Launching Public Private Partnerships for Highways in Transition Economies

In many countries the private sector has
been involved in financing infrastructure through
concessions under a public-private partnership (PPP)
program. PPP schemes, however, are somewhat underutilized in
transition economies, where the potential financing gaps are
significant and growing, and there seems to be an enormous
potential for more private sector involvement in the
financing and operation of highway assets in these
countries. Institutions such as the World Bank can
contribute to enhance private financing of road
infrastructure through greater use of their guarantee power,
in addition to supporting, when required, the public sector
contribution to the construction cost of a PPP project
through loans. Partial risk guarantees are particularly
relevant in the context of seeking more private involvement
in the financing of road infrastructure. This paper reviews
potential applications of partial risk guarantees, the
required legal framework (for example, concession law) for
attracting private capital for PPP schemes, possible steps
for a country to launch a program of private participation
in highways, the concept of greenfield and road maintenance
concession programs, and the treatment of unsolicited
proposals. It also summarizes potential applications of the
World Bank Toolkit for PPP in Highways as an instrument to
help decision-makers and practitioners to define the best
PPP approach for a specific country.