Privatization of Transport Infrastructure Risks Costly Consequences for Taxpayers
Governments need to improve regulations and fix institutional issues to attract private investment in transport infrastructure. Some countries have found creative ways to involve the private sector, but roads still require public funding. Partnerships between public and private sectors at ports and airports are underutilized. Regulators must understand costs, be fair to shippers, and anticipate demand to attract private capital. Contract-based regulation is becoming more common, but inadequate contract design can lead to conflicts and higher costs. The risk of regulatory and political issues makes investors cautious, potentially leading to contract renegotiations. Privatization benefits may not reach consumers without fair distribution through independent regulatory institutions and effective competition agencies.