The latest event in FIDIC’s 2024 webinar series took place on 27 February 2024 with a deep dive into the issue of investment for large-scale infrastructure and how such investments can be de-risked by international financial institutions to draw in private sector finance to fill the funding gap.
The webinar, De-risking and leveraging infrastructure investment: Helping the private sector fill the funding gap, organised by FIDIC’s International Financial Institutions Committee (IFIC) and sponsored by Bentley Systems provided a platform for IFIs to air their views and highlight the steps that they can take to de-risk these major investments to make major infrastructure projects more attractive and bankable for those organisations looking to invest in them.
Speakers at the webinar, which was chaired by Suraj Rana, managing director of DT Global and chair of the FIDIC International Financial Institutions Committee, included Frederic Wiltmann, head of the programme team at the Multilateral Cooperation Center for Development Finance at the Asian Infrastructure Investment Bank (China), Şebnem Erol Madan, practice manager for the infrastructure finance and guarantees group at the World Bank (USA), Wale Shonibare, director energy financial solutions for policy and regulation at the African Development Bank (Ivory Coast), Vera Monika Masurat, senior consultant at GOPA Infra (Germany) and Gregory Liu, acting director general for infrastructure investment department (Region 2), Asian Infrastructure Investment Bank (China).
Welcoming delegates to the webinar, FIDIC board member and Eptisa president Luis Villarroya highlighted the importance of FIDIC’s International Financial Institutions Committee in working with International Financing Institutions and related organisations in the development of policies, guidelines and processes to improve financial management, procurement and to enable implementation of innovations and best practice.
Introducing the webinar, Suraj Rana, managing director of DT Global and chair of the FIDIC International Financial Institutions Committee, said that with massive global infrastructure needs come massive challenges. “IFIs play a crucial role in helping to attract private finance to global infrastructure projects,” he said and he looked forward the webinar speakers addressing some of those challenges.
First speaker Frederic Wiltmann, head of the programme team at the Multilateral Cooperation Center for Development Finance at the Asian Infrastructure Investment Bank, highlighted some of the practical ways that IFIs were mobilising emerging market financiers in the delivery of quality infrastructure investments. He also gave examples of some of the frameworks being used to de-risk investments and how these were also supporting more sustainable projects.
Şebnem Erol Madan, practice manager for the infrastructure finance and guarantees group at the World Bank, highlighted the importance of attracting private finance to major infrastructure projects and the key role of the IFIs within that. She highlighted three key ‘modalities’ for this - public-private partnerships, state-owned enterprises making public investments and risk sharing through financial intermediaries. “The World Bank Group is committed to leveraging investment thorough its suite of products which can mitigate risk for a wide range of investors,” she said.
Wale Shonibare, director energy financial solutions for policy and regulation at the African Development Bank (ADB), spoke about the wide-ranging work of the bank in encouraging investment in the energy sector. This included regulation, promotion of best practice and the encouragement of technical assistance. “There is a correlation between a functioning regulatory environment and the ability to attract investment,” he said. Shonibare also highlighted the importance of data and also the role of regional connections in fostering a more sustainable sector for the long term.
Vera Monika Masurat, senior consultant at GOPA Infra, offering the consultant’s perspective on public-private partnerships said that three key areas needed to be considered by those setting up the projects. These were the overall scope of the project, whether it is really bankable and the complexity of stakeholders involved. “Not all projects will be suitable for PPP, especially those that are smaller,” she said. Addressing the complexity of stakeholders involved, Masurat said that capacity building training for IFIs was needed as it was not straightforward to liaise and deal with many different organisations and their interests.
Gregory Liu, acting director general for infrastructure investment department (Region 2) at the Asian Infrastructure Investment Bank, highlighted the key importance of appropriate risk allocation on projects as a key area to consider in ensuring project success. He also agreed with previous speakers who advocated more capacity building, for both the private and public sector. There needed to be more focus on training all the way along the value chain, Liu said.
The discussion highlighted a range of issues. A number of speakers made the point that public-private partnerships were not a panacea or a ‘golden bullet’ and they would not be suitable in every case. The issue of project risk was also raised by a number of attendees as was the need to be vigilant on the threat of corruption. Other issues raised were how to decide which projects to invest in and whether the emphasis should be on vital projects or those likely to generate substantial revenue.
Speakers also addressed the key questions of what can the IFIs do practically to de-risk and leverage in investment and how can the key issues of lack of funding, climate change and technology challenges be addressed and overcome to encourage investment in the major infrastructure the world badly needs.
The next webinar in FIDIC’s 2024 programme is an event organised by the FIDIC Future Leaders Advisory Council looking at company values and whether they are being lived up to by firms in the engineering, construction and infrastructure sector.
Click on the video below to view the full webinar recording.
