Public and private roles in transport

1
Public and private roles in transport

• Bergen, June 2005
• Paul Amos, Transport Adviser
• World Bank

2
Contents

• World Banks Infrastructure Action Plan
• Public and private roles in transport
• Public private partnerships

3
World BanksInfrastructure 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.

4
Infrastructure Action Plan key features
Engagement Anywhere Along the Spectrum
Private
Public
Combine Bank Group Instruments IBRD/IDA Loans,
Credits and Guarantees IFC Loans and
Investments MIGA Guarantees
Protecting the poor with targeted subsidies
for disadvantaged groups and Public
Service Obligations
5
The performance of Government in its roles are
crucial to sector development
1.Political public policy
2. Custodian public property

• Roles of Govt.

3. Economic regulator
4. Safety/environt. regulator
5. Purchaser of services
6
Public and private roles in transport

• Three types of transport enterprises
• Transport service providers
• Transport infrastructure providers
• Vertically integrated entities
  (infrastructure plus services)

7
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

8
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

9
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.

10
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.

11
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

12
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).

13
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

14
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?