Infrastructure financing

Overseas markets, particularly outside of Western Europe, where infrastructure, project development schedules, and financing are uncertain... 

In November 2003, the EC also launched the European Initiative forCrowthto boost EU economic development. The initiative includes a "Quick Start Programme" with a list of projects for public/private investment in infrastructure, networks and knowledge. The aim is to encourage the creation of public/private partnerships in co-operation with the Member States and the European Investment Bank in order to leverage finance. 

There are six neoclassical roles of government (Wade 1990). Government should first, maintain macroeconomic stability second, provide physical infrastructure especially that which has fixed costs in relation to variable costs third, to supply public goods fourth, contribute to the development of institutions for improving the markets for labor, finance and technology fifth, offset or eliminate price distortions, which arise in cases of demonstrable market failure and sixth, redistribute income to the poorest in sufficient measure for them to meet basic needs. 

Because of the anticipated payment shortfalls, a transfer of large sums of money from the state budget - or other sources of financing - was needed for the sole purpose of subsidising the Georgian infrastructure for power generation, transmission and distribution. 

Kathryn A. Cassidy, Treas./VP Michael A. Neal, CEO/Pres., GE Commercial Finance John G. Rice, CEO/Pres., GE Infrastructure James Campbell, CEO/Pres., GE Industrial Susan P. Peters, VP-Exec. Dev. 

But there is also a totally insidious dependability problem caused by the fact that systems-of-systems may come into existence essentially accidentally. Interconnections may be made between systems, without due regard for the consequences, and have the result of creating an accidental system-of-systems, indeed one of such utility it comes to be depended upon, even though there is no-one responsible for ensuring its dependability. And indeed this in part is exactly what has happened on a massive scale, as various separate critical national infrastructures (e.g., for energy, water, transportation, finance, information, etc.) have become much more interdependent than anyone had planned—hence the setting up of various national and international investigations into critical infrastructure interdependencies. 

The World Development Report 2004 reviews traditional approaches to public service delivery and discusses how they have often failed the poor. Whether in health, education, or infrastructure, supply-side subsidy strategies to fund inputs—such as staff costs, equipment, and buildings used in delivery—have not improved the access to quality services among the poor. An important question remains for developing countries and the international development community on how to deliver and target public subsidies in ways that promote efficiency and innovation, increase accountability for performance, and leverage public resources with private participation and financing. 

The team greatly benefited from comments and advice from Abdo Yazbeck, as well as participants of the workshop Competitive Vouchers for Health Care Service Delivery held at the World Bank on April 22, 2004. The team is grateful to Ellis Juan, the manager of Infrastructure Advisory Services, and Hossain Razavi, the director of Infrastructure Economics and Finance, for their support and guidance. 

See J. Paul Forrester, et al.. Securitization of Project Finance Loans and Other Private Sector Infrastructure Loans, The Financier ACMT, 1994, at 7. 

There is also the whole chicken-and-egg issue in respect of mass production and infrastmcture, referred to above, the full dimensions of which are now apparent. It is clear that FCVs will never even approach cost-competitiveness with ICE vehicles without mass production (at least 500000). However, it is not clear how they will achieve this level of sales until the cost (and therefore price) reductions of FCVs have taken place. Nor is it clear either that such sales will take place until the requisite infrastructure to service the vehicles is in place, or who will provide the finance for the huge investment in infrastructure that would be required. Possible policies and strategies that may resolve these difficult transition problems are discussed below. 

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