Did you know? Note 8
Recent transport activity was distributed across regions, but focused in a few countries and supported by government funding
Private activity in transport infrastructure in developing countries reached peak levels in 2005-07, both in terms of new projects and investment commitments. Such activity was more evenly distributed across regions and income groups than during the 1990s, when upper middle income countries accounted for most of the transport activity (charts 1 and 2). Forty-eight low- and middle-income countries implemented new transport projects, though investment remained concentrated in a few countries. The top five countries by number of projects (India, China, Nigeria, Mexico, and Indonesia) accounted for 67% of new projects implemented in 2005–07 while the five countries with the highest investment commitments (China, India, Mexico, Turkey, and Hungary) accounted for 62% of transport investment in that period.
Another feature of recent private activity in transport is the use of government payments — either to complement or entirely
replace revenues from user fees — as a way to make projects more financially viable. At least 13 developing countries provided
government payments to private operators of transport projects in 2005-07. The forms of government payments used vary significantly
across countries and projects (see table). In most cases, however, the amount of government support was determined through the
competitive tenders in which the concessionaire was selected. In other cases, the amount of government support was defined by the
government prior to the tender. With the exception of four projects, government payments have been used only in road projects.
The exceptions are South African Gautrain light rail concession, which was granted a US$3 billion government subsidy; Ecuadorian
Manta port concession, which obtained a US$55 million subsidy; Indian GMR Hyderabad International Airport BOT, which received
a US$25 million capital grant; and the Peruvian Regional Airport Network Group I concession, which was granted government payments
required to cover actual gap between project revenues and cost.
Number of private transport projects with government payments, 2005-07
Countries |
Transport projects |
Form of government payment |
with government payments |
Total |
Brazil |
1 |
4 |
Fixed periodic payments to cover expected gap between revenues and costs |
Ecuador |
2 |
5 |
Fixed subsidy amount to cover part of project costs |
Chile |
1 |
3 |
Fixed subsidy amount to cover additional project costs |
Colombia |
1 |
7 |
Fixed subsidy amount to cover part of project costs |
Hungary |
1 |
2 |
Fixed annuity payments to cover expected construction and operational costs |
India |
50 |
97 |
Fixed capital grants to cover expected gap between revenues and costs
Availability payments (annuities) to cover the expected construction and operational costs
Fixed subsidy amount to cover part of project costs |
Mexico |
7 |
21 |
Shadow tolls
Availability payments (annuities) to cover expected construction and operational costs
Fixed subsidy amount to cover part of project costs |
Peru |
8 |
10 |
Variable payments to cover actual gap between project revenues and cost
Fixed government payments to cover expected construction and operational costs. |
South Africa |
1 |
1 |
Fixed subsidy amount to cover most of project costs |
Total |
72 |
150 |
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Source: World Bank and PPIAF, PPI Project Database.
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