From 8 to 11 June was held the 21st edition of the International Economic Forum of the Americas in Montreal (Canada) which received more than 3,800 people of all over the world and there were 190 speakers.

The main purpose of this event was to highlight the knowledge and the conscience about the economic globalization with particular emphasis in the relation between America and the other continents and its main theme was “Building a Balanced Economy” based on changing the models that prevailed before the 2008 crisis.

Other objectives of this conference are to promote the information exchange, to enhance the free discussion about the current economic problems and to ease meetings between world leaders to improve the international speech.

Javier Pérez Fortea, CEO of Globalvia, was invited as speaker in the roundtable of the Plenary Session which was held on June 9 and its panel discussion was “Closing the Infrastructure Gap” focused on the infrastructure as a way for creating sustainable jobs.

You can check Javier Pérez Fortea’s presentation on the following link: https://vimeo.com/131773866

Javier shared table with various personalities, all of them leaders in their sectors, such as Arundhati Bhattacharya (State Bank of India President, who are the most influent woman in Asia according to Forbes), Arsenio Balisacan (General Manager of the National Economic Development Authority of The Filiphines), Fadi Selwan (Executive Vice Presidente of the Grupo and President of VINCI Concessions), Pierre Gabriel Côté (Investissement Québec CEO) o Robert Palter (Mckinsey & Company Infrastructure Director).

About the panel discussion, Javier Pérez Fortea, commented: “I believe there is actually no Gap between the needed infrastructure and the liquidity available to fund it. There are really three levels of Infrastructure, the existing, the required and the one that can be financed. The difference between the first two is real, so it’s a “gap” in the sense that one is larger than the other. However, between the second and the third is where I claim there is no gap. 

The liquidity of the market today is enormous. There are institutional investors (pension funds, infra funds, etc…) wanting to enter the Infrastructure market, or expand their positions. There are large construction groups wanting to secure construction contracts for their companies, who are ready and able to invest in PPP projects all over the world. So in the end, why is it that it might seem that there is not enough money to build the much needed Infrastructure (in not only emerging economies, but also in the 1st world) ? I believe that the problem which makes both ends not meet is the wrong allocation of risks.

There are four main players in this Infrastructure world, Public administrations, financial investors/ lenders, promoters / concessionaires, and the citizens (users). The first three are there to provide services to the fourth player, however if the risk allocation is not appropriate, in the end the project itself might either be built and go bankrupt, thus not providing the intended service, or might even not ever be built. Each risk should be handled by the party that has the ability to manage it. There’s no sense in “unloading” a risk that cannot, or should not be managed by a specific party, unto that such party.
For example, expropriation risks should be borne by the grantor, who is the party that can manage it. Construction, operational risk, financial closing risk, should be borne by the concessionaire. There are public administrations in some countries wanting to take over operational risk from a concessionaire without actually being able to do it themselves, so they want to let subcontracts to do the O&M of the specific project. There are infra funds investing in Brownfield assets and then building up their teams to actually run the assets. Well, forgive me for saying this, but you should let companies such as mine do this for you, because that is what we do, and we do it really well.

Infrastructure has a social component, which means that only because a given road, or mass transit system is needed to provide service to any given urban area, this doesn’t make it a sound project from the economic standpoint. In this case the public administration should bear the demand risk, and there are methods to do this, availability payments, shadow tolling, etc.

In the end, if projects keep going under because of the incorrect risk allocation, or if the investors see that the risks in a specific project are not manageable by the party to whom they have been allocated, they will look elsewhere to invest their money, and the “non-existing” gap will all of a sudden exist.

I had the chance to participate in the Preparatory meetings for the G20 Prime Ministers’ meeting in Australia last year, and out of those reunions came several recommendations which we passed on to the Prime Ministers aimed at creating a sustainable economy for the world, creating long term jobs and increasing the GDP throughout the G20 countries. One of these recommendations was to create a Global Infrastructure Hub that would amalgamate the “best practices” of the industry, and that would ensure a common legal framework, and that would prevent corruption from hampering growth.

Infrastructure projects should be defined and decided upon by technical experts not politicians. A short sighted political need should not jeopardize cities and countries (citizens in the end) for years to come.”

Javier Pérez Fortea was asked about the Event and he highlighted the opportunity that had been for him and on behalf of Globalvia to participate in such a high level event surrounded by many economic and social celebrities all around the world.

The Event was a success in terms of organization and the participation of Javier Pérez Fortea was definitely recognized thanks to the great international level of Globalvia as a company and as a global leader in the infrastructure sector.