Private Financing for Infrastructureby William G. Reinhardt, Editor; Public Works Financing, PWF International, Westfield, NJ,
Serial Information: Worldwide Projects, 1993, Vol. 1, Issue 1, Pg. 21-24
Document Type: Feature article
Abstract: From the United States to Germany and the Third World, financing has replaced the availability of technology and expertise as the main infrastructure problem. Public deficits, resistance to taxes, and a shift among development strategists toward private investment incentives have created a need and an opportunity for private companies with money, good legal and financial advice, and an appetite for equity risks; Morrison-Knudsen and Bechtel are among those that have already benefitted. In addition, after years of cost overruns and change orders on 100 percent publicly funded projects, many governments are seeking greater efficiency by centralizing the management and control of complex projects in the hands of private experts. Ideally, BOT (build, operate and transfer) projects and public-private joint ventures put large, well-capitalized private firms at the service of governments with a strong commitment to economic development, in the process finding design and construction efficiencies and distributing risks and rewards fairly. In practice, however, companies face such problems as institutionalized beliefs about the relationship between public and private sectors, and the vast technical, financial and psychological differences among projects. A recent survey by the newsletter Public Works Financing of infrastructure projects using private finance shows the sectors and countries most active in the field. Trends to watch include the increasing complexity of contract terms, the shrinking size of privately funded projects, and the need for governments and equity investors to take on more risk in the face of jittery credit markets and bankers.
Subject Headings: Infrastructure | Private sector | Financing | Joint ventures
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