Promotion of private infrastructure

The evaluation covered the period 1992-94. The project, which is being implemented by the Ministry of Policy Planning and Implementation"s Secretariat for Infrastructure Development and Investment (SIDI), has made very little progress toward achieving its purpose, as evidenced by the following. (1) A core of expertise for the design, tendering, negotiating, and approval of projects, as well as the interagency review and approval process of the expected private infrastructure network has not been developed. (2) The public awareness component has been successful in reaching the business communities and line ministries, which are now well-informed about private sector approaches. There has been little outreach, however, to increase the understanding and support of the general public. (3) Due to a lack of commercially viable projects and associated incentive packages, marketing activities did not proceed beyond the initial stage. (4) Procedures for treating unsolicited proposals have been established but only in a very preliminary form. Little progress has been made in setting up either a private sector credit facility for infrastructure investment or a mechanism for co-financing feasibility studies. Lack of progress can be attributed to: lack of host government commitment in implementing its private financing policy and economic infrastructure policy; failure of the project design to focus on strengthening host government commitment and building the related institutional capacity; lack of implementing authority or even of a clearly defined role for SIDI; and the inexperience which has rendered technical advisors and consultants in the areas of policy reform and institution building incapable of proposing or undertaking needed corrective actions such as project re-design. The Housing Guaranty Component has focused on developing municipal water supply, wastewater treatment, and solid waste projects under build-own-operate/build-operate-transfer (BOO/BOT) or other forms of public/private sector partnerships. To date, an Environmental Infrastructure Unit has been established in SIDI with considerable project assistance and has proven effective in meeting the TA and training needs of both SIDI and the municipalities. The implementation of projects will likely to prove difficult, however, because few activities seem able to provide returns sufficient to attract private investment. Two lessons have been learned. (1) Development of privately funded projects is not possible without policy changes and capacity building of involved institutions. (2) The validity of assumptions needs to be closely monitored; if they are found invalid, the logframe needs to be revised. The key action decision is to redesign the project, shifting the focus from development and approval of infrastructure projects to policy and procedural reform and institution building.