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How do we help cities breathe better? Introducing the Clean Bus Project

Kavita Sethi's picture
Buses, cyclist, and car traffic in Santiago de Chile. Photo: Claudio Olivares Medina/Flickr
Earlier this month, Santiago de Chile took delivery of 100 brand-new electric buses. The event was a first in the region, and impressive images of the state-of-the-art buses driving in convoy toward their new home in Chile’s capital city were shared by global media. These buses are part of a broader effort to tackle smog and revolutionize the city’s public transport system. By 2022, Chile aims to increase the number of electric vehicles in the country tenfold, which would put it in the vanguard of clean mobility in Latin America and the Caribbean (LAC), and amongst developing countries worldwide. These changes are expected to help the country meet its Nationally Determined Contributions (NDCs) target, set in the wake of the Paris Agreement on climate change. The target calls for a 30% reduction in GHG emissions per unit of GDP by 2030, with transportation being one of the main sectors for mitigation.

The story of Santiago, however, remains an exception in the region. Though Latin American countries, as signatories to the Paris Agreement, have signaled their concrete intention to embrace a low-carbon future, the transition to low and zero-emissions vehicles has been slow. To better understand the challenges in accelerating the adoption of clean technologies in LAC, the World Bank has recently implemented the Clean Bus project, funded by the NDC Support Facility, a contribution to the NDC Partnership.

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?