MIF and IDB´s Infrastructure and Environment Sector Launch Regional Advisory Services Program
Jul 12, 2012
This week the Multilateral Investment Fund (MIF), member of the Inter-American Development Bank Group, approved the “Regional Public-Private Partnerships Advisory Services Program.” This innovative program is designed to enable governments to more effectively attract private-sector participation in infrastructure projects and strengthen government capacities in the design, execution and management of these public-private partnerships (PPP). It will focus on the national governments in small and less developed countries and governments at the sub-national level that lack capacities.
Green PPPs with environmental benefits and social sector PPPs in areas such as health and education will be at the focus of the program. It will provide both training and support for the development of non-financial products for project financing, management and monitoring. In addition, capacity building will be provided directly to government institutions to identify and manage PPP projects.
Public-private partnerships are long-term contracts between a public-sector body and a private-sector entity for the design, construction operation and maintenance of public infrastructure. Finance is usually provided by the private-sector entity that also takes over construction, operation and maintenance. The public-sector body remains responsible for policy oversight and regulation, with control generally reverting to them at the end of the contract term.
PPP contracts can serve as a vehicle for attracting private sector finance, reaping benefits from private sector management capacity and allocating risks effectively between public and private sector partners.
At times, however, the private sector lacks actionable market information on potential projects. PPPs may also be constrained by a lack of funding for feasibility studies, which are critical to making the business case for private investors. Despite governments’ willingness to pursue infrastructure development through PPPs, countries’ regulatory and legal regimes are often not conducive for utilizing these contractual mechanisms.
The MIF is a recognized leader in building public sector knowledge and capacities for PPPs in the region. Since 2004, the MIF has leveraged US$14.9 million in 18 technical cooperation projects, serving as the catalyst for an additional US$671 million in private investment and more than US$4 billion in anticipated private investment through PPPs.
The MIF will leverage additional resources and knowledge by partnering with the Inter-American Development Bank’s Infrastructure and Environment Sector (INE). The MIF is contributing US$5 million in non-reimbursable funds and INE has committed to provide US$3 million over the course of the program through the Infrastructure Project Preparation Fund (InfraFund).