Proceedings of the 12th Meeting of the COMCEC

Financial Cooperation Working Group

Infrastructure Policy Framework:

The enormity of investments and the long-term

nature of infrastructure financing require appropriate policies and capabilities for

implementation. A lack of a list of bankable pipelines of infrastructure projects in many

countries makes it difficult to estimate demand and needs. The policies and plans

would prioritize between different projects of national importance.

Legal and Regulatory Framework:

Prof. AHMED identified three types of enabling

laws to promote infrastructure financing. First, PPP and concession laws that would

provide legal basis and clarity for private sector involvement. Second, since different

infrastructure sectors are have unique features, there is a need for sectorial specific

laws and regulations. Finally, Islamic financial laws to support operations of Islamic

banking, nonbank financial institutions and Islamic capital markets.

Institutional Arrangements for Procurement Processes & Procedures:

Prof.

AHMED

then discussed the procurement frameworks by identifying World Bank’s

three key elements of PPP procurement regimes. Preparation relates to selection of

PPPs and would depend on the priorities identified in an integrated infrastructure

plan. Procurement deals with processes of bids, evaluation and award of contracts.

Finally, contract management phase tracks progress, completion, and contract

implementation after the completion of the PPP project.

Project Related Factors:

A key issue from a private sector’s perspective is the

bankability of projects which relates to adequate cash flows to repay the investors.

Since infrastructure projects are complex and long-term, investors are careful to

assess the risks of variation of cash flow and ensure that they remain within the

expected margins.

Human Capital:

Structuring financial contracts for infrastructure projects is

complicated and requires not only financial expertise but also an understanding of the

project’s features along with the knowledge on risks and return. A key constraint is the

lack of professionals with the knowledge and experience of structuring and financing

large infrastructure projects.

After providing the background of infrastructure and the role of private sector in contributing

to its development, Prof. AHMED discussed the methodology used in the research. He pointed

out that the research was descriptive and evaluative and arranged, summarized and presented

data/information to enable meaningful interpretation. The research analyzed both

quantitative and qualitative data with the former including examining size and status of the

infrastructure financing needs and the status of Islamic financial sector in different

jurisdictions. He continued that some analyses are qualitative and conceptual in nature and

information for them were collected using content analyses of various sources which included

relevant literature, surveys of countries, policy documents from international organizations

and standard setting bodies, national level public policy and legal/regulatory documents, etc.

Case studies on different countries were carried out by principal investigator and country level

specialists. The information was gathered from national level public policy and

legal/regulatory documents and meetings and interviews with key stakeholders (policy

makers, industry players, regulators).

In the second part of the presentation, Prof. AHMED started by presenting the status of overall

infrastructure, transport, electricity and telephony infrastructure of OIC member countries and

other regions. While the status of the infrastructure sectors for OIC member countries is better

than Sub-Saharan Africa and South Asian regions, their status is lower compared to other four