_18_ _Why Infrastructure Financing Facilities Often Fall Short of Their Objectives_ _46. Results._ The design phase of the facility has been a long drawn out process due to a lack of government coordination, the long lead time between the demand survey and the final implementation of the facilities and inconsistencies between developmental objectives being pursued by the government and commercial objectives being pursued by Bancoldex, the public banks in which the facility was to be housed.

_47. Lessons Learned._ The Colombian case study offers best practice in three important aspects: (i) employment of a detailed demand analysis that identifies impediments to private investment in infrastructure, (ii) provision of a limited number of instruments that are well targeted at specific non-commercial risks, and (iii) leverage of govemment funds. Nevertheless, it also highlights some of the problems governments face when setting up these facilities.

48. The concept of the facility and the design of the instruments were based on a detailed demand analysis, which helped to initially identify obstacles to private investment in infrastructure. However, the survey was not of sufficient detail to provide specific information as to the underlying factors that are constraining private capital flows to that sector. For example construction risk which was identified as a key impediment for private investment in toll roads. Yet the information gathered in the survey was of insufficient detail to identify specifically what part of the construction risk was the constraining factor. And the facilities was to offer a limited number of instruments targeted at specific risks-financial market interruption-and aimed at achieving a better risk allocation between the private and public sector and allowing the project company to insure itself against those aspects of the refinancing risks it has little control over. By the same token, as the exercise of the refinancing option is linked to good performance, the facility is insulated against such risk over which they have limited control, commercial risks. The limited number of instruments in combination with the limited number of sectors targeted also mitigate demands on the organizational structure and on internal technical capacity and make the management of the facilities more manageable from the government's point of view.

49. Nevertheless, the Colombian case also exemplifies some of problems that arise in the design phase of a government infrastructure sponsored financing facility and may adversely affect the effectiveness of this form of government assistance to infrastructure. A large amount of government and donor resources have been spent during the design phase and have yet to yield concrete results. The high implementation and design costs can partly be attributed to a lack of government coordination. The different government agencies involved in the endeavor failed to establish good channels of communication early on in the process and decide which of the government agencies is to take the lead in designing and setting up the facility. The lack of ownership on the part of the government agencies and ministries involved and the lack of a champion for the project advancing the project through the different bureaucratic processes let the project languish.

_50._ In addition, long gestation periods of financing facilities entail the risk that the results of the demand survey (which is aimed at identifying impediments to private