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Public-private partnerships: Promise and hype

Michael Klein's picture
Here is a new paper I wrote that provides perspectives on patterns of public-private partnerships (PPPs) in infrastructure across time and space.  
 
PPPs are a new term for old concepts. Much infrastructure started under private auspices. Then many governments nationalized the ventures.

Governments often push infrastructure providers to keep prices low. In emerging markets, the price of water covers maybe 30 percent of costs on average, that of electricity some 80 percent of costs. This renders public infrastructure ventures dependent on subsidies. When governments run into fiscal troubles, they often look again for PPPs, and price increases. As a result, PPPs keep making a comeback in most countries, but are not always loved.

Learning PPPs live with Hangouts and Twitter

David Lawrence's picture
I would loved to have been at the PPP Days 2015 conference in London this week. But even though I was in Kyiv, I was able to join in. The opening plenary was streamed live, and on the second day, I was able to interact with a panel of PPP experts using Google Hangouts and Twitter.
 
Some of the #PPPMOOC-tagged tweets during
the Google Hangout. For more PPP-related 
tweets, follow @WBG_PPP.

I’m no stranger to either platform. I get most of my news through Twitter, and my daughter sends me messages from class on Hangouts (hi dady [sic], school is sooooo boring :P).
 
This time, however, I was engaging with giants of the public-private partnership (PPP) universe. Laurence Carter, the Senior Director of the World Bank Group’s PPP Group, moderated a panel of seasoned experts from EBRD, the Indian School of Business, and Meridiam, an investor in infrastructure. Together they provided perspectives on PPPs from international financial institutions, academia and the private sector. I joined about 200 other people from around the world and watched it live. But something was different: you could interact with the panel from afar and ask questions via Twitter using the hashtag #PPPMOOC (go check it out).

I was aching to test the system, so I tweeted a question about the value of small PPPs at the municipal level, like the Malyn Biofuel PPP I blogged about recently. I could hardly believe it when Laurence asked the panel for their views on the subject. How incredible: from Ukraine, I was influencing the course of discussion of a panel of PPP experts in London! They talked about it for five minutes and offered some valuable insights.

PPP Days Dispatch: Day Two

Tanya Scobie Oliveira's picture
The second half of the PPP Days conference in London was devoted to country presentations of priority PPP projects, and a few projects – those most likely to be brought to market in the next six to 12 months – were showcased in detail. It was an inspiring example of collaboration for the greater good, proving that PPPs’ potential is limited only by our imagination. (OK, and budgets. And elections. And good structuring. And the presence or absence of natural disasters. But it all starts with imagination and commitment.)
 
PPP Days participants also exchanged ideas today with people around the world who are engaged in the ongoing Massive Open Online Course (MOOC) on public-private partnerships, via the first-ever PPP MOOC Google Hangout. This was an unprecedented opportunity for the over 23,000 people from more than 190 countries now taking the course to ask their most pressing PPP-related questions to officials and experts attending PPP Days – and for these officials and experts to learn from those in the field.

The PPP MOOC Google Hangout was facilitated by Laurence Carter, Senior Director of the World Bank Group’s PPP Group. Panelists included Julia Prescott, Chief Strategy Officer, Meridiam; Thomas Maier, Managing Director for Infrastructure, EBRD; and Pradeep Singh, CEO of the Mohali Campus and Deputy Dean of the Indian School of Business.
 
World Bank Group #PPPMOOC Google Hangout

PPP Days Dispatch: Day One

Tanya Scobie Oliveira's picture

As your PPP Days Rapporteur, I feel like I should start this dispatch by typing “Dateline: London” on a manual typewriter in a newsroom thick with cigarette smoke. Alas, I am hunting and pecking the tiny keyboard of my phone from Exchange Square, the immaculate, smoke-free home of the European Bank for Reconstruction and Development (EBRD), our hosts for the PPP Days meeting.

Photo: (c)EBRD/Dermot Doorly

“Doing More, Doing Better” is PPP Days’ ambitious-sounding theme. The event’s creators convened the gathering to enhance the collaboration among multilateral development banks (MDBs) that is already strengthening the PPP marketplace. One of the best examples of this collaboration, the PPP Knowledge Lab, launched at the conference this morning. The PPP Knowledge Lab, now live at www.PPPknowledgelab.org, is an online “one-stop-shop” for everything PPP. It’s an important online resource that will continually be refreshed and expanded.

Just as the PPP Knowledge Lab gathers great ideas onto one platform, PPP Days has gathered experts and thinkers in one place. These two days are packed full with talks, presentations, panel sessions, and breakout sessions that chip away at one of the most challenging questions of our day: “What would it take to double the right private infrastructure investment in emerging markets?” 

Obrigado, Brazil!

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. 

Sharing PPP stories from around the world: our 2015 PPP Short Stories Competition winners

Lauren Wilson's picture
A still from "Clinic on the Move: A PPP that Expands Access to Primary Health Care in Namibia,"
which won the competition's video category.
We are pleased to announce the winners of the Public-Private Partnerships (PPP) Short Stories Competition. The competition, which was sponsored by the Public-Private Infrastructure Advisory Facility (PPIAF), received 153 submissions from more than 50 countries around the world.

The submissions included examples of innovative PPPs in emerging markets across a broad range of sectors, such as transport, water, energy, and health. Submissions were judged by an independent panel on several criteria, including the identification of actionable ideas, replication potential and relevance to the World Bank Group’s twin goals: ending extreme poverty by 2030 and boosting shared prosperity (measured as the income of the bottom 40 percent in any given country).

The overall winner is Anna Roy for her submission on the India Infrastructure Finance Company’s use of innovative financing to facilitate private investment in infrastructure projects. The India Infrastructure Finance Company was created in 2006 by the Government of India to help raise long-term funds for PPPs. The company, which is fully owned by the government, has approved investments in more 300 infrastructure projects since its inception.

Helping governments act upon the advice they seek

Jyoti Bisbey's picture
Path along the Ishim River in Astana,
Kazakhstan. Photo: Jyoti Bisbey
“What is different now?” This question echoed through my head during my recent morning runs along the beautiful Ishim River in Astana, Kazakhstan.

I was in Astana on mission to launch the new technical assistance program for Kazakhstan’s PPP policy reform, which addresses bottlenecks that constrain project structuring. This reform is especially important if the country’s Almaty Ring Road PPP is to be effective. Almaty Ring Road has been a thought-provoking transaction because previous attempts to solidify the partnership have not panned out, and grasping the history is important to resolving this successfully. Moazzam Mekam, IFC’s Regional Manager for Central Asia, and I spent many hours brainstorming on scenarios that would allow us to bring all of the stakeholders into agreement.  Most of the time, it felt like we were trying to pull a rabbit out of a hat.
 
The Almaty Ring Road is Kazakhstan’s only PPP in preparation right now, and it’s in the spotlight during its prequalification stage. The advisory services are provided by IFC; three years of project preparation have been devoted to ensuring that this is the right project to take to market as a PPP.  As the World Bank Group continues to support Kazakhstan on bringing private sector participation into the delivery of public infrastructure services, the reality is that since the 2006 Concession Law, not one PPP project has transpired.  Before the Concession Law, there were three PPP projects, but all of them have had issues. 
 
As I resumed one of my sunrise runs in this very flat, picturesque, futuristic city, I recalled a recent conversation with Moazzam. He made the point that even when there is a high level of political support for PPPs in the country, institutional and regulatory frameworks are sometimes not ready for PPPs. Capacity and willingness to undertake PPPs at the line ministry/agency level is limited. In instances like this, or when conditions exist in a similar context, we must ask ourselves how to respond, and how to move forward.

​A PPP Manifesto: Getting where we need to go

Jeff Delmon's picture
Some PPPs succeed. Some don’t. And many of these partnerships stake their ground somewhere in-between: they are effective but still fall short of a result or two; they deliver but with less efficiency than intentioned; they innovate but not at the scale envisioned.  In other words, PPPs’ potential is being fulfilled, but certain changes need to be made – urgently, and at the highest levels – so these partnerships can achieve their true potential. 

How?

I’m glad you asked. Many decades of PPP experience and many conversations over cocktails with colleagues on the public and the private side of these deals has prompted this call to create partnerships that can do an even better job serving people around the world. Here are four areas that must be addressed:

Preparation
A well-prepared project is a successful one; yet, we need more. More funding to prepare projects and to prepare governments for the demands of PPP from start to finish. More time to get things right, especially identifying the right partner and agreeing on how the partnership will work. More technical support for governments, since PPP is a huge leap from their usual business of public service and they therefore need extra help and advice.

There are some technical assistance funds available, but too few, too far between, and providing too little capacity. One interesting approach is to provide funding to existing entities with capacity, with a financial interest in the relevant project. This links the project preparation funding with a clear incentive to bring the project to fruition, and for this reason has achieved some important success in helping to prepare projects.

Do better roads really improve lives?

Eric Lancelot's picture
Also available in: Español | Français | العربية | Português

How can improved roads change peoples’ lives? How much do people benefit from road projects? Answering these seemingly simple questions is, in fact, much trickier than it appears.

We recently concluded an impact evaluation to measure the socio-economic impacts of World Bank-financed municipal road improvements on poor rural households in the state of Tocantins, Brazil. After 10 years of study, what were the results and lessons learned? And how did we go about conducting the evaluation?

The study followed a methodology traditionally used in impact evaluations in the social sector and was based on a precedent in Vietnam. Throughout the state, one of the least-developed and least-populated in Brazil, most municipal roads are unpaved with inadequate maintenance. The World Bank’s municipal roads project helped construct 700 concrete bridges and 2,100 culverts crossing rivers and streams, providing year-round access to remote populations that once couldn’t access municipal centers during rainy season.

The anticipated result chain of the project was as follows: improvement of physical accessibility would contribute to increase travel demand to markets, schools and health services. This would, in turn, contribute to improved education, better health and increased business opportunities. Finally, it would result in long-term household income growth.

Our study aimed at measuring these impacts through a “difference in differences with matching,” a method that compares a treatment group (population benefiting from the interventions) and a control group (population that does not), while ensuring similar socio-economic characteristics (or comparability) between groups. An “instrumental variables estimator” was then used to confirm the robustness of the results.

The results show positive socio-economic impacts to rural residents, as well as provides for several policy implications:

​Five secrets of success of Sub-Saharan Africa’s first road PPP

Laurence Carter's picture
A view of the Dakar-Diamniadio toll road.

Why is Senegal’s Dakar-Diamniadio toll road, which opened on time and on budget in August 2013, so successful? The road has dramatically improved urban mobility around Dakar, reducing commute times between the city and its suburbs from two hours to less than 30 minutes.  
 
Building on this positive experience, in 2014 the Government of Senegal awarded a further concession to extend the motorway to connect it to Dakar’s new Blaise Diagne International Airport. Excluding South Africa, this is the first greenfield road PPP in sub-Saharan Africa. What lessons can we draw? 
  1. Political commitment. The Government of Senegal set the project as a priority. The first driver on the road was the President – who paid the toll. But commitment alone isn’t enough; it needs to be turned into action by government agencies. An intra-agency coordinating committee was set up. The National Agency for the Promotion of Investments (APIX) oversaw the preparation of the concession. The Public Private Infrastructure Advisory Facility (PPIAF) supported APIX with technical assistance, including the design of a framework for the oversight of the project.
  2. Toll plaza along the road
    Consensus-building and stakeholder engagement.  Part of PPIAF’s US$250,000 grant to the Government of Senegal helped to pay for seminars with stakeholder groups to discuss structuring options for the road and socio-economic drivers of the willingness to pay. The final structure chosen involved a relatively low toll, with an upfront contribution by the government to the cost, with the concessionaire taking full construction, operating and traffic risk. The combination of careful outreach to stakeholders, a fairly low toll, significant time savings and a well-maintained road meant that the first toll road in the country was accepted by the population. In addition, the fact that there is a free alternative road helped the Government and other stakeholders point out that motorists could always choose to use the other route.
  3. Experienced concessionaire with strong commitment to Senegal. The concessionaire, the Eiffage Group is one of Europe’s leading construction and toll road operating companies, with a long history of involvement in, and commitment to, Senegal. Eiffage, through the special purpose company set up to construct and operate for 30 years the road, SENAC S.A., ensured that the road was constructed and is being operated to a high standard, on time and within budget.  

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