TRANSPORT INFRASTRUCTURE FINANCING Jit N. Bajpai World Bank Bangkok, Sept. 16, 2005
EAST ASIA’S INFRASTRUCTURE NEEDS East Asia, estimated infrastructure expenditure, actual and projected, 1996 – 2010 ($ billion / year) all, excluding China
$165* bil
180
$147 bil
160 140
rail water and sanitation
$123 bil
telecoms Maintenance
120
roads
100 80
China
60
Investment
electricity
40 20 0 1996-2000
2001-2005
2006-2010
by sector
by country
by economic classification
* Based on econometric simulations consistent with projected regional growth, and efficiency prices. Due to data limitations, the simulation excludes a number of key infrastructure services, notably ports and airports, and all but major roads
MEETING EAST ASIA’S INFRASTRUCTURE THE PRIVATE SECTOR The private sector bubble has burst…
… but sentiment is positive
45
140
To all developing countries (right axis)
40
120
35
Does your company expect to increase, sustain, or decrease your total sector investment in the region in the next two years?
100 30
88%
To EAP (left axis)
25
80
20
60
67%
15 40 10
24%
20
5
8%
4%
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0 1990
0
10%
increase Global f irms
Private sector investment in infrastructure ($ billion)
sustain
decrease East Asian f irms
FLOW OF FUNDS FOR INFRASTRUCTURE Financiers can change the time profile of taxes & user charges by providing loans or equity but ultimately those loans need to be repaid.. Financier help to smoothen tax or tariff increases
TAXES: TRENDS • Is the fuel tax running out of gas? – Infrequent changes; – Fewer $/ltr. though twice as many Km/ltr.; – Ineffective in capturing true costs;
• Trends: – Favor balanced transport system: cars-public transport (US, EU); – Surge of local taxes: sales tax, new real estate tax, payroll tax, fuel tax, other;
• Local voice & politics influence investment decisions
USER FEES: TRENDS • Fee = Capital + O&M + Externalities (noise, air, accidents, congestion); • In EU: 8.3 Euro though true costs = 12-24 euro; • Fee structure needs to be altered to align costs & price w/o any change in overall tax level; • IT solutions: distance based user fees (US, Germany); congestion pricing (Singapore, London).
PRIVATE SECTOR OPTIONS IN TRANPORT • Community (Sweden) • State Corporation (UK- Hwy agency, Chile-Port Corp., German Rly., China toll roads); • Management Contract (Uganda -Hwy, Zambia-rail); • Lease (Las Vegas transit, Mexico Rly., Australia: airports, Philippines: LRT3); • DBFO (UK-Trunk roads, London underground, Athens Airport, Portugal: motorways); • BOTs (California SR91; France: Millau Viaduct, India: Nhava Sheva port; S. Africa/Asia: road concessions); • Franchise (UK-train, buses, Bagota-buses, Australiapublic tr.); • Private Co. (UK-Railtrack, Airports in Australia, NZ, Germany, Mexico)
TOLL ROAD CONCESSIONING: A FRAMEWORK PLANNING AGENCY National Development Plan
MIN. OF PUBLIC WORKS
National Highway Plan Pre-Feasibility Study & Package Data
Environmental clearance Land Acquisition
Toll Road Authority
PPI packages
MIN. OF FINANCE
Project Financing & Guarantees
EAP BUSINESS STRATEGY Leveraging Bank Group finance and private flows - example: Nam Theun 2, Laos • $1.45 billion hydro project (incl. contingent financing) exporting energy to Thailand • Leveraged private sector financing of $1.2 billion through IDA guarantee of $50 million, IDA grant of $20 million and MIGA guarantee up to $200 million. • Entailed partnership with other donors, including ADB, AFD and EIB
What scale of private sector financing? Bangkok BTS Blue Cost
$1.23 bn
$3.13 bn
$0.9 bn
$1.54 bn
$0.32 bn
$0.68 bn
80% for land+Civil 0%
10%
0
0
0
20%
25.6%
25.4%
0%
10%
20.4%
22%
28%
66.8%
25.6% for Eqpt/O&M 74.4%
60%
54%
52.6%
72%
Planning to buy
Planning to buy
Assets taken in 2000
Asset taken in 2000
NA Listed
Lease>re v15% return.
% Govt. Depot sites %Govt. Loan %Privat e Other Equity Debt Govt Action
Kuala Lumpur Manila Star Putra Monor LRT III ail
0% 33%
Declining Public Transport Use
Taipei Singapore Seoul
Early 80's Late 90's
Kuala Lumpur
Rail in late 90's Bangkok Manila Pusan 0
10
20
30
40
50
% share
60
70
80
90
Limited Effectiveness of Rail & Bus Cities
1980’s
Late 90’s
Cars /1000
Buses / 1000
$GDP /Capita
Cars /1000
Singapore
68
2.70
22,710
110
Kuala Lumpur
38
1.18
4,700
210
Pusan
16
8,600
145
13,250
210
1,850
220
1,050
90
8,600
220
320 (city: 1,050)
8.1 (MC:300)
Taipei Bangkok
71
Manila
45
Seoul
127
HCMC
1.22
1.55
Buses /1000
Rail Pass / KM
Rail KM
12,500
80
0.5
2,200
37
0.7
18,000
32.3
5,630
39.10
8,510
23.50
28,570
14.0
0.5
0.82
Financial Difficulties with Urban Rail Systems Fare Revenue/Operating Costs of Metros
Annual S u b s id y
0
O p e r a t in g S u r p lu s
0 .5 0 .2
0 .4
1 .0 0 .6
M é x ic o C a lc u tta
1 .4
P u san Sao P a o lo
R io d e J a n e ir o P o r to A le g r e
1 .5
2 .0 1 .6
S eou l
1 .8
2 .5 2 .0
2 .2
M a n ila S a n tia g o
H ong K ong M TR
Strategic Approach
Initiate a consensus based planning process to develop “building blocks” to be implemented over time including transit priority schemes and ROW preservation Proposals must be fiscally constrained, market responsive and monitored Cont.
Strategic Approach Implement each “building block” including the complementary policies and investments with participation of stakeholders Build government institutions to be effective regulator and purchaser of private transport services on a competitive basis Review options for mobilizing new resources for the sector
TRANSPORT CAPACITY
Framework for Incremental Approach Urban Rail Road Pricing Rail/Bus/Parking Integration Grade Separated Bus Priority Options Demand Management Vehicle Restraint Bus Priority Parking Policy Expansion Strategic Road Infrastructure Modal Transfer Bus network / Regulation Freight traffic Management Periurban land use & transport Parking Policy Traffic Management & Safety
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