commitments or only investment commitments paced with the ability of the operator to generate cash is going to surge. At best, even in regions in which concessions tended to dominate, the need to better manage risk is likely to increase the relatively share of greenfield projects. This is already the case for Latin America for instance. Overall, the main beneficiaries are going to be developed countries. With an excess supply of cash on the international financial markets, the willingness of large construction firms to move back to the European market as the liberalization speeds up and proceeds well is already quite obvious for anyone working on project finance.

The evolution of the financing structure, of the cost of capital, and of the forms of contracts is not the only source of evidence to assess the evolution of PPP in the sector. A study conducted by Guasch (2004) of about 1000 concessions contracts signed during the 1990s in Latin America suggests that problems have been in the making for a while now. Defining renegotiation as an event in which a concession contract undergoes a significant amendment in any of the following areas: tariffs, investment plans and levels, exclusivity rights, guarantees, lump-sum payments or annual fees, coverage targets, service standards and concession periods, Guasch finds that transport concessions renegotiation are almost a norm rather than an exception. Indeed, Table 4 shows that 55% of all transport concessions implemented between 1985 and 2000 in the Latin American and the Caribbean region were renegotiated<sup>10</sup> . This percentage implies that more than one out of every two transport concession contracts has been renegotiated.<sup>11</sup> It took as little as 3.1 years before the average transport contact underwent a renegotiation.

Table 4. **Level and speed of concession renegotiation requests in Latin America**

||**All infrastructure**<br>**sectors**|**Transportation**|
|---|---|---|
|Percentage of renegotiated contracts|30|54.7|
|Average time to renegotiate since award (years)|2.2|3.1|

_Source_ : Guasch (2004).

As pointed out by Guasch, not all renegotiations were bad. A renegotiation can indeed be a welfare-enhancing instrument when used to address the inherently incomplete nature of concession contracts. Although some renegotiations were desirable, the high percentage of renegotiated contracts indicates the design, implementation and enforcement of concessions contracts will require a careful fine tuning. The main problems identified by Guasch (2004) include the incompleteness of the contracts, the lack of competitive bidding processes with clear and transparent award processes and the absence of an independent an technically well-endowed regulator. It is interesting to note that, in the transport sector, in 57% of the cases the renegotiation was requested by the operator ( _vs._ 61% for all infrastructure contracts) and that the Government was the sole initiator in 27% of the cases, the highest rate across sectors.<sup>12</sup> 10. The empirical findings in Guasch (2004) rely on a dataset of more than 1 000 concessions granted in the Latin American and the Caribbean region during 1985-2000.

11. In relative terms, the number of contracts renegotiated are much higher than in the electricity sector and the average of all sectors but it is lower than the percentage in water and sanitation, see Guasch (2004).

12. A fifth one not addressed here is the macroeconomic impact of the reforms specific to the transport sector. While there is a growing volume of publications on the positive effects of the sector on growth levels or 13