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Infrastructure

Investing in Infrastructure

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It used to be that critical public services and infrastructure—think roads and airports and power lines and public hospitals and water and sewage systems—were entirely the domain of governments. While governments are still responsible for ensuring that citizens have access to basic infrastructure, the task of financing, designing, building and maintaining or operating public works is one that increasingly falls to the private sector.

At IDB Invest, we provide investment and expertise for infrastructure around the region and mobilize additional capital to support these projects. We look to incentivize market entry and promote sustainable solutions, focusing on four primary areas—energy, transportation, water and sanitation, and social infrastructure.

On the financing side, we offer a full range of options, including project loans, corporate loans, guarantees, bridge financing, mezzanine debt, equity, capital market issuances and local currency financing.

Our advisory services include appraisals related to climate change adaptation and mitigation, to help our clients reduce their carbon footprint and become more resilient. Gender equality is another area where we work with clients, advising them on how to obtain national and international certifications and create more opportunities for women in these traditionally male-dominated fields. In some cases, we can even blend in concessional resources to offer lower interest rates to companies that meet certain standards.

The IDB Group is especially well-positioned to support public-private partnerships. The Inter-American Development Bank brings to the table its technical and public policy expertise and provides financing to the public sector, while IDB Invest works with private sector partners and puts together financing packages that will attract investment.

Here’s a brief overview of the areas where we provide infrastructure financing and services:

Energy

We have a strong track record in getting solar and wind projects off the ground in Latin American and Caribbean countries, and continue to back such ventures in places the market is not yet serving efficiently. Other areas of interest to us include geothermal energy, energy-efficient street lighting, smart grids, battery storage for solar power and off-grid distributed power generation for remote areas. We also support natural gas projects to provide energy alternatives that are cleaner than other fossil fuels such as diesel.

Transportation

The need for better urban mobility creates a demand for long-term private investment in major physical infrastructure projects such as airports, seaports, subways, roads and bridges. We are also promoting investment in fuel-efficient bus fleets and other environmentally friendly public transit options. The transportation sector typically accounts for a high percentage of a country’s greenhouse gas emissions, so governments want to find cleaner alternatives to meet their commitments under the Paris Agreement.

Water and Sanitation

About 80 percent of households in the region have ready access to potable water, but only 35-40 percent are connected to a sewage system. We believe that private capital is needed to improve those numbers, so we are looking at ways to incentivize and support greater investment in water and waste management. One potential area for investment involves waste-to-energy systems that produce fuel from trash and other solid waste.

Social Infrastructure

We are also working on attracting private capital to invest in public infrastructure projects that address social needs, including hospitals and schools. Although this type of arrangement is still unusual in Latin America and the Caribbean, in some parts of the world public-private partnerships are created in which a private company not only designs and builds the school or clinic but also manages ongoing “soft” services such as catering and maintenance.