Billion-Dollar Projects Fuel Spike in Private Sector Infrastructure Investment
Singapore: Multi-billion dollar projects are fueling stronger private sector investment in infrastructure projects in developing countries, which increased by 24 percent from 2016 levels, reflecting US$36.7 billion across 132 projects, says a new World Bank Group report.
However, although the growth of larger-sized projects is contributing to improved figures for the first half of 2017, investment levels remain 15 percent lower than the half-year averages of the past five years, reports the Half Yearly Update of the Private Participation in Infrastructure (PPI) Database. Excluding the mega-projects, average project sizes increased from US$156 million in 2016 to US$171 million in 2017.
“Private sector investors are committing increased investment in infrastructure projects, and that is a welcome development given the tremendous need for more infrastructure in developing countries. The World Bank Group continues to encourage more private investment in infrastructure, which remains a small part of total infrastructure spending. Since 1990, the private sector has invested only US$1.6 trillion overall in infrastructure projects in developing countries,” said Cledan Mandri-Perrott, Head of the Infrastructure, PPPs, and Guarantees Group at the World Bank Hub for Infrastructure and Urban Development in Singapore and leader of the report team.
The East Asia and Pacific region received more than one-third of total global investment, overtaking for the first time the Latin America and Caribbean region, which saw investment commitments decline slightly. The energy sector also drew the most interest, accounting for almost three-quarters of total 2017 investment commitments, with top destinations Indonesia, Jordan, and Pakistan signing power projects worth over a billion dollars, respectively.
While 17 of the 33 destination countries for private sector infrastructure investment commitments closed only one project each, a few countries signed many deals, with China and India topping the list. China approved 36 projects, and India 22 ventures.
The renewable energy sector continues to gain strength, with 68 of the 82 electricity generation projects focused on solar and wind power. Of the 29 solar projects signed in 2017, 13 are in China and seven are in India, while Brazil accounts for 7 of the 16 wind projects recorded. The average size for renewable energy projects is US$149 million.
Investments in low-income countries also strengthened, with investments increasing to US$2.1 billion across 15 projects in 10 countries. In 2016, only six low-income countries received private sector investment in infrastructure.
While the PPI Database focuses on private sector investment, many of the deals involve public sector or multilateral financing. Many countries are stepping up efforts to encourage more private participation in infrastructure projects.
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For more information on the Private Participation in Infrastructure Database, please visit: https://ppi.worldbank.org
For more information on the World Bank Group’s Infrastructure, PPPs, and Guarantees Group, please visit: www.worldbank.org/ppp