What makes a good infrastructure investment project?

The Intergroup on Long Term Investment and Reindustrialisation, chaired by MEP Dominique Riquet (ALDE, FR), hosted an event on what makes a ‘good infrastructure investment project’. The Intergroup is an unofficial body in the European Parliament that provides a platform for discussions across political groups. The opening speech was given by European Transport Commissioner Violeta Bulc who said that the transport sector is in the midst of reshaping itself on everything, from how it is financed to the services it offers. This re-shaping requires money. Bulc said that she has the biggest budget an EU Transport Commissioner has ever had, but that it is still not big enough to cover the EUR 600 billion needed to complete the transport corridors in EU. On the other hand, insurance companies and pension funds across Europe have EUR 30 trillion sitting idle looking for investment opportunities. Commissioner Bulc views the European Fund for Strategic Investments (EFSI) as a tool that can bring funding and investment needs together.

Olav Jones, Deputy Director at Insurance Europe, was present to answer the question on what makes a good project from an investor’s point of view. To him, one of the most crucial deciding points to enter a Public-Private-Partnership (PPP) is the presence of a political commitment. If governments around Europe engage with insurance companies and pension funds over a period of time that can extend over 20 years or more, the companies want to know for sure that the originally agreed PPP conditions do not change on a regular basis. On another note, Olav Jones believes that one of the biggest changes in transport is the rising of the smartphone. It has completely changed the way people use transport and the way transport interconnects. Based on this, the future is going to be run by data. Good quality data will be an essential factor for investors to assess the potential of investments in transport infrastructure. Besides the political commitment and quality data, investors also need standardised information (comparable balance sheets, accounting rules etc.) and the prospect of revenue streams.

In the quest to tie all actors and interests together, the Commission has created an approach consisting of three columns that will support the objective of a transport infrastructure pipeline attractive for investors across Europe. First and foremost, the

Commission wants to ensure a stable regulatory framework, secondly they have set-up an investment advisory hub together with the European Investment Bank, and lastly they have put in place EU funding opportunities in form of the EFSI. Moreover the Commission will not only be attracting investments from Europe, but also from China, U.S.A., and Saudi-Arabia.