Downturn playing to privatisation push
Dover is just one of the ports involved in the privatisation debate
The downturn has given some countries further justification for transport infrastructure privatisation, but care needs to be taken that funds are directed to the projects with the largest long-run social benefits.
This was the outcome of one of the 2011 International Transport Forum annual summit session, More with Less: Shrinking Budgets and Growing Demand.
As seen in many places, private sector involvement can help increase the efficient operation of infrastructure, in a context where government sets performance standards. But it can also be pushed further, towards privatisation. However, to make it work, the consensus is that there is a need for a strong regulator that is independent of both political parties and industry players – and that some financial techniques such as securitisation do have a part to play as long as this regulator is in place.
So should the privatisation effort be intensified? Some say that there is considerable potential for more socially beneficial privatisation, and the supply of capital looking for transport-type investment opportunities is large. But others point to downsides or false hope.
One of these downsides is that privatisation deprives government of the possibility to correct mistakes, for example when assets are sold to parties that pursue objectives very different from those the government had in mind. And a - common - false hope is that privatisation can deliver large social savings in addition to those to be had from more efficient management.
Also, it was suggested at the session that the impact of the crisis on the ability of governments to fund projects is sometimes overstated. Therefore, the crisis certainly provides opportunities to improve cost-efficiency, but whether that should imply a massive shift towards private funding is less obvious.
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