Boosting Infrastructure Investments: Insights from Infrasia Capital’s CEO at the EBRD Annual Meeting

In a compelling panel discussion at the EBRD Annual Meeting, industry leaders gathered to explore the pivotal role of Public-Private Partnerships (PPPs) in addressing infrastructure financing gaps. Among the notable participants was Odilbek Isakov, CEO of Infrasia Capital, who contributed valuable insights into the conversation.

The Urgency of Infrastructure Investments

Lucy Hawkings, a BBC presenter, moderated the discussion, emphasizing the critical need for increased infrastructure investments, particularly in emerging markets. Traditional government budgets are insufficient to meet the growing demands for infrastructure development. Public-Private Partnerships (PPPs) present a viable solution by leveraging private sector involvement, financing, and technological expertise to drive economic growth and job creation.

Panel Insights on PPPs The panel featured esteemed speakers including Thierry Deau, CEO of Meridiam; Astrid Manroth, Head of Global Infrastructure Facility (GIF); and Ekaterina Miroshnik, Regional Head of Infrastructure at EBRD. They collectively underscored the importance of collaboration between governments and private entities to bridge the infrastructure gap, estimated to be $8.3 trillion by 2040.

Key Points Discussed

Infrastructure Gap: The panel highlighted the substantial and widening infrastructure gap. Addressing this gap is crucial for unlocking the economic potential of various regions.

Financial Viability: Emphasizing the need for bankable PPP projects, the panelists discussed strategies to attract more private investment into urban and transport projects. They also addressed climate challenges and the necessity of maintaining high standards.

Case Studies and Successes

Uzbekistan's Achievements: Uzbekistan has attracted $17 billion in private sector funding through PPPs over the last five years, with a goal of reaching $30 billion by 2030. This demonstrates the significant impact of PPPs in mobilizing private capital for infrastructure projects.

Almaty Ring Road, Kazakhstan: The Almaty Ring Road project was highlighted as a successful PPP. This 20-year concession involved constructing and operating a road in Almaty, improving connectivity, reducing pollution, and completing the project ahead of schedule and within budget.

Addressing Challenges

The panelists did not shy away from discussing the challenges associated with PPPs:

Preparation and Capacity Building: The GIF, established by the G20, plays a crucial role in advising governments on preparing complex infrastructure projects for private investment. This includes ensuring environmental and social assessments, feasibility studies, and fiscal affordability.

Long-term Financing: In Uzbekistan, the government is considering setting up the Infrastructure Financing and Development Company to provide local currency loans for PPP projects, addressing the lack of long-term financing options.

The Role of Government and Private Sector

The panel emphasized the need for transparent and fair processes in evaluating unsolicited proposals.

In Uzbekistan’s example, the Law on PPP would allow unsolicited proposals, stated as private initiatives, which go through a 45-day “Swiss Challenge” process to ensure transparency and competitiveness. If, at least, one qualified bidder submits interests in such project within during the “Swiss Challenge”, then a one-stage tender process will start between the original private initiator and qualified bidder(s). This was project preparation (upstream and midstream) would benefit from private sector efficiency while ensuring much needed transparency in the process.

EBRD has also confirmed its support for such a process provided a set of transparency requirements are met.

Moreover, there are successful examples of public-Private collaborations, such as the Welsh education program, were cited to illustrate the potential benefits of government action and private sector involvement.

Importance of Infrastructure Investments in Emerging Markets

The panel underscored the growing gap in infrastructure investments, exacerbated by geopolitical events and budget constraints. The consensus was clear: private sector involvement is crucial to bridge this gap, particularly in emerging markets (EM). The public sector alone cannot meet the increasing demands, making private investments indispensable.

Upstream Work and EBRD's Support

A significant portion of the discussion focused on the importance of upstream work in EM. The EBRD’s role in providing advisory support for project preparation, marketing, procurement, and documentation was highlighted. Additionally, the EBRD's efforts in capacity development for government employees were highlighted as vital for the successful implementation of infrastructure projects.

One of such examples is Uzbekistan Project Development Facility – a EUR10m loan facility provided by EBRD – which will accelerate selection of consultants for the upstream work.

Global Infrastructure Facility’s Role

Astrid Manroth highlighted the GIF’s collaboration with 11 International Financial Institutions (IFIs), including the EBRD, to fund upstream work. The GIF's commitment to aiding countries in achieving a green transition was emphasized, with a call for increased efforts in this area.

Uzbekistan's Success Story

Uzbekistan was presented as an exemplary case, with over 400 projects worth USD 17 billion signed. Uzbekistan’s “Strategy 2030” aims for USD 30 billion in investments in PPPs. The panel attributed this success to strong political will and significant policy and advisory support from IFIs. However, capacity issues and misconceptions about the long-term value of PPPs compared to budget-funded EPC projects remain challenging.