A recent report –
http://ppi.worldbank.org/features/September2009/200909PPIFinancialCrisisImpact.pdf – by the Public-Private Infrastructure Advisory Facility, tracking trends in private participation in infrastructure projects in emerging markets, reported that investments in new projects recovered in the first half of 2009.
At $49bn, the level of investment in new projects was slightly above that of the first half of 2008. By number of projects, however, investment activity was down by 20% in the first half of 2009 compared with the same period in 2008.
The majority of the investment occurred in Brazil, India and Turkey, and was driven primarily by large ventures. Most projects that raised financing in the first half of 2009 did so through club deals rather than syndications, which had been the norm until the first half of 2008.
By region, Latin America and South Asia attracted the highest levels of investments: $14bn and $18bn, respectively, in the first half of 2009. Investment activity in sub-Saharan Africa was $900m in the first half of 2009.
The upturn should not mask the fact that the crisis is continuing to affect investment in new projects, with many enterprises delayed and some even being cancelled. But thanks to the energy sector, investments in infrastructure overall are showing signs of revitalisation.
Some 42 energy projects with $36bn in investment reached closure in the first half of 2009, an increase of 39% compared with the first half of 2008.
Still, investment in energy initiatives remains below pre-crisis levels. Transport was the sector most severely affected by the crisis, with investment reaching just $10bn in the first half of 2009, a decline of 45% compared with the first half of 2008. (The number of projects was also down by 30%.)
The report points out that despite hardship as a result of the crisis, developing country governments remain committed to public-private partnerships and privatisation programmes.
Local banks and multilateral development finance institutions continued to offer critical project financing. However, governments have also had to restructure infrastructure projects in order to improve their financial viability.
Infrastructure sponsors also had to look for new sources of private financing, for example, by listing infrastructure projects in local stock exchanges or using bond markets for large projects.
- Kosovo has launched a 41st wave of privatisations.
- Proceeds from privatisation for Turkey next year are expected to be sizeable and could surpass the target of $7bn.
- Poland has announced the sale of several companies by auction and proceeds from privatisation are expected to reach 7.4bn zlotys ($2.7bn) this year.
- Sierra Leone is proceeding with the privatisation (concession) of its ports terminal.
- India has approved a plan that requires all state-run companies to have 10% of their shares traded publicly. the government is considering reducing its stake in the Steel Authority of India and in NMDC.