Developing countries are not the only ones that are “capacity” and “governance” challenged when it comes to doing major infrastructure projects. My favorite example of this to date has been the Paul S. Sarbanes Transit Center in Silver Spring, Maryland. This publicly financed transportation hub in one of the wealthiest jurisdictions in the United States is years overdue, tens of millions of dollars over budget, and currently unusable due to major structural defects. Bringing the project to completion is tied up in a volley of charges and countercharges between the private developer, the county government, and regional transportation authority.
Here’s what the transit center was supposed to look like by 2012:
And here’s what it looks like in 2014:
But today I have a new candidate to help us get behind the kumbaya idea that developed or developing, our countries are more the same than not. Or at least our politicians are. The Washington Post this week reported on the troubled story of a proposed toll road in a rural stretch of Virginia (just a few hundred miles from the Sarbanes transit center!).
You can read all about it here, but here are some highlights that ought to resonate, whether you’re reading this in Southeast Asia or Southeast Virginia:
Virginia’s powerful (at the time) governor made an aggressive push for a new toll road, pitching a public-private bond issuance that would rely on the future stream of toll revenues. The toll road just happened to serve his home corner of the state.
But hey, who cares about that, so long as the underlying economic model is strong, right? Yes well, here’s the Post story: “Critics said projected traffic was too sparse to justify the investment,” describing the existing corridor as “a lightly traveled four-lane road that stretches between Petersburg and Suffolk” (where and where?). In other words, it looks doubtful that road usage and toll revenues would have ever been sufficient to pay back the bonds.
Worse, the governor was pushing the project with investors, and had committed $250 million in state finances, in the face of clear warnings from the federal regulatory body that the project would not clear environmental regulatory hurdles.
Following the retirement of the governor, Virginia’s incoming governor has now put the project on hold.
So what are some of the common lessons we can draw about the politics of infrastructure, whether we’re sitting in Richmond or Dar-Es-Salaam? Here are a few off the top of my head:
Politicians will use the levers of power to pursue pet projects.
Public-private partnerships do not necessarily impose discipline on these projects.
Transparency helps. So does aggressive reporting by the press.
Developing countries may have an advantage in working with institutions like the World Bank, which, at least in principle, can help to ensure that a project is economically viable and has met fiduciary and environmental standards according to a clearly defined timeline and sequencing.
What lessons do you draw?