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Abstract
We now have over a decade of experience with regard to alternative approaches to
private participation in transport operations and infrastructure in Latin America. At the
beginning of the 1990s, virtually all of the region's railways were under public ownership
and control. Ten years later, there were only a few, small publicly operated railways.
Seaports generally have been concessioned under alternative models. Most airlines have
been privatized and airport concessions of varying types have been put in place
throughout the region. Toll roads have been developed or extended with varying degrees
of success.
Policy initiatives to mobilize private financing and participation of the private sector have
been achieved with considerable success. Between1990-1999, cumulative long-term
international private capital flows to developing countries (excluding foreign direct
investment) amounted to over USD 150 billion. Latin America attracted the largest share
of any region, about USD60 billion. In addition, Latin America and the Caribbean
undertook about USD220 billion of private infrastructure
projects/concessions/investments, of which about USD130 billion - USD140 billion
involved divestitures of former public infrastructure.
The record of the past decade has shown that is possible, even during recurrent emerging
market crises, to mobilize private finance. But the larger question remains as to whether
this mobilization was accomplished “on whatever terms necessary”, resulting in an
uneven distribution of benefits and ambiguous results with respect to social welfare.2
Moreover, the project financing instruments used also have the incentive to promote
integrated, monopolistic market structures either to maximize proceeds to the government
or to increase the rate of return to the concessionaire.
This paper reviews the region’s transport experience, emphasizing lessons learned and
their implications for the next generation of transport projects. Section I describes the
background and motivations that helped produce reform efforts. Section II describes
principal results for each mode. Section III describes different organizational forms used
to structure private participation, emphasizing the development of concessions. Section
IV discusses concessions and regulatory risk. Section V analyzes the determinants of
transport concession performance. Section VI describes concession renegotiations.
Section VII draws lessons from this experience for the next generation of transport
projects in Latin America.