Public-Private Partnerships Can Help Finance Urban Infrastructure Needs, Seminar Told

ISTANBUL, TURKEY (4 May 2005) - Private investments can be tapped to help bridge the resource gap in the infrastructure financing needs of developing countries, a seminar heard yesterday.

Companies engaged in public-private partnerships presented various modalities through which the private sector can help finance urban infrastructure needs, at an ADB seminar on Financing the City - Private-Public Sector Partnership.

The seminar, moderated by Jørgen Ørstrøm Møller, Danish ambassador to Singapore, Brunei Darussalam, Australia and New Zealand, was the second of a series of three today on the problems and opportunities presented by the projected growth of Asia's urban centers, held on the eve of ADB's Annual Meeting of the Board of Governors in Istanbul.

Foo Hee Kiang, Chief Operating Officer of the Hyflux Group, which has undertaken a desalination project in Singapore, explained the background of the drinking and industrial water sector in Singapore, the structuring of the project, and the allocation of risks between the project company and the offtaker for the water - the Public Utilities Board (PUB) of Singapore.

"The commitment and professionalism of the PUB in allowing for flexible and innovative solutions and the support of the Government of Singapore in wanting to increase public-private partnerships for the long term are the important factors in the structuring of the desalination deal," he said.

S. Ramakrishnan, Executive Director of Finance for Tata Power Company in India, outlined the context of the privatization of electricity distribution in New Delhi and presented their innovative funding arrangement to cover losses during the transition period.

He said that power supply has improved since privatization, citing the better performance of the private sector electricity distribution in the city of Mumbai in contrast with the public sector one in Delhi.

The key aspects that support Tata Power's work in New Delhi, according to him, are the political commitment of the New Delhi government, support from the Government in providing law enforcement support to Tata Power, and realistic targets and expectations for a turnaround of the sector.

Credit organizations were also presented as a viable financing method. Philippe Valletoux, Vice President and Director of Dexia Credit Local of Belgium and France, said that credit organizations have provided great benefits to utilities, city governments, and the public.

Compared to commercial banks, he explained, credit corporations, like Dexia, can better finance urban infrastructure because they offer longer maturities, have flexible financing instruments that can match municipal requirements, and have more expertise in advising client city governments on how to optimize their borrowing.

"I strongly urge Asian countries to consider this model for urban upgrading," he said.

Contact Person

Seethapathy Chander
Tel. No. (+90-212) 241-8000 loc. 2548
E-mail: schander@adb.org