Financing Infrastructure Projects

Prestige Capital Partners l| Financing infrastructure projects worldwide

“Infrastructure networks enable people, goods, energy, information, water, and waste to move efficiently. … The extent, capacity, and quality of these networks has a direct bearing on the economy, … the environment, and the quality of life of everyone.” –  HM Treasury and Infrastructure UK, Strategy for National Infrastructure, March 2010

Financing Infrastructure Projects

Research suggest that well designed infrastructure investments can raise economic growth, productivity and land values which can help economic development, energy efficiency, public health and manufacturing. There are other positive benefits from infrastructure investments. According to the Bureau of Economic Analysis, publicly-owned transportation infrastructure makes up nearly 13 percent of our total non-residential capital stock, and this stock has resulted in significant positive externalities. Evidence suggests that infrastructure investment can raise property values, which reflects an improvement in living standards. For example, research suggests that
proximity to public transport raises the value of residential and commercial real estate.

Infrastructure Projects

Governments look towards private companies to invest in their infrastructure to help stimulate the economy when Government funding is dry. Infrastructure consists of:

  • Railway and road networks
  • Hospitals
  • Sewage treatment and piping
  • Water and electric connections
  • IT

Infrastructure Investment

Infrastructure systems are built to develop economic growth in areas where there is demand because of increasing population. Infrastructure projects that make improvements can be funded publicly, privately or through public-private partnerships (PPP). Governments will contract a private partner possibly through tenders to finance, build and operate infrastructure assets in that nation for a certain period of time.

Global Railway Projects

Railway projects in the pre-tender stage amount to $700bn USD globally, with Asia offering the most opportunities for investment. Urban development, air pollution, a growing middle class and regional integration are key trends that will underpin railway construction plans over the coming years.

Railway infrastructure will offer significant opportunities for investment, as rail transport projects especially in the pre-tender phase. Factors driving growth in the sector are trends such as: urban development, efforts to curb pollution as well as a rise in income levels. Asia has the largest railway project pipeline overall, but  other countries in various parts of Africa will also offer substantial opportunities.

Improving Americas transportation system can save middle class families money by reducing the costs associated with congestion and the additional vehicle maintenance caused by poor road conditions. One recent study found that poor conditions of roads cost the average motorist who drives in cities on a regular basis over $400 USD a year. Moreover, providing high speed rail and improved public transportation will provide middle class families with more options to save time and money, so that they can keep more of their income for other purposes and spend more time doing what they want, rather than spending time getting there.

Funding Utility Projects

The world needs newer, efficient utility technologies to satisfy the growing demand of the world’s population putting greater need for constant water and energy supply. Finance for infrastructure projects is widely available for the development and construction of power generation and infrastructure. Financing such projects can replace and uplift outdated infrastructure, but also to meet the requirements to deliver more electricity from renewable energy sources.

Utility sector investment levels are expected to increase in Europe. From steady levels of growth from the late 1990’s to the middle of this decade, approximately 40 Billion Euros in expected to be invested annually. Utility investment in the United States should also see a similar trend with all eyes on Asia and Africa as water droughts are a common occurrence.

World Commodities

Since the dawn of the industrial revolution, products are manufactured en mass and allowed commerce to operate on a global scale. As employees worked using power-driven machines, these products bought about efficiency and therefore productivity grew. Innovative technological breakthroughs increased growth in machinery operating by a number of power sources such as steam and electricity.

We mentioned in the renewable energy article that there is now a greater demand for new sustainable technologies as we are seeing a heavily polluted Earth. Commodities help each nation grow through shipments and exporting goods.

Today, we are entering a new technological age whereby it is more common to see robots and other technologies such as computers and smart phones on the production line. Not only is this keeping companies automated but there is a threat that this could lead to mass unemployment.

It is interesting to see how the world trades and the industries that shape countries. The CIA factbook has documented every countries to their commodities. You can see that the biggest commodity in the world is oil and petroleum products. Should there be a shortage in supplies could have a knock on effect in other world industries.

World Commodities Map

From Visually.

Looking forward, is this sustainable? Will people change and evolve to be self sufficient or can we survive on the current fiat monetary system and still be in employment? Only time will tell.

 

Financing Infrastructure Projects was last modified: July 27th, 2017 by Denise