session 1 sector perspective on ppps l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Session 1: Sector Perspective on PPPs PowerPoint Presentation
Download Presentation
Session 1: Sector Perspective on PPPs

Loading in 2 Seconds...

play fullscreen
1 / 20

Session 1: Sector Perspective on PPPs - PowerPoint PPT Presentation


  • 104 Views
  • Uploaded on

Session 1: Sector Perspective on PPPs. Vickram Cuttaree The World Bank St. Petersburg – May 22, 2008. Objective of the presentation. Provides an overview of PPP trends in selected infrastructure sectors Analysis includes review of investment in other countries and use of specific structures

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Session 1: Sector Perspective on PPPs' - gitel


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
session 1 sector perspective on ppps

Session 1: Sector Perspective on PPPs

Vickram Cuttaree

The World Bank

St. Petersburg – May 22, 2008

objective of the presentation
Objective of the presentation
  • Provides an overview of PPP trends in selected infrastructure sectors
  • Analysis includes review of investment in other countries and use of specific structures
  • Some guidance will be given on the selection of structure with the understanding that it ultimately remains a project-specific decision
although ppp investment is mostly in telecom and energy solid growth is seen in transport
Although PPP Investment is mostly in Telecom and Energy, solid growth is seen in Transport
  • PPP Investment has remained mainly in Telecom since 1990 (almost 50% of total investment)
  • Most of the growth in infrastructure between 1990-99 and 2000-06 was driven by Telecom and Transport
    • Telecom average yearly PPP investment increased by 118% between 1990-99 and 2000-06
    • Transport yearly investment increased by 34% between the same two period
    • Growth in other infrastructure sectors more limited (5% in Energy and 10% in Water & Sanitation)
slide4
Choice of Structure has implication on level of investment and required return for the private partner

As risk increases…

…cost of debt and equity increases…

…need for higher project returns increases in order to be financeable.

slide6
Concession and Greenfield are mainly in Transport and Energy whereas Lease/Mgt dominate Water Sector

Source: World Bank and PPIAF, PPI Projects database.

ppp arrangements differ also across regions
PPP arrangements differ also across regions

Projects

Source: World Bank and PPIAF, PPI Projects database.

how to match structure with sector project
How to match structure with sector/project
  • Although some structures are used more in specific sectors, it is difficult to recommend a specific structure for a given type of project
  • Investment trends and experience show the structure used depend on the sector, Government/City objectives and project characteristics
  • The choice of structure is decided during (pre)-feasibility studies
government city objectives will guide choice of ppp form
Government/City objectives will guide choice of PPP form

Key: $$$ to a large extent; $ to a small extent; X not usually.

establishing frameworks extent of tasks under different types of ppp structures
Establishing frameworks: Extent of tasks under different types of PPP structures

Concessions/Greenfield often require extensive work on the legal/regulatory framework

These activities should take place as early as possible, and during the feasibility stage

sector characteristics transport
Sector characteristics: Transport
  • Public ownership and operation common as transport services are considered public goods
  • Infrastructure involves substantial planning, safeguards issues and upfront investment
  • Cost recovery difficult as many users without contractual obligations
    • Roads: users have often low willingness to pay
    • Airports, ports, railways: importance of reforms before seeking private investment
  • Demand for services is very dependent on Government policy/planning decisions
    • Hence, risky investment for private sector
    • Almost always risk sharing of demand risk or funding
  • Primary PPP arrangement: Concessions/Greenfield
    • BUILD being the driver in BOTs
sector characteristics power
Sector characteristics: Power
  • Private participation linked to industry structure and level of reforms
    • Private ownership common in power generation and often first step in power sector
    • Public often retains distribution as a perceived public good
  • Like in transport, power sector is characterized by important investment and relatively long contracts
  • Primary PPP arrangement: Privatization and Greenfield
sector characteristics water sewage and sanitation wss
Sector characteristics: Water, Sewage and Sanitation (WSS)
  • WSS services have characteristics that create special problems for public policy:
    • Public good and natural monopoly characteristics – customers doubt value for money and resist price increases – below cost-recovery tariffs result
    • Ongoing, long-term investment requirements often ignored – underinvestment
    • Externalities for which individual customers unwilling to pay (eg sanitation and associated reduction in disease control)
    • Assets largely underground; condition difficult to assess (problem for PPP bidders, hard for governments to set appropriate tariffs)
    • Local, provincial and national governments often have overlapping/conflicting responsibilities
  • Government’s biggest challenge is to address these problems and encourage investment to improve quality, lower costs and extend access
  • A variety of PPP models have been tried, in particular:
    • Management contracts
    • BOT/(B)ROT/RLT
    • Affermage/leases
    • Concessions
    • Divestiture
water utilities ppp contracts arrangements 2003 07

Divestitures

Divestitures

(full), 1

(partial), 4

BOT, 4

Management

contracts, 16

RLT, 1

ROT, 36

Leases, 23

BROT, 12

Water utilities PPP contracts arrangements, 2003-07

Greenfield projects

Concessions

BOT = build, operate, transfer. BROT = build, rehabilitate, operate, transfer. ROT = rehabilitate, operate, transfer. RLT = rehabilitate, lease or rent, transfer

Source: World Bank and PPIAF, PPI Project database

conclusion on sector overview
Conclusion on Sector Overview
  • PPP investment in transport has seen a solid increase in recent decade (although total investment mainly in telecom and energy)
  • Choice of structure varies across regions and even within a sector
  • Sector and project characteristics, as well as Government objective will determine the appropriate structure
  • Essential role of feasibility study in confirming the choice of structure
sector perspective on ppp
Sector Perspective on PPP

THANK YOU !!!

Vickram Cuttaree

The World Bank

vcuttaree@worldbank.org