6.1 Infrastructure: Introduction Flashcards
Define Infrastructure.
Types of Infrastructure.
essential facilities and services upon which the economic productivity of society depends.
Economic –> Transport, Energy, Utilities, Communication
Social –> Hospitals, Schools, Prisons
Greenfield Infrastructure
▪ Covers the …, from the … of the project itself and its start-up
▪ Infrastructure assets tend to involve major construction work, in which …
Risks involved –> …,Construction risks,…
initial stages of infrastructure
design to the construction
risk can be quite high
Design and technological risks, Economic, legal and political risks
Brownfield Infrastructure
▪ …
▪ The history of operations provides good visibility into…
Risks involved –> Revenue risk, …
Assets are already constructed
revenue, usage rates, and operating costs
Operational and maintenance risk
See slide 9 for diagram
Infrastructure payer and pricing differentiation
The end user pays to use the assets:
▪ Private goods: …
▪ …: consumption is not rival and consumers can be excluded (e.g. most toll roads, utilities, communications networks)
Government and taxpayers pay for the use of assets
▪ …: can be consumed by everyone and consumption is rival (e.g. universities, hospitals, play grounds)
▪ Public goods: …
consumption is rival and consumers can be excluded (e.g. private hospitals)
Club goods
Common goods
can be consumed by everyone and consumption is not rival (e.g. roads, bridges, dams)
Regulated pricing vs. unregulated pricing
Regulated pricing
▪ The pricing for essential goods and services is
… in most countries
▪ Price changes must be approved by public entities
Unregulated pricing
▪ There is a growing trend toward unregulated pricing of …
▪ These are most common in…
heavily regulated
certain infrastructure investments in mature countries
the energy sector
Benefits of Public-Private-Partnerships
▪ Private capital sources can be used to…
▪ Competition improves …
▪ Private-sector management skills, …, and efficiencies can be …
▪ … to entities that may be better qualified to bear it
finance capital- intensive projects
the supply and quality of infrastructure services
technical expertise; leveraged
Transfer of risk from the public sector
Challenges of PPP
The … is a key success factor that should be well prepared
▪ … can lead to problems
▪ Governments do not always have the … to manage complex PPPs
initial design of PPP policies, legislation, and guidance
Inappropriate risk models
required skillset
