Below are some examples of the World Bank Group’s support to PPPs that increase access to infrastructure services, benefit the governments’ bottom lines, and accrue further development benefits.
Solid Waste Management PPP—West Bank & Gaza
The West Bank & Gaza has long suffered from limited investment in public infrastructure. In the West Bank in particular, the population generated about 500 tons of waste daily, most of which burned, dumped outdoors, or sent to unsanitary landfills.
The Joint Services Council for Hebron and Bethlehem sought support from the World Bank Group and international donors to fund a modern, sanitary landfill—and the World Bank Group provided support at several levels.
IFC was brought in to find a qualified private partner through a PPP to operate and manage a modern landfill and two waste transfer stations. They helped design a transaction structure with input from regional and international solid waste management operators that balanced the needs of the grantor with those of investors for the benefit of the public.
IFC also secured an $8.25 million grant from the Global Partnership on Output-Based Aid that uses a results-based approach tying subsidies to the delivery of services. A system of performance standards and penalties ensured sanitary operation of the landfill, adherence to environmental standards, and performance.
Seven international and regional private sector operators expressed interest in the project. Of these, three submitted bids. Technical and legal experts helped evaluate the bids in a transparent manner. Once a Greek consortium won the bid, the concession was signed in 2013; the site became operational one year later. It is now serving 33 municipalities with 840,000 residents.
Metal, plastic, paper, cardboard, and carton waste are recovered and sold to the private sector for recycling—reducing greenhouse gas emissions by an estimated 13,400 tons over seven years. The PPP has also led to the closure of 19 existing unsanitary dumpsites, which has significantly improved people’s lives.
National Telecom S.A. (Natcom)—Haiti
Even before the devastating January 2010 earthquake, Haiti’s telecommunications infrastructure was woefully inadequate. Fixed-line penetration was only 1.2%, the lowest in Latin America and the Caribbean; mobile density was about 35%; and internet penetration was below 1-in-100 people. Teleco—the state-owned phone company—was operating at a huge loss, borne by taxpayers.
In 2007 the government decided to sell a 60% stake in Teleco to a qualified company. This was critical to Haiti’s development, as the absence of key telecom infrastructure was a major obstacle to attracting much-needed investment in the country. IFC supported the Banque de la République d'Haïti, the Central Bank, with a sale of share in Teleco, with the new company to provide nationwide telecom services to residential, business and public customers in Haiti.
IFC recommended that the selected investor would be required to capitalize Natcom with an investment of at least $80 million in exchange for 60% of its equity capital, with the Central Bank retaining 40% ownership and providing telecommunications licenses and other assets. According to the World Bank’s Country Partnership Framework for 2015, the resulting PPP “stimulated competition in the sector, reduced communication prices, and increased access.”
Indeed, internet penetration went from 1-in-100 people to more than 1-in-10. Mobile penetration jumped 30% – with many having access to the internet via their phone. Natcom’s efforts to improve telecommunication infrastructure with the installation of two undersea fiber cables has also led to the growth of internet service providers, which could not have existed before.
The PPP also led to a national development policy—supported by the InterAmerican Development Bank—to transform Haiti into a destination for business processing outsourcing service companies, which rely on IT infrastructure.
So far, the tax on international phone calls from Natcom and its competitor—Digicel—has raised $53 million for the Haitian government. Additionally, since the launch of Natcom services in 2011, the government has been collecting a 5 cent per minute fee on all international calls into Haiti to finance a free compulsory education program across the country.
Public Street Lighting—India
There are many cases where the World Bank Group looked to the private sector to solve a developmental challenge via PPPs.
In India’s Odisha state, IFC helped the state capital, Bhubaneswar, find a private-sector energy service company (ESCO) to improve its outdated and poorly-maintained street lighting infrastructure. The previous state-operated system’s service record was poor, leading to safety issues—especially for women. And because there was no way to monitor usage, energy consumption was costly, and a strain to the city’s finances.
IFC helped the city conduct an open, transparent tender in this PPP transaction. A local Indian consortium, Shah Investments, won the contract to overhaul the city’s street lighting infrastructure. IFC recommended an innovation to link the ESCO’s revenue to the amount of energy it saved the city. In short, IFC created a powerful incentive for the private sector resulting in better service at lower cost to the city.
Shah Investments got the message. It offered an 80% drop in municipal energy consumption. The city is saving about $100,000 annually and those funds are now available for other pressing needs. ESCO set up a centralized control and monitoring system with remote operations, dimming, and monitoring capabilities, saving the city electricity costs while also making the streets brighter and safer.
Before the PPP, women in Bhubaneshwar were scared to walk around in the evenings and stayed home after dark. The LED street lights have changed that and women report feeling safer. They can go out with their children in the evenings and small business owners are able to keep stores open later—allowing their business to grow.
This model has been replicated across five cities in the State of Odisha. IFC also helped Jaipur, in the state of Rajastan, replicate the project. IFC is also replicating the model in LAC and may do the same in ECA and MENA. The contractual documents for the project were published publicly online. This facilitated the implementation of similar projects in cities such as Pune & Thane in Maharashtra, Bhopal and Indore in Madhya Pradesh—as well as four more cities in Odisha.
Last Updated: Oct 04, 2016
