Municipal Finance Practicioners

Discussion » Sub-National Public-Private Partnerships

Sub-National Public-Private Partnerships

Updates:

 

August 30, I have revised the draft to reflect comments that I received from Joshua Gallo and John Probyn. Please see the final version here. The revised key take away is below:

 

    1. Overall annual growth rate of PPP market in developing countries was 10.1%—The PPP market has grown by 10.1% over the last 16 years amounting to $818 billion in investments where the growth in PPP market was driven most by increase investment in the transportation sector followed by the energy sector
    2. Sub-national projects made up 20% of PPP market—Sub-national PPP projects accounted for $163 million of the total PPP investments in developing countries while the national PPP projects made up the rest of the PPP market amounting to $655 billion (80%). The growth rate for national PPP has been relatively steady while sub-national grew unevenly year-on-year.
    3. East Asia Pacific (EAP) region had the largest share of the sub-national PPP market while it lagged behind Latin America and the Caribbean (LAC) region in the national PPP market—EAP region had 39% of annual sub-national PPP market followed by LAC region with 31%, South Asia Region (SAR) with 19%, Europe and Central Asia (ECA) with 7%, Sub-Saharan Africa (SSA) with 3% and Middle East and North Africa (MENA) with 1%. But LAC had much larger share of the national PPP market with 45% of followed by EAP with 19%.
    4. Transportation sector dominated the sub-national PPP market while energy sector dominated the national PPP market—Transportation sector made up 62% of annual average investment in the sub-national PPP market, water and sewerage sector made 20%, and energy made up 18%. Energy sector contributed to 55% of national PPP investment volume followed by 43% of the transport sector.
    5. Brazil, Russia, India and China (BRIC) accounted for 83% of sub-national PPP market and drove majority of its growth—The investment in each region has been primarily driven by one major country, namely, China in EAP, Brazil in LAC, India in SAR, Russia in ECA, South Africa in SSA, Morocco in MENA. The BRIC countries accounted for $8.3 billion or 83% in average sub-national PPP investment annually over the last 16 years.
    6. Build, operation and transfer (BOT) is the most used contract type for sub-national projects among BRIC countries while BROT was most used for national projects—BOT were used for $77 billion (58%) of sub-national investment in BRIC countries and followed by $43 billion (32%) of build, rehabilitate, operate and transfer (BROT) contracts. For national projects in BRIC countries, $120 billion (43%) were BROT projects and $89 billion (32%) were BOT projects.

  

August 24: I have posted the draft report and summary of the main take-away under the Analysis section in bold. Please leave your comments and suggestions. Thank you.

 

 

 

 

 

Dear community members,

 

My name is Yao. I am a summer research analyst at the World Bank.  I am doing a research project on sub-national public-private partnership projects to gauge its market size and market trends. I will use this discussion board to seek comments regarding the research and share the findings and any literatures that might be of interest to the community.

 

Research

 

The focus of the research is to generate a list of sub-national PPP projects and create a sub-national PPP Projects factsheet. 

 

  1. Data

    1. The most challenging task of the project was to obtain solid dataset on PPP projects at sub-national level. After looking around for readily available data on the subject without any success, I used the Private Participation in Infrastructure Database as an base and isolated sub-national projects based on the following criteria:

      1. Keep those transactions that are labeled as local/municipal and state/provincial under the “GovtGrantingContract” between 2000 and 2015

      2. Eliminate any transactions that are labeled as “divesture" and "merchant"
    2. I did a sampling study of those transactions generated in 1.a. to make sure that the projects are indeed sub-national PPP projects. Out of the 90 transactions sampled, 73% were sub-national and 27% were not sub-national. Of those transactions that are not sub-national, majority of them are private transactions in the India power generation sector due to the free market nature of the electricity generation sector in India. If I took these transactions out, the sub-national projects reached 85% of the sample. Thus, I concluded that the PPI database is a good data source on sub-national projects by eliminating electricity generation segment for India on top of the sorting method in I.a.
    3. The full dataset and result can be found under these two links Dataset and Survey Result
    4. I want to share the filtering criteria and result of the sample study with the community to see if there is any comment on the approach or even alternative to obtain similar data
  2. Analysis
    1. I have drafted the report on the subject. I am seeking comments from the communities. Any comments on the draft would be help. Please click here for the draft. Thank you.
    2. The key take away is the following
      1. Overall compound annual growth rate (CAGR) of PPP market in developing countries is 10.1%—The PPP market has grown by 10.1% over the last 16 years amounting to $818 billion in investments where the growth in PPP market was driven most by increase investment in the transportation sector followed by the energy sector
      2. Sub-national projects made up 20% of PPP market—Sub-national PPP projects accounted for $163 million of the total PPP investments in developing countries while the national PPP projects made up the rest of the PPP market amounting for $655 billion (80%). The growth rate for national PPP has been relatively steady while sub-national grew unevenly year-on-year.
      3. East Asia Pacific (EAP) region had the largest share of the sub-national PPP market-- EAP region had 39% of annual sub-national PPP market followed by Latin America and the Caribbean (LAC) region with 31%, South Asia Region (SAR) with 19%, Europe and Central Asia (ECA) with 7%, Sub-Saharan Africa (SSA) with 3% and Middle East and North Africa (MENA) with 1%. 
      4. Transportation sector dominated the sub-national PPP market—Transportation sector made up 62% of annual average investment in the sub-national PPP market, water and sewerage sector made 20%, and energy made up 18%.
      5. BRIC accounted for 83% of sub-national PPP market and drove majority of its growth—The investment in each region has been primarily driven by one major country, namely, China in EAP, Brazil in LAC, India in SAR, Russia in ECA, South Africa in SSA, Morocco in MENA. The BRIC countries accounted for $8.3 billion or 83% in average sub-national PPP investment annually over the last 16 years.
      6. Build, operation and transfer (BOT) is the most used contract type among BRIC countries—BOT were used for $77 billion (58%) of sub-national investment in BRIC countries followed by $43 billion (32%) of build, rehabilitate, operate and transfer (BROT) contracts.

 

 

 

Literature

 

Most of the literature that I have read so far are either country specific or sector specific. I have not seen any writing on public-private partnership at sub-national level. I post those literature such as PPP policy framework and PPP development of a particular sector below. Hopefully, those resources would be useful to others in the group. I also hope the group can share any literature on subject as well.

 

  1. PPP Policy Framework by country

 

    1. Indonesia—Public-Private Partnership Governance: Policy, Process and Structure
    2. Honduras—Fiscal Implication of Public Private Partnership in Honduras
    3. Albania—PPP Overview in Albania
    4. Turkey—The Role of Privatization & Public Private Partnership in Infrastructure Development
    5. Korea—Public-Private Partnership Infrastructure Projects: Case Studies from the Republic of Korea

 

  1. Sector Policy by country

    1. Mexico—Framework Conditions for Private Sector Participation in Water Infrastructure in Mexico

    2. Brazil—Framework Analysis for Public-Private Partnerships in Irrigation
    3. Armenia—Armenia Takes on Water: Public-Private Partnerships in Water Sector
    4. Colombia—Social Policies and Private Sector Participation in Water Supply

 

  1. PPP database

    1. India: maintains a comprehensive database on PPP projects

      https://infrastructureindia.gov.in/

  

 

Message was edited by: Yao Shi Uploaded the draft report on the subject and seek comment from the communities.

  • Dear Yao, thank you for sharing this excellent draft! A few comments for your consideration:

     

    • It would be great to add a brief appendix (or a box in the main text) with the list of the top subnational transactions by volume, and perhaps a separate list with the top 10 projects by Region.
    • In your Executive Summary, consider stating the objectives of the research. What will the reader find in this report?
    • Consider moving highly technical concepts such as "CAGR" from the main text to a footnote or so.
    • When you present the largest share of subnational PPP transactions (for example, paragraph 1.3), it may be useful to specify which region has the largest share relative to their overall PPP volume of investments, not just the largest volume compare to the volume in other regions. This will highlight instances where subnational PPPs are actually more "developed" relative to national PPPs.
    • When you say "BOT is the most used contract type among BRIC countries" (paragraph 1.6), please specify if you're referring to subnational PPPs and whether this is indeed different than what you would find at the national level.
    • I would suggest adding a link to the PPI Database you've used for this analysis, and a bit more explanations on the filtering criteria applied for this research.

     

    Looking forward to your final report, and thank you again for engaging with our community on this important work!

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