Transport Infrastructure Investment

Transport Infrastructure Investment

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14 Feb 2008
9789282101568 (PDF) ;9789282101551(print)

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Surface transport plays a fundamental role in nearly all social and economic activity. Providing and maintaining the infrastructure consumes enormous resources. Thus, it is essential that this be carried out in the most efficient and effective way possible. 

Many options are available to provide surface transport infrastructure – public ministries and agencies, public-private partnerships (PPPs), state-owned companies, private and non-profit entities, and outright privatisation. There are also various means of paying for it, including user charging, subsidies, public borrowing or private financing.  

This report examines key principles that should be considered by governments in deciding how to provide and pay for surface transport infrastructure, with a view to best serving societies’ needs and employing public resources. It also considers the key issues that must be resolved in making more use of private financing and expertise.

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  • Summary of conclusions and recommendations
    The report Transport Infrastructure Investment: Options for Efficiency was developed by a group of international experts under the aegis of the Joint Transport Research Centre of the Organisation for Economic Co-operation and Development (OECD) and the International Transport Forum. Its purpose is to examine the elements that should be considered by governments in choosing the appropriate models for the provision of surface transport infrastructure. This includes maintenance of old and investment in new capacity, as well as questions of financing. The primary focus is on roads and rail, and, to a lesser extent, inland waterways.
  • Frameworks for the provision and financing of surface transport infrastructure
    The provision of infrastructure refers to all of the tasks required to ensure an adequate supply of infrastructure services in order to meet the needs of society. As surface transport infrastructure provides a fundamental underpinning to much – if not all – other social and economic activity, this responsibility ultimately falls to governments.
  • International experiences
    The previous chapter outlined various models employed for providing surface transport infrastructure. The present chapter provides an overview of how infrastructure is presently provided in different countries. As background Section 2.2 discusses future transport needs. Section 2.3 describes governments’ search for new models for providing infrastructure, while Section 2.4 considers overall experience to date in this area. Road, rail and inland waterway issues are considered in Sections 2.5 to 2.7. The Annex includes a number of case studies that provide more details regarding some of the examples discussed in this chapter.
  • Infrastructure investment and budget treatment
    This chapter discusses the possible implications for the public sector’s budget of the choice between different models for the provision of infrastructure. The focus is on whether a given initiative is considered on or off the public budget and whether this should have any real significance for the choice of model.
  • Principles for efficiency in the provision of surface transport infrastructure
    It has already been emphasized that efficiency should be the primary justification for choosing any particular investment of society’s resources over another. This chapter provides a working definition of this fundamental concept, and describes the factors that contribute to it.
  • Efficiency in different models for infrastructure provision
    Having defined the meaning of efficiency in Chapter 4, we now turn to the models for the provision of infrastructure identified in Chapter 1 to assess their potential qualities with regard to enhancing efficiency.
  • Risk sharing in public-private partnerships
    The question of risk is fundamental in the consideration of PPPs. One way to define PPP arrangements is as mechanisms for the premeditated sharing of risk between public and private partners. In this chapter we will look at the tradeoffs involved when risk is shared between the principal and the agent. Focus is on the principal-agent relationship and on cost efficiency aspects of risk allocation, as well as on how this issue may be managed in contracts.
  • Efficient charging of infrastructure use – should infrastructure be paid for by taxes or charges?
    Previous chapters have addressed the potential efficiency benefits from outsourcing the production of surface transport infrastructure by contracting with commercial enterprises, and from devolving control over infrastructure provision to entities that are independent of government to a greater or lesser extent.
  • Public-private partnerships legislation and regulation
    This chapter discusses the overall legal and regulatory framework that typically must accompany the creation of public-private partnerships for the provision of surface transport infrastructure, with a view to protecting the public interest and providing private partners with a stable business environment.
  • Public-private partnerships procurement and quality control
    Where PPPs are employed, the procurement process itself – involving tendering and contracting – is essential for establishing the overall frameworks for the resulting project, and thus for achieving desired efficiency gains. In order to achieve optimal outcomes, PPP procurement must be carefully designed and supported by adequate quality assurance mechanisms.
  • Annex. case studies - networks
    Czerny (2006) describes motorway provision in Austria. Much of the following is based on that work. Austria provides an example where the entire motorway network has been devolved to a state-owned enterprise. At the same time, the government retains control over tolling rates. Furthermore, public guarantees for loans reduce the costs of borrowing, although the company’s debt is not consolidated with that of the state. Finally, this is also an example where a state-run company is planning to outsource important new projects by way of PPP arrangements.
  • Annex. case studies - projects
    One of the most ambitious initiatives for private involvement in infrastructure across an economy is the UK’s Private Financing Initiative (PFI). By early 2002, about 500 PFI contracts had been signed in the UK (see Mackie and Smith, 2005b, for an overall review of the PFI, as well as Spackman, 2002).
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