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public-private partnerships

One Bus Away: How unbundling bus provision from operation can support bus modernization programs

Leonardo Canon Rubiano's picture
Photo credit: Leonardo Canon Rubiano/World Bank
The World Bank is supporting the Government of Sri Lanka’s efforts to create a roadmap for the modernization of urban bus services in the capital, Colombo. We have discussed ways in how cities with high-quality public bus networks have approached the issue: the public sector is responsible for infrastructure development, network and service planning, and regulating and monitoring of operations, while efficiency-oriented bus companies operate the services according to well-defined contracts.

Three ways governments can create the conditions for successful PPPs

Lincoln Flor's picture
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A healthy Public-Private Partnership (PPP) has several defining features: strong competition, bankability with low financial costs, lower risk of renegotiations, secure value for money, and efficiency gains.

What does it take for countries to develop PPPs that can fit this description? Why is it that some countries such as India, Colombia, Turkey, and Egypt have been able to develop strong and successful PPP programs while others have not been able to award any projects under special-purpose PPP legislations? 

Our experience with infrastructure PPPs across the globe suggests that three institutional pillars are needed to increase the probability of PPP success.

Maximizing finance for safe and resilient roads

Daniel Pulido's picture


Around the world, roads remain the dominant mode of transport and are among the most heavily-used types of infrastructure, accounting for about 80% of the distance travelled for individuals and 50% for goods.

Despite this intensive use, the funding available for road maintenance has been inadequate, leaving roads in many countries unsafe and unfit for purpose.

To make matters worse, roads are also very vulnerable to climate and disaster risk: when El Niño hit Peru in 2017, the related flooding damaged about 18% of the Peruvian road network in just one month.

It is no surprise then that roads are the sector that will require the most financing. In fact, the G20 estimates that roads account for more than half of the $15 trillion investment gap in infrastructure through 2040.

Maximizing finance for sustainable urban mobility

Daniel Pulido's picture
Photo: ITDP Africa/Flickr

The World Bank Group (WBG) is currently implementing a new approach to development finance that will help better support our poverty reduction and shared prosperity goals. This crucial effort, dubbed Maximizing Finance for Development (MFD), seeks to leverage the private sector and optimize the use of scarce public resources to finance development projects in a way that is fiscally, environmentally, and socially sustainable.
 
There are several reasons why cities and transport planners should pay close attention to the MFD approach. First, while the need for sustainable urban mobility is greater than ever before, the available financing is nowhere near sufficient—and the financing gap only grows wider when you consider the need for climate change adaptation and mitigation. At the same time, worldwide investment commitments in transport projects with private participation have fallen in the last three years and currently stand near a 10-year low. When private investment does go to transport, it tends to be largely concentrated in higher income countries and specific subsectors like ports, airports, and roads. Finally, there is a lot of private money earning low yields and waiting to be invested in good projects. The aspiration is to try to get some of that money invested in sustainable urban mobility.

How can we enhance competition in bus passenger urban transport?

Shomik Mehndiratta's picture
Photo: EMBARQ Brasil/Flickr

Também disponível em português.

While bus services are often planned and coordinated by public authorities, many cities delegate day-to-day operations to private companies under a concession contract. Local government agencies usually set fares and routes; private operators, on the other hand, are responsible for hiring drivers, running services, maintaining the bus fleet, etc. Within this general framework, the specific terms and scope of the contract vary widely depending on the local context.

Bus concessions are multimillion-dollar contracts that directly affect the lives of countless passengers every day. When done right, they can foster vigorous competition between bidders, improve services, lower costs, and generate a consistent cash flow. However, too often the concessions do not deliver on their promise and there is a perception across much of Latin America that authorities have been unable to manage these processes to maximize public benefits.

As several Latin American cities are getting ready to renew their bus concessions—including major urban centers like Bogotá, Santiago de Chile, and São Paulo—now is a good time to look back on what has worked, what has not, and think about ways to improve these arrangements going forward.

In India, this transport engineer is racing toward the future… with German supercars

Shigeyuki Sakaki's picture
Harsh, a civil engineer from Surendranagar, the western State of Gujarat in India, proudly has a collection of supercars recently delivered from Germany. They are all brand new with sleek designs, glossy paint, and fully loaded with state-of-the-art features. One of them is a 600 horse-power monster, another is the first of its kind in India.
 
Without further ado, let's see what he has...

Ahorro Pensional para Proyectos: ¿Un nuevo significado para las APP en América Latina?

Daniel Pulido's picture
Also available in: English
Siga al autor en Twitter: @danpulido
 
Los proyectos de infraestructura implementados a través de asociaciones público-privadas (APP) han sido tradicionalmente financiados por los bancos. Sin embargo, en la medida en que el dinero a largo plazo de estas instituciones financieras se ha vuelto más difícil de conseguir y más costoso y los activos de los fondos de pensiones y otros inversionistas institucionales han seguido aumentando, el interés por atraer el gran acervo de capital que estos últimos manejan ha crecido rápidamente. En un contexto de bajos rendimientos para los bonos, los fondos de pensiones están buscando oportunidades atractivas de inversión a largo plazo para diversificar sus tenencias y cumplir con sus obligaciones de pago de largo plazo. Tras darse cuenta de la oportunidad que existe para acercar la oferta y la demanda de financiación, los Gobiernos y los inversionistas en los países desarrollados y en desarrollo han dirigido su atención hacia los “bonos de proyectos”, instrumentos de deuda emitidos por empresas en los mercados de capitales como una manera de financiar inversiones en infraestructura.

Estos “bonos de proyectos” están principalmente dirigidos a inversionistas institucionales —incluidos fondos de pensiones— y han generado un gran interés entre banqueros de inversión, firmas de abogados e inversionistas. Todo este bombo plantea una serie de preguntas: ¿Están los "bonos de proyectos" realmente a la altura de las expectativas? ¿Pueden los Gobiernos depender de los ahorros pensionales para financiar proyectos (¡un nuevo significado para la sigla APP!)? ¿Qué necesitamos hacer para convertir a los fondos de pensiones en una fuente de financiamiento significativa y así terminar con el déficit de inversión en el sector de infraestructura?

Pensioners Paying for Projects: A new meaning for PPP in Latin America?

Daniel Pulido's picture
Also available in: Español
Follow the author on Twitter: @danpulido
 
Public-Private Partnership (PPP) projects in infrastructure have traditionally been financed by banks. However, interest in new funding sources is increasing as long-term money from banks has become more difficult and expensive to get, while the assets held by pension funds and other institutional investors have continued to soar. In a context of low bond yields, pension funds are looking for attractive long-term investment opportunities to diversify their holdings and meet their long-term payment obligations. Realizing an opportunity to match supply and demand, governments and investors in the developed and developing world have turned their attention to Project Bonds, debt instruments issued by PPP project companies in the capital markets as a way to fund infrastructure investments.

These “Project Bonds” mostly target institutional investors - including pension funds, and have generated a great deal of interest among investment bankers, lawyers and investors. All this hype raises a number of questions: Are these “Project Bonds” really living up to expectations? Can governments really rely on Pensioners Paying for Projects (a newfound meaning for PPPs!)? What do we need to do to turn these instruments into a significant source of financing and close the infrastructure investment gap?

Building Metros in Latin America: Not all projects are created equal, but they all need strong institutions

Daniel Pulido's picture
Follow the author on Twitter: @danpulido
 

Construction of the Quito Metro
Representatives from international and local commercial and development banks convened in Bogota, Colombia at the end of March for the Second International Workshop to discuss the First Line of the Bogota Metro. Bogota is currently undertaking the engineering studies required to develop the metro project but the key question remains:  how to develop it in a manner that reduces costs, mitigates risks and maximizes benefits for users? Together with other Bank colleagues, I was invited to the workshop to discuss the procurement and financing models adopted in other urban rail projects in Latin America (see workshop presentations here). My main take away from the discussions is that although there is no such thing as a single recipe for success, there is one widely recognized essential ingredient: strong government institutions with the sufficient managerial and technical capacity to prepare, manage and supervise these complex projects.