Latin America Needs Better Planning and Transparency to Enhance Infrastructure

The Infrastructure for Latin America Development Conference, held on April 25–26 in Buenos Aires, convened by CAF—development bank of Latin America—, concluded after two days of analysis, discussion and exchange of experiences among top public officials, entrepreneurs and scholars.

During the closing panel, different aspects of the continent’s infrastructure challenges, such as governance, transparency, and Public Private Partnerships (PPP) were discussed. In this vein, CAF’s Vice President of Infrastructure Antonio Henrique Pinheiro Silveira said: “Infrastructure is a key tool to improve connectivity and integration in cities and countries. At CAF, we work on two pillars: accessibility of cities and logistics corridors to improve well-being and productivity of the population. Because the needs are many, we must all work together to close this gap: governments, multilateral organizations, commercial banks, entrepreneurs and individuals.”

Other guests included the Minister of Urban Development and Transport of the City of Buenos Aires, Franco Moccia, the President of Colombia’s National Infrastructure Agency, Dimitri Zaninovich, the Deputy Director General of Project Financing at BANOBRAS, Federico Gutiérrez Soria, and the Chief Economist for the Infrastructure Division at the IDB, Tomás Serebrisky.

Advancing project planning, transparency and quality through public works or Public-Private Partnerships (PPPs) was the common denominator in the conclusions. “Our countries need so much infrastructure that they have to ensure professional, transparent public works that start and finish on time,” Moccia said. In addition, Zaninovich noted that “governance is key to attracting funds and building investor confidence. In Colombia, we created the ANI only for PPPs. The FDN was also created to attract the financial sector, and we have yet to build stronger institutions for planning.”

Tomás Serebrisky noted that “Latin America requires more and better investment in infrastructure, and for that we need good planning with sustainable infrastructure.” Lastly, Federico Gutiérrez Soria assured that “for PPPs to really be successful they must be transparent in order to avoid corruption, and thus prevent renegotiation problems, among others.”

The second day of the Infrastructure for Latin America Development Conference also featured the head of government of the City of Buenos Aires, Horacio Rodríguez Larreta, who delivered a lecture on the transformation of infrastructure in Buenos Aires. The mayor thanked CAF for the financing of Paseo del Bajo, an iconic project that will transform access to the city of Buenos Aires.

He also explained the work underway in urban roads of the city: from major road projects, to encouraging residents stop using their cars and use public transport. “Thanks to the new trains, the underground transports now at least 1,300,000 passengers. At rush hour, people choose speed over comfort. Therefore, every person who gets on the subway and stops using their car is a success.” He also referred to the need for people who come to the city to do so by public transport. “It goes against quality of life of people if they have to commute for one hour and a half, and therefore we need to work on the public side, to encourage them to shift towards public transport.”

Competence and efficiency to promote energy integration

Technological advances in the energy sector have raised uncertainty about what will be the most competitive energy source in the coming years. The progress of renewables will continue to take center stage along with other innovations in addition to wind and solar photovoltaic. Energy storage is another issue that will set the tone for the future. These were some of the central themes of the energy panel in which planning, competence and efficiency set the agenda.

During his presentation, Carlos Skerk, partner and director of Energy Supply Studies of Energy Markets Consultants, stated that “we don’t need to be afraid of competition to promote efficiency because the technologies are already mature for that. Europe pioneered the promotion of renewables, and is now encouraging stakeholders to compete and bear the costs, and urging governments to promote competition to ensure success.”

The Secretary of Electricity Policy Coordination of Argentina’s Ministry of Energy and Mining, Alejandro Sruoga, noted that the nation has already moved from urgent to important issues because the sector has already normalized and now they work on innovative issues such as paradigm-shifting smart networks. “One of the duties of governments for the future, in addition to planning, is to promote competition, because it is a useful mechanism to reach reasonable costs, attract investment and improve quality of service, among other virtues,” he explained.

Infrastructure financing

Pablo Quirno, Chief of Staff of the Ministry of Finance of Argentina, explained in his presentation the importance of transparency and trust in financial systems for infrastructure projects. “Transparency has an economic value, because it arouses greater interest and promotes more competition; competition leads to better prices and as a result we can undertake more projects with the same amount of money.” Quirno emphasized the importance of multilateral banking in recent years and how Argentina has learned to maximize resources to “do more in a shorter period of time.” He also gave a clear message, that we have now all opportunities to “finance well and finance in the long run.”

Mariano Colmenar, general business manager at ICO, Spain, emphasized three key aspects in infrastructure investment:

• Project quality: There must be an optimal transfer of risks from the public to the private sector
• Transparency
• Security: The rules of the game need to be clear in the legal, security and regulatory aspects. This will all eventually create ecosystems where sponsors and financiers feel comfortable.

In addition, Ignacio Fombona, Financial Advisory director at CAF, supported PPPs as a great funding model in the region, but clarified that they are “long-term agreements, which means that the project must show sustainability in the long run. Thus, before finalizing them, the parties must show their credentials and demonstrate that there is political, social stability and reliable regulatory frameworks.”

By organizing the Infrastructure for Latin America Development Conference, CAF reiterates its commitment to closing the infrastructure gap and improving quality of life of Latin Americans, not only based on funding but also on research for the development of the region.