Indian roads drive emerging markets resurgence

Transport projects that reached closure with private participation increased by 40% in value terms last year in 16 low- and middle-income countries around the world. The return to pre-Crisis levels of activity was primarily due to roads projects, the majority of them in India.

Last year, 93 transport projects with private participation reached financial or contractual closure in 16 low- and middle-income countries, with investment commitments totalling $28.3 billion. This was a 40 percent increase in investment compared with 2009, according to the World Bank’s Private Participation in Infrastructure database, and brought these countries back to pre-Crisis levels of activity.

The addition of new investments of $700 million into projects implemented between 1990 and 2009 brought the total committed in 2010 to $29 billion. The number of projects in these countries also increased by a margin of 75 percent compared with the previous year.

The headline figure was hugely bolstered by the Indian market and by road projects. India accounted for 56 percent of total investment in the 16 countries last year and 61 percent of new projects. Road projects, meanwhile, accounted for 69 of the 93 new projects and $20 billion of the $28.3 billion in new investment.

Making up the total were 16 ports projects with investment of $3.7 billion, two railway projects with investment of $3 billion and six airport projects with investment of $2.3 billion.

The database divides up its coverage into six regions: East Asia and the Pacific, Europe and Central Asia, Latin America and the Caribbean, the Middle East and North Africa, South Asia and Sub-Saharan Africa.

Of these regions, South Asia was unsurprisingly the most prolific last year thanks to the influence of India, accounting for $16.6 billion of investment in 58 new projects. Roads made up 49 of these projects, most of which involved the expansion of highways from two lanes to four (covering more than 4,870 kilometres). India also witnessed a particularly large closure of a greenfield rail project, with phase II of the Mumbai Metro – sponsored by Reliance ADA Group and SNC Lavalin – drawing more than $2.5 billion in investment.

The second most active region last year was Latin America and the Caribbean, with 23 new projects attracting $5.7 billion in new investment. Colombia was the single-largest recipient of capital in the region, with a total of $2.3 billion directed to two road concessions (Ruta del Sol sections 2 and 3), an airport concession and a greenfield container terminal.