Central Asia may be close to entering the PPP era for
infrastructure investment a development that could help
transform these landlocked, inaccessible nations.
Juan Miranda, ADB Director General for Central and West
Asia, said this weekend that we havent had in
Central Asia the unique transaction that says: the future looks
like this, but he believes one is not far
PPP arrangements could be applied to a multi-billion dollar
project to convert gas into chemicals in northern Uzbekistan,
Miranda said.If that happens, weve created a
message. We convey an opportunity to the international
investment community that this place is open for
Central Asia urgently needs private sector investment, but
is not set up to attract it. It is mountainous, making road and
pipeline development difficult; population centres are
thousands of miles from ports; and the world investment
community has been indifferent towards them.
Getting deals completed is limited partly by a lack of
private sector risk appetite and partly the absence of an
environment that would attract it. In Central Asia we
have the big ticket projects waiting for the private sector to
invest, but unlike other parts of Asia the upstream work [such
as legal infrastructure] lags behind, Miranda said.
Concession laws do exist, notably in Kazakhstan which
has a dedicated PPP unit within its government and an approved
list of projects for it to pursue but usage has so far
been modest. There is a comfort zone that is not that
huge here, and we need to expand that comfort zone.
In the meantime Miranda expects gradual progress, with most
involvement at the less committed end of the spectrum of
private sector involvement.
Would you be able to have an all-singing, all-dancing
concession and BOT? Maybe not right now, he acknowledged.
But maybe you go in more realistically, and expect a
management contract to start with. That, he feels, is
still progress. If you go from zero to something
thats no longer zero, that still represents
A positive sign for the region came last week with the
signing of Russias first major PPP deal, a ?715 million
loan financing package for the expansion of Pulkovo Airport in
St Petersburg. We think its a really path-breaking
deal, Rashad Kaldany, Vice President of the IFC (the
World Banks private sector arm), said.
Russia has a long history of PPPs faltering, mainly because
investors consider them too risky. Kaldany said that the
difference here was the government having a dedicated
team that was empowered to negotiate and engage, being willing
to adjust if need be, and to listen to investors.
Kaldany believes that the deal demonstrates not just
for Russia but for all CIS countries that this can be
done, and expects PPPs to follow in Central Asia. The IFC
is looking at PPPs for a hospital and part of a road in
Kazakhstan, and health diagnostic centres in Uzbekistan, among
other things. There is progress and we are