1. European Investment Bank Public-Private Partnerships in Financing and Providing Infrastructure Philippe Maystadt President, European Investment Bank Presentation at the Bridge Forum Dialogue Luxembourg, 20 January 2005

2. 2 Contents  How much has public investment declined?  Have public capital stocks been eroded?  Has lower public investment been offset by PPPs?  Economic pros and cons of PPPs

3. 3 Public Investment in EU and US % of GDP Source: OECD EU US

4. 4 Public Investment in Large EU Countries % of GDP Source: OECD

5. 5 Public Investment in Smaller EU Countries % of GDP Source: OECD

6. 6 Public Investment in Cohesion Countries % of GDP Source: OECD

7. 7 Public Capital Stock in Large EU Countries 1970 = 100 Source: Kamps (2004)

8. 8 Public Capital Stock in Smaller EU Countries 1970 = 100 Source: Kamps (2004)

9. 9 Public Capital Stock in Cohesion Countries 1970 = 100 Source: Kamps (2004)

10. 10 “Net Worth”of Governments Public capital less public debt (% of GDP) Source:Kamps (2004), OECD

11. 11 Characteristics of PPPs  Serves a public policy objective  Long-term arrangement  Private finance and ownership of asset  Risk and rewards shared

12. 12 PPPs in Relation to Public Investment Signed value of PPP contracts (stock) to public investment (flow), average 1995-2003 (%) Source: ProjectWare, HM Treasury, OECD

13. 13 Geographical Distribution of PPPs Signed value of PPP contracts, 1995-2003 Source:ProjectWare, HM Treasury

14. 14 Sectoral Distribution of PPPs, Non-UK Signed value of PPP contracts, 1995-2003 Source:ProjectWare

15. 15 Sectoral Distribution of PPPs, UK Signed value of PPP contracts, 1987-2004 Source:HM Treasury

16. 16 Size Distribution of PPP Projects Number of projects by size (mill €) Source: ProjectWare, HM Treasury 494

17. 17 Pros: higher cost efficiency from...  Private ownership of infrastructure asset  Bundling and life-cycle planning  Sharing of risks and rewards Economic Pros and Cons of PPPs

18. 18  Cost savings may reduce service quality  Transaction costs  Institutional and administrative capacity requirements Economic Pros and Cons of PPPs Cons of PPPs:

19. 19 Macroeconomics of PPPs  Accounting treatment  Do PPPs boost economic growth?

20. 20 Experience with PPPs  Construction on-time and on-budget  High and underestimated bidding and negotiation costs  Key success factors:  Competitiveness of bidding process  Appropriateness of risk sharing  Public sector’s capacity to manage

21. 21 EIB and PPPs Source:EIB Sectoral distribution of EIB’s PPP portfolio

22. 22 EIB and PPPs Source:EIB Geographical distribution of EIB’s PPP portfolio

23. European Investment Bank Public-Private Partnerships in Financing and Providing Infrastructure Philippe Maystadt President, European Investment Bank Presentation at the Bridge Forum Dialogue Luxembourg, 20 January 2005