Arise: A New Public-Private Partnership for Infrastructure Investment
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Transcript of Arise: A New Public-Private Partnership for Infrastructure Investment
Presented at “Transforming Transportation 2012”, Washington DC
A N E W P U B L I C - P R I V A T E P A R T N E R S H I P F O R I N F R A S T R U C T U R E I N V E S T M E N T
ARISE
Dr. D
avid
J. Jhira
d01/2
6/2
012
Source:
THE IMPERATIVE FOR MULTI-FACETED INNOVATION
Source: IEA WEO 2011
INFRASTRUCTURE INVESTMENT NEEDS
Investment in new power plants and infrastructure in the New Policies Scenario
Source: GEF STAP
INCREASING DEMAND FOR TRANSPORT INFRASTRUCTURE
Source: Columbia CGT
THE NEED FOR LONG-TERM INVESTORS
WHY ARE SWF A GOOD FIT?
• Uniquely positioned as long-term investors• Can leverage their large asset base• Have the intergenerational outlook necessary for large-
scale infrastructure investment• Prefer to invest in large projects >$500m• Natural to expand their mission from preserving financial
wealth to include the preservation of environmental wealth by mitigating climate change
• Have access to the massive amounts of capital required for transformation to a low carbon economy
Source: Deutsche Bank
WHICH COUNTRIES HAVE AN SWF?
Source: SWF Institute
WH
ICH
AR
E T
HE
LAR
GES
T S
WF
Total Capital of around 3.6 trillion USD
WHAT ARE SOME KNOWN BARRIERS TO SWF INVESTMENT IN INFRASTRUCTURE?
• Comparatively larger risk than traditional investments
• Lack of relationship similarly long-term providers of debt financing to match SWF equity stake
• Lack of knowledge of international infrastructure investment markets and investment environments in target countries
• Lack of relationship with project development entities
• Can be perceived as not in line with mission of preserving and multiplying wealth for future generations
ACCELERATING RESILIENT INFRASTRUCTURE INVESTMENT FOR SUSTAINABLE ECONOMIES
• Launch a process and a working group consisting of Sovereign Funds, Multilateral Development Banks and other stakeholders;
• Focus on resilient and sustainable infrastructure investment with social and economic returns supplementing financial returns;
• Aim to mobilize an international infrastructure project preparation fund for Rio +20 launch;
• Employ cutting edge geospatial information systems to support project design and implementation, and the strategic switch from conventional to green infrastructure.
ARISE TOWARDS RIO
• Identify and Remove barriers to investment.• Facilitate dialogues between Sovereign Funds, Multilateral
Development Banks, financial institutions, companies and other stakeholders in a high-level working group
• Define “resilient and sustainable infrastructure”.• Develop qualitative and quantitative benchmarks to
define social, economic, and environmental sustainability and resilience of infrastructure projects.
• Develop metrics and methodologies to assess the suitability of potential infrastructure investments against these benchmarks.
• Develop a package of infrastructure projects to attract capital investment
ARISE LAUNCH AT RIO +20
• Announce a new and innovative public-private partnership to invest in resilient and sustainable infrastructure, including the Sovereign Wealth Funds (SWFs), Multilateral Development Banks (MDBs), foundations, and the private sector, in direct collaboration with beneficiary communities.
• Create a forum in which SWFs and MDBs will determine how to mobilize debt and equity in a timely manner on a project-by-project basis
• Attract innovative financing sources such as debt guarantees and grant funding to minimize technological risk and to overcome the initial capital cost hurdle of new technology.
• Commit funding and resources to an international project preparation fund to determine investment feasibility, including financial, social, economic and environmental risks and returns.
• Support policy and regulatory reforms to create an enabling environment for resilient and sustainable infrastructure development.
POTENTIAL INITIAL PARTNERS
ARISE
ILLUSTRATIVE PROJECT EXAMPLES
• Bus Rapid Transit Systems:• Dedicated lanes and bus stops
with easy access• Local, Express and Feeder
Services• Tickets integrated across whole
system and affordable for general public
• Reliable user information system• Clean buses with low emissions,
e.g. using CNG• Integrated into zoning to enable
transit-oriented hubs
CONCENTRATED SOLAR POWER PLANT
• Around 50MW Capacity
• Project cost of $300m• Annual power sales of
$ 50m• Cash-flow positive
within 24 months• Ideally sited where
some form of renewable energy sales credits or subsidies are available