Download PPPs - The Bridge Forum Dialogue

European
Investment
Bank
Public-Private Partnerships in Financing and
Providing Infrastructure
Philippe Maystadt
President, European Investment Bank
Presentation at the Bridge Forum Dialogue
Luxembourg, 20 January 2005
Contents

How much has public investment declined?

Have public capital stocks been eroded?

Has lower public investment been offset by PPPs?

Economic pros and cons of PPPs
2
Public Investment in EU and US
5
% of GDP
EU
4
US
3
2
1971
1981
1991
2001
3
Source: OECD
Public Investment in Large EU Countries
% of GDP
6
France
Germany
Italy
UK
5
4
3
2
1
1970
1980
1990
2000
4
Source: OECD
Public Investment in Smaller EU Countries
% of GDP
6
Austria
Denmark
Netherlands
5
Belgium
Finland
Sweden
4
3
2
1
1970
1980
1990
2000
5
Source: OECD
Public Investment in Cohesion Countries
% of GDP
6
Greece
Portugal
Ireland
Spain
5
4
3
2
1
1970
1980
1990
2000
6
Source: OECD
Public Capital Stock in Large EU
Countries
1970 = 100
240
France
220
Germany
Italy
UK
200
180
160
140
120
100
1970
1980
1990
2000
7
Source: Kamps (2004)
Public Capital Stock in Smaller EU
Countries
1970 = 100
350
Austria
Denmark
Netherlands
300
Belgium
Finland
Sweden
250
200
150
100
1970
1980
1990
2000
8
Source: Kamps (2004)
Public Capital Stock in Cohesion
Countries
1970 = 100
550
500
450
400
350
300
250
200
150
100
Greece
Portugal
1970
Ireland
Spain
1980
1990
2000
9
Source: Kamps (2004)
“Net Worth”of Governments
Public capital less public debt (% of GDP)
60
40
1981
2001
20
0
-20
-40
-60
-80
AT BE DK FI FR DE GR IR
IT NL PT SP SW UK
10
Source:Kamps (2004), OECD
Characteristics of PPPs

Serves a public policy objective

Long-term arrangement

Private finance and ownership of asset

Risk and rewards shared
11
PPPs in Relation to Public Investment
Signed value of PPP contracts (stock) to
public investment (flow), average 1995-2003 (%)
35
30
25
20
15
10
5
0
LA
GR
IR
IT
NL
Source: ProjectWare, HM Treasury, OECD
PT
SP
UK
12
Geographical Distribution of PPPs
Signed value of PPP contracts, 1995-2003
48%
UK others
UK (LU)
Portugal
Italy
Greece
Spain
Netherlands
Others
23%
13
Source:ProjectWare, HM Treasury
Sectoral Distribution of PPPs, Non-UK
Signed value of PPP contracts, 1995-2003
Transport
Water and Sewage
Defence
Education
Hospital
Others
14
Source:ProjectWare
Sectoral Distribution of PPPs, UK
Signed value of PPP contracts, 1987-2004
12%
CTRL
London Underground
other transport
health
defence
education
police and prisons
others
7%
9%
37%
11%
8%
15
Source:HM Treasury
Size Distribution of PPP Projects
Number of projects by size (mill €)
100
494
Non-UK
UK
80
60
40
20
0
0-75
75-150
150-750
Source: ProjectWare, HM Treasury
750-1500
>1500
16
Economic Pros and Cons of PPPs
Pros: higher cost efficiency from...

Private ownership of infrastructure asset

Bundling and life-cycle planning

Sharing of risks and rewards
17
Economic Pros and Cons of PPPs
Cons of PPPs:

Cost savings may reduce service quality

Transaction costs

Institutional and administrative capacity
requirements
18
Macroeconomics of PPPs

Accounting treatment

Do PPPs boost economic growth?
19
Experience with PPPs

Construction on-time and on-budget

High and underestimated bidding and negotiation
costs

Key success factors:
 Competitiveness of bidding process
 Appropriateness of risk sharing
 Public sector’s capacity to manage
20
EIB and PPPs
Sectoral distribution of EIB’s PPP portfolio
6%
39%
7%
17%
22%
Source:EIB
Roads
Tunnels, bridges
Urban trans., devel.
Airports
Railway
Sociasl infrastructure
Water
Energy
21
EIB and PPPs
Geographical distribution of EIB’s PPP portfolio
24%
UK
Portugal
Spain
Greece
Denmark
Germany
Netherlands
Poland
Sweden
Ireland
Austria
19%
22
Source:EIB
European
Investment
Bank
Public-Private Partnerships in Financing and
Providing Infrastructure
Philippe Maystadt
President, European Investment Bank
Presentation at the Bridge Forum Dialogue
Luxembourg, 20 January 2005