in its response to the mainstreaming effort. Significant research has been undertaken along with the delivery of successful operations to address the specific needs and constraints of men and women in transportation.

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