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infrastructure

Breathing new life into power utilities through debt restructuring tools

Teuta Kaçaniku's picture


Photo: Raymond Ward | Flickr Creative Commons

Sector reform is a familiar concept for anyone working in the energy sector, particularly in developing countries. Typically, reforms involve measures such as building an institutional framework that allows for an independent regulator, improving the operational efficiency of utilities (for example, by unbundling vertically-integrated utilities), creating an environment for private sector participation, and last but not least, introducing tariffs that reflect costs. All these measures are designed with one goal in mind: to put the sector on a sustainable path and improve the quality of service for end-users.

While acknowledging the many benefits that sector reforms can bring, one issue we continue to face is the poor financial state of key power utilities. In other words, a lack of creditworthiness. Often, their lack of financial creditworthiness is the most critical obstacle to implementing investment programs. This makes utilities even more dependent on continuous government subsidies.

How do city leaders get things done? Learning from mayors in Japan

Sameh Wahba's picture
Picture of the Competitive Cities Technical Deep Dive participants enjoying a walk through the Minato Mirai 21 area (with the Cosmo Clock in the background), which aims to concentrate high-value added activities and a high quality of life in an integrated urban core in downtown Yokohama. Photo Credit: TDLC
The task of mayors and city leaders is no longer limited to providing efficient urban services to their citizens. Job creation is at the forefront of the economic development challenge globally.

Cities need jobs and opportunities for their citizens and the means to generate tax revenues to fund projects that meet their populations’ growing demand for basic services. The WBG flagship report on Competitive Cities outlines how creating jobs in urban areas – urgently but also at scale– is essential.
 
In November, 2017, we spent a week with approximately 30 city and national government officials and policymakers from several countries, including Argentina, Chile, Croatia, Egypt, Ethiopia, Malaysia, Philippines, Romania, South Africa, Tunisia and Uganda. These leaders represented diverse cities across the world, all with a common objective – how to make their cities and regions more competitive?

Many were dealing with a fragmented institutional landscape, often with overlapping jurisdictions – necessitating clarity of institutional circuits and processes. Some struggled to coordinate economic development strategies with private sector. Lack of adequate sub-national socio-economic data to drive evidence-based policy making compounded issues. City leaders are not looking for a lesson in theory – but evidence of what works and what doesn’t, and practical, implementable examples of how to get things done.
 
We spent the week as part of a Technical Deep Dive, studying and living the experience of two exceptional Japanese cities - Yokohama and Kobe. These cities have dealt with:
  • population influx,
  • industrialized at a rapid pace,
  • responded to environmental challenges,
  • reached the technological frontier,
  • undergone a housing bubble,
  • and even went through a major disaster (the Kobe earthquake) and recovered from it.

Energy challenges in the Kyrgyz Republic: It’s time to act!

Zamir Chargynov's picture
Last week, a technical failure occurred at Bishkek’s Heat and Power Plant, leaving parts of the capital city temporarily without power and heat supply. People residing in buildings connected to the district heating system experienced very cold and uncomfortable conditions, made worse by the exceptionally harsh winter this year. While the specific causes of the incident are still being investigated, it seems clear that old equipment at the Plant which is being operated well beyond its shelf-life was behind the failure.

Bishkek Heat and Power Plant

How an online platform helps drive infrastructure in developing countries

Catherine Workman's picture


Photo: Free-Photos / Pixabay Creative Commons

In order for investors to see the potential in developing long-term attractive infrastructure assets, projects must be well prepared. The lack of such primed projects is a major obstacle for ramping up global infrastructure, particularly in developing and emerging economies.

This is one of the priorities for the G20, as Argentinean President Mauricio Macri emphasized in December 2017: "Infrastructure for development" will be one of the key issues of focus during the country's G20 Presidency and it will "…seek to develop infrastructure as an asset class by improving project preparation."

Maximizing finance for sustainable urban mobility

Daniel Pulido's picture
Photo: ITDP Africa/Flickr

The World Bank Group (WBG) is currently implementing a new approach to development finance that will help better support our poverty reduction and shared prosperity goals. This crucial effort, dubbed Maximizing Finance for Development (MFD), seeks to leverage the private sector and optimize the use of scarce public resources to finance development projects in a way that is fiscally, environmentally, and socially sustainable.
 
There are several reasons why cities and transport planners should pay close attention to the MFD approach. First, while the need for sustainable urban mobility is greater than ever before, the available financing is nowhere near sufficient—and the financing gap only grows wider when you consider the need for climate change adaptation and mitigation. At the same time, worldwide investment commitments in transport projects with private participation have fallen in the last three years and currently stand near a 10-year low. When private investment does go to transport, it tends to be largely concentrated in higher income countries and specific subsectors like ports, airports, and roads. Finally, there is a lot of private money earning low yields and waiting to be invested in good projects. The aspiration is to try to get some of that money invested in sustainable urban mobility.

Strategies that work: New South Wales leads infrastructure development in Australia

Mar Beltran's picture


Photo: Dylan's World / Flickr Creative Commons

A decade before the financial crisis, Australia was a bastion of infrastructure successes. The country’s four major airports (Melbourne, Perth, Brisbane and Sydney) were privatized. Numerous greenfield projects were also launched, for example, extensive highway construction, and new projects were continually added to the pipeline.
 
Some of these new projects, however, faced significant difficulties: some were constructed without robust performance data, leading to overambitious forecasting and overaggressive financial structures. In part, this led Australia to suffer multiple high-profile defaults and brought the country’s infrastructure project pipeline to a halt.
 
But, today, Australia is displaying signs of promise once again. And one state, in particular, is among the developed world’s GDP growth outliers: New South Wales (NSW). The state’s economic growth has reached 3.5%, outstripping the country’s average rate of 2.8%, and even the G20 average (which stands at 3%). As such, NSW’s infrastructure model has likely had a multiplier effect on economic activity—and has been identified as a potential playbook for other jurisdictions.

How PPIAF leveraged $17.1 billion for infrastructure by focusing on the critical upstream

François Bergere's picture


Photo: BrilliantEye | iStock

As the only global facility specifically dedicated to reinforcing the legal, institutional and policy underpinnings of private sector participation in infrastructure—which we call the critical upstream—we at the Public-Private Infrastructure Advisory Facility (PPIAF) realize we have a key responsibility to developing countries.

That responsibility is to help client governments unlock their potential by de-risking investments and creating an enabling environment for private sector participation, itself a condition to achieving the Sustainable Development Goals and climate-smart objectives. As such, PPIAF fits neatly into the new Maximizing Financing for Development (MFD) approach to crowd in the private sector, an initiative launched by the World Bank Group and other multilateral development banks last year.

Can Islamic finance unlock funds for development? It already is

Amadou Thierno Diallo's picture

Also available in  العربية | Français



Two years in the making, last week the Islamic Development Bank Group (IsDBG) and the World Bank Group officially launched the landmark report Mobilizing Islamic Finance for Infrastructure Public-Private Partnerships at a discussion broadcast online from Washington, D.C. We illustrated that, through partnerships, the power of Islamic finance can be instrumental in unlocking financial resources necessary to meet the tremendous demand for critical infrastructure.
 
In fact, infrastructure PPPs funded with Islamic finance have proliferated in the Middle East, and have flourished in other countries throughout Africa and Asia. Both of our institutions are committed to leverage our competitive advantages, achieve effective interventions, and yield measurable results in scaling up and broadening the use of Islamic finance.

Infrastructure & Africa’s development—the PPP imperative

Fida Rana's picture


Photo: CIFOR | Flickr Creative Commons 

Africa is a continent rich in natural resources and boasts a large young, ambitious, and entrepreneurial-minded population. Harnessed properly, these endowments and advantages could usher in a period of sustained economic growth and increased well-being for all Africans.
 
However, a lack of modern infrastructure is a major challenge to Africa’s economic development and constitutes a significant impediment to the achievement of the Sustainable Development Goals.
 
According to a recent report by the World Bank, there are varying trends in Africa’s infrastructure performance across key sectors and regions. In telecommunications, Sub-Saharan Africa has seen a dramatic improvement in the quantity and quality of infrastructure, and the gains are broad-based. Access to safe water has also risen, with 77% of the population having access to water in 2015, from 51% in 1990. In the power sector, by contrast, the region’s electricity-generating capacity has changed little in more than 20 years. At about 0.04 megawatts per 1,000 people, capacity is less than one-third of that of South Asia, and less than one-tenth of that of Latin America and the Caribbean.

Guarantees light the way for clean energy through renewable auctions

Arnaud Braud's picture


Photo: Scaling Solar project in Zambia

What is a common thread between Argentina, Maldives, and Zambia? In each of these countries, the World Bank provided guarantees to support transparent auctions for renewable energy. Through these, I have seen how the Bank’s involvement helped increase private investors’ confidence, attract world-class developers, and ultimately reduce tariffs.

Drawing on 10 years of diverse experience in the power sector in both public and private organizations, my role is to help bridge the divide between public and private parties and help each side better understand the other. The World Bank is ideally positioned for this. Both sides understand the World Bank carries out a detailed due diligence and ensures the auction meets international standards. Both sides appreciate the World Bank will be an honest broker if issues arise. Because of its long term and continuous involvement in our client countries, the World Bank can help identify and solve issues early on. As such, no World Bank project-based guarantee has ever been called.


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