Mr. Kumar Vinay Pratap, Deputy Secretary, PM's Office Delivers Lecture at IIM Lucknow

Excerpts from IIML Dialogue Session with Mr. Kumar Vinay Pratap

Can you give us a brief round-up of private sector investment in infrastructure today? Can you also provide us with a few key statistics?

Private participation in infrastructure has been responsible for over 1 Trillion Dollars of

investments in developing countries from 1990 onwards. More than 140 developing countries have tried to follow the PPI route to breaching the infrastructure deficit.

Telecom has contributed for more than half of these investments, mainly because the sector has the highest viability amongst all infrastructure sectors. Investments have gone to energy, transport, water and sewerage, in that order of importance. Water and sewerage sector has been responsible for only 5% of the total investment of over 1 Trillion Dollars because of political sensitivity and low cost recovery in this sector.

Among the regions, Latin America and the Caribbean region account for over 40% of the current investment in infrastructure, while South Asia accounts for around 10%. In the South Asia region, India leads in participation in infrastructure, being the only low income country in the first 10 developing countries ranked by private participation in infrastructure. More than 300 private infrastructure projects worth nearly 100 Billion Dollars have been financed in India from 1990 onwards.

Telecom has attracted the maximum investments while water accounts for the least. Water projects have seen the highest percentage of failure with stagnant investment in the water sector. A large number of poor in the developing countries continue to suffer from inadequate quantity and quality of water.

What do you see as the future of private sector participation in infrastructure?

The number of failures in infrastructure is increasing, but still remains low at 5%. However, the rate has doubled in the last 5 years and this is a cause of concern. But given the infrastructure deficit, we should continue to see a boost in private sector investments in infrastructure. As investment in the telecom sector is the most viable, it would continue to account for the highest share in infrastructure investments. It accounts for more than 50% of the total investment in infrastructure now, and this percentage is not likely to go down in the future. Energy and transport sector will also account for a large portion of private investments in infrastructure. This is visible in India in the successful bidding of the Ultra Mega Power Projects, with 3 of them being awarded to the private sector.

The biggest challenge in private participation in infrastructure is being faced in the water and sewerage sector. Private sector investments would continue to come into countries with clear policy framework. India would continue to attract private sector in infrastructure projects.

Concluded.

Contributed by -
Pankaj Bhatt,
Media Relations,
IIM Lucknow.

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