How profitable are infrastructure concessions in Latin America? Empirical evidence and regulatory implications

Abstract

This report estimates the returns that private investors in infrastructure projects in Latin America really made on their investments, and assesses the adequacy of these returns relative to the risks taken-the cost of capital-and the impact that the quality of regulation had on the closeness of alignment between returns and the cost of capital. This is done by estimating both historical and projected future returns earned by a sample of private infrastructure concessions, across a variety of Latin American countries and infrastructure sectors, and comparing them against expected returns given the level of risk taken-the cost of capital. In this way, it is possible to evaluate whether private investors did indeed earn abnormally high returns on their investments. The report develops a quality of regulation index and examines the extent to which the quality of the regulatory framework contributed to maintaining a closer alignment between rates of return and cost of capital, or did allow for the capture of excessive rents by the investors or of excessive benefits by the users at the expense of the investors.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 40 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.