Bridging Continents CMS_LawTax_Negative_28-100.

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Infrastructure Index 2019

cms.law/infraindex2019
 Contents
The top 10 Countries ranked 11 – 50
11 Austria 81.48 31 Russia 57.80
Bridging Continents4

Global infrastructure opportunities6

12 France 81.22 32 Peru 57.14
The CMS Infrastructure Index analyses data across 50 jurisdictions against six criteria 13 United Arab Emirates 79.18 33 Indonesia 55.76 New frontiers for infrastructure
investors8
to create a guide to the most attractive destinations for infrastructure investment. 14 Japan 76.93 34 Oman 55.74
15 Spain 74.40 35 Kuwait 55.59 Germany:
Spearheading the
16 South Korea 73.32 36 South Africa 55.29 energy transition 2.012
17 Hong Kong 73.00 37 Kazakhstan 55.18
3 18 China 69.21 38 Turkey 54.73
Case study:
4 19 Poland 69.18 39 Romania 54.49
The allure of Germany14

United Kingdom:

Singapore Australia
20 Chile
21 Saudi Arabia
68.14
67.76
40 Philippines
41 Bulgaria
54.44
53.95
UK eyes renewables leadership16

Interview:
87.90 22 Italy 67.11 42 Qatar 53.04 Alistair Ray, Dalmore Capital20
87.50
23 Czech Republic 66.22 43 Morocco 51.92
Europe:
24 Slovakia 63.78 44 Vietnam 50.46 Brimming with opportunities23
2 25 Malaysia 63.33 45 Brazil 48.88
Interview:
26 Colombia 62.50 46 Ukraine 44.94 Niall Mills, First State Investments28
5 27 Mexico 61.78 47 Cambodia 41.70
Netherlands 28 Hungary 61.67 48 Bangladesh 39.42
Interview:
David Delgado-Romero, Meridiam30

89.23 Canada 29 India 60.86 49 Algeria 35.56 Case study:

Europe steps up its WtE game33
86.66 30 Thailand 59.37 50 Iran 34.21

1 Middle East:
Smart cities shaping the future35

Germany
Interview:
Countries with the biggest rise in index points Sonia Ytuarte Nasser, Ras Al Khaimah
Waste Management Agency38
Points Increase Points 2019 Points 2017

89.67 6 42.78
Interview:
Antoine Poussard, Finergreen 40
58.77 40.67
51.82
Norway 57.80
69.21 50.46
25.99 Case study:
Neom, a new future43

86.08 60.86
34.21 Americas:
15.02 LatAm leads innovation45
10 10.44 9.79
9.04
Russia China Vietnam
India
8.22
Interview
Iran
Belgium Diana Muñozcano, Grupo Indi48

82.07 Case study:

7 -7.43 -4.28 -4.24 -3.27 EllaLink: breaking the status quo 51
-17.86 Czech Slovakia

United Qatar Chile UK Republic

Africa:
Trade ambitions boost
63.78
9
8 States 68.14 83.15
66.22 interconnectivity53

United 84.73
53.04
70.46
67.05
Asia Pacific:
Securing digital transformation
87.43
Kingdom Finland 70.90
75.57 leadership57

83.15 83.81 Interview:

Points decrease Points 2019 Points 2017 Jeremy Chun Chong Ong, DNV GL62

Methodology64
Countries with the biggest fall in index points
Scores are out of 100.
 Sustainability New PPP
Bridging Continents rising up agenda opportunities
ESG criteria becoming a priority LatAm, Asia Pacific, the
In Bridging Continents, the 2019 CMS Infrastructure Index, we see
for infrastructure investors and Middle East and Africa
that infrastructure is connecting people worldwide at an unrelenting
intrinsic to projects have strong PPP pipelines
pace. With sustainability, innovation and digital transformation at the
heart of government agendas, investors are finding new and exciting
opportunities on a global scale, including 5G, subsidy-free renewables,
smart cities and PPP in new markets.

This year’s CMS Infrastructure Index ranks 50 countries

in order of investment attractiveness. There are some
guidance on how to measure and report performance.
Regulators globally are working to create their own
Renewables Race for 5G
big shifts since our 2017 Index and Germany has
taken top spot. Germany’s focus on sustainability
frameworks in this area but, with many countries
creating their own, international operators will face mature Asia Pacific countries
and innovation is the driving force behind its a complex matrix of requirements for their different are in the driving seat
position. The country is making climate action an assets around the world. 16 PPAs signed in Spain in 2019,
essential part of the political agenda and supporting
this through a number of offshore wind projects, the In this year’s report, we see some very strong with more across the rest of
construction of a fourth electricity highway and an
extensive EV charging programme.
representation from the Americas. Latin America has
some mega interconnectivity projects, presenting
Europe
some exciting developments. Examples include a
The UK’s story is not so positive. We see the UK fall 3,500km submarine fibre optic network from the
from fourth in 2017 to ninth in 2019. The Brexit- north to the south of Chile and the recently completed
effect. Without Brexit, the UK would rank fifth. 10,000km subsea cable connecting California to Chile.
There is a steady pipeline in some infrastructure On the other side of the continent, Brazil is working
sectors: for example, rolling stock renewals in England on the innovative 9,300km EllaLink subsea cable

Power in MENA Secondary

and transport in Scotland. There is also a shift from system bridging between the American (Brazil) and
primary to secondary investments, with more European continents (Portugal and Spain).
opportunity for secondary market investors in rail,
airports and energy. However, unsurprisingly, the
political uncertainty has led to delays for flagship
Overall, the infrastructure sector continues to present
a positive picture in an uncertain world. Governments USD 1trn to be invested in MENA market
power projects in next five years
buoyancy
projects and a decrease in lending to UK projects. globally are investing heavily in infrastructure assets to
stimulate their economies. At the same time, there is
Another country to note is China, which has risen an abundant support of capital as investors look for
over 10 points since the 2017 Index and is now in long-term stable investments.
18th position. 5G is instrumental in China’s increased Global secondary market
ranking due, in part, to major corporations such as
Huawei and ZTE; over 10 million advance orders for
Thank you to our research partners inspiratia, and to
our interviewees for giving up their valuable time to
strong, especially in CEE
5G data plans were submitted to China’s three mobile share their views. If you would like to discuss the
operators, and they will deploy a total of 130,000 report, or any of its themes, we would welcome a
stand-alone 5G base stations across the country by conversation.
the end of 2019.

As the world focuses on climate change and Kristy Duane

Bridging BRI delivers

sustainability, we see this transferring to the Partner
infrastructure sector too. Infrastructure assets play T +44 20 7524 6568
a vital role in climate change mitigation and E [email protected]
environmental, social and governance (ESG) criteria
are becoming a top priority for infrastructure investors Paul Smith continents USD 368bn committed
and important to projects. However, the sector is Partner by China to BRI projects
facing a number of challenges, including an absence T +44 20 7367 3475 46,800km of subsea cables
of consistent standards and, as a result, limited E [email protected] across Asia
involved in LatAm's mega
interconnectivity projects
Global infrastructure opportunities Europe
1 Germany 9 UK 15 Spain
The EU’s economic engine is expected The USD 3.5bn acquisition of a The closing of the 300MW Talasol park
to increase its 2030 offshore wind majority stake in Gatwick Airport in May 2019 marked one of Europe’s
capacity goal from 15GW to 20GW. highlights the scale of investment largest unsubsidised solar transactions.
Americas
opportunities in the secondary market.
2 Netherlands 19 Poland
5 Canada
One of the world’s most dynamic 10 Belgium A major project currently in
In 2019, Ontario committed USD
electric vehicle charging infrastructure The 36% stake of Brussels airport to procurement is the USD 420m Olsztyn
86bn for infrastructure over the
markets saw oil giant Shell making its institutional investors is awaiting waste-to-energy plant.
next decade.
first play in the sector by announcing its completion.
partnership with engineering major 41 Bulgaria
7 United States
AECOM for the roll-out of a nationwide 12 France The IGB gas interconnector that will
President Trump’s proposed
charging network in July 2019. The 600MW Dunkirk offshore wind connect Bulgaria to Greece was
USD 2trn infrastructure plan aims
tender in 2019 was the country’s most granted a final licence to start
to bolster investor opportunities.
competitive auction yet. construction in July 2019.

20 Chile
The government’s plans to tender
USD 2.6bn in concessions aimed at
highways, hospitals and water
projects in 2019 exhibit how core Middle
infrastructure investments are
East
poised to drive the country’s
economic growth. 13 UAE 34 Oman
Developing two smart cities, Masdar International investment is set to
26 Colombia City and the Zayed Smart City. increase significantly following the
The country is currently sourcing country’s updated privatisation and
private investment for the first line 21 Saudi Arabia PPP procurement legislation,
of the Bogotá Metro, a USD 4.3bn In July 2019, AECOM was awarded the permitting 100% foreign ownership.
new 24km line that will include the management consultancy services
development of 15 stations contract for Phase One of Neom Bay, 35 Kuwait
connecting the capital’s north and part of the country’s USD 500bn smart The construction of the USD 4bn
south east regions. city megaproject. South Saad Al Abdullah smart city
began in 2019 and complements the
45 Brazil county’s 2.3% GDP growth.
The landmark EllaLink that will
connect Spain, Portugal and Brazil
– the first direct subsea cable link
between Europe and Latin America
– is scheduled for commissioning
Asia
by the end of 2020.
Pacific

3 Singapore 29 India
The establishment of Digital Industry Singapore The 49% sale of Mumbai’s international airport
Africa (DISG) – an authority dedicated to drive digital and the establishment of the National Investment
infrastructure investments – further bolsters the & Infrastructure Fund in 2015 highlight the
36 South Africa county’s reputation as Asia’s data centre hotspot. country’s investment opportunities in traditional
Restructuring of state-owned utility infrastructure assets.
Eskom expected to de-risk private 18 China
participation in renewable projects. The government is planning to invest USD 113bn 40 Philippines
in rail, road and waterway projects. US investor engagement in the country’s Build,
43 Morocco Build, Build infrastructure programme – a
Established itself as the leading 25 Malaysia China-backed scheme that will see between
energy hub on the continent. The Malaysian government signed a revised USD 57bn and USD 177bn invested in the country’s
agreement with China to resume construction core infrastructure assets.
49 Algeria work on the suspended East Coast Rail Link, a
A bolstered pipeline of rail and project that will see the development of a 648km
transport projects creates a positive link from Straits of Malacca to Pengkalan Kubor.
outlook for infrastructure opportunities.

Bridging Continents Infrastructure Index 2019 | 7

New frontiers for
infrastructure investors
The shape of the infrastructure Across Europe, the race towards green leadership
will gather pace, with proactive government
market continues to change. The policies providing the necessary incentives for
2019 Infrastructure Index uncovers investors and developers alike to reach their
respective targets.
four key areas that present exciting
opportunities for investors tussling Germany, the top-ranking country in the 2019
Index, aims to make climate action a part of its
with the limited deal flow in national identity. To this end, investors can expect
traditional markets: PPP in new opportunities in electric vehicle (EV) charging
infrastructure, the country’s expanding offshore
markets, 5G, subsidy-free renewables wind market and energy storage assets that will help
and floating technologies. manage existing and future renewables capacity.
PPP demand in new markets Brazil's President Bolsonaro has promised a flurry
Flourishing PPP models and increasing openness of activity, including the privatisation of state
2019 possesses the hallmarks of a turning point The Brexit-effect on UK performance may cause
towards the private sector across Latin America, assets. Meanwhile Chile, Colombia and Peru
in the global transition into greener, smarter and concerns for some. However, despite the limited
Asia Pacific, the Middle East and Africa provide have bolstered their infrastructure strategies and
more sustainable assets. The clean energy sector political attention to new greenfield developments,
ample opportunities for investors to leverage their procurement frameworks for projects, exemplified
has now arguably achieved maturity – and crucially the UK government maintains a strong political
expertise, as well as their capital, in structuring by Chile’s USD 1.2bn Americo Vespucio Oriente toll
cost parity with fossil fuels in a number of markets will for transforming its energy networks with
large projects. road concession awarded to Spanish group, Sacyr.
– and climate action has risen up the agenda. both England and Scotland establishing net zero
This has encouraged investors to demand sustainable emission targets for 2050 and 2045, respectively.
Gulf Cooperation Council (GCC) governments will In the case of Africa, several countries are
destinations for their capital, breathing life into Similarly, broadband targets have been reinforced,
continue a trend of extensive reforms. Oman’s restructuring regulatory frameworks to better
new technologies and social responsibility in the promising full fibre roll-outs and 5G capabilities
new PPP law, approved in July 2019, will allow for attract foreign investment or to improve current
infrastructure space. within the next five years.
100% international ownership of assets. A similar PPP programmes. For example, Ghana has
boost in attractiveness is expected in Saudi Arabia launched several PPP tenders, including a 27-year
as investors anticipate the approval of the concession awarded to a 16-strong consortium
country’s Private Sector Participation Law. of Ghanaian and European developers for the
USD 2.2bn Eastern Railway Line PPP in April 2019.
Oman’s new PPP law improved its 2019 Meanwhile, Kenya awarded the USD 1.5bn
private participation score to 77.65, a Nakuru-Mau Summit Highway PPP to a Vinci
15.15 increase from 2017 Concessions-led consortium in February 2019.

+15.15% With scarce opportunity comes

Oman
2017
Oman high competition, putting pressure
2019
on projects to provide high yields.
Continents with significant infrastructure deficits, India’s first private train, developed under a PPP,
such as LatAm and Africa, will drive demand for the Lucknow-Delhi Tejas Express became
PPPs to support their economic transformations, a operational on 5 October 2019. Investors are
factor that is already attracting capital from leading preparing for another wave of privatisations in
investors. According to inspiratia, activities in Brazil the country, fuelled by this success story and the
have contributed heavily to LatAm’s total 2019 deal increased efficiency associated with private sector
flow of over USD 22.9bn across infrastructure and involvement in infrastructure projects.
energy assets – particularly due to the USD 8.6bn
Transportadora Associada de Gas sale, where
Canadian pension fund CDPQ and Engie acquired
stakes in the transmission pipeline in June 2019.

Bridging Continents Infrastructure Index 2019 | 9

Growing digital appetite China is quickly establishing itself as a global 5G
Globally, investors are strategically positioning hub. Between 1 September 2019 and 10 October
themselves for opportunities in this sector with 2019, over 10 million advance orders for 5G data
some involved in the 2019 broadband PPP tenders plans were submitted to China’s three mobile
held in Peru, whose government is aiming to take operators, namely China Mobile, China Telecom
advantage of LatAm’s strong internet growth and China Unicom. The three companies will
prospects. Meanwhile, France and Greece, among deploy a total of 130,000 stand-alone 5G base
others, are channelling strong political will into stations across the country by the end of 2019.
plugging rural broadband connectivity gaps.
Others are following the lead of Antin
Infrastructure Partners and Goldman Sachs with Corporate PPAs are quickly
their acquisition of UK altnet CityFibre in 2018,
using dedicated funds or private equity to establish becoming the preferred choice of
positions in growing digital businesses.
backstop for projects as demand
The Marguerite-backed EllaLink subsea cable
project, connecting Brazil and Portugal, challenged for clean energy grows.
the traditional dominance of complex consortia
and tech giants in financing fibre interconnectors. Subsidy-free future for renewables
In the Middle East, a number of countries are Confidence in subsidy-free renewables assets has
developing smart cities as they strive to become increased significantly over the past year, especially
global economic hubs. in markets such as Spain, Germany and Italy, with
each presenting unique conditions for different
technologies. As the value of subsidies declines and
APAC countries are in the ultimately disappears, fully-merchant projects are
beginning to surface in European countries with
driving seat in the global increasing appetite from lenders to provide debt.
In August 2019, Banco Sabadell financed a 73MW
race to adopt 5G. portfolio of merchant solar PV plants for USD 33m
in Ciudad Real, Spain. However, most subsidy-free
APAC countries are in the pole position in the race projects are currently backed or are planned to be
to implement 5G. South Korea boasts the world’s backed by PPAs. These provide an element of
first nationwide 5G network which reached one revenue visibility for lenders and also premium
million subscribers in 2019. Elsewhere, July 2019 pricing from corporates.
saw Equinix and Singapore’s GIC form a USD 1bn
joint venture to develop hyper-scale data centres Corporate PPAs are quickly becoming the preferred
across Europe. choice of backstop for projects as demand for
clean energy grows. While the US has led such
deployment over past years, Europe is rapidly
catching up, with regions such as the Nordics
Number of advance orders for 5G plans and the UK making substantial contributions.
made between 1 September 2019 and In February 2019, Ørsted struck a 10-year corporate
10 October 2019 PPA with utility Northumbrian Water to supply
power from its 573MW Race Bank project. This was
considered to be the UK’s first offshore wind

2.2m corporate PPA, and more have followed.

China
2.2m
6.26m
Telecom Floating wind emerges
China As nearshore project sites begin to become scarce,
Unicom discussions are underway in several jurisdictions
for floating wind projects to sate the demand for
China Mobile new developments. In July 2019, Equinor entered
a joint venture with Korea National Oil Corporation
to build a 200MW floating offshore wind project
in South Korea. Meanwhile, in the UK, Equinor
also secured a PPA with Danske Commodities for
Source: China Mobile, China Telecom, China Unicom its 30MW Hywind project in Scotland.

Bridging Continents Infrastructure Index 2019 | 11

 Germany is set to become a leading EV
Germany: charging innovation hub by addressing
Spearheading the energy transition 2.0 domestic charging infrastructure needs
and exporting technical expertise.

#
1 Germany takes the number one spot in the 2019
Infrastructure Index. The country’s move to the top of
the rankings is attributed to its spike in sustainability
and innovation – an increase of almost 8% from 2017
– as well an improvement in ease of doing business.

Offshore wind revives the subsidy bids. The winning Energy storage is an integral EV charging infrastructure Mixed demand for traditional The project is an expansion of a
renewables programme projects are now in the market part of how the country plans Germany is fast becoming a infrastructure 24.4km motorway, along with
Offshore wind will play a central looking for financing. German to efficiently manage existing global powerhouse in electric Investment in traditional the construction of 31 bridges.
role in reviving the country’s utility Innogy is looking to raise and upcoming capacity. Utilities vehicle charging infrastructure infrastructure has been steady, Nonetheless, due to increased
renewables expansion and help funds of EUR 600m for its for all over the country are and innovation. By the end of with money coming in from competition and the relative
reach a target for 65% of its 325MW Kaskasi project. incorporating storage into their 2018, the country held a both the public and private scarcity of projects, bid prices
renewable electricity by 2030. operations, tapping into the 177,000 electric and plug-in sectors. This is due to a series are expected to be squeezed.
The German government is The secondary market is also available revenue streams and hybrid car stock, Europe’s third of competitive road tenders
expected to upscale its offshore
wind target from 15GW by
very dynamic. For example, in
February 2019 a consortium
cost-saving services. In May
2019, Enel Green Power
largest after Norway and the
UK, and had more than 25,000
being run in 2019. Successful
rail concessions, such as the Energiewende aims to
2030 to 20GW, boosting a
market that is already the EU’s
comprising Commerz Real, asset
manager wpd invest, fund
inaugurated its 22MW
Cremzow battery storage plant
publicly available EV charging
points, only second to the
EUR 389m Augsburger Netze,
where sponsor Amomare
make climate action
second largest after the UK. manager KGAL and the Ingka
Group acquired 80% of the
co-located next to energy
company Enertrag’s wind power
Netherlands in the EU. The
National Platform for Electric
Vermietungsgesellschaft raised
funds from NordLB, Helaba and
part of the German
Two auctions took place in 402MW Veja Mate offshore plants in northern Germany. Mobility, a Government advisory BayernLB, have also recently national identity.
2017 and 2018, awarding more wind farm in a deal worth council, forecasts the country concluded. In July 2019,
than 2.5GW of total capacity, EUR 2.3bn. The country’s residential will need 2.4 to 3.5 million Germany’s federal government, On the other hand, public social
some of which were at zero- storage sector is also thriving, private charging points and up alongside railway company infrastructure spending is
Grid for the future with more than 100,000 to 190,000 public ones by 2025. Deutsche Bahn, announced an declining, despite social needs
In August 2019, Germany’s storage systems installed by the investment plan of EUR 86.2bn being on the rise. It is expected
Federal Network Agency end of 2018. At the beginning Global and local EV leaders are in rail infrastructure between that private capital will play a
proposed the construction of of 2019, energy storage aiming to secure a greater share 2020-2029, which should help more active role in the
a fourth electricity highway to start-up sonnen, which was in the country’s booming to keep deal flow steady. infrastructure sector, although
transfer the wind energy acquired by Shell in February market. Vattenfall, Shell and ABB project financing opportunities
produced in the north to the 2019, created a virtual battery are some of the international In May 2019, Austria’s Strabag are still limited.
industry-packed southern part of using residential storage players competing with a strong and France’s Vinci were
the country. The much-needed installations and generates domestic presence, such as shortlisted for the EUR 670m
transmission lines are designed revenue from the Primary Innogy, EnBW and Ionity, a A49 motorway PPP. The next
to balance existing production Control Reserve (PCR) market, Munich-based JV between major motorway PPP planned by
with consumption and enable the country’s main frequency car manufacturers BMW, project authority DEGES is the
further capacity. regulation service. Daimler, Ford and Volkswagen. B247 project in central Germany.

Bridging Continents Infrastructure Index 2019 | 13

Case study: The allure of Germany

TRIG casts a wider net into Germany’s fast paced

offshore wind market, making a move with the
acquisition of a 25% stake of the Gode I wind farm.

In May 2019, a share of the TRIG is managed by InfraRed The sector is not only integral
330MW Gode I wind project, Capital Partners, a global to Germany’s energy transition,
located in Germany’s North Sea, investment manager with plans to scale additional
was acquired by The Renewables headquartered in the UK. offshore wind capacity from
Infrastructure Group, otherwise 15GW to 20GW by 2030, but
known as TRIG, with the listed Policy shift, from UK it also boasts an attractive
fund scooping up a 25% indirect to Europe secondary market. Big ticket
equity interest from Global The transaction marks a shift in deals have already transpired
Infrastructure Partners. policy to allow greater exposure for the EUR 1bn 400MW Bard
to non-UK projects – notably in project located 100km off the
The transaction represents 8% Germany, Ireland, France and coast of north-western Germany,
of TRIG’s total portfolio of 70 Scandinavia – which currently and the EUR 2.3bn 402MW Veja
assets across the UK, France, stand at 42% of its portfolio Mate offshore wind farm in the
Sweden and Germany. following the deal. In October German North Sea.
2019, its investment policy was
TRIG invests principally in a modified to increase exposure
diversified portfolio of from 50% to 65% of total
TRIG is drawn to the pace at
renewable energy infrastructure portfolio value. which Germany’s offshore
assets in the UK and Northern
Europe, with a focus on Germany aligns with TRIG’s market has grown in the
operating projects. strategy to build its portfolio
on stable renewable energy
past four years.
Developed by Danish power frameworks. The company
company Ørsted, which retains expects mainland Europe to
a 50% stake, the project became yield 100GW of growth by
operational in 2017. It is backed 2030. Germany’s target for
by a feed-in tariff until November wind and solar capacity stands
2027 and a floor price for an between 215GW and 237GW
additional 10 years post-2027. for the same period.

TRIG’s March 2019 fund raise TRIG is drawn to the pace at

brought in GBP 302m and a which Germany’s offshore
portion of this was used to market has grown in the past
make the Gode I acquisition, four years. The transaction
supplemented by a draw-down grants the firm entry into the
from the company’s revolving second largest offshore wind
credit facility. market after the UK.

Germany aligns with TRIG’s strategy to

build its portfolio on stable renewable
energy frameworks.
Bridging Continents Infrastructure Index 2019 | 15
United Kingdom:
UK eyes renewables leadership

#
9 The UK falls to number nine in this year’s Infrastructure
Index. Brexit has created political stasis, dominating the
political agenda at the expense of other priorities and
creating uncertainty over the future of key infrastructure
projects. But while its infrastructure and renewables
market tackles the impact of this political uncertainty,
the UK is placing a bet on global renewable energy
leadership with its “net zero” strategy. Delays on some flagship projects are
contributing to a general perception
of uncertainty.

Uncertainty takes its toll Since the referendum, lending to The sectors most likely to
The result of the 2016 EU UK projects has decreased experience severe, but short-
membership referendum has significantly and the country term, costs in the event of a
meant that government time and could face a multi-billion-pound no-deal Brexit are those with
resources have been diverted to funding gap should the European operational assets such as ports In a bid to address these Highways England launched a Sizable investment from the
Brexit at the expense of other Investment Bank, a key source of and airports that are heavily concerns, plans for a national tender for the A303 (Stonehenge) private sector is expected, given
matters, including infrastructure. long-term investment, cut the exposed to trade and passenger infrastructure strategy were tunnel with the scheme now set Prime Minister Boris Johnson’s
The impact of political uncertainty UK’s membership. The UK traffic with the EU. announced after Boris Johnson to use public money rather than goal to reach full-fibre by 2025,
has handicapped the UK’s 2019 government is deliberating the became Prime Minister in July private finance. instead of 2033 as previously
score, without which it would option of creating its own national At the same time, the Labour 2019. Simultaneously, Scotland scheduled.
have ranked 5th rather than its infrastructure bank to support Party’s re-nationalisation plans launched consultations to revise Overall, the UK still offers plenty
current position of 9th. vital infrastructure post-Brexit. for the UK’s energy, railway and its national transport strategy, of opportunities, particularly in The UK’s broadband gap already
water infrastructure are causing aiming to increase spending over the secondary market, as offers opportunities to new
mounting concerns for investors. the next 20 years. demonstrated by the acquisition entrants – altnets such as
of a 39% stake in Cadent Gas CityFibre – that are challenging
Position without Brexit: Position with Brexit: Confirmation by the then- Until future concrete proposals for GBP 1.9bn by Macquarie the market leadership of
chancellor Philip Hammond in his are set in motion, delays on Infrastructure and Real Assets BT-owned Openreach.
2018 Autumn Budget that the some flagship projects – such as in July 2019.
Project Finance Initiative (PFI) the expansion of Heathrow Other opportunities are likely

5 9
was coming to an end has left Airport, HS2 and Hinkley Point C Full-fibre by 2025 to spring out of the 5G roll-out,

# # the UK market wondering how

the government plans to
mobilise private capital for UK
– are contributing to a general
perception of uncertainty.
The UK lags behind some of its
European peers – notably Spain
– in the roll-out of fibre-to-the-
as all UK mobile operators
(EE, Vodafone, O2 and Three)
are set to deploy the technology
infrastructure. Knock-on However, the country still has home broadband infrastructure. in the country before the end
pressure is now being felt in the several greenfield projects that The digital divide is felt in both of 2019.
UK’s construction industry, as it are moving forward, such as hard-to-reach rural communities
heads for a downturn due to London’s Thames Tideway and and cities like London and
limited greenfield projects. Silvertown Tunnel. In July 2019, Manchester.

Bridging Continents Infrastructure Index 2019 | 17

 Rolling stock renewals
The UK’s rolling stock market
has been gathering steam in
2019 as investors position
themselves for the substantial
introduction of new rail vehicles.

Political uncertainty in the

country has not deterred major
rail players like Greater Anglia
– jointly owned by Abellio and
Mitsui. It is embarking on a GBP
1.4bn roll-out of 38 bi-mode
trains and 20 electric trains and
aiming to replace 169 trains by
end of 2020.

Net zero 2050 6GW to six offshore wind The UK Department for
Counterbalancing the current allocations – the UK is now Transport’s rail franchise
hesitancy in delivering big among the countries schedule indicates that the Cross
infrastructure projects, the UK spearheading the global Country network – the most
is now securing leadership transition to subsidy-free extensive network in the UK –
amongst G7 economies in the renewables. is likely to be the next franchise to
race to decarbonisation. execute new rolling stock orders
In particular, the country boasts from November 2019 onwards.
In June 2019, the previous UK a growing track record of
government led by Theresa corporate PPAs, thanks to a New fleet deployments and
May pledged to reach net zero relatively high number of franchising are also triggering
carbon emissions by 2050, up creditworthy industrial secondary market activity as
from the previous goal of an companies eager to lock in investors see more value in
80% reduction from 1990 levels energy prices while enhancing competitively priced new fleets
by the same year. The power their green credentials. compared to financing the
sector remains a key driver of refurbishment of existing fleets.
this goal and one in which the Another crucial factor in For instance, in May 2019, a
government can effect change accelerating the UK’s energy consortium consisting of Japan
with the relevant regulations transition will be the Infrastructure Initiative, Rock
and incentives as the energy development of new Rail, Equitix and Dalmore Capital
transition is crystallised as a interconnectors with other acquired an additional 15%
firm national policy. European countries. The first stake in concessionaire Agility
subsea UK-Belgium Trains from Hitachi Rail for the
Scotland, however, will beat the interconnector, called Nemo Link, first phase of the Intercity
rest of the UK to net zero. The came online in January 2019 and Express Programme which will
Scottish parliament has new projects are currently being replace 125 carriages and
unanimously approved legislation developed with France, Norway, expand the fleet.
committing Scotland to achieving Denmark and Ireland.
net zero emissions by 2045.

Already the cradle of offshore

wind development, driven by
The UK is securing leadership amongst G7
the contracts for difference
auctions – with its third round
economies in the race to decarbonisation
results awarding 5.5GW out of and spearheading subsidy-free renewables.

Bridging Continents Infrastructure Index 2019 | 19

Interview: Dalmore Capital Future models other participants to ensure that all parties were
Under the Bazalgette consortium – also featuring incentivised to manage such risks,” concludes Ray.
Allianz, Amber Infrastructure, DIF, International Public
Partnerships and Swiss Life Asset Management – RAB is ordinarily used to govern utilities, after
Dalmore Capital utilised the regulated asset base emerging as a method of valuing existing UK assets
(RAB) model in the GBP 2.3bn Thames Tideway deal. during privatisations. Interest has risen in applying
According to Ray, Thames Tideway is an excellent it to new greenfield opportunities such as nuclear.
example of a financing structure that benefits all In 2018, the Department for Business, Energy and
project participants by “positioning risk with the Industrial Strategy announced that the viability of
parties that are best able to take it”. RAB for nuclear projects was under review. A public
Alistair Ray
consultation closed in October 2019.
Chief Investment Officer (CIO) “It became financeable because infrastructure
and Co-founder investors were asked to take the risks that they To Ray, the significant investment size and the fact
were able to manage around procurement, around that new nuclear power stations are currently a
financing but also due to being able to share other core government policy makes the nuclear sector
Dalmore Capital is a fund manager
risks – which we had less control over – with the interesting to watch.
overseeing GBP 5bn of assets in the UK and
investing in over 140 infrastructure projects.

The UK infrastructure market has been

shrouded by indecision as all political focus
remains on Brexit but Ray still sees ongoing
activity, particularly in non-regulated assets.
What should be of interest to investors,
“The politicised climate may lead
according to Ray, is whether limited
government activity in procuring greenfield
to some investors looking to exit
investments in recent years will “build up in
the future” and if new models replacing PPPs
which will produce opportunities
would be considered suitable investments
with attractive returns. within the UK market.”
Nationalisation plans from the Labour Party
are adding fuel to the fire, as regulatory
clampdowns pose challenges for the UK’s
regulated infrastructure assets, heralding
skinnier returns.

To overcome the ambiguity, Ray places his belief

in the highest quality regulated assets, stating,
“If you are invested in the top performing
companies like Anglian Water and Cadent Gas
then, through them providing good operational
performance to the customers, you will do well
as investors.”

However, unlike stifled greenfield opportunities,

the secondary market will be largely determined
by a politicised climate that is making foreign
investors hesitant.

“The politicised climate may lead to some

investors, particularly from overseas, looking to
exit which will produce opportunities within the
UK market. And it may be that some of those
opportunities are less competitive than they
have been in the past because of fewer
bidders,” he adds.

Bridging Continents Infrastructure Index 2019 | 21

Secondary Electricity surge
market Electric vehicle charging sees Europe:
demand across Europe
buoyancy Brimming with opportunities
CEE sees rise in opportunities,
especially in airports as Europe’s renewables sector marches towards
passenger numbers rise
merchant power projects in 2019 with market
disruptors well positioned to capitalise on the
subsidy-free solar boom.
The rise in the popularity of Spain, a current global hotspot
corporate PPAs has also reached for solar in 2019, is set to
1 Germany
Central and Eastern Europe develop approximately 4GW of
(CEE). Poland is making big PV installations by the end of 2 Netherlands
strides in the clean energy 2019, with an overall renewable

Digital Merchant sector, with a wind farm

producer and a car
electricity target already being
raised by the country’s
6 Norway

8 Finland

demands projects popular

manufacturing group signing government to 74% by 2030.
one of its first PPAs in August From the beginning of 2019 to 9 United Kingdom
2018. The agreement is also October, 16 PPAs were signed 10 Belgium
Europe’s first automotive for approximately 3.3GW of
5G hits the market Mature renewables market renewables transaction. Other capacity. 11 Austria

with bundle of marches towards merchant transactions followed. Polska

Grupa Energetycza (PGE) is Due to the impressive
12 France

projects risk structures instrumental in expanding the performance of its solar sector, 15 Spain
country’s pipeline of PPAs, which has attracted some of the 19 Poland
having signed new agreements leading international investors,
in 2019 with the leading Spain’s Index score in 2019 was 22 Italy
chemical company Grupa Azoty. 74.40, considerably higher than 23 Czech Republic
In 2019, Signify signed its first its 2017 performance of 69.09.
24 Slovakia
European renewable energy
virtual power purchase Crucial improvements in the 28 Hungary
agreement (VPPA) in a 10-year sector were witnessed across
deal with Green Investment Europe, with markets such as 31 Russia
Group’s Kisielice onshore wind Italy and Portugal, as well as 39 Romania
farm in Poland. the Scandinavian region, set to
produce proliferations of 41 Bulgaria
Poland has performed strongly PPA-backed projects similar to 46 Ukraine
thanks to the country’s political those in Spain.

Sustainable New key stability, ease of doing business

and private participation scores

focus asset classes

improving compared to previous
years. Favourable policies
implemented in the energy Boasting the highest growth in
ESG criteria and UN Transport, EV charging, sector – including assigning a
separate basket to onshore,
passenger traffic in Europe, CEE
sustainable development renewables, 5G, offshore wind and small PV in
auctions – have boosted
countries are announcing big
goals are informing interconnectors renewable project development. airport expansion projects.
investor decisions and
project pipelines
Bridging Continents Infrastructure Index 2019 | 23
 Europe: Brimming with opportunities

Country summaries
2 Netherlands has already acquired three attract significant interest from
The Netherlands continues to be domestic onshore wind assets private, long-term investors.
a top market for infrastructure with a cumulative capacity of In July 2019, the concession
investors. The country’s 73MW for EUR 90m. contract for Lille-Lesquin
traditional and digital airport was awarded to an
infrastructure sectors present 9 United Kingdom Eiffage-led consortium.
vigorous opportunities for global With the pound weakening and
players, such as Macquarie the UK set to become a third The 600MW Dunkirk offshore
Capital, Siemens and Shell. party in any future cooperation wind auction attracted an
with the EIB, infrastructure impressive number of
The privatisation of Dutch sector players are facing a lack competitive bids from market
utility Eneco has attracted of certainty and direction. players such as EDF, Equinor,
multiple bidders, with Ørsted, Vattenfall and Engie.
Mitsubishi, Macquarie and Nonetheless, the country’s Following the favourable
EDF expressing interest. In July multi-billion-pound offshore auction results, the government
2019, US-based investor KKR wind sector and its ambitious of France announced it will
teamed up with Rabobank to net zero and fibre targets play double its offshore wind target
bid for the company while an important role in securing to 1GW per year.
PGGM and Shell joined forces the UK’s position among the
in January 2019. top 10 jurisdictions globally. 15 Spain
Spain’s traditional infrastructure
6 Norway 10 Belgium sector is steadily recovering after
First introduced under former One of the most attractive social economic damage to toll road
Prime Minister Kjell Magne infrastructure markets in Europe, operators, due to repeated legal
Bondevik’s centrist coalition, the Belgium boasts a robust pipeline disputes over lost revenues
Norwegian PPP programme has of schools with the education because of post-financial crisis
been buoyed by the success of infrastructure agency, AGION, traffic slowdowns.
the RV3/RV25 project, the first tendering roughly EUR 190m
closed in the country since 2006. worth of school PPPs over the In June 2019, France’s Meridiam
past 12 months. bought an 85% stake in the
On 13 February 2019, the Autopista del Sol from Ferrovial’s
Norwegian Public Roads 11 Austria Cintra and Unicaja Banco.
Administration published a risk Austria’s 5G auction began The project comprises two
clarification document for the in February 2019 with seven independent concessions,
RV555 Sotrasambandet PPP bidders receiving licences for Ausol I and Ausol II, which form
project to facilitate contract the utilisation of spectrum in part of the larger AP-7 road.
negotiations. The project is the 3.4 -3.8GHz band and
valued at EUR 1.04bn. roughly EUR 188m raised. 19 Poland
Developing the next some also planning new for supporting infrastructure. Poland’s ambitious coal
European airport hub greenfield additions, including in Germany-based Ionity partnered 8 Finland In July 2019 the country made generation reduction target,
A high level of activity in the Romania and Lithuania. with Shell in Q3 2018 to deploy Finland’s digital infrastructure strides in liberalising its necessitating a 50% decrease
airport secondary market and EV charging stations in 24 strategy and optical fibre broadband sector when Allianz by 2040, is a driver of
sturdy passenger growth has In July 2019, a new contender European countries including deployment initiative are in line Capital Partners acquired a investment in renewables,
fuelled the interest of seasoned as a regional hub emerged with Poland, Czech Republic, Hungary with the government’s plans to 74.9% stake in Lower Austria- while the country is set to
airport owners such as Vinci, Vinci taking control of Serbia’s and Slovakia, as part of what turn the country into a global based provider NoGIG which become one of the most
AMP Capital and Ardian. With Nikola Tesla Airport with plans could be Europe’s largest communications leader. To date, was entirely owned by the state. promising offshore wind
several attractive and profitable to invest roughly EUR 730m to ultra-fast charging network. Finland has granted roughly 30 markets globally.
assets, CEE countries are buildup the facility into the licences for 5G testing with the 12 France
providing a pocket of best-connected airport in the Austria’s largest electricity country also ramping up its President Emmanuel Macron’s The Polish government is
opportunity for airport region. provider, Verbund, also renewables programme. infrastructure and energy targeting the development of
investors in 2019. partnered with Enel X, Smatrics, ambitions were hobbled by 10GW offshore wind capacity
Strategic co-operation in Greenway and OMV to develop A consortium of Finnish pension public opposition and a series by 2030. The number of
Boasting the highest growth in EV charging an EV charging infrastructure in funds established a EUR 300m of contract-related delays. projects coming to the market
passenger traffic in Europe, CEE CEE countries are also making Romania, Slovenia, Croatia, renewable energy investment Despite the stalled privatisation has favourably affected
countries are announcing big strides with electric vehicles Hungary and other countries in platform in the first half of 2019. of Aeroports de Paris, French technology prices.
airport expansion projects, with following an upsurge in demand the region. The new company, Exilion Tuuli, regional airports continue to

Bridging Continents Infrastructure Index 2019 | 25

22 Italy 28 Hungary 41 Bulgaria
In August 2019, Marguerite The reconstruction of the In July 2019, after several delays,
announced its acquisition of a 152km Hungarian section of the the Transport Ministry of
48.15% stake in the Italgas Budapest-Belgrade rail line was Bulgaria selected a preferred
subsidiary Medea for an initial awarded in April 2019 to a bidder for Sofia Airport. A
investment of EUR 25m. The deal Chinese-Hungarian consortium consortium including Meridiam,
is expected to reach financial including China Tiejiuju Strabag and Munich Airport was
close at the end of the year. Engineering and Construction, selected as the preferred bidder
China Railway Electrification for a 35-year concession.
Italy signed the FER1 decree at Engineering Group and RM
the beginning of July 2019, International. The project is The 182km Bulgaria-Greece gas
strengthening its commitment to valued at EUR 2.3bn. interconnector was granted a
deploying renewable energy. The final licence in July 2019 enabling
first solar auction process, for 31 Russia ICGB – the company developing
500MW of capacity, kicked off Russia’s leap into the the project – to commence
on 30 September 2019. renewables sector received construction. The project is
An additional three tenders will attention from several worth approximately EUR 220m.
be launched in 2020. international market players,
with Finland’s Fortum taking 46 Ukraine
23 Czech Republic home nearly 1GW of wind and A spike in Ukrainian onshore
Macquarie Infrastructure and solar capacity in the auction wind activity in 2019 points to
Real Assets (MIRA) entered a held between 29 May and a renewables market heading in
deal worth EUR 1.8bn in April 9 June 2018. the right direction. At the end of
2019, taking over the Czech- July 2019, VLC Renewables and
regulated gas distribution 39 Romania LongWing Energy announced
network, Innogy Grid Holding. In February 2019, the Romanian the financial close of one of the
government proposed a list of country’s largest wind farms to
Another noteworthy project in 21 PPP projects, including date, the 500MW Zaporizhia
the Czech Republic is the highways, hospitals, railways, Phase I.
ongoing D4 highway PPP power plants and tourist
procurement process, with resorts. The plan was met with One month before, in June 2019,
Hochtief/Strabag, Vinci/ scepticism since the country another Ukrainian wind farm, the
Meridiam and Porr/Macquarie/ lacks the necessary experience 200MW Primorskaya, also
OHL/Egis the shortlisted to implement PPP projects. reached financial close, having
consortiums as of April 2019. raised funds from a group of
One of the most advanced German banks. The project’s total
24 Slovakia tendered projects was the cost is approximately EUR 150m.
The construction of a Slovakia- Ploiesti-Brasov motorway, the
Poland gas interconnector began sole remaining bidder for which
in September 2019. The project is was a consortium comprising
being executed by the Slovak China Communications
transmission system operator Construction Company and
EUSTREAM, collaborating with Turkish construction firm
its Polish counterpart GAZ- Makyol. But in July 2019 the
SYSTEM. Romanian government decided
to declare it a project of
In the same month, Slovakia’s national importance and to
government also expressed finance it from government
interest in facilitating Azerbaijani funds instead.
gas transit to the EU. The two
governments are currently in In July 2019, the Romanian
negotiations to cooperate in a government decided to declare
wide range of sectors including the highway a project of
energy, transport, agriculture and national importance and
tourism. Slovakia also launched finance it from government
its first prison PPP project. funds.

Bridging Continents Infrastructure Index 2019 | 27

Interview: First State Investments M&A opportunities have already come to market importance. He says, “ESG has become a top
in 2019 with most transactions attracting multiple priority for infrastructure investors. All of our
experienced bidders, including the likes of Vinci, investors and sector peers are trying to introduce
Meridiam and ADP. strong ESG strategies and policies. This is because
the sector is becoming increasingly aware of its
“Airport passenger numbers have grown a lot in the social obligations and wants to do the right thing
past 10 – 20 years and many major hub airports are for the environment.”
near capacity. We have witnessed this with the
ongoing UK debate around building more runways According to him, businesses must display genuine
and terminals. We need infrastructure solutions, or commitment by implementing ESG standards from
we will encounter a capacity problem soon.” the bottom-up.
Niall Mills
Partner Infrastructure Investments An ESG era “ESG is very much part of our business, it is not a
ESG leadership is increasingly perceived as an built-on, it is not an extra, it is business as usual,”
Established in 1988 in Australia, First State intrinsic part of infrastructure businesses and an concludes Mills.
Investments is a global asset manager with area Mills identifies as assuming the highest
approximately AUD 223bn of assets under
management.

First State launched its third European

infrastructure fund in September 2019 with a
EUR 3.5bn target and a focus on mature assets
in the energy, transportation and utility sectors.
“ESG has become a top
Despite a period of change, caused by Brexit and
priority for infrastructure
other political changes across Europe, there
remains an attractive pipeline of opportunities
investors.”
in European infrastructure, according to Mills.

First State recently closed the OU Utilitas

transaction in Estonia on a bilateral basis, signed
a deal to acquire the Vopak storage terminals
and purchased a substantial stake in OLT’s Italian
offshore LNG terminal.

Reflecting on these deals, Mills says, “We are

looking for well-managed businesses with high
quality management teams and assets with a
long-term horizon, good environmental track-
record and excellent customer engagement.

"Good relationships with the local community

are another decisive factor when assessing
opportunities in the infrastructure sector.”
Several infrastructure sectors offer outstanding
potential, according to Mills, with European
countries having distinct, individual infrastructure
development agendas.

“Transformation and innovation in technology are

really impacting the electricity sector which not
only offers distribution companies the ability to
control power demand more dynamically than even
five years ago but is also preparing the network for
electric vehicle roll-out and self-charging points as
well as other emerging demand profiles,” says Mills.
A number of airport concessions as well as pure

Bridging Continents Infrastructure Index 2019 | 29

Interview: Meridiam
“We aim to target a wealth of infrastructure
assets that comply with our standards but
also reflect our willingness to contribute to
the UN sustainable development goals.”
David Delgado-Romero
Partner and Director, CEE

With over EUR 50bn in deployed capital and proven to be a very good approach and is
roughly EUR 6.4bn worth of assets under allowing us to continue expanding our investment
management, Meridiam is a long-term global capacity,” says Delgado-Romero.
investor and asset manager.
The scarcity of bankable projects is one of the
In 2019, Meridiam was selected as the sponsor for factors affecting levels of competition in the
Poland’s Olsztyn waste to energy (WtE) plant, was market. In order to best capitalise on existing
the preferred bidder in Bulgaria’s Sofia Airport opportunities, investors have to rethink their
tender and participated in an impressive number strategies.
of transactions globally.
“Our investment in Allego is a good example which
“The WtE sector is developing all over CEE countries shows how Meridiam is identifying ways to enter
and offering great perspective. Our interest in this new markets.”
sector is increasing and it is evident that this type
of infrastructure will bring and attract significant Allego is one of the global leaders in the EV
levels of investment in the near future,” says charging infrastructure sector with over 14,000
Delgado-Romero. stations already deployed across Europe.

The target set by the European Union, of As Delgado-Romero explains, direct growth is not
processing 50% of member states waste by the only factor calling for new infrastructure, but
2020, have been key drivers of investment also compliance with ESG standards. According to
in the waste management sector. him, increasing environmental standards, reducing
congestion, pollution or noise and improving
Rethinking strategy quality of lives are current hot topics.
“Our transition fund has target assets that
contribute to the lower emission economy and WtE Outlook
is an asset class we are targeting, as we aim to Interest in Europe will continue to be high,
expand our portfolio of investments. despite current macroeconomic and political
concerns. According to Delgado-Romero,
"We aim to target a wealth of infrastructure assets authorities in some CEE countries understand
that comply with our standards but also reflect the situation and have been providing support
our willingness to contribute to the UN sustainable in sectors such as rural fibre deployment, road
development goals,” says Delgado-Romero. PPPs and airports.

Nonetheless, increasing competition in a wide “My outlook is positive and I think we need to be
range of infrastructure sectors – complemented both optimistic and realistic in terms of the future.
by market liquidity – is making it more difficult The public sector is undergoing a period of
for investors to thrive in this climate. transition towards fully accepting the involvement
of private partners in the operation of public
“Meridiam has addressed this phenomenon infrastructure.
for some time and one of the initiatives we
implemented was to develop and expand our “This is happening, but it is yet to be completed,”
business in new geographical areas. This has he concludes.

Bridging Continents Infrastructure Index 2019 | 31

Case study: Europe steps up its WtE game

Europe is stepping up its WtE game with multiple

projects in the UK, the Netherlands and Serbia.
Racing to make headway on the EU recycling target
of processing 50% of the country’s waste by 2020,
Poland’s waste-to-energy market is also thriving.

Waste management laws in owned company, Miejskie a 25-year contract to provide the
Poland are being revised Przedsiebiorstwo Energetyki city of Belgrade with heat. The
regularly and changes are Cieplnej. companies, namely Suez, Itochu,
frequently introduced to secure and Marguerite, will also sell
the appropriate infrastructure Approximately EUR 100m in electricity to Serbia’s power
and successful operation and debt finance will be provided utility EPS under a 12-year PPA.
maintenance of facilities. by a consortium of lenders
including the European On 10 July 2019, the Lostock
Olsztyn, Poland’s new Investment Bank. WtE plant in Cheshire, UK was
WtE hub granted approval for a capacity
Located in north-east Poland, Multiple WtE projects come increase of 30MW. Copenhagen
in the capital of the Warmian- to market Infrastructure Partners and FCC
Masurian region, the Olsztyn Elsewhere in Europe, waste Environment acquired the asset
WtE project was awarded on firm Indaver and construction from Tata Chemicals in 2018.
17 June 2019 to a Meridiam-led business Acciona secured a The project, estimated at
consortium under a 30-year contract with the councils of EUR 534m, reached financial
PPP contract. Aberdeen City, Moray and close in March 2019.
Aberdeenshire in August 2019
Total project costs are estimated for the construction and North Carolina-based IPP Blue
at EUR 780m with Meridiam operation of the Ness Energy Sphere announced in March 2019
taking ownership of an 80% Project in Aberdeen, Scotland. it had raised EUR 38.9m for the
stake. China’s Urbaser – an The project’s total cost is Sterksel-based Dutch WtE plant,
environment management estimated at EUR 164m, to be including EUR 29.2m from BNG
company active in the urban provided by the three local Bank, EUR 6.42m in junior debt
services, waste and water authorities. from BNK Bank, Energietransitie
treatment sectors – holds the Financieringsfaciliteit (ETFF) and
remaining 20% share. Another Scottish WtE site also Nationaal Groenfonds and a
recently moved ahead, the EUR 3.25m equity investment
The new combined heat and Drumgray Energy Recovery from Israel’s Helios Capital.
power plant for Olsztyn aims Centre project, under the
to provide clean energy for the company FCC Environment.
173,000 inhabitants of the city, A master plan was submitted
replacing an ageing fleet of in July 2019 to the local council
coal-fired stations. for approval with the project
earmarked to cost EUR 408m.
The project will receive roughly
EUR 40m in funds from the In July 2019, the developers of
European Union with the direct Serbia’s EUR 339m Beo Cista
beneficiary being a municipal- Energija WtE power plant signed

Bridging Continents Infrastructure Index 2019 | 33

Pervasive PPP Powered up
Robust PPP legislation in USD 1trn forecast to be Middle East:
Kuwait, Oman, Qatar, invested in power projects
up to 2024
Smart cities shaping the future
and the UAE delivers
confidence to investors
As private-led investments continue to build across
the region, the Middle East makes headway in
becoming a global smart, and sustainable, city hub.

Funding for the Middle East’s In particular, the Middle East

large-scale projects remains has presented some of the most
13 United Arab Emirates
heavily state-financed but the ambitious solar and onshore
share of private finance is wind projects, closing a pipeline 21 Saudi Arabia
slowly, but steadily, increasing. of over 2.8GW according to

For sale Smart living Supportive PPP legislation in the

UAE, Kuwait, Qatar, Oman and
soon Saudi Arabia is set to
inspiratia. The region –
collectively and individually –
is putting renewable energy at
34 Oman

35 Kuwait
38 Turkey
State asset privatisations Neom leads the way to increase investor confidence the centre of its growth agenda
and support the region’s as well as fuelling its smart city 42 Qatar
present many investment create a global smart economic diversification. ambitions.
50 Iran
opportunities across and sustainble hub
Middle East In particular, the Middle East has presented
some of the most ambitious solar and
onshore wind projects, closing a pipeline
of over 2.8GW according to inspiratia.

Country summaries
13 United Arab Emirates an extension of the Dubai Metro in September 2019. The new
Abu Dhabi and Dubai boast a Red Line, reached financial close unit is expected to operate
significant pipeline of energy, in March 2018. based on PPP best practices,

Private Key asset

transport, water and digital leverage international expertise
infrastructure projects. Abu Dhabi is developing two and efficiency, and will support
smart cities, Masdar City and the city’s new strategic plans for

participation classes KKR and BlackRock acquired

a 40% stake in Abu Dhabi
National Oil Company’s 750km
the Zayed Smart City. Launched
in 2018, the latter is a five-year
pilot initiative to upgrade
2019 to 2021.

On the energy side, Dubai’s

Water, transport and solar Water, solar, midstream oil pipeline in June infrastructure in the Corniche landmark phase four of the
2019, a USD 4bn equity area of Abu Dhabi with artificial 950MW Mohammed bin Rashid
projects saw the highest transport, social transaction representing the intelligence. Al Maktoum solar park reached

levels of private participation first of its kind for a national

infrastructure asset in the To further encourage foreign
financial close in March 2019,
raising USD 2.5bn. Phase five
in 2018-2019 region. In Dubai, the landmark investment in its infrastructure tenders launched shortly
USD 2.9bn Route 2020 project, plans, Dubai launched a PPP unit afterwards in June 2019.

Bridging Continents Infrastructure Index 2019 | 35

21 Saudi Arabia Given the scarcity of freshwater Sector Participation law is set to Water Procurement Company status score which dropped The USD 500m project attracted
Early 2019 began with the resources in the country, unlock further opportunities for issued an RFQ for the 500MW from 22.89% in 2017 to 16 international industry
announcement of a USD 425bn desalination is set to remain the foreign investors. Manah Solar I, the first phase 17.02% in 2019. However, heavyweights such as Engie, Mitsui
boost to Saudi Arabia’s Vision most active sector, with tenders of a 1.1GW development. confidence in Turkey is being & Co. and Korea Electric Power
2030 infrastructure plans launched in April 2019 for the 34 Oman maintained by export credit Corporation amongst others.
including considerations for Yanuba desalination plant and Oman has a strong track record 35 Kuwait agencies covering commercial Agreements and grid connection
new and refurbished airports, May 2019 for the Jubail 3A and of completing infrastructure In 2018, Kuwait’s GDP grew and political risks. are expected to be completed
additional railways and 3B reverse osmosis plants. projects and investor confidence 2.3% due to increased non-oil by 2020.
industrial projects. is set to be further boosted by revenues and government 42 Qatar
The kingdom possesses an the recently approved PPP law, spending, according to the Despite diplomatic tensions with Due to host the 2022 FIFA World
In June 2019, a new airport attractive renewable energy bringing forth even more World Economic Outlook 2019. the rest of the Gulf Cooperation Cup, Qatar is also forging ahead
servicing Saudi Arabia’s smart market, having successfully lucrative opportunities. Construction on Kuwait’s USD Council, Qatar’s economy has with its USD 45bn Lusail Smart
city development Neom – a city closed multiple petrochemical, By October, 38 PPP projects 4bn smart city, South Saad Al proved resilient. Qatar has City, scheduled for completion by
that will be powered by 100% onshore wind and solar deals under consideration – spanning Abdullah, commenced in 2019. turned to PPPs to tackle its the end of 2019.
renewables – was inaugurated since 2017, with an additional education, healthcare and In 2018, Kuwait’s USD 4.2bn budgetary constraints, especially
for commercial flights. Neom Bay 4.5GW solar pipeline that transport – were unveiled in the International Airport reached in social infrastructure. In March 50 Iran
is the first airport supported by a includes the 2.5GW Mecca country’s first national PPP forum. financial close. Once completed, 2019, the government unveiled The reimposition of US sanctions
5G network in the Middle East. solar farm. it will handle 25 million a USD 13bn pilot PPP scheme for in November 2018 partially
A flurry of deals have concluded passengers per year. 45 schools to be delivered in six suspended Iran’s railway
The USD 16bn Haramain The increasing openness to over the past five years, especially phases over the next five years. programme and discouraged
high-speed rail system international private participation in desalination. The USD 114m 38 Turkey international investors.
connecting Mecca and Medina and improved political stability Sharqiyah desalination plant was Political instability and currency Qatar launched a tender for the
was inaugurated in 2018 and the have improved Saudi Arabia’s the latest to reach financial close, volatility have taken their toll on 500MW Al Kharsaah solar PV
landmark Riyadh Metro project score in the Index from 2017. in May 2019. Meanwhile in July Turkey’s infrastructure market, project in 2018 which it plans to
is over 70% complete. Saudi Arabia’s anticipated Private 2019, the Oman Power and heavily impacting its economic award as a 25-year PPP contract.

Bridging Continents Infrastructure Index 2019 | 37

Interview: R
 as Al Khaimah Waste Vision 2035: the circular economy A circular economy has already been developed

Management Agency Vision 2035 will prioritise a circular economy

strategy as well as a zero-waste-to-landfill target
for glass from the 33 hotels situated in the area.
Collected glass is transported to Dubai to be
according to Nasser. This means various forms of processed and the cutlets are returned to glass
energy-from-waste are on the table. The UAE is manufacturer Saverglass in Ras Al Khaimah.
in a rush to establish leadership in environmental
sustainability and to achieve this RAKWMA, as well RAKWMA is confident in its control of feedstock
as other emirate agencies, see the private sector as as well as its regulatory capacity to protect
a key partner. investments, so the agency is now seeking waste
processors interested in setting up a variety of
“We're really focused on creating alternative fuels, facilities. These could include a solid refuse fuel
Sonia Ytuarte Nasser for example solid refuse fuel,” says Nasser. plant, lead acid recycling plant and other specialised
Executive Director waste streams such as diaper recycling.
“We have started doing pilot projects with the
Ras Al Khaimah Waste Management Agency cement factories here, namely Gulf Cement, where
(RAKWMA) is part of the UAE’s public services we’re sending all our camel waste because of its
department tasked with meeting the UAE Vision high calorific value,” she continues.
2021 target of 75% diversion from landfill.

It manages the waste for a population around

400,000 and it is a “one-stop-shop” for the
regulatory, planning, collection, treatment and “We are exploring PPPs with
different entities and looking
disposal needs of the government. However, as a
utility it has reached a tipping point in meeting the

to see if they can do it more

UAE’s waste diversion target. RAKWMA has been
working with CMS Middle East on customising civic

efficiently than us.”

contracts for various types of infrastructure projects
to help meet its targets.

“We’re very small and lean but at the same time we

have a lot of government mandates. There’s a role for
government and then there’s a role for private
industry,” says Nasser.

“That’s why this year we have started exploring options

with the Ras Al Khaimah Economic Zone, whose job is
to go out and get investors,” she continues.

Next round of PPPs

PPPs in the UAE’s waste sector began in 2009
with two wastewater treatment plants in Abu Dhabi
developed by BESIX and Veolia: the 300,000m3
capacity per day Al Wathba 2 plant
and the 130,000m3 capacity per day Allahmah plant
near the city of Al Ain. These projects set
the standard for future PPPs.

According to Nasser, while plans are still at an

exploratory stage, projects are likely to be tendered
for the Ras Al Khaimah Economic Zone with a
preference for “design, build, finance, maintain
contracts because our hiring process for operating
these facilities is very difficult within government. We
are exploring PPPs with different entities and looking
to see if they can do it more efficiently than us.”

Bridging Continents Infrastructure Index 2019 | 39

Interview: F inergreen “Large-scale projects are at the forefront because For example, in September 2019, Nestlé
of their size, but there is a lot of appetite for inaugurated the UAE’s largest ground-mounted
distributed solar, spanning from private-wire PPAs private solar PV facility of 5.5MW alongside its
to rooftop solar projects for big factories,” he adds. Al Maha factory in Dubai.

More than 125MW of solar capacity has been Port operator DP World is developing 20MW solar
added so far under the Shams net metering PV on rooftop and carpark premises, boasting the
programme since its 2014 launch, and the largest rooftop PV project in Middle East.
programme is gaining momentum.

Antoine Poussard
Managing Partner – MENA

Finergreen is a financial advisory boutique “However, energy and infrastructure are still core
specialising in renewables and energy
efficiency projects.
priorities, and governments are working hard to
keep up the pace of development.”
“Governments have understood that
Renewable energy is fast becoming a core part of Aggressive competition in the bidding process is
shifting from a pure oil-driven economy
Middle Eastern countries’ strategy to diversify away
from fossil fuels, creating a promising growth
another challenge players will need to take into
consideration, especially when it comes to solar
to an energy mix comprising renewables
opportunity for the renewable industry. developments.
makes more economic sense.”
“Governments have understood that shifting from In October 2019, a record-low bid led by Saudi
a pure oil-driven economy to an energy mix developer ACWA Power was reportedly submitted
comprising renewables makes more economic for the Dubai Electricity and Water Authority’s
sense,” Poussard states. tender for the fifth phase of the landmark
Mohammed bin Rashid Al Maktoum Solar.
Nonetheless, not all the countries in the region
are moving at the same pace, as the impact of The 900MW solar tender allegedly attracted
reducing subsidies is different in the context of a bid of US$16.953 per MWh.
each local economy.
“There is less appetite from second-tier IPPs in
“Removing oil subsidies for local consumption can the medium-term,”
heavily impact consumers’ appetite, and this can
have a negative effect in economic growth,” “Even top tier players will be more cautious and
Poussard adds. selective in the tender they decide to participate in,”
Poussard adds.
In terms of ambition, Saudi Arabia is stealing
the thunder by setting a target of 58.7GW of Contrary to solar tenders, in which there is less
renewables by 2030. room for innovation and technology cost reductions
are subject to the race for economies of scale, wind
“Many developers are attempting to position tenders have more room for added value and
themselves in Saudi Arabia, but the environment technical improvements to achieve better pricing.
is a bit more challenging,” Poussard says, citing
delays in the development process. Distributed renewables: the opportunity
in disguise
Challenges “The commercial & industrial (C&I) market is
Despite initial ambition, a few countries are slowing booming, and is offering alternative opportunities
down renewables deployment for technical reasons. for smaller developers,” Poussard says.
For example, auctions and new licenses have been
suspended in Jordan until the Jordanian government For example, Dubai Electricity & Water Authority
has assessed the capabilities of its power network. (DEWA) has launched the Shams Dubai initiative,
which aims to deploy solar energy in buildings,
“In Lebanon, among other events, the current as part of the Distributed Renewable Resources
political situation has resulted in tenders being Generation programme to support its ambitions
on a standstill,” Poussard says. to make Duai a landmark smart city.

Bridging Continents Infrastructure Index 2019 | 41

Case study: Neom, a new future

Led by the pivotal Vision 2030 programme, Saudi Arabia

is pushing the boundaries of technology advancements
with Neom, a smart city.

Since its reveal in 2016, powered 100% by renewable Mobility

Vision 2030 – the economic energy and governed by an Neom will house disruptive
diversification masterplan independent judicial system to solutions for transport,
pioneered by Crown Prince encourage investment towards particularly providing an
Mohammad bin Salman – has 16 priority industries, including enabling environment for
spurred investor interest towards advanced manufacturing, automated driving and drones.
landmark infrastructure and mobility and biotech.
energy deals in Saudi Arabia. In June 2019, the Neom Bay
By 2017 the vision had evolved According to official Airport, located in the northern
to include Neom, a 26,500km2 announcements in 2017, Saudi region of Sharma, was
mega-smart city development. Arabia’s Public Investment Fund inaugurated for commercial
(PIF) and a mix of investors have flights and is the first 5G
committed over USD 500bn. network-supported airport
A privatisation programme will in the Middle East.
also be implemented.
Contracts for the King Salman
Construction on the first urban Bridge – a 32km causeway
area, Neom Bay, began in Q1 linking Saudi Arabia’s Tabuk
2019, with named contractors to Sharm El-Sheikh in Egypt –
including the Saudi Binladin were awarded to developers
Group and AECOM. Arup Group, WSP and Fugro.
Saudi Arabia expects The bridge will not only serve
Neom to generate Preparations for phase two, an Neom but also directly connect

USD 100bn industrial city, have already

begun. Seven bids from foreign
the Middle East to Africa.

in total GDP by 2030. firms have been invited to assess

the best proposal for executing
From connected infrastructure to the development.
smart buildings and mobility, the
smart city concept is hailed as a Champions of the water
solution to rapid urbanisation industry
whilst simultaneously improving The Neom coastline stretches
economic and social potential. 468km along the Gulf of Aqaba Saudi Arabia’s Public
By aligning digital transformation and the Red Sea. The vast supply Investment Fund and
and sustainability with its Vision of seawater will be used to fuel a mix of investors are
2030 plans, Saudi Arabia expects Saudi Arabia’s thriving desalination due to invest over
Neom to generate USD 100bn in industry and attract the latest
total GDP by 2030. Neom will be water technology to Neom. USD 500bn

Bridging Continents Infrastructure Index 2019 | 43

Prevalent PPP EV bolsters
200+ PPP projects in suppliers Americas:
Canada and pipeline
remains strong
Chile's copper industry LatAm leads innovation
has a huge opportunity
amid global EV uptake
Canada dominates PPP activity while
infrastructure opportunities are on the
rise in the US. In LatAm, the spotlight is
on digital and electricity interconnectivity.
Digital interconnectivity In April 2019, Google completed
Mega interconnectivity projects a 10,000km subsea cable
5 Canada
in LatAm are creating the digital connecting California to Chile.
infrastructure of the future. 7 United States

Connecting
Grupo Gtd, a Chilean On the other side of the

Plentiful Peru telecommunications company,

is installing a 3,500km-long
continent, Brazil is working on
the innovative 9,300km EllaLink
20 Chile

26 Colombia

continents 51 PPP projects are in the

submarine fibre optic network
from the north to the south of
subsea cable system aiming to
link Brazil with Portugal and 27 Mexico
Chile. The new digital Spain. In May 2018, equity fund 32 Peru
46,800km of sub-sea cables pipeline in Peru including connectivity will allow further Marguerite joined the project as
45 Brazil
involved in LatAm's mega high-speed broadband investment to exploit the country
as a gateway to Colombia and
a financial sponsor. The project
constitutes the first transatlantic
interconnectivity projects tenders Peru, allowing tech companies system connecting Europe and
to expand their operations in the Latin America without having to
country. go through the US.

The project constitutes the first transatlantic

system connecting Europe and Latin America
without having to go through the US.
In July 2019, Chile also advanced
its plans to develop a 24,000km
fibre optic cable to connect
South America with Asia Pacific

US embraces Key asset

– Argentina, Brazil and Ecuador
have expressed an interest in
participating after a USD 3m

PPAs classes feasibility study agreement with

the Development Bank of Latin
America.
Renewables sector dominates 4G/ 5G, solar PV,
global corporate PPA deal flows
subsea cables,
with US leading the way
electricity
interconnectors,
data centres
Bridging Continents Infrastructure Index 2019 | 45
Country summaries prices over 2018 led to a well as daring reshuffles to the to a consortium featuring
slowdown of PPA activity in country’s infrastructure plans, DHMONT, Telkom and Bantel.
5 Canada Infrastructure acquired a The country’s renewables 2019. including the controversial
Canada has proactively majority shareholding in sector leads on the adoption of cancellation of the USD 13bn Peru’s PPP authority,
maintained its attraction for contractor EllisDon's 10-strong corporate PPAs, with the likes In 2019, the Chilean Texcoco airport in October 2018. Proinversion, has a pipeline of
private and institutional portfolio of transportation and of Facebook, Microsoft and government announced the On the other hand, Mexico’s 51 projects while also
investors through its strong social infrastructure PPPs. Starbucks having dominated Chile Sobre Rieles – a USD 5bn renewables market has enjoyed considering adding three new
PPP procurement activity the 2019 deal flow. In one such investment programme in the an upward trend in terms of deal ones for the period up to 2022.
which continued apace during 7 United States deal, Enel Green Power signed country’s railway network flow, adding approximately
2019. Although the focus is Amid revived determination at a 12-year PPA with food and – and a USD 7bn road 800MW of additional capacity 45 Brazil
largely on traditional both federal and state level to beverage giant Mondelez in infrastructure plan. in 2019 from solar PV and The country’s corruption
infrastructure, and most address the country’s ageing July 2019. onshore wind procurements. scandals around state-owned oil
specifically transport, infrastructure, all eyes are on 26 Colombia company Petrobras have
opportunities in social the strategy used to improve 20 Chile Colombia’s score improved from In July 2019, finance minister affected the country’s business
infrastructure PPPs remain the situation. In April 2019, Despite positive developments in 2017’s index thanks to steep Arturo Herrera announced a environment. President
abundant. President Trump announced an the country, Chile fell from the differences in ease of doing stimulus package of USD 25bn Bolsonaro’s announcement of
agreement with Congress to 11th position in 2017 to 20th in business (53.96% up to 79.58%) to boost private investment in Petrobras’ privatisation, as part
In May 2019, a consortium led pursue a USD 3trn investment 2019, due to deterioration in and its tax environment infrastructure. of a wide range of privatisations
by Canadian construction in infrastructure to improve the economic measurements, tax (50.64% to 80.40%) indices. aiming at reducing corruption
company Aecon reached country’s highways, railways, environment, political stability The country’s attractiveness is 32 Peru and the state’s debt, has been
financial close on the Highway bridges and broadband. and private participation. still scarred by the 2016 Peru is evaluating the feasibility well received by the business
401 PPP in Ontario after raising However, discussions with the Odebrecht corruption scandal of an electricity interconnector, community. According to public
CAD 639.8m. In June 2019, US government on this issue Commodity prices have a wide surrounding the cancellation of with the support of the Inter- statements, approximately USD
the government of British have once again come to a halt. impact on the region’s economic the Ruta Del Sol 2 highway American Development Bank, 20bn of assets have been
Columbia pre-qualified three growth. Chile’s economy is concession but, thanks to the with the possibility of Argentina privatised since the new
bidders for its CAD 2.83bn PPPs have made some notable significantly dependent on the fourth generation (4G) toll road becoming involved. The project president took office in January
Broadway Subway PPP, a appearances. In June 2019, the export of metals (most tender programme launched in – connecting Arica in Northern 2019, including the offload of
5.7-kilometre extension of state of Maryland approved a importantly copper) – an 2016, it is slowly recovering. The Chile and Tacna in the south of USD 12bn of Petrobras’ assets.
Vancouver’s Millennium Line. USD 11bn road PPP scheme, industry worth USD 31.5bn a latest 4G project to close was Peru – is anticipated to provide
praised as the largest highway year which represents 10% of the USD 594m Pasto Rumichaca flexibility to the region’s In March 2019, Petrobras
In June 2019, not-for-profit PPP in the world. The project the national economy. China is road PPP in July 2019, after transmission systems and handed over majority control of
care provider Providence entails the upgrade of 70 miles the country’s major trade being awarded to Sacyr and facilitate the addition of further gas distribution network
Health Care issued a request of the interstate highway on the partner, making Chile Herdoiza Crespo Construcciones. renewables capacity. In May Transportadora Associada de
for qualifications for the first Capital Beltway encircling significantly dependent on 2019, the two governments Gas (TAG) to France’s Engie and
phase of a new CAD 1.9bn Washington, DC, widening China’s growth. In July 2019, the country put reviewed the latest economic Canada’s CDPQ in a USD 8.7bn
hospital campus in Vancouver. existing lanes and adding new in place new rules for its and technical updates of the deal. The transaction was
ones. Whilst investment in This effect was apparent in the renewable energy auctions to feasibility study. completed following a landmark
The Canadian PPP market has transport is welcome, the sector PPA deal flow of Chile, the most deliver 4.3GW of solar capacity, ruling from the Brazilian
been robust for more than 15 is changing in other ways. mature PPA market in Latin after the first attempt failed Peru garnered a lot of interest supreme court allowing the sale
years, with authorities having Mobility is firmly in the America which has attracted, due to a lack of competitive in 2019 with its high-speed of subsidiaries of state-owned
procured more than 200 PPP crosshairs of disruptive, app- among others, technology and conditions. broadband PPP tenders. Six companies without
projects. The scale of based services – including telecommunication giants and concessions were awarded in congressional approval.
greenfield development is also ridesharing, car-sharing and the mining sector. As the 27 Mexico January; four to a Yachay
having knock-on effects in the last-mile services such as availability of PPA off-takers is Mexico’s president, Andrés Telecomunicaciones, Yangtze
secondary market. In February e-scooters – which are gaining dependent on the economy’s Manuel López Obrador, has Optical Fibre and Cable
2019, Toronto-based Fiera popularity among commuters. conditions, a drop in commodity had surge of high ambitions as Company consortium, and two

Bridging Continents Infrastructure Index 2019 | 47

Interview: Grupo Indi “Going forward, the important thing is that
investment starts to flow and that money is spent
they are ready to start new projects with more
strength,” says Muñozcano.
on infrastructure, so the recent infrastructure PPP
plans give a lot of confidence,” says Muñozcano. Banks in Mexico find themselves with high levels of
liquidity and are consequently on the lookout for
Reason for optimism in Mexican infrastructure existing assets to refinance and monetise, as well as
In the past year, the government has prompted waiting on the sidelines for new projects.
serious concerns after cancelling a new airport
project and a renewables auction. However, the Investors, for their part, are also ready and waiting
real impact of the airport cancellation was not as to deploy capital despite macroeconomic
severe as widely perceived due to the legal process decelerations.
through which it was carried out and the fact that
Diana Muñozcano contracts were generally honoured. Muñozcano says, “We're also seeing many contracts
Chief Investment Officer on the horizon in the maritime and port sector
“The government has passed through the learning which is a very important one for Grupo Indi.”
Despite recent political uncertainty, Mexico’s curve that comes with the first year in office and
infrastructure sector shows signs of strength,
says Grupo Indi’s Chief Investment Officer,
Diana Muñozcano.

The infrastructure sector in Mexico has seen an

important evolution in the past decade. An increasing
number of small companies have been able to access
more contracts with longer and improved terms.
“The government has passed through the
Not many new players have entered the fray,
learning curve that comes with the first
however. At the federal levels, the same companies
tend to compete for contracts. This is largely due to
year in office and they are ready to start
the high sophistication of contracts, more stringent
capital requirements on aspects such as debt
new projects with more strength.”
financing and how capital is contributed.

At more local levels, there is more leeway for new

entrants, says Muñozcano. “I do think that at the
state and municipal level we are starting to see
new players. These are companies who've been
able to stabilise their business and companies that
have grown to be medium-to-large with more
stable cashflows.”

Generally speaking, Mexican government policy

towards infrastructure is leaning towards
brownfield rehabilitation and maintenance PPP
projects, particularly in the road sector.

In the short term, there will be few new-build

greenfield road projects. The relatively low levels
of traffic make them unsuitable as toll concessions
and hard to justify as availability-based contracts.
If there are projects, they will probably be in the
north of the country.

Brownfield works do not create a great opening

for new entrants but, given that this a new
government, and new governments in Mexico
tend to be followed by economic deceleration,
it is good that a brownfield drive is being pursued
to drive the sector in the short term.

Bridging Continents Infrastructure Index 2019 | 49

Case study: EllaLink: breaking the status quo

Large fibre optic projects were typically the preserve

of tech giants but European equity fund Marguerite II
broke the mould by sponsoring the cross-continental
EllaLink submarine cable network.

EllaLink was first conceived in National Research and Education significantly lower latency
2012 as a next-generation Networks – Cape Verde (essentially the delay in the
submarine cable route spanning Telecoms and the Madeira transmission of data) than
10,000km of the Atlantic Ocean Electricity Company. existing routes.
floor bed, linking the Brazilian
cities of São Paulo and Fortaleza BELLA, one of the anchor connection speed
with Lisbon, Portugal. tenants, is an EU-funded

The Marguerite II Infrastructure

programme providing long-
term interconnectivity between
+ 1,600%
Fund stepped in as an equity Europe and Latin America. since 2003
investor in May 2018, a landmark Since their interconnection
venture considering that global in 2003, shareholders GÉANT
internet infrastructure is and RedCLARA have seen
dominated by a handful of connection speeds between
US, mostly tech, companies. the two continents grow by Connection speeds between
By January 2019, Marguerite 1,600%. However, greater Europe and Latin America
reached financial close on the flow of data is restricted by the have grown by 1,600% since
EUR 150m project. limited capacity of existing and 2003 but are restricted by
indirect interconnector routes. current interconnectors.
The cost of financing is, in part,
being sourced from pre-payments Subsea routes between Europe Plans for the system include an
made by anchor tenants, and Latin America have typically additional branch route
including Building the Europe depended on connections to connecting to French Guyana,
Link, with Latin America North America. The EllaLink the CariLink system connecting
consortium (BELLA) – comprising system will bypass North French Guyana and Columbia,
regional data networks GÉANT, America with its direct and branches to Africa via Cape
RedCLARA and the Latin America connection providing Verde and Mauritania.

+ 60%

10 Gbps

Broadband connection speeds between Europe and Latin America

have grown significantly to 10 Gbps in 2018 but, once operational,
EllaLink will improve speeds by 60%.

Bridging Continents Infrastructure Index 2019 | 51

Mind the gap Facilitating
USD 130-170bn per year trade Africa:
required to fill Africa's
infrastructure gap
Transport and trade-enabling Trade ambitions boost interconnectivity
infrastructure a top priority

Fiscal constraints may hinder ambitions

but African governments are opening their
doors to greater private investment to
overcome their infrastructure deficits.

In July 2019, the launch of the a top priority for the country,
African Continental Free Trade which, with the support of 36 South Africa

BRI Regulating
Area (AfCFTA) – the largest in World Bank-backed programme
the world – demonstrated a Scaling Solar, is currently 43 Morocco
rising intergovernmental implementing a 1GW pipeline of
49 Algeria
internationalises renewables commitment to bolster the
continent’s economic potential.
If political and existing regional
solar PV tenders.

Enhancing digital
International appetite for 100% renewable energy trade obstacles can be infrastructure
overcome, AfCFTA is set to A growing asset class across the
investment is increasing, capacity for Kenya as East attract large investment in critical region is telecommunications,
particularly from France, Africa demonstrates strong trade and telecommunications
infrastructure to enhance
with strategies to improve
internet penetration being
Japan and UK political will and regulation interconnection as the continent explored. Ethiopia is in the
embraces digitalisation. process of privatising its state
monopoly, Ethio Telecom, and
Eastern Africa stands out the island country Cape Verde is
The eastern region was already to be linked to the landmark
producing standouts prior to the EUR 150m EllaLink subsea cable
launch of AfCFTA. In a 2018 project connecting South
World Economic Forum, Kenyan America with Europe.
President Uhura Kenyatta
announced ambitions to move
Kenya’s installed renewable AfCFTA, demonstrated a rising
energy capacity from 70% to
100% by 2020. This target is intergovernmental commitment to bolster
Private Key asset well on its way largely due to
the 310MW Lake Turkana wind
farm, which was connected to
the continent’s economic potential.

participation classes the national grid via the new

USD 271m Loiyangalani-Suswa
Across the continent, the
construction of large assets has

strong
power transmission line in mainly been driven by China’s
Transport, renewables, December 2018. Belt and Road Initiative (BRI).

telecoms Strong political will and

However, China is facing
increasing competition from
USD 6.9bn of private investment regulation have also made French, UK and Japanese
in Africa in 2019 Ethiopia an attractive destination
for investors. Securing energy to
government-backed investors to
develop projects in Kenya,
meet its growth needs has been Ghana and Ethiopia.

Bridging Continents Infrastructure Index 2019 | 53

Country summaries
36 South Africa Flagship projects include the
Despite a long stretch of 2018-inaugurated Al-Boraq
relatively sluggish growth, South high-speed rail line connecting
Africa still ranks as the Casablanca and Tangier and,
continent’s most favourable more recently, the third phase
environment for private of the Tanger Med 2 port in
investment. The solvency crisis Tangiers in June 2019. Future
of state-owned utility Eskom opportunities are set to emerge
disrupted South Africa’s in special economic zones in
pioneering Renewable Energy northern Morocco. In 2017,
Independent Power Producer the Moroccan Agency for
Procurement programme for up Sustainable Energy successfully
to three years but, in 2018, 20 implemented the landmark
onshore wind and solar PPAs 177MW Noor PV project.
were finally signed. It is tendering several projects
including phase two of the
To prevent further disruptions to 800MW Noor Midelt
greenfield projects, the concentrated solar power plant
government plans to unbundle launched in July 2019.
Eskom into separate generation,
transmission and distribution 48 Algeria
arms. In 2018, the UK Algeria’s outlook for
government invested USD 500m infrastructure opportunities is
to develop the country’s energy very positive, as it begins to see
storage market, and by results from its 2015 USD 7.8bn
September 2019, Eskom had five-year transport expansion
unveiled plans to launch a programme, boasting a pipeline
360MW battery tender – the of seaports, rail and airports.
first tender of its kind in Africa.
Developed by an Alstom-led
43 Morocco consortium, the second phase
Backed by strong performance of the 10.3km Constantine light
in the Infrastructure Index rail line extension was
across its economic and inaugurated in July 2019. In
political stability scores, 2019, projects such as Algiers
Morocco has ambitions to be Metro extensions and phase
the leading infrastructure and one of the Sétif tram network
energy hub on the continent. were completed.

Bridging Continents Infrastructure Index 2019 | 55

BRI delivers Visitors
USD 368bn committed by China welcome Asia Pacific:
to BRI projects across Asia
116% increase in China's Securing digital transformation leadership
private participation score,
with increases also seen in
India and Indonesia Investment in digital infrastructure is on a
general upswing in the Asia Pacific region
with countries such as Singapore and
South Korea leading the way.

Regional leaders, such as Japan, renewable energy projects as

China, South Korea and APAC investors are keen to tout 3 Singapore
Singapore, are vying for their ESG credentials.
supremacy in the communications 4 Australia

5G in demand Data hot spot sector. The numerous digital

infrastructure investment
opportunities are backed up by
Multiple solar and wind
generation schemes are already
operational under the BRI, such
14 Japan
16 South Korea

10million+ advanced orders Singapore emerges as Asia's strong regulatory frameworks as Pakistan’s 1GW Quaid-e-
17 Hong Kong
and swift development Azam solar park, the 99MW
in China in two months data centre hot spot with capabilities in these countries. Jhimpir wind farm and the 18 China

show demand for 5G unprecedented digital growth Whilst China, Japan, South Korea
49.5MW Dawood wind project
in Pakistan, with more expected
25 Malaysia

and Singapore are among the to come to the market over the 29 India
global 5G frontrunners, some next few years.
30 Thailand
other Asian countries are still
struggling with their 4G roll-outs. Renewables are a game 33 Indonesia
changer for Asian-Pacific
37 Kazakhstan
Belt and Road Initiative economies
forging ahead? Renewables auctions, tax 40 Philippines
A multibillion-dollar network of incentives and feed-in tariffs are 44 Vietnam
projects launched in October increasingly being deployed
2013 by Chinese President Xi across the region. The promising 47 Cambodia
Jinping, the China-backed Belt development prospects of
48 Bangladesh
and Road Initiative (BRI) aims offshore wind projects in Taiwan
to build comprehensive enabled global investors, such
terrestrial, maritime and digital as Macquarie, JERA and Ørsted,
routes connecting the East to take projects like the 128MW

Quality
with the West. Formosa 1 and 376MW

New key Perceived as the playground of

Formosa 2 plants to financial
close in 2018.

standards set asset classes China’s state-owned enterprises,

due to some high-risk large
infrastructure projects, the BRI
Floating wind and solar are also
prominent draws for investors in
Japan is becoming a Digital, large-scale BRI, has driven substantial the region, with Korea’s 200MW
investment in the APAC region. Donghae floating wind farm
global prototype for renewables project to be developed by
infrastructure quality The increasing emphasis on
greening the BRI is contributing
Equinor, Korea National Oil
Corporation and Korea East-
to the success of several West Power by 2024.

Bridging Continents Infrastructure Index 2019 | 57

Country summaries version sees China’s score 63.30% in 2019. One of the automotive companies such
increase substantially from most noteworthy transactions of as Toyota and Nissan eye the
3 Singapore Another mega project is the 16 South Korea 57.27 to 69.21 due to the the year was the acquisition of country’s e-mobility market.
One of the world’s most USD 10bn Changi International Eager to invest in infrastructure improvement of private the country’s biggest toll The latter has already signed
competitive economies as well Airport Terminal 5, which is and energy, South Korea is participation in the sector as expressway firm, PLUS Malaysia a contract with Taiwan-based
as a thriving financial hub, also the biggest expansion of ranked 4th in the APAC region well as increasingly favourable Bhd, by Asian private equity manufacturer Delta Electronics
Singapore jumps up three the airport to date. Completion and 16th globally. A leading tax environment. group RRJ Capital for USD to deploy charging systems for
places from the 2017 CMS of the project is scheduled for digital infrastructure market, the 716.4m. both home and public stations.
Infrastructure Index to third, the 2030s. country deployed the world’s On 5 March 2019, the
overtaking Australia, Canada first nationwide 5G network in government committed to The country’s most ambitious On 23 September 2019, the
and the United Kingdom. Singapore Tuas megaport also April 2019. investing CNY 800bn in railway infrastructure project, the Kuala government of Thailand
represents a bold investment. construction and CNY 1.8trn in Lumpur-Singapore High Speed announced it will invest
In addition to the highly The first phase – whose total South Korea is set to invest road and waterway projects. Rail project, was once again put USD 557.3m into the Eastern
favourable tax environment, costs are estimated at USD 1.8bn USD 26.2bn in sectors such as on hold, for the next two years Economic Corridor (EEC) in
robust political framework and – is expected to become autonomous driving, smart cities China is not only the leading according to Malaysian public 2020 to speed up its
macroeconomic landscape, operational in 2021. Another and a digitalised healthcare and fastest growing 5G hub, authorities. development. The EEC is
Singapore has become Asia’s three phases will be necessary system between 2019 and 2022, due to major corporations such Thailand’s most iconic mega
data centre hotspot, thanks to to develop the port, which will as announced by president as Huawei and ZTE, but also 29 India project, aiming to develop the
an unprecedented growth in be fully operational from 2040. Moon Jae-in in April 2019. one of the largest consumer On 25 September 2019, country’s eastern provinces into
the digital infrastructure sector markets worldwide. Substantial the Indian Prime Minister, a core ASEAN economic zone.
including 5G, broadband, IoT 4 Australia Considering the country’s investment is expected in the Narendra Modi, announced
and cloud computing. Ranked 4th globally, Australia ambitious plans in the digital sector with provincial authorities the government’s intention 33 Indonesia
is home to some of the world’s infrastructure sector and its such as the Shenzhen city to spend USD 1.3trn on The country’s scores for
On 26 June 2019, Singapore’s largest infrastructure and strong performance in 2019, government already announcing infrastructure over the next few political stability, ease of doing
Ministry of Communications energy investors, such as there is no surprise that South plans to pay operators CNY years. Public authorities officially business and private
and Information announced the Macquarie and AMP Capital. Korea ranks 16th in 2019. 10,000bn for each stand-alone acknowledged the importance participation significantly
opening of Digital Industry 5G base station. of private capital being invested improved between 2017 and
Singapore, an entity set up to The Australian government 17 Hong Kong in projects, with more 2019. The improvement is
guide investments in digital continues to offer unwavering Ranked 5th in the APAC region While the China-US trade war privatisations expected. backed up by the country’s
infrastructure, allowing close support and announced in and 17th globally, Hong Kong escalates, a number of private ability to attract institutional
collaboration with the private 2019 that it will invest at least remains an attractive foreign investors could benefit Considering the increase in investors including pension
sector through PPP models. AUD 100bn in the transport destination for investors, despite from the dispute, as the Chinese popularity of PPPs and the funds. In September 2019,
infrastructure sector over the political tensions with Beijing. authorities reiterate their positive evolution of this Canada Pension Plan
An upcoming pipeline of next 10 years. One of the most heated sector commitment to open the financing model in India, Investment Board made its first
approximately 178MW of new debates is over the 1,000 infrastructure and energy opportunities for private capital infrastructure investment in
data centres is expected 14 Japan hectares of land to be created markets to foreign private capital. deployment are expected in a Indonesia, acquiring a 45%
between 2019 and 2021. Japan is well equipped to off Lantau island as a solution number of sectors, not only stake in toll road operator
Demand is mainly driven by become a global prototype for to tackle the territory’s housing For instance, a USD 35bn railways, but also toll roads and Cikopo-Palimanan, also known
record requirements from large infrastructure quality, already crisis. The artificial island is US-based private equity airports, among other assets. as Cipali.
technology and cloud leading the way in deploying valued at HKD 624bn. company, General Atlantic,
companies. disaster and climate-resilient announced in September 2019 The country’s score for ease of In May 2019, the Indonesian
assets, including early warning 18 China that 10% of its current doing business leapt from 47.64 government committed to an
Some of the most noteworthy systems. Only ranked 6th in the APAC portfolio is comprised of in 2017 to 72.92 in 2019 while ambitious infrastructure plan,
traditional infrastructure region, China has ramped up Chinese assets including an private participation also from worth USD 412bn, including
projects in the pipeline are the The country kicked off the investment in infrastructure in investment in Hebei-based Asia 53.75 in 2017 to 93.53 this time 25 new airports as well as new
USD 11bn Singapore – Kuala privatisation of multiple 2019 after a significant Medical, a hospital operator round. As India’s opening up power plants. Roughly 40% of
Lumpur high speed rail line airports during the first half of slowdown in late 2018. The and privately-owned healthcare strategy pays off, the country has the total sum required will be
and the second phase of the 2018, with more opportunities country is expected to become services provider. already attracted well-versed provided by the government,
deep tunnel sewerage system to come to market in 2019 Asia’s infrastructure driving force investors such as Vinci and Ardian. with 25% coming from
which has its centralised including the Hiroshima and to continue its rise in the 25 Malaysia state-owned companies and the
collection and treatment points International Airport, rankings in the next few years. Malaysia’s secondary market is 30 Thailand rest from the private sector. The
in Changi, Kranji and Tuas Kitakyushu, Kagoshima flourishing, with the country’s Thailand is readying for the transport infrastructure sector
and is expected to cost and Nagasaki. In comparison to the 2017 CMS score also improving slightly swift deployment of an EV will be the beneficiary of 60%
approximately USD 9.6bn. Infrastructure Index, the 2019 from 59.50% in 2017 to charging infrastructure as major of the total investment.

Bridging Continents Infrastructure Index 2019 | 59

37 Kazakhstan 44 Vietnam
Kazakhstan claims 37th place In October 2019, ADB announced
in 2019 due to a pivot towards it will finance Vietnam’s first
greening its energy and large-scale floating solar project,
transport sectors. In October offering a USD 37m loan to
2019, the European Bank for Vietnam’s Da Nhim-Ham
Reconstruction and Thuan-Da Mi (DHD), a subsidiary
Development stated it would of national utility EVN.
provide additional funds of up
to USD 328m to support the The project will be built in
deployment of renewable energy southern Vietnam where DHD
projects in the country. already operates its 175MW
Da Mi hydropower plant.
In addition, in August 2019, 100
new electric buses were acquired 47 Cambodia
to serve capital Nur-Sultan. In A sewerage infrastructure
September 2018, Eurabus project in Phnom Penh received
opened its e-bus manufacturing a USD 26m grant from the
facility in Kazakhstan with the Japanese government in October
company expecting orders of 2019. The funds will help build
500 units in 2019. a wastewater treatment station,
aiming to tackle some of the
40 Philippines shortcomings of the country’s
Bidding for a Chinese-funded current sewerage system and
railway project in the Philippines, process water before its release
under the Build, Build, Build into Choeung Ek lake.
infrastructure initiative, started
in October 2019. The estimated 48 Bangladesh
project cost is USD 960m, with UAE-based investors committed
the 71km Subic-Clark railway USD 10bn towards the
due to be completed by 2022. development of infrastructure
in Bangladesh. According to the
The Philippines dropped from Asian Infrastructure Investment
its 29th place in 2017 to 40th Bank, the country requires
in 2019 due to a substantial approximately USD 24bn of
decrease in the country’s ease infrastructure investment to
of doing business score. achieve its Vision 2021.

Multiple infrastructure projects

have seen major delays, with the
Subic-Clark railway being no
exception, as one of the three
shortlisted companies was
disqualified by the Philippines
government and bidding laws in
the country require three bidders.

Bridging Continents Infrastructure Index 2019 | 61

Interview: DNV GL Ensuring cost-effective installations coming up with good installations and
According to Ong, one of the major technical methodologies. Therefore, having the experienced
challenges is designing a large utility-scale project and innovative EPC teams in place is essential to
on a potable water reservoir, which is not ensure a cost-effective installation.”
something that has been witnessed in other similar
Asian initiatives so far. The limited staging space at The 50MW project in Singapore is only the
the Tengeh Reservoir project represents another beginning with other opportunities coming to the
challenge for EPC contractors and developers. market in the next few years.

A good understanding of the regulations and “We already see a few floating PV projects that have
requirements is therefore crucial, as this specific been tendered out on reservoirs and even a 5MW
Jeremy Chun Chong Ong project is under scrutiny from local authorities and floating PV plant near shore is in the process of
Principal Consultant the national water agency. being built north of Woodlands Waterfront Park.
I believe there is definitely a huge interest in
With roots stretching back to 1864, the DNV “Theoretically, this specific project could be more Singapore,” Ong concludes.
GL Group is a technical advisor on renewable expensive, however we have seen EPCs elsewhere
energy projects including the 50MW first-of-
a-kind floating solar photovoltaic park at the
Tengeh Reservoir in Singapore.

Having already advised on approximately 800MW

of projects in the Asia Pacific (APAC) region, DNV
GL combines strengths in solar and maritime
energy so it can advise on floating technologies.
“The pioneering feature of this
Across APAC, supportive government policies, such
PPA is that it requires the energy
as the deployment of demo-plants and ambitious
renewables targets, could propel the dissemination
supplier to provide energy
of floating solar technologies. round the clock from both
“There is definitely a huge interest in the APAC
region. China and Japan are really leading in
conventional and renewable
floating solar deployment, so is Taiwan and I think
Vietnam has the potential to become the next
energy sources.”
market, as well as Thailand, Malaysia and
Philippines.”

50MW Tengeh floating solar

DNV GL was contracted by Public Utilities Board
Singapore (PUB) in July 2019 as a technical advisor
for south-east Asia’s largest public tender for
floating PV thus far. The project – located on
Tengeh Reservoir – aims to diminish annual carbon
dioxide emissions by 28,000 tonnes.

“What sets this project apart is that we are working

on behalf of the energy off-taker, not on behalf of
the developer. The pioneering feature of this PPA is
that it requires the energy supplier to provide
energy round the clock, which will require both
conventional and renewable energy sources to
power the off-site facilities owned by the off-taker,”
says Ong.

“The generated electricity will be delivered for the

next 25 years, throughout the lifetime of the project.”

Bridging Continents Infrastructure Index 2019 | 63

Methodology The scores and subsequent rankings (rounded to the nearest 0.01) of the top ten countries are highlighted below.

Ease of
This Infrastructure Index provides an effective tool for identifying the most promising Final Economic Sustainability Tax Political doing Private
markets for infrastructure investment by allowing a refined analysis based on the Ranking score status and innovation environment stability business participation
comparison of specific factors, such as political stability and ease of doing business among
different jurisdictions. The methodology adopted in the 2017 edition of this report has Germany 1 89.67 26.40 14.11 5.21 17.55 10.00 16.40
been retained and updated to reflect global market developments and incorporates a
broader set of jurisdictions (which went from 40 in 2017 to 50 in 2019). The commentary Netherlands 2 89.23 27.20 13.81 5.16 18.37 8.35 16.35
provided in this report offers a regional context for our findings whilst also considering
major themes in the industry, track records and project pipelines. Singapore 3 87.90 27.00 12.89 4.96 18.90 10.60 13.55

The parameters of the Infrastructure Index are based on the six main indicators and Australia 4 87.50 25.10 13.20 5.24 16.77 11.25 15.95
further sub-indicators, as shown below:
Canada 5 86.66 25.10 12.56 4.60 17.35 11.10 15.95
— Economic status
Norway 6 86.08 25.50 12.71 5.49 19.18 9.15 14.05
— Sustainability and innovation
— Tax environment United States 7 84.73 23.04 13.22 5.02 16.11 11.30 16.05
— Political stability
Finland 8 83.81 23.32 13.50 5.18 18.56 9.90 13.35
— Ease of doing business
— Private participation United Kingdom 9 83.15 21.32 13.63 4.93 17.97 10.35 14.95

Belgium 10 82.07 21.88 13.17 5.48 16.89 9.40 15.25

All of these are weighted as follows:

4% Annual trade (% of GDP)

19% Credit rating and outlook
5% Interest rates
28% Economic status

5% Environmental performance
Sustainability
2.5% Innovation
9% Quality and condition of infrastructure
16.5% and innovation

3% Corporate tax rate

1% Resource drain
3% Complexity
7% Tax environment

10% Governance and stability

2% Rule of law
7.5% Regulatory stability
19.5% Political stability

Ease of doing
12%
5% Transparency/corruption
7% Ease of doing business business

5% Government support
Private
2% Gross fixed capital formation
10% Private investment
17% participation

Bridging Continents Infrastructure Index 2019 | 65

About CMS
CMS is a top six global law firm with 70+ offices in 40+ countries. With over 4,800 lawyers globally, we
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A study of infrastructure investment trends

Global infrastructure report

Connected Future In cooperation with:

February 2019

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