The European Bank for Reconstruction and Development and PPPs
The EBRD has an explicit mandate to encourage economic and political transition in the former Soviet Union countries and the Eastern Bloc satellites through the development of market economies. Since the beginning of operations in 1991, the EBRD has been involved in creating the legal environment for private investment in its countries of operation, including concession laws.
The EBRD has been involved in financing PPPs in the transport sector since 1993 and the municipal and environmental infrastructure (MEI) sector since 1996.
Since 2005 the bank has financed 19 private projects in the MEI sector, accounting for 25 per cent of total EBRD MEI commitments, although some of these may not have been PPPs as we would define them.
In the transport sector the EBRD has financed a similar number of PPPs since 2005, although the exact figure is not clear because not every project is labelled as a PPP in the bank’s project description.
Controversial PPP projects financed by the EBRD include:
- The M1/M15 and M5 motorways, Hungary
- The Sofia water concession, Bulgaria
- The Zagreb wastewater treatment plant, Croatia
- The M6 motorway, Hungary
(Read more one these projects in our case studies.)
The EBRD has also had several near misses in recent years in which it planned to finance controversial PPP projects but in the end did not, either because of obvious non-compliance with its standards and civil society pressure (eg. Moscow – St. Petersburg motorway) or because the projects unravelled, as in the D1 motorway Phase 1 PPP in Slovakia and the Tbilisi water project in Georgia.
During the decade up till 2008, the evaluation unit at the EBRD assessed 14 PPP projects that the bank had financed in power and energy, municipal infrastructure and transport. It judged the bank’s achievement of attracting and maintaining private sector involvement and ensuring legal protection of the private partner and commitment of the public agency. Based even on these narrow criteria, the evaluation concluded that the EBRD has had uneven success in PPP projects.
Now that the bank is planning to expand its operations to the Middle Eastern and North Africa countries, starting with Egypt, Tunisia, Jordan and Morocco, it has indicated its interest in promoting PPPs there, too, in spite of the model’s problematic outcomes elsewhere.