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Public-Private Partnerships in Financing and Providing Infrastructure

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?

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Public-Private Partnerships in Financing and Providing Infrastructure

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  1. 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. 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

  3. Public Investment in EU and US % of GDP EU US Source: OECD

  4. Public Investment in Large EU Countries % of GDP Source: OECD

  5. Public Investment in Smaller EU Countries % of GDP Source: OECD

  6. Public Investment in Cohesion Countries % of GDP Source: OECD

  7. Public Capital Stock in Large EU Countries 1970 = 100 Source: Kamps (2004)

  8. Public Capital Stock in Smaller EU Countries 1970 = 100 Source: Kamps (2004)

  9. Public Capital Stock in Cohesion Countries 1970 = 100 Source: Kamps (2004)

  10. “Net Worth”of Governments Public capital less public debt (% of GDP) Source:Kamps (2004), OECD

  11. Characteristics of PPPs • Serves a public policy objective • Long-term arrangement • Private finance and ownership of asset • Risk and rewards shared

  12. PPPs in Relation to Public Investment Signed value of PPP contracts (stock) to public investment (flow), average 1995-2003 (%) Source: ProjectWare, HM Treasury, OECD

  13. Geographical Distribution of PPPs Signed value of PPP contracts, 1995-2003 Source:ProjectWare, HM Treasury

  14. Sectoral Distribution of PPPs, Non-UK Signed value of PPP contracts, 1995-2003 Source:ProjectWare

  15. Sectoral Distribution of PPPs, UK Signed value of PPP contracts, 1987-2004 Source:HM Treasury

  16. Size Distribution of PPP Projects Number of projects by size (mill €) 494 Source: ProjectWare, HM Treasury

  17. Pros: higher cost efficiency from... Economic Pros and Cons of PPPs • Private ownership of infrastructure asset • Bundling and life-cycle planning • Sharing of risks and rewards

  18. Cons of PPPs: Economic Pros and Cons of PPPs • Cost savings may reduce service quality • Transaction costs • Institutional and administrative capacity requirements

  19. Macroeconomics of PPPs • Accounting treatment • Do PPPs boost economic growth?

  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

  21. EIB and PPPs Sectoral distribution of EIB’s PPP portfolio Source:EIB

  22. EIB and PPPs Geographical distribution of EIB’s PPP portfolio Source:EIB

  23. 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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