The highway network, for example, has grown to a multiple of 0.7x (i.e. 70%) against multiples of 30x of Spain, 6x of France and 2x of Germany; that of the high-speed railway train, notwithstanding that at the beginning of the 80’s we were, together with France, the only Countries in Europe to have them, today, Italy has an railway line extension equal, more or less, to half that of France, Spain and Germany. On the subject of urban mobility, Italy has circa 160 km of subway line, against the 340 km of France, 530 km of Spain and 600 km of Germany.
What can be said about these last considerations?
-that for an infrastructural revitalization in Italy, it would probably be necessary to re-establish the legal framework of the sector starting from the reform of Article 117 of the Constitution, as desired by certain critics of the so-called concurrent legislation (between Regions and State) in matters of infrastructures;
- And, perhaps, review the mechanisms of generation and acquisition on the territory of consent to the infrastructure;
- And, also, go through a revision of the procedural regulations, to prevent the conviction that they will be quickly and adequately reconciled only with special powers;
- And also revise the regulations on appeals and protection of the time deadlines for work completion.
A reform measure would be necessary and urgent for many of these items; but one is also aware of the difficulties implied by such complex and delicate regulatory interventions.
Therefore, pending more radical reforms, in the meantime, it is urgent to make headway.
Here the structural knot occurs which, even more than the regulatory constraints, has determined, in the past, most of the quantitative and qualitative deficiencies that we have illustrated; the knot, as is obvious to understand, is the financial one: an even more critical aspect in the present phase in which the European States are engaged in works of consolidation of public finances, and the banking system is still subject of major restructuring.
In particular, the reduced capacity of investment of our Country as a whole, due to clear cost constraints (it is known that Italy “boasts” the largest public debt – in the order of 118% of the GDP, a little less than double compared to the average of all the other European Countries, excluding Italy) has determined a severe slowdown in our growth of infrastructural stock.
First of all, let us consider the profile of the technical instrumentation in which we can seek substitute lines of action compared to traditional public financing of infrastructural projects: from this viewpoint, the crucial importance of the substitute instrument par excellence seems evident: the project financing (PF) or, better still, when there is a major public involvement, the PPP (Public-Private Partnership).
In the very probable constancy/escalation of the cost constraints of the State Budget, it would be fairly easy to find in these instruments (after all, they are certainly not new – in Italy scarcely utilized, except for now historic and laudable operations) the most rapid way out of the tightness of the sources of public financing of the infrastructural investments.
And, notwithstanding this, they are used, all things considered, in a limited range of operations and even, often surrounded by scepticism which has its roots – in the opinion of the writer – in the lack of awareness of the advantages and limitations of the instruments in question. Perhaps it might be beneficial to recapitulate them:
- Among the advantages: apart from not weighing, or very little, on the public budget, the project in PF or in PPP normally implies that the project is subjected to much more penetrating verification, validation and control than that carried out on totally public projects; which means – we must admit – that it is not always appreciated. Furthermore, the legal structure of the relationship tends to maintain in many ways, the interests of the actuator aligned with those of the contracting/licensing station (especially costs and times).
- Among the limitations: once again it concerns limitations connected to the insufficient development of the specific legislation, which, for their technicality, are not appropriate to recall here, but just to remember the great criticism over the allocation of the so-called administrative risk, above all, in phase of acquisition of the consensus on the territory (who wishes to can read up in the special Occasional Paper, recently published by the Banca d’Italia).
A useful engineering of the PF or PPP schemes could be realized with recourse – obvious in certain ways – to instruments of liberation of public resources, if necessary, to support financing of the market interventions: suffice to think simply of the enhancement in value of the public real-estate assets (the operations made in the past could be replicable, with the necessary adaptations and in function of the conditions of the financial markets, if necessary also downstream of the so-called federalization of the public land, recently started) or of the most complex, but not less effective, financialization of the external values generated by the infrastructure, which is, apparently, still almost unknown as a financing instrument, but in reality, very clear in the mentality of many private entrepreneurs; it concerns, basically, putting to good use – from a financial point of view – the generation of wealth that any infrastructure indirectly generates in the territory of the single economic infrastructure (typical example: value enhancement of areas, etc.).
Obviously, the large-scale activation of market instruments, alone or in competition with Government interventions, could pose problems of appropriate instrumentation for the financial provisions, at least, for operations of greater importance, ideally transnational. From this point of view, a particularly suitable instrument for the financing of large infrastructural projects could be constituted by the so-called Project Bonds. They are real bonds to finance single large projects, issued by a promoter (defined “project company”) and promoted by great institutional investors. An example of ‘great institutional investor’ could be the “Marguerite Fund” constituted by the most important European deposit and loans banks and by the European Bank of Investments.
What are the principal characteristics of these Project Bonds?
- the interest in underwriting the project bonds can be found, above all, in market subjects interested in long-period investments, such as the deposit banks, pension funds, insurance companies and the sovereign funds (in this last, we can refer to the great opportunities offered by the enormous surpluses accumulated by the emerging Countries, such as China or India), but also by the savings of families;
- the major obstacles to the introduction of the project bonds regard not so much the instrument in itself, but the nature of the underlying projects (and, therefore, essentially, the issuers, like the “project companies”) too often insufficiently validated from the point of view of the financial returns which should generate the new works, also due, especially in Italy, to the uncertainties which are generated regarding the stability of the planning, management and realization of the procedure, very often made uncertain by delays in the technical-administrative procedures;
- another element to keep in mind is the effect of the financial crisis on the monoline insurers, which, in the past, functioned as wrappers on the bonds issued, with the purpose of improving the creditworthiness of the project and make it somewhat less hazardous for the investors, a role that some important supranational financial institutions with high credit rating could consider (e.g. the European Bank of Investments or the same Marguerite network);
- an urgent Infrastructural Reform could favour the development of project financing through fiscal incentives, the review of intervention methods of the Deposits and Loans Bank, the modifying of the mechanisms of qualification of the companies, the reduction of delays of payment to the companies, the consolidation and stability of procedures etc.,
Lastly, as far as Italy is concerned, in relation to the total infrastructural activities which are considered strategic for the Country (therefore, cannot be privatized) and owned totally or in part, directly or indirectly, by the State, some of them listed, a company could be found (the same CDP?), or investment fund of national interest open to public scrutiny – existing or of new constitution – to which:
- to transfer summaries of activities or shareholdings held in companies operating in infrastructural sectors considered to be strategic for the Country (brown field);
- to delegate the planning and implementation of new infrastructural projects characterized by the same degree of interest for the community (green field).
The capital and economic-financial structure of the company or of the funds must be such as to guarantee (for statutory obligations) that through the flow of resources generated by the infrastructural activities already available income, together with recourse to funding on the market aimed at institutional investors and the public savers, the first support the second, who in their turn – when income – should support the development of new projects.
The total asset value of this new reality could reach tens of billions of Euros and generate significant resources earmarked for the infrastructural development of the Country. This approach, which should obviously be accompanied by precise choices of industrial policy, would have the advantage of:
- maintaining strategic activities under public control;
- developing economies of scale in the management of activities characterized by similar logic;
- enhance the modern “arbiter” role of State which focuses financial and managerial resources on the territory represented by all of the strategic networks/backbones of the Country;
- gradually aim for the ideal condition of self-financing of the entire sector of the National networks in a rolling perspective of “brown financing green” without additional loads for the State.
Certainly, to switch to a phase of strong relaunching of the infrastructural investments in Italy and, above all, to adopt not only a conjunctural/emergency decision-making tool, some actions appear necessary both on the legislative level and, so to speak, on the cultural level (in particular if one refers to– the insistence on the subject is not coincidental – how bumpy the path of consensus is in Italy, or how distorted is the philosophy of the so-called “compensatory works”, which very often affect the costs of realization of the infrastructures without generating additional amenities of secure economic autonomy).
But, notwithstanding this, instruments, techniques and know-how exist, as well as a vast number of institutional investors who are only waiting to be involved in the projects, on condition that they are:
- valid from the infrastructural point of view;
- and, as a consequence, can be validated at the economic and financial levels, with adequate returns for the investors (too often certain infrastructural projects respond more to needs of local interests than to real structural requirements demonstrable from the economic point of view);
- assigned with rapid, but transparent procedure;
-“certain agreement” on the part of the territory involved.
On these conditions, there would be no reasons for doubt concerning the ‘financiability’ (also sizeable) on the market of operations of qualitative and quantitative upgrading of the Country, both for the typical characteristics of the infrastructural assets and for the real opportunities which the financing of same generates.