Are Returns to Private Infrastructure in Developing Countries Consistent with Risks Since the Asian Crisis?
This paper presents a basic assessment of the financial performance of infrastructure service operators in developing countries. It relies on a new database of 120 companies put together to track the evolution of the cost of capital, the cost of e...
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| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/08/5114029/returns-private-infrastructure-developing-countries-consistent-risks-asian-crisis http://hdl.handle.net/10986/14155 |
| Summary: | This paper presents a basic assessment
of the financial performance of infrastructure service
operators in developing countries. It relies on a new
database of 120 companies put together to track the
evolution of the cost of capital, the cost of equity and the
return to equity for electricity, water and sanitation,
railways and port operators in 31 developing countries
distributed evenly across low-income, low-middle income and
upper middle-income countries. The paper shows that between
1998 and 2002, the average cost of capital in developing
countries varied from less than 11 percent to over 15
percent across regions and sectors while the cost of equity
varied from around 13 percent to over 22 percent.
Low-middle-income countries have recovered relatively well
from the East Asia crisis, while low-income and
upper-middle-income countries have seen their situation
deteriorate since the crisis. At the regional level, the
main story is that East Asia is recovering quite well from
its crisis, and that the financial performance of the
operators in Africa and Latin America has deteriorated.
Eastern Europe and South Asia are doing relatively better
but show a large volatility of returns over time and within
sectors. At the sector level, the railways and the energy
sectors have seen their performance deteriorate
significantly over the period, while the water and port
sectors have done relatively better. In all sectors and
regions, the average return to equity has been lower than
the cost of equity since the Asian crisis. |
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