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Transport

​Caribbean PPPs come of age: Boot camp-style workshops kick off new approach to partnerships

Luciana Guimaraes Drummond E Silva's picture
Street scene in Delmas, Haiti
“Plantain nu eat like rice” — a Caribbean saying roughly translated as “Make do with what is available to you” — applies to the region’s experience with public-private partnerships (PPPs) as well as to life on the islands. For many decades, implementation of PPPs in the Caribbean has been mixed; government officials and citizens alike have had to “make do” with these results.  

Some partnerships have successfully delivered new or improved roads, ports, airports, bulk water treatment facilities, and electricity generation plants, along with other high-quality infrastructure facilities. However, other promising PPPs faced challenges that were never overcome. ​In many cases, the complexity of the PPP development and implementation process meant long delays in delivering projects; others resulted in questionable value or unexpected costs to governments or consumers. 

To help Caribbean governments fulfill the promise of PPPs to deliver improved infrastructure assets and services, the Caribbean Development Bank (CDB), the Inter-American Development Bank (IDB), the Multilateral Investment Fund (MIF), the World Bank Group (WBG), and the Public-Private Infrastructure Advisory Facility (PPIAF) have created the Caribbean Regional Support Facility. This US$1.2 million program was launched at the High-Level Workshop on Practical Implementation on PPPs in Saint Lucia on June 15.  An important component of its near-term activities, an upcoming series of boot camp-style workshops, will increase technical capacity among Caribbean government officials, offering the depth and breadth that’s been missing from the PPP market.

Crossing the Hindukush mountains in Afghanistan

Luquan Tian's picture
A panoramic view of the Salang Pass in Afghanistan
Panoramic view of the Salang Pass in Afghanistan. Credit: World Bank

The Afghan Government takes full ownership of a new project to rehabilitate the Salang Pass Highway

If you had travelled along the silk route to Afghanistan over a hundred years ago, your caravan would have encountered some formidable mountain terrain.  Crossing the treacherous icy passes was one of the greatest dangers, and could only be undertaken during the summer months.
 
Things did not change much until the 1960s.  That was when the Soviets built the sturdy two-lane Salang highway across the Hindukush mountains and bored a 2.8 km long tunnel at the Salang Pass at 3,400 meters above sea level. The Salang tunnel - the world’s highest road tunnel at that time - was a feat of engineering.

5 questions about road safety in India

Arnab Bandyopadhyay's picture
 
Panoramic view of car jam in India


In the run up to the first hackathon on road safety in India, we caught up with Arnab Bandopadhyay, Senior Transport Engineer at the World Bank and asked him a few questions: 
  • Why is the World Bank focusing on road safety in India?
India’s roads are among the most dangerous in the world. The number of deaths from road accidents has risen sharply over the past decade. More than one million people have lost their lives in the past 10 years alone and another 5.3 million have been disabled or disfigured for life.

While India has less than 3% of the world’s vehicles, it accounts for some 11% of the world’s road deaths. That too, when many such incidents are not documented at all.

Road accidents are not only traumatic for victims and their families but also take a huge economic toll on the country.    They cost an estimated 3% of GDP each year. The large majority of road accident victims are pedestrians, cyclists and motorcyclists - mostly from the economically weaker sections of the society – making road safety a matter of social equity. Promoting road safety is therefore an important national priority.

Protecting Your PPP: Stabilizing partnerships in uncertain times

Waleed Youssef's picture
Uncertainty is inherent in developing and operating complex infrastructure and services projects, and it is for this very reason that government officials seek public-private partnership (PPP) partners to mitigate the most complex of risks. Yet legal and regulatory frameworks, in place for legitimate reasons (especially in emerging markets), often dampen the private sector’s ability to address in an optimal manner the challenges that can and often do arise during the term of a concession.

It is important to distinguish between projects that exceed expectations — and therefore generate greater than expected financial returns to both parties, yet require additional, unanticipated capital investments — and struggling projects where there is an urge by the developer to reduce ongoing investment and maintenance.
 
Istanbul Ataturk Airport. 
Photo: Wikimedia Commons

“Successful PPPs are all alike…”
To paraphrase Tolstoy, successful PPPs are all alike, but every unsuccessful PPP is unsuccessful in its own way.

Successful projects are easier to manage owing to positive cash flows, and could additionally incorporate an obligation by the developer to increase its investment according to certain capacity-related triggers on the basis of floor and ceiling for project returns. This could also be supplemented by sponsor commitments to co-investment or to extend the concession terms based on minimum returns, as well as a sponsor sinking fund to ensure independence from the uncertain and tedious public budgeting process. Very often, concession agreements focus on what to do when things go wrong, but not how to continue to meet demand when things go well, especially toward the end of the concession term.

In India, the great — yet unexplored — potential of inland water transportation

Shivika Singh's picture
Most of us attendees were novices in the area of inland water transportation in India and were curious to know what Arnab Bandyopadhay, Senior Transport Engineer at the World Bank’s India country office would say.

 
Indian waterways
Indian waterways. Photo credit: World Bank


And the gold medal for PPP goes to…Galeão International Airport’s record-setting deal

Isabel Marques de Sá's picture
When the Olympic Games comes to Rio in 2016, new medal-worthy sports will include kitesurfing, golf, and rugby sevens. If the Olympic Committee ever considers including our “sport” – the practice of public-private partnerships (PPPs) – the top medal would surely go to the home-grown Galeão International Airport PPP, which set the 2014 record as the largest PPP deal that closed globally. For this gateway to Rio – which is in the midst of preparing to accommodate more than 10,000 athletes and tens of thousands more visitors for the 2016 Olympics – even the concessions merit global rankings.
 
Image: Wikimedia Commons

Standing by for liftoff
The concession of Galeao International Airport (official name: Rio de Janeiro/Galeão–Antonio Carlos Jobim International Airport) got off the ground in the second round of airport concessions. The first round dates back to early 2012, when the government issued tenders for three major airports: Guarulhos (São Paulo), Viracopos (Campinas) and Brasília.  

In mid-2012, following the successful outcome of these three projects, the Brazilian National Development Bank (BNDES) approached IFC to assist with a second round of airport concessions, including Confins airport (Belo Horizonte) and Galeão (Rio de Janeiro).  IFC teamed up with the Estruturadora Brasileira de Projetos (EBP), a project preparation company owned by some of the biggest Brazilian commercial banks and BNDES. Together, IFC and EBP were responsible for the financial, technical/economic/engineering, and environmental studies. 

Improving Public Investment Management: Spotlight on Ethiopia

Mario Marcel's picture
 
Overview of Addis Ababa, Ethiopia. Photo - Arne Hoel / World Bank
Overview of Addis Ababa, Ethiopia. Photo: Arne Hoel / World Bank


Last month I met with ministers and local officials in Addis Ababa to explore areas where we, at the World Bank, can help build institutional capability in Ethiopia. The trip was an enriching experience, both personally and professionally. It was gratifying to see first-hand the good work and commitment to development exhibited by our staff in the country.

We have had a decade-long engagement with Ethiopia with a successful track-record. Ethiopia has one of the largest World Bank portfolios in the Africa Region (US$6.1 billion in 2014) and the partnership is strong, with a robust future.

During my visit, I gave a lecture at Addis Ababa University on Public Investment Management before an audience of faculty, students, civil society organizations and donors. I shared with them how much public infrastructure investment has done for the country. Ethiopia has the third-largest public investment rate in the world and three times the average for Sub Saharan Africa.

This effort has contributed to growth that has averaged 10.9 percent since 2004—a figure higher than that of their neighbors or low-income countries on average. Infrastructure investment has also been helpful in expanding access to services and in gaining competitiveness, being a large landlocked country. 

​Is infrastructure in emerging markets a good investment?

Laurence Carter's picture
There’s a lot of discussion about attracting more investors to invest in infrastructure in emerging markets. This will be one of the themes of the Financing for Development Conference next week. Last month the PPI Database’s 2014 full year update showed that total investment in infrastructure commitments in emerging markets for projects with private participation in the energy, transport and water and sanitation sectors increased six percent to US$107.5 billion in 2014, compared to 2013.  
 
But what does the evidence tell us about how good those investments might be for investors?
 
One interesting source comes from a Moody’s study based on the performance of over 5,300 projects. This data represents more than 60 percent of all project finance transactions worldwide over 1983-2013. It is broadly representative of worldwide project finance activity by year, industry sector and regional concentration. The data shows that:

Empowering local women to build a more equitable future in Vietnam

Phuong Thi Minh Tran's picture


Vietnam’s economic emergence is perhaps best experienced along its rural roads: more than 175,000 kilometers of pavement, rubble and dirt track extend to two-thirds of the country’s population, including nearly all of the poorest people, who live among its productive farms, lush forests and meandering river valleys.

In recent years, road investments in Vietnam’s rural areas have improved socioeconomic development and promoted gender equity, social participation, improved school attendance, and more inclusive health services to impoverished regions. However, all but a few hundred communes remain off-grid, and infrastructural roadblocks and bureaucratic potholes have delayed the goal of a fully integrated road system.

The World Bank’s Third Rural Transport Project (RTP3) supported a win-win solution: employing ethnic minority women to sustainably manage road maintenance through an innovative participatory approach to local development. This blog entry describes the experience of improving the roads — and women’s lives — in rural Vietnam. Here are some of the lessons we’ve learned along the way:

Lesson 1: Solutions can come from unexpected sources.
The RTP3 task team’s investigation showed that up to a third of the population in Vietnam’s Northern Uplands provinces would be expected to contribute up to 10 percent of their total annual household expenditure to ensure safe passage along local roads — too much for most to afford. Furthermore, even when adequate resources are made available for maintenance, contractors have sometimes been unwilling to work in inaccessible regions for fear of mudslides during the rainy season.

Will the Asian Infrastructure Investment Bank become the new musketeer?

Arturo Ardila's picture
On Monday, China officially launched the Asian Infrastructure Investment Bank (AIIB) in a ceremony with representatives from the bank's 57 founding-member countries. AIIB will have a capital base of US$100 billion, three-quarters of which come from within Asia.
 
Infrastructure is a growing need for Asia,
and collaboration is critical to filling
gaps. Photo: World Bank

At the inaugural ceremony in the Great Hall of the People, Chinese President Xi Jinping reaffirmed the new institution's mission, saying that "Our motivation [for setting up the bank] was mainly to meet the need for infrastructure development in Asia and also satisfy the wishes of all countries to deepen their co-operation."

Indeed, the AIIB is a major piece of China's regional infrastructure plan, which aims to address the huge needs for expanding rail, road and maritime transport links between China, central Asia, the Middle East and Europe. But the AIIB should also represent a huge opportunity for cooperation not only between countries in the region but also with other multilateral development banks.

Our experience working on transport mega-projects co-financed by several multilateral development banks (MDBs) already shows that this collaboration is much needed and critical for the success and viability of mega-projects. The most recent experience with the Quito Metro Line One Project, for example, shows that the co-financing banks – World Bank, Inter-American Development Bank, Andean Development Corporation and European Investment Bank –  brought not only their financial muscle but also their rich and diverse global knowledge and experience.  Incidentally, because of the Quito Metro project, all the MDBs involved in the project were dubbed as the  “musketeers, ” precisely due to the high degree of collaboration and team work that is making this project a success.

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