Page 60 - Industrial plants

meant that the need for additional infrastructure supported tapping in the energy and initiative of the
– roads, power plants, water-treatment plants – private sector, and the discipline imposed by its profit
continued to grow; motive, to enhance the efficiency and productivity of
• The debt crisis meant that many countries had what had previously been considered public-sector
less borrowing capacity and fewer budgetary services.
resources to finance badly needed projects; the
debt burden required them to adopt an austere It is now increasingly recognised that the private sector
approach when planning fiscal spending, can play a dynamic role in accelerating growth and
compelling them to look to the private sector for development. Many countries are encouraging direct
investors for projects which in the past would private-sector involvement and making strong efforts to
have been constructed and operated in the public attract new money through new project financing
sector; techniques.
• Major international contracting firms which in the Such encouragement is not borne solely out of the
mid-1970s had been kept busy, particularly in the need for additional financing, but it has been recognised
oil-rich Middle East, were, by the early 1980s, that private-sector involvement can bring with it the
facing a significant downturn in business and ability to implement projects in a shorter time, the
looking for creative ways to promote additional expectation of more efficient operation, better
projects; management and higher technical capability and, in
• Competition for global markets among major some cases, the introduction of an element of
equipment suppliers and operators (particularly in competition into monopolistic structures.
the power and transportation industries) led them
to become promoters of projects to enable them Project Finance is being introduced in both developed
to sell their products or services; and developing countries as an alternative way to
• Outright privatisation was not acceptable in some finance infrastructure and industrial projects, both small
countries or appropriate in some sectors for and large. The concept is being used in transportation
political or strategic reasons and governments (tolled roads, tolled estuarial crossings and railways);
were reluctant to relinquish total control of what energy (private power stations, waste-to-energy plants
may be regarded as state assets. and gas-distribution pipelines); sewage and water-
treatment plants; health care (construction and
operation of new hospital buildings and clinical waste
During the 1980s, as a number of governments, as disposal plants); education (provision of student
well as international lending institutions, became accommodation and facilities for universities, colleges
increasingly interested in promoting the development and schools); and provision of government offices.
of the private sector, a consensus developed. It

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