Best Practices in PPP Financing Latin America - e-Institute - World ...

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Best practices in Public-Private Partnerships financing in Latin America efficiencies along the whole project cycle and establish a project history that reduces future costs of financing. In general, three main lessons in PPPs can be drawn: (i) there are some sectors that are easier than others: telecommunications is the sector with more private financing (receiving almost 50% of the investment, even though merely as private financing and not through PPPs) whereas the hardest sector has been water. In between, we find the transport and energy sectors; (ii) investment has been concentrated in a few countries, perhaps associated with the rapid growth experienced in these countries. Conditions need to be fulfilled in order to make these projects more attractive to private investment through PPPs. Perhaps it is associated with the rapid growth experienced in these countries; (iii) the vulnerability revealed by the crisis. Investors now want to invest in safer projects, from a legal and regulatory point of view. In this respect, projects receiving local financing faced the crisis better. Likewise, the WB is interested in having its loans leveraged with other funds, particularly in a world where capital flow is going to be restricted. He pointed out that the problem is not necessarily associated to the lack of financing, but that a worse deficiency is not to have well structured investment projects. Lastly he metioned that the WB has internally organized a team that includes all competencies and skills related to a projects’ life cycle: structuring, financing, management and supervision of the project, and for that purpose, there is now more interaction with the IFC. However, the development of competencies and skills is still a very significant aspect in the WB agenda and in the agenda of its technical team.
Day 1 - FIRST SESSION DAY 1 First Session: Recent trends in PPP financing in Latin America and the Caribbean Lecturer JORDAN SCHWARTZ, Lead Economist, Latin America and Caribbean Region, Sustainable Development Department, World Bank In this session, the main PPP financing trends in LAC were presented. Schwartz pointed out that between 2005 and 2009, the region kept a growing trend in investments made through PPPs. Compared to other regions, LAC was not affected by the global financial crisis. Mainly, projects in Brazil (energy sector) and Panama (the Panama Canal expansion) mitigated the negative effect of the crisis. In the 2000-2010 period, trends showed that the sectors concentrating higher investment volumes in PPPs were energy and transport. In contrast, the sectors with less investment flow were telecommunications, water and sanitation. Brazil and Mexico were the countries that received major infrastructure capital flows. Chile, Colombia and Peru were also favored with such investments. In 2009, investments through PPPs in Brazil represented 2.5% of GDP, while in Chile and Peru investments represented 1.0% and 1.4% of GDP respectively (refer to Table N.1). It is possible to affirm that in sectors such as mining or electricity there is no correlation between risk and direct foreign investment, due to the high returns. However, for infrastructure, higher risk levels involve a lesser participation of the private sector. On this subject, it is worth mentioning that there are countries such as Brazil, Chile, Panama, Peru, Mexico or Colombia, that present country-risk levels lower than those of China and Vietnam. In contrast, other groups in the LAC region are quite above. Most evident is the difference between - 19 -
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