A Two-Way Street: Public-private partnerships fill infrastructure gaps

Sarah Fister Gale

Infrastructure projects help nations build a better future. Emerging economies need upgrades to roads, railways, energy grids and broadband networks in order to sustain domestic growth. But these countries face a particular conundrum: how to build highways, power plants and ports that will stimulate economic development when public funds are in short supply.

To make ends meet, many governments are turning to public-private partnerships (PPPs). PPPs allow the public sector to leverage private funding and expertise to more rapidly plan, launch and deliver infrastructure projects. In exchange, private-sector partners are given long-term maintenance and operation contracts that turn a profit.

“On the face of it, PPPs are a great project model to fill in the funding gaps these countries face,” says Andy North, a former senior vice president of strategic development and management in Kuala Lumpur, Malaysia, for AECOM, a global design, engineering and construction firm.

The global gaps are staggering. According to McKinsey & Co., an estimated US$57 trillion will be needed to finance infrastructure development around the world through 2030, with much of that investment needed in developing countries. Latin America and the Caribbean, for example, will need more than US$700 billion to double power-generation capacity by 2030, according to the U.S. Energy …

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