Low India PPI deals pull down world average

PRIVATE participation in infrastructure (PPI) development in India fell to a 10year low in 2015, contributing to the contraction in the global investment to below its five-year average of $124.1 billion, the World Bank said in a latest report, reports fe Bureau in New Delhi.

Still, India continued to be the second highest ranked country attracting private capital in infrastructure with $341 billion in 1990-2015. Brazil topped the table with $510 billion during the period.

In 2015, 36 PPI projects in India achieved financial closure totalling $4.1 billion, under half the $9.2 billion seen in 35 projects in 2014. In its Global PPI Update, the bank noted the 10-year low in investments was because only six road projects — a rich source of PPI in the last 10 years — reached financial closure.

Analysts said the pick-up in investments in the highway sector over the last threefour quarters is not reflected in the World Bank report as new projects being awarded are predominantly in the engineering, procurement and construction (EPC) category funded by the gover nment.

Besides India, poor commitments in Brazil and China pulled down global investments to $111.6 billion in 2015, below the five-year average of $124.1 billion from 2010 to 2014.

Most notably, commitments in Brazil were only $4.5 billion in 2015, a sharp decline from $47.2 billion the previous year, reversing a trend of growing investments. Investment in China also fell to around $3 billion in 2015 from about $7 billion in 2014, significantly below its 5-, 10-, and 20-year averages.

In 2015, there were 43 deals in South Asia for a combined total of $5.6 billion, representing 5% of world investment, a decline of 82% from the five-year average of $30.5 billion.

Consistent with historical trends, India generated a majority of the projects (36 out of 43) in the region; Pakistan had four; Nepal two; and Bangladesh one.

Notably, 26 of the 36 projects in India, amounting to $2 billion, targeted renewable energy.

The combined investment of three traditional heavyweights — India, China and Brazil — of $11.6 billion in 2015 only made up 10% of the global total, compared with 54% in 2014.

PPI investment remained at the same level in 2015 as 2014 because of surging investment in Turkey. Turkey enjoyed a banner year in 2015, with financial closings on seven projects totalling $44.7 billion, or 40% of global investment.