RecondOil | Flickr
Regional trade in electricity and other energy products can be a powerful force for market integration and sustainable development. In the Arab world, there are great potential benefits from increasing electricity trade beyond its current, very low level. The potential shared value of trade in electricity in 2020–2030 is estimated at $12 billion. We can expect even greater savings, about $44 billion, from more optimal power systems operation, with a major role for gas as the main fuel for power generation, displacing expensive liquid fuels.
Legenda | Shutterstock
This is one in a series of blogs by Jeff Delmon using the metaphor of marriage (or divorce) to explore the dynamics of public-private partnerships (PPPs) as relationships created between two parties.
In that context, the task at hand for the Sustainable Mobility for All initiative (SuM4All) was clear: How can we work with decision-makers and the international community to transform the conversation, harness the full potential of these emerging solutions, and take on the world’s most pressing mobility issues?
To tackle these challenges, the initiative decided to focus on three essential steps.
- inclusive transport
- Sustainable Development
- infrastructure financing
- transport financing
- rural access
- transport accessibility
- road safety
- safe transport
- green mobility
- low-carbon transport
- green transport
- international cooperation
- Global Engagement
- sustainable mobility
- sustainable transport
- Sustainable Communities
- Urban Development
- Law and Regulation
- Information and Communication Technologies
- Global Economy
- Financial Sector
- Climate Change
For that reason, our interventions often have a dual goal: supporting high quality infrastructure, and, at the same time, supporting institutions’ efforts to modernize and become more efficient. That institutional development sometimes comes in the form of stand-alone project components that focus on modernizing processes, governance, and skills. But in other cases, infrastructure investment projects can also provide opportunities to initiate important institutional changes.
This is often the case with civil works contracts, and the Tamil Nadu State Road Sector project in India is illustrative of how contracting strategies implemented with Bank support helped a highway agency enhance its implementation capacity, the efficiency of its expenditure, quality of infrastructure, and system sustainability through significantly improved asset management.
It takes a lot to do a first Public-Private Partnership (PPP) well. In the past 12 months, we witnessed the successful financial close of two landmark PPPs: the Tibar Bay Port PPP—a first for Timor-Leste, one of the youngest countries in the world—and the Kigali Bulk Water project in Rwanda, considered the first water build-operate-transfer project in Sub-Saharan Africa.
To make these projects happen, deal teams, sponsors, and financiers did outstanding work in difficult environments. The Public-Private Infrastructure Advisory Facility (PPIAF) also earned some bragging rights and a share of the battle scars along with these actors.
Tomas Castelazo | Wikimedia Commons
The Colombian magazine Dinero, one of the most respected economic publications in Latin America, recently published a story about a World Bank study that placed Colombia as the second most competitive country in the world—behind a tie between Great Britain and Australia—to finance infrastructure projects under the public-private partnership model (known as PPPs). This score (83 points out of 100) was also shared by Paraguay and the Philippines.
At first glance, this is a virtuous recognition—at least on paper. However, in daily practice in the Latin American region, like most emerging economies, the administrative complexity of government bodies still presents enormous challenges that demand immediate attention if PPPs are to reach their full potential. Getting this right would truly integrate the PPP model into the economic and social development engine required to compete in a globalized economy.
Recently, I published a book about infrastructure public-private partnerships (PPPs) in the most challenging developing countries—a private sector perspective on what is required to bring investment and expertise to partner with governments in providing vital infrastructure services.
There is already a substantial body of work on the potential of PPPs and how to design, finance, and implement them—even in countries where there are limited legal and regulatory frameworks on which to build. What compelled me to write my book is the urge to share, as a practitioner over two decades in some of the most challenging markets, common pitfalls I’ve seen and what appear to be the critical elements of success in creating successful and replicable PPPs.
In a previous blog, I used the metaphor of marriage to explore the dynamic of public-private partnerships (PPPs) as relationships created between two parties with often very different expectations and methods of communication.
Today, we explore PPP cancellations, the what and why— further stretching the marriage metaphor.
The worst reconciliation is better than the best divorce – Miguel De Cervantes Saavedra
BRJ INC | Flickr
In the 18th century, muskets were produced by skilled craftsmen, one piece at a time. Each component was individually forged, filed, and worked—like a piece of art—until they could all be put together into a single weapon.
Today, the limitations of this approach are apparent. The cost and time required to produce each musket were high, and replacement parts had to be made by hand. This method was replaced by production with interchangeable parts in the early 19th century, a process advanced by Eli Whitney, an inventor who produced arms for the U.S. government.
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.