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  • Reply to: What can we learn from public-private partnerships in the transport sector in Europe and Central Asia?   2 weeks 2 days ago

    The lessons outlined are definitely relevant for Romania. I would just add a few more aspects.
    Irrespective of the size of the project and the way it is structured, any PPP project has an associated public expenditure item. (government financing or government guarantee) and it is very important to make sure that this expenditure can be accommodated within the public sector’ budget ceiling over time. Therefore, the involvement of the Ministry of Finance in the early stages is crucial for the better integration of the PPP project in the budget planning process and also in assessing its affordability and value for money. This is not always the case and the involvement or the lack of involvement of the Ministry of Finance is sometimes (mistakenly) triggered by the fiscal treatment of the PPP projects: on the government’s balance sheet or off the government’s balance sheet. The fiscal treatment actually triggers the decision of having a PPP project or not. . Although, theoretically, this decision should be taken based on a thorough assessment (affordability, bankability, value for money), most of the times the decision to use the PPP option is taken according to the fiscal treatment, using the argument that on short term the public expenditure related to it is not reflected on the government’ s balance sheet.

    Talking about institutional capacity, I fully agree that having a good law and an institution/unit empowered to prepare and implement PPP projects is very important. What I think is also needed is having decision makers at the political level (champions) and very strong expertise at the technical level with staff well remunerated and incentivized to come up with sound technical solutions. One way to strengthen this capacity, especially in countries with no successful track record, is to start with small PPP projects, not so exposed, that would allow all those involved to learn by doing.

  • Reply to: What can we learn from public-private partnerships in the transport sector in Europe and Central Asia?   2 weeks 4 days ago
    Dear Radek

    Yes, I agree with your points. In the case of recent EU countries, it is really the combination of fiscal constraints with Eurostat accounting of PPP projects that creates this incentive to limit PPP to "off-balance sheet" (off-budget) accounting.

    A solution could be to start with projects already funded and assess the potential for PPP, which would then focus more on efficiency and value-for-money. Unfortunately the incentives are not there as PPP is used mainly when there is no public (incl. EU) fund available for new assets.

    Strengthening public investment management to include PPP, as well as fiscal risk management can help. Collaboration with EIB/EBRD is also essential as many of these projects assume financial support from these institutions, who would also benefit from better projects.

    Thanks for your contribution

    Vickram.
  • Reply to: What can we learn from public-private partnerships in the transport sector in Europe and Central Asia?   2 weeks 4 days ago

    Very useful summary capturing well the lessons learned in ECA. Any teams trying to pursue some PPP related assistance projects (not only in ECA) have to keep them in mind.
    Just a few additional observations and suggestions mostly in relation to development of PPPs in relatively advanced ECA (and other MIC)countries:
    - relative poor performance of ECA was also caused by limited fiscal space in their budget following 2008 crisis; ECA was hit stronger than other regions;
    - the new ECA European Union member states (Croatia, Czechs Republic, Poland and others) are very busy utilizing large EU co-funded projects so there is on one hand limited fiscal space for PPPs but on the other hand PPPs may offer more or better public services within such limited space;
    - in the EU member countries the way forward to develop some projects could therefore require keeping a close eye on EU regulations and be either complementary to any EU assistance packages or become part of it by for example piloting so called "hybrid schemes" combining private-EU-budget/public funds; the new EU co-financing perspective (until 2020) seems to offer some new "windows of opportunity" in this area;
    - political/institutional stability and long-term relationship between WB Group and beneficiaries are key factors, since institutional capacity improvement programs and preparation of large and complex PPPs takes significant time and effort; stable long-term country commitment of the public sector to involve private sector is a serious pre-condition;
    - while the transaction costs of involving WB group may be significant perhaps support to groups of smaller projects or PPP financial support facilities/programs either for central governments or for strong and increasingly capable subnational governments may be worth pursuing; such smaller PPPs offer additionally some potential to strengthen local private sector partners since there are more chances that smaller local companies will bid for them; perhaps in some countries such arguments may find their way through to political decision makers and general public, thus contribute to convincing local public sector partners to try PPPs;

  • Reply to: Can we accelerate energy efficiency by using less fuel?   1 month 1 week ago

    Hi Marc, Very timely and relevant article. Thanks.

    The energy efficiency analysis of our Global Tracking Framework Report that we did under SE4ALL last year (http://www.worldbank.org/en/topic/energy/publication/Global-Tracking-Framework-Report) clearly showed that transportation sector energy efficiency will have to be one of the major contributors in order to achieve the SE4ALL's 2030 overall energy efficiency improvement goal.

    While modal shift from individual to mass transport is a policy that would help reduce the energy intensity of transport to some extent, at the same time, in the developing countries in particular, increasing wealth and rapid urbanization is unfortunatly continuing to push the ongoing trend of fast-growing vehicle ownership, as a car is not just seen as a means of meeting the needs of going from one place to another there, but much beyond that. It is perceived as a sign of prosperity, prestige and status and more of an asset. You get a job, you move to the city, and the first thing you do save enough or borrow to buy your own personal vehicle... this is the case in most growing economies. So, a huge emphasis has to be continued on changing the mindset (a difficult endeavor by itself), to not stop buying cars but encouraging to buy efficient vehicles and make ideas like car-sharing as "cool thing" to do....But awareness building will not solve it completely or quickly either... For quick impacts, policy/financial incentives and mandates may work better. These have started demonstrating some impacts already in a few developing country cities... like tax/registration fee incentives, loan discounts, congestion pricing, etc. to promote the shift towards higher efficiency levels of the personal vehicle stock (as well as change in driving patterns).

    By the way, I am also wondering that as public sector vehicle procurement must be quite a significant chunk(not only Govt cars and LDVs but also HDVs for public utility services, etc.) do public procurement systems (for vehicles) have energy efficiency considerations integrated into them? I know on the energy appliance/equipment side (energy efficient air conditioners, efficient lights, space heating systems, hot water heaters, etc. for public buildings and street lights and city water pumping systems) this is happening to a limited extent (where lifetime energy usage costs are considered along with the purchase and O&M costs) but I was not aware if there are developing countries which have set up public procurement of transportation stock based on similar lines of lifecycle costs...

    It will be great to have a BBL/meeting to carry on this discussion between the Transport and Energy GPs/CoPs ...on this interesting interface.

  • Reply to: Concerns over the growth of motorcycles in cities   1 month 3 weeks ago

    I think one should also realize that if these people were not riding effecient motorcycles they would mor likely be driving less efficient cars,one only needs to look at the u.s. The effeciency of the motorcycle is not just in how much fuel it uses but the resources required to build it and maintain it which are far less than cars. A focus on proper safety gear for riders and training seems to be appropriate,but one must not overlook the benefits of this transportation.