Annex 1
DFID'S PRIVATE SECTOR INFRASTRUCTURE (PSI)
PROGRAMME: A SUMMARY OF PERFORMANCE TO DATE, 31 MARCH 2006
OBJECTIVE
1. The objective of the programme is to
secure increased private sector participation in infrastructure
in developing countries for economic growth and poverty alleviation.
PROGRAMME DESIGN
2. DFID plays a leading role in thirteen
multi donor facilities that deliver a PSI programme that is designed
to address three main problems—the poor enabling environment
including building the respective capacities of the public and
private sectors to work in partnership to deliver infrastructure
services for the poor; the difficulties, risks and costs associated
with project development; and the shortage of suitable finance
caused by weaknesses in capital and credit markets.
ASPECTS OF
PERFORMANCE
3. At the aggregate level, we currently
measure the impact of the programme in terms of private investment
generated and numbers of households getting access to infrastructure
services for the first time. Individual programmes and projects
have targets that feed into this aggregate measure as well as
their own specific national performance targets. We recognise
the need to develop lagging indicators to show the impact of improved
infrastructure on national economic growth.
4. As we can see from Figure one, over the
three year period 2003-04 to 2005-06, the programme levered in
some US$1.5 billion private investment. This represented a donor/private
sector leverage rate of 1:10 ie for every one dollar of donor
money spent the private sector invested 10 dollars in infrastructure.
This was a significant achievement and one that we intend to maintain
or improve on as the PSI programme is scaled up over the next
three years. Figure one also reveals that the most popular infrastructure
sectors were transport (US$399 million), construction (US$328
million) and telecommunications (US$308 million). These are likely
to continue to be popular infrastructure sectors for private sector
participation over the next three years although we plan to do
more on water and power distribution—areas which have direct
impact on poverty alleviation. The great majority (98% or US$1,433
million) of the private investment generated from the programme
over the last three years has benefited Africa. We expect Africa
to continue to be the main beneficiary although a new facility
for Asia—AsPIFF, will ensure that Asia also receives a greater
volume.
5. Figure two shows that the impressive
figure for private sector investment has been generated from just
13 completed large-scale projects. DFID supported facilities are
new and in some cases have only recently started to do business.
With these facilities now beginning to hit their stride and a
new facility to come on stream, we expect the number of completed
large-scale projects to treble over the next three years to forty.
We can add to this 33 smaller scale output based aid projects
that target subsidies to increase access to infrastructure services
for the poor.
6. Over the next three years, we expect
to have water and energy projects coming on stream that will focus
on increasing the distribution of services to the poor. These
include those identified already under the Global Partnership
for Output Based Aid programme—estimated numbers for which
are shown in Figure three.[10]
We also expect to "mainstream" access targets into projects
developed by other supported facilities. On this basis, we have
set provisional, minimum targets for giving 500,000 households
access to energy and water services for the first time. As most
of the access will be given through demonstration projects that
we expect to be replicated, we are confident that the number of
households to eventually get access to services for the first
time as a result of the programme will be much greater.
INDIVIDUAL FACILITIES
A snapshot of the aspects of performance for
each of the thirteen facilities that make up the programme is
provided in the table below.
A SNAPSHOT OF ASPECTS OF PERFORMANCE BY FACILITY
| Facility and description
| Aspects of performance—2003-04—2005-06
|
Enabling environment
|
| Public Private Infrastructure Advisory Facility (PPIAF)—provides technical assistance to developing country governments to improve the enabling environment for private sector participation in the provision of infrastructure services.
| Since its inception in 1999 PPIAF has approved 412 activities valued at US$93.4 million including the strengthening of 47 regulatory institutions; 48 new pieces of legislation or regulation; 39 sector reform strategies and 176 training programmes and workshops.
|
| Local Capacity Technical Assistance Fund (TAF)—works with PIDG facilities to enhance the capacity of the public and private sectors to attract private investment in infrastructure and related services.
| Established in 2003, so far thirteen projects have been funded by TAF, two of which have been completed—a communications outreach programme in Uganda and support for horticultural investments in Mozambique.
|
| Energy Sector Management Assistance Programme (ESMAP)—provides technical assistance to governments on sector reform and restructuring; access to energy; and sustainable energy production.
| Supported by DFID since 2005, progress so far on PSI includes programme proposals for four countries—Bangladesh, Cambodia, Cameroon and Kenya.
|
| Water and Sanitation Programme (WSP)—provides support to national and local governments to help them to increase access to water and sanitation services for poor people in urban and rural areas.
| Supported by DFID since 2005, the PSI part of the programme will support the enhancement of policy and regulatory frameworks in six focus countries.
|
Project development
|
| Infrastructure Development Collaboration Partnership Fund (DevCo)—assists governments to create major infrastructure deals for implementation by the private sector in partnership with government.
| Launched in 2003, by the end of 2005 it had bid out five projects that will realise US$606 million private investment, generate new government income of US$300 million and realise government budget savings of US$23 million. Over the next four years it will scale up to bid out six projects per annum in order to deliver US$1.5 billion private investment and 500,000 new connections.
|
| Infrastructure Development Company (InfraCo)— packages infrastructure projects for investment in poorer countries; puts them out to the market for investment; and recovers costs and a margin through a sale price.
| Began operating in 2005, currently has five projects under due diligence worth in excess of US$500 million. Over the next three years it expects to complete six projects and generate around US$750 million private investment.
|
| Global Programme for Output Based Aid (GPOBA)—Supports the design and piloting of performance-based approaches for targeting public funding and subsidies on the delivery of basic services to the poor.
| Launched in 2003, it has developed 33 projects for possible implementation from April 2006. These could realise up to US$90 million private investment and give over one million households access to services.
|
| Asia Private Investment Finance Facility (AsPIFF)—develops and invests in green field infrastructure projects in the poorer countries of Eastern Asia. It provides equity and quasi-equity investment products along side other private and public sector investors and lenders.
| Launched in early 2006 as part of DFID's Asia 2015 initiative, its focus will be on projects in the range $US5-75 million. DFID will provide seed corn funds. It is expected to close 25 deals in the first five years leveraging in US$750 million private investment.
|
| Slum Upgrading Facility (SUF)—leads and coordinates initiatives to develop bankable projects that promote affordable housing for low income households; the upgrading of slums; and the provision of infrastructure services to slums in poorer countries.
| Supported since late 2004, it has recently completed the design of outline programmes in four countries—Ghana, Indonesia, Sri Lanka and Tanzania. Implementation of the programmes will commence in 2006-07.
|
| Water and Sanitation for the Urban Poor (WSUP)—identifies, develops and delivers projects that provide more effective delivery of water supply and basic sanitation services to the urban poor.
| Launched in 2005, it has two pilot projects in the early stages of implementation—Bangalore, India and Naivasha, Kenya. Scoping studies are underway in Madagascar, Mozambique, Indonesia, Peru and Brazil.
|
Credit and capital markets
|
| Emerging Africa Infrastructure Fund (EAIF)—provides long term loans for commercially viable and developmentally sound private sector ventures in the poorer countries of sub Saharan Africa. The initial focus was on telecommunications, building, transport and energy. It expects to do more in the water sector over the next three years.
| Launched in 2001, it has financed six projects that have achieved significant impact including $US1,316 million private investment, new electricity capacity of 83MW, 3.9 million new telephone subscribers and the creation of 3,600 new jobs. EAIF will double both the number of financed projects over the next three years to six and the new private investment generated to US$ three billion.
|
| Local Currency Guarantee Facility for Infrastructure (GuarantCo)—provides credit enhancement of bonds and other commercial paper as well as well structured municipal bond offers. Also guarantees bank loans.
| Established in late 2003 and reinvigorated in late 2005, it has implemented one project—Celtel Kenya, and another project is imminent—Ubongo Power Plant, Tanzania. At least six implemented projects are expected over the next three years.
|
| Community-Led Infrastructure Finance Facility (CLIFF)—Mobilises finance for organisations of the urban poor for infrastructure and housing projects to improve living conditions through actions on the enabling environment, project development and the provision of capital.
| Launched in 2002 and initially piloted in India, it supports 13 projects. Ten of these are housing developments, which will provide housing and secure tenure for over 5,000 households. The rest are sanitation projects that will benefit some 279,000 households.
|
10
The figures for GPOBA exclude an estimated 1,200,000 households
expected to get access to energy services in Egypt for the first
time from an exceptionally large demonstration project. Back
|
