TRANSPORT Public and private roles in transport Bergen, June 2005 Paul Amos, Transport Adviser World Bank

TRANSPORT Contents 1.World Bank’s Infrastructure Action Plan 2.Public and private roles in transport 3.Public private partnerships

TRANSPORT World Bank ’ s Infrastructure Action Plan Huge infrastructure investment need in developing countries  Private sector contribution not sufficient  Public roles crucial Re-invigorated Bank support for public sector infrastructure in key sectors; while …creating enabling environments to make private participation possible and beneficial.

TRANSPORT Infrastructure Action Plan key features Protecting the poor with targeted subsidies for disadvantaged groups and Public Service Obligations for disadvantaged groups and Public Service Obligations Combine Bank Group Instruments IBRD/IDA Loans, Credits and Guarantees IFC Loans and Investments MIGA Guarantees Engagement Anywhere Along the Spectrum PrivatePublic

TRANSPORT Roles of Govt. The performance of Government in its roles are crucial to sector development 1.Political: public policy 2. Custodian: public property 3. Economic regulator 4. Safety/environt. regulator 5. Purchaser of services

TRANSPORT Public and private roles in transport Three types of transport enterprises:  Transport service providers  Transport infrastructure providers  Vertically integrated entities (infrastructure plus services)

TRANSPORT Public and private roles: services Services include: road haulage, bus companies, taxis, shipping, airlines, stevedores, train operating companies Service delivery by governments has often been disappointing in many countries Experience favours private service provision within competitive (or periodically contestable) markets

TRANSPORT Public and private roles: services Efficiency of public sector delivery influenced by: The influence of multiple and changing public policy objectives, and short-term political imperatives Public service constraints on management freedom Government budgeting policies/process Conflict of interest with competitive markets if the referee is also a player

TRANSPORT Public and private roles: services Private sector delivery of services:  more focused commercial objectives  greater management freedom  more effective management incentives and accountability….. But without competition or economic regulation, benefits may accrue mainly to the provider rather than users.

TRANSPORT Public and private roles: infrastructure Infrastructure includes: road, rail and waterway networks, airspace, shipping channels, major ports and airports Public ownership is the global ‘norm’ in both developed and developing countries Generally, the policy issues are more complex than for transport services….

TRANSPORT Public and private roles: infrastructure Transport infrastructure can be a natural monopoly or confer significant market power Investment often lumpy, with returns that are risky and long-term Sometimes it is difficult to levy direct user charges Major land-use, environmental or social issues, can make it politically sensitive Many subscribe to concept of ‘public estate’

TRANSPORT Public and private roles: vertically integrated entities Vertically integrated enterprises remain in many transport enterprises in developing countries:  ports-stevedoring  airports-aviation  rail network - train operations Vertical separation can facilitate competition and private participation at the service level, while retaining public role in infrastructure (landlord model).

TRANSPORT Public private partnerships Both parties must anticipate gain Elements of partnership:  finance  risk sharing  rewards Partnership must be governed by robust commercial agreements, not wishful thinking

TRANSPORT Public private partnerships Issues for decision makers contemplating PPP approaches:  Is the Project justified?  Can it be implemented?  Is it likely to provide best value for money?  How will the poor be protected?