2009 - World Bank - Private Participation in Transport: Lessons from Europe and Central Asia

Experience in private participation in transport in Europe and Central Asia has been mixed. Investment since the early 90s has been mainly driven by a few economies of Central and Eastern Europe and Southeastern Europe such as Hungary, Poland, Croatia and Bulgaria. Investment never took off during the 90s but rose from 2004 until the fall of 2008, with growth in private investment in 2001-07 being more than twice the level in 1994-2000. The first attempts to implement PPP projects in transport in the region often faced delays, protracted negotiations, renegotiations, and cancellations. Several factors contributed to these problems, including: lack of robust feasibility studies, optimist traffic forecasts, public resistance to tolls, changing financial support mechanisms, uncompetitive procurement, and subsequent revision of legal and regulatory framework. The review of 10-15 years of experience in PPP in the transport sector has identified specific elements for success related to project selection and design, procurement and contract monitoring, and legal and institutional framework. The report recommends countries with more experience in PPP to focus more on achieving value-for-money and improving public sector capacity. Countries with limited experience should start by formulating a strategy for the required reforms and policies for PPP, and consider using risk mitigation instrument. Although the current economic situation is limiting the short-term potential for private investment, governments can still achieve value-for-money through PPP.