Table 3. **Types of Private Sector Involvement Across Countries in Transport in Developing and Transition Economies (Number of projects per contract type between 1990 and 2001)**

||**Africa**|**East**<br>**Asia**|**Eastern**<br>**Europe**|**Latin**<br>**America**|**Middle**<br>**East**|**South**<br>**Asia**|**Total**|
|---|---|---|---|---|---|---|---|
|**Divestiture**|3|29|17|7|0|0|**56**|
|**Greenfield Projects**|11|82|12|60|8|23|**196**|
|**O&M Projects**|12|7|5|14|3|2|**43**|
|**Concession**<br>**Contracts**|11|111|9|229|6|16|**382**|
|**TOTAL**|**37**|**229**|**43**|**310**|**17**|**41**|**677**|

_Source_ : World Bank PPI database.

The distribution of contract types across regions reflects differences in politics, history and risks. Latin America has tended to prefer concession contracts over the other forms because it was believed to be the most effective way of shrinking the fiscal cost of the sector while maintaining the ownership of the assets in the public sector. East Asia, on the other hand, has benefited from the willingness of large local regional financing sources to contribute to expansion projects with high potential payoffs. For the poorest regions such as Africa and South Asia, greenfield projects were effective solutions to isolate risks to specific activities for which these risks would be manageable. New port terminals for instance have often been co-financed by shipping companies for instance. The relatively small proportion of O&M projects reflects the facts that these types of projects are usually too small to be picked up by this type of database but most importantly, the fact that the PPP wave of the 1990s was mainly designed to get the private sector to take on the investment responsibilities. O&M contracts come short on that ground and were hence less attractive at the time.

The evolution of contract types does however give a sense that there may be a shift in this view of the world. Indeed, since the Asia crisis, but in particular since the Argentinean crisis, very few new concession contracts have been signed while the number of greenfield contracts have tripled (from 67 to 196) between 1997 and 2001 —the few concession contracts that were eventually signed had been in the pipeline since well before the crisis. The ongoing dialogue with the major sponsors of these contracts is quite clear: they are no longer willing to take on as much risk as in the 1990s.

This increased risk aversion is quite clearly revealed already in the evolution of the financial structure of listed private projects. According to Correia _et al._ (2004), the leverage rate has been increasingly significantly since 1998 for all infrastructure projects in developing countries but in particular in transport. The debt to equity ratio for most transport projects, based on market value of the assets, is now around 60%, an increase of about 50% over the mid-1990s values. The cost of capital has also been increasing quite significantly. Estache and Pinglo (2004) show that, based on a book valuation of the financing structure (which has tended to be much more optimistic in recent years with the depressed markets), the cost of capital in rail and ports is around 12-13% and the cost of equity around 15-16% on average. Note that for the lowest income countries the cost of equity is significantly higher and reaches close to 20%, at a time when interest rates are at some of the lowest historical levels.

At these costs of capital levels, the willingness to sign concession contracts is bound to decrease and it would seem rational to expect that the demand for contracts requiring no investment 12