Public-Private Partnerships in Financing and Providing ...

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Public-Private Partnerships in Financing and Providing ...

  1. 1. 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
  2. 2. 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
  3. 3. Public Investment in EU and US % of GDP 5 EU 4 US 3 2 1971 1981 1991 2001 3 Source: OECD
  4. 4. 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
  5. 5. Public Investment in Smaller EU Countries % of GDP 6 Austria Belgium Denmark Finland 5 Netherlands Sweden 4 3 2 1 1970 1980 1990 2000 5 Source: OECD
  6. 6. Public Investment in Cohesion Countries % of GDP 6 Greece Ireland Portugal Spain 5 4 3 2 1 1970 1980 1990 2000 6 Source: OECD
  7. 7. Public Capital Stock in Large EU Countries 1970 = 100 240 France Germany Italy UK 220 200 180 160 140 120 100 1970 1980 1990 2000 7 Source: Kamps (2004)
  8. 8. Public Capital Stock in Smaller EU Countries 1970 = 100 350 Austria Belgium Denmark Finland Netherlands Sweden 300 250 200 150 100 1970 1980 1990 2000 8 Source: Kamps (2004)
  9. 9. Public Capital Stock in Cohesion Countries 1970 = 100 550 Greece Ireland 500 Portugal Spain 450 400 350 300 250 200 150 100 1970 1980 1990 2000 9 Source: Kamps (2004)
  10. 10. “Net Worth”of Governments Public capital less public debt (% of GDP) 60 1981 2001 40 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
  11. 11. Characteristics of PPPs Serves a public policy objective Long-term arrangement Private finance and ownership of asset Risk and rewards shared 11
  12. 12. 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 PT SP UK 12 Source: ProjectWare, HM Treasury, OECD
  13. 13. Geographical Distribution of PPPs Signed value of PPP contracts, 1995-2003 UK others UK (LU) Portugal Italy 48% Greece Spain Netherlands Others 23% 13 Source:ProjectWare, HM Treasury
  14. 14. Sectoral Distribution of PPPs, Non-UK Signed value of PPP contracts, 1995-2003 Transport Water and Sewage Defence Education Hospital Others 14 Source:ProjectWare
  15. 15. Sectoral Distribution of PPPs, UK Signed value of PPP contracts, 1987-2004 12% CTRL 7% London Underground other transport health defence 9% education police and prisons others 37% 11% 8% 15 Source:HM Treasury
  16. 16. Size Distribution of PPP Projects Number of projects by size (mill €) 100 494 Non-UK UK 80 60 40 20 0 0-75 75-150 150-750 750-1500 >1500 16 Source: ProjectWare, HM Treasury
  17. 17. 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
  18. 18. Economic Pros and Cons of PPPs Cons of PPPs: Cost savings may reduce service quality Transaction costs Institutional and administrative capacity requirements 18
  19. 19. Macroeconomics of PPPs Accounting treatment Do PPPs boost economic growth? 19
  20. 20. 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
  21. 21. EIB and PPPs Sectoral distribution of EIB’s PPP portfolio 6% Roads 7% 39% Tunnels, bridges Urban trans., devel. Airports Railway Sociasl infrastructure 17% Water Energy 22% 21 Source:EIB
  22. 22. 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
  23. 23. 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

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