P UBLI C - P RIV A TE P A RTNERS H I P S IN SOUT H A SI A
FIGURE 1.4 Traditional versus Public-Private Partnership Procurement of Infrastructure in India, 2001–17 5,000
Rs, billion
4,000 3,000 2,000 1,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PPP
Traditional
Sources: Department of Economic Affairs, Ministry of Finance, India; Private Participation in Infrastructure database. Note: For PPPs, year is the year of the concession agreement, financial closure, or the appointed date, whichever is available, in that order. For traditional procurement, the year is the project award year. PPP = public-private partnership.
is terminated early. To value the fiscal risks, the study adopts a value-at-risk methodology (see annex 1A for details).
Predicted Probabilities of Distress for Active PPP Projects in South Asia Data come from four sources: the World Bank Private Participation in Infrastructure Project (PPI) database;12 the Polity IV Project;13 the World Bank’s World Development Indicators (WDI);14 and the Systemic Banking Crises data set of Laeven and Valencia (2018) (see annex 1B). The PPI database includes data on project characteristics as they were agreed at the time of the signing of the PPP contract or at the time of financial closure. These characteristics include the type of project, sector, contract period, government level (national or subnational) granting the contract, identities of the sponsors, types of government support, amount of investment commitments, and financing information. The PPI database also provides the current status of the project as active, concluded, distressed, or canceled. The PPI database is sourced from publicly available information, such as press reports. As a result, some projects might not be captured in the database, and a considerable number of projects in the database lack the
data for all characteristics. For the variables essential for the analysis—namely, contract period and the level of government that granted the contract—missing data were added for all projects using the individual project descriptions provided in the database, if available. The institutional characteristics of a country are drawn from the Polity IV data, using variables on yearly executive recruitment, the concept of constraints on the executive, and the concept of political competition. From the WDI, annual series of per capita growth rate and nominal exchange rates are used to create series of detrended and demeaned series of per capita growth rates and exchange rate shocks using the filter suggested by Hamilton (2018). The data on financial crises come from the Systemic Banking Crises data set of Laeven and Valencia (2018). The econometric estimation uses the data on all PPP projects in low- and middle-income countries. After estimating equation (1A.2), in annex 1A, predicted probabilities of distress are obtained for the PPP projects in South Asia using the predictions implied by the survival analysis.15 The PPI database records 7,979 projects in emerging markets and developing countries, encompassing 127 economies, with financial closure dates from 1990 to 2019. The sample
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