ADIC-UBS Bid for Mega Infrastructure Projects

ABU DHABI — The ADIC-UBS Infrastructure Investment Fund is currently bidding for four multi-billion US dollar infrastructure projects including the Aqaba Port Redevelopment in Jordan, an Independent Power and Water Plant in Saudi Arabia, a Sewage Treatment Plant in Bahrain, and a Schools Project in Egypt.

“We have submitted an expression of interest for the Aqaba Port Redevelopment Project in Jordan, a $400-500 million project, which will be developed on Built-Operate-Transfer (BOT) basis. The project will move to the bidding stage in October,” said Mark Thompson Chief Executive Officer ADIC-UBS Infrastructure Investment, in an interview withKhaleej Times. Abu Dhabi Investment Company (ADIC) and Union Bank of Switzerland (UBS) launched the infrastructure fund early this year, to invest in the expanding infrastructure in the MENA and Turkey.

The Fund will take up to a $100 million equity stake in a 3,000 megawatt power project in Saudi Arabia worth $3.5-4 billion. An international consortium has recently been awarded the status of “conditional preferred bidder” for the project and a final decision is expected shortly.

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Infrastructure spending needed to attract investors

The government needs to consider tweaking taxes and its incentives system if it wants to address investor concerns regarding the country’s poor infrastructure.

This was indicated by Reza Baqir, International Monetary Fund (IMF) resident representative, on the occasion of the release of a UN report pointing to an underperforming Philippines.

The 2009 World Investment Report of the United Nations Commission on Trade and Development, said Mr. Baqir, ranked the Philippines 77^th among 141 states in terms of the potential to attract foreign direct investments (FDI). The country, however, was in 99^th in terms of actually getting the funds.

Poor infrastructure was among the top reasons the country is not attracting as much FDI as it should, he said, thus the need to raise revenues to build the needed facilities.

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Bush to address nation again on financial turmoil

WASHINGTON (AP) -- President Bush will appear in the Rose Garden Friday to deliver a statement to the country concerning a series of actions the federal government is taking and considering to deal with instability in the financial markets.

White House press secretary Dana Perino announced the president's plans and said he would be joined for the late-morning statement by Treasury Secretary Henry Paulson and Christopher Cox, chairman of the Securities and Exchange Commission.

She said Bush "will discuss the causes of the crisis and outline actions being taken to stabilize markets and restore confidence."

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Stocks Soar Worldwide on Bank Bailout, Curb on Short Sales

Sept. 19 (Bloomberg) -- Stocks surged, sending benchmark indexes in the U.K. and China to their biggest gains on record, after the U.S. Treasury and Federal Reserve announced plans to halt the credit-market seizure and British and American regulators cracked down on short sellers.

UBS AG, the European bank hardest hit by the subprime crisis, climbed 32 percent. Macquarie Group Ltd., Australia's largest investment bank, soared 38 percent after U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed removing troubled assets from the balance sheets of financial companies. Barclays Plc advanced 31 percent as the U.K.'s Financial Services Authority banned speculators from betting against financial shares until Jan. 16.

Europe's Dow Jones Stoxx 600 Index rose the most since data for the index began in 1987, adding 7.3 percent to 275.53 at 1:15 p.m. in London, while the U.K.'s FTSE 100 Index posted a record advance of 8.3 percent. Russia's RTS Index jumped 20 percent after a two-day suspension and President Dmitry Medvedev's pledge of $20 billion to prop up the market. Futures on the Standard & Poor's 500 Index climbed 4.1 percent, and the MSCI Asia Pacific Index rebounded 4.8 percent from a three-year low. China's CSI 300 Index increased 9.3 percent, the most since the measure was created in 2005.

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How to prevent the next Wall Street crisis

NEW YORK (CNN) -- Many seem taken aback by the depth and severity of the current financial turmoil. I was among several economists who saw it coming and warned about the risks.

There is ample blame to be shared; but the purpose of parsing out blame is to figure out how to make a recurrence less likely.

President Bush famously said, a little while ago, that the problem is simple: Too many houses were built. Yes, but the answer is too simplistic: Why did that happen?

One can say the Fed failed twice, both as a regulator and in the conduct of monetary policy. Its flood of liquidity (money made available to borrow at low interest rates) and lax regulations led to a housing bubble. When the bubble broke, the excessively leveraged loans made on the basis of overvalued assets went sour.

For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.

The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?

First, key regulators like Alan Greenspan didn't really believe in regulation; when the excesses of the financial system were noted, they called for self-regulation -- an oxymoron.

Second, the macro-economy was in bad shape with the collapse of the tech bubble. The tax cut of 2001 was not designed to stimulate the economy but to give a largesse to the wealthy -- the group that had been doing so well over the last quarter-century.

The coup d'grace was the Iraq War, which contributed to soaring oil prices. Money that used to be spent on American goods now got diverted abroad. The Fed took seriously its responsibility to keep the economy going.

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China's Urbanization Means Rich Rewards for Business

As the number of Chinese living in cities explodes, the development opportunities are vast in every field, starting with construction

By 2030, 1 billion consumers will live in China's cities. Chinese and global companies are well aware of the huge size and potential of this emerging urban market. But businesses should shift their sights from a panoramic view of the opportunity to a close-up of the dynamics of urbanization. To be successful, they need to keep pace with the rapidly changing managerial strategies that city leaders are employing as their cities expand.

China's urbanization is largely a local phenomenon. City mayors are the most powerful movers and shapers of the process. Their effectiveness—or lack of it—should be a key component of companies' strategic planning for the Chinese market. New research by the McKinsey Global Institute (MGI) argues that business has a chance to play a key role as cities mature. Companies can bring not only capital but also an infusion of knowledge and can help guarantee greater efficiency and productivity from major public projects.

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Gasoline rises on Ike, but crude dips below $100

NEW YORK (AP) -- Gasoline prices jumped at the wholesale level Friday as Hurricane Ike swept through Gulf of Mexico, prompting companies along the Texas coast to shut down refining and drilling operations.

Crude oil on the futures market, however, briefly sank below the psychologically important $100-a-barrel mark for the first time since April 2 - showing that investors believe a worsening global economy will continue to drive down demand for some time in the United States and elsewhere.

The fact that U.S. fuel demand is so weak right now might mean the recent surge in the wholesale price of gasoline - which rose to about $4.85 a gallon in the Gulf Coast market Friday - might not be passed along to consumers unless Ike's impact is severe and long-lasting.

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Presidente Arias pide cerrar acuerdo UE-Centroamérica en 2009

MADRID (AP) -- El presidente de Costa Rica, Oscar Arias, explicó el jueves que aspira a cerrar el acuerdo de asociación entre Centroamérica y la Unión Europea en el primer semestre de 2009.

Después de reunirse con su homólogo español, José Luis Rodríguez Zapatero, Arias subrayó la enorme repercusión que este convenio podría tener para las economías de la región centroamericana que, dijo, "producen lo que no consumen y consumen lo que no producen".

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Bolivia interrumpe suministro de gas a Brasil

LA PAZ (AP) -- Bolivia interrumpió el jueves el envío de 14 millones de metros cúbicos diarios de los 30 millones que exporta a Brasil debido al daños en ductos provocado por grupos opositores del presidente Evo Morales, se informó en la empresa que opera uno de los gasoductos.

El asesor de Relaciones Institucionales de la empresa petrolera Transierra, Hugo Muñoz, dijo a la AP por teléfono que "ni una molécula se está enviando a Brasil desde la mañana del jueves". Precisó que Transierra exporta 14 millones de metros cúbicos y el resto es exportado por otra empresa.

Transredes la otra compañía que exporta gas a Brasil informó que el suministro de gas al vecino país era normal hasta el jueves en la mañana, informó a la AP la portavoz de la empresa Teresita Arandia.

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A blackout for sun power

The U.S. stock market surged on Monday and swooned on Tuesday, but one sector stayed consistent throughout. Solar power company stocks got killed.

The apparent reason: Investors are worrying that an oversupply of solar panels in 2009 will result in downward price pressure that wipes out profit margins.

The carnage is playing out exactly as predicted in January by Jerome Ball, an obsessive follower of solar stocks at his Alternative Energy Trading blog. (See "Pop Goes the Solar Bubble?")

My prediction? The oversupply problem will disappear once we're all driving plug-in hybrids -- especially in regions that have renewable energy mandates. But government can help. If Congress truly is considering making $50 billion in low-interest loans available to the auto industry for retooling factories to produce fuel efficient cars, how about renewing the production tax credit for solar power while they're at it?

― Andrew Leonard (How the World Works: Salon.com)

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Brazil to build high-speed train line

September 9, 2008

(AP) SAO PAULO, Brazil - Brazil's Transportation Ministry says it hopes to have a high-speed train operating in time for the 2014 Wold Cup.

Ministry's transportation policy director Marcelo Perrupato says the new train line is expected to cost some US$15 billion and will link the cities of Sao Paulo, Rio de Janeiro and Campinas.

Perrupato said on Tuesday that the project will be put out to bid in March and construction should begin by early 2010 or sooner.

He says the technology will most likely be provided by companies from France, Japan, Korea or Germany that will form consortiums with Brazilian engineering firms. The only two companies he mentioned were Frances Alstom SA and Germany's Siemens AG.

Winners & Losers of the Fannie and Freddie Bailout

Oil Leads Commodity Slide on Saudi Comments; Orange Juice Falls

Sept. 9 (Bloomberg) -- Crude oil fell to a five-month low in London, leading commodities lower, after Saudi Arabia's oil minister said supplies are sufficient to meet demand. Orange- juice futures slumped to the lowest in three years.

The S&P GSCI index of 24 commodity futures fell 2.2 percent as wheat, gold and nickel weakened. The oil market is ``well- balanced'' and inventories are ``healthy,'' Saudi Oil Minister Ali Al-Naimi said today in Vienna, suggesting the Organization of Petroleum Exporting Countries will maintain output.

``The risk of an oil production cut has been lifted,'' Hussein Allidina, a commodity analyst at Morgan Stanley, said by phone from New York.

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Syrian economy opens ... will its politics follow?

DAMASCUS, Syria (AP) -- At the hip Costa coffeehouse downtown, young Syrians chat over cappuccinos and lattes, laptops propped before them. Shoppers at nearby boutiques try on Prada and Armani designs. Tourists stream in and out of the Four Seasons Hotel.

Syria is transforming itself economically and is starkly different from the drab socialism of just a few years ago. Whether it can change politically at the same pace, and break with its hard-line reputation, remains to be seen.

Already, there are signs of a more flexible Syrian stance in the region. President Bashar Assad has agreed to establish diplomatic ties with Lebanon. He has pursued indirect peace talks with Israel, mediated by Turkey, and says he wants direct talks next year.

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$50 Billion to Wire Britain with Fiber?

The high cost of replacing copper broadband links to homes creates a strong case to get started on long-distance fiber networks

(Businessweek) The gigantic cost of building a full end-to-end fibre next generation broadband network acrosss the UK may create a compelling case for getting on with rolling out fibre to the cabinet (FTTC) in the next few years instead.

The cost of deploying a next-gen fibre network in the UK has been estimated at £5.1bn for FTTC (fibre to the cabinet), compared to £28.8bn for full fibre to the home (FTTH), according to a report from the government's advisory group on broadband, the Broadband Stakeholder Group (BSG).

FTTC refers to laying fibre between the exchange and the street cabinet, while FTTH means replacing the copper line from the cabinet to the home as well to create a full end-to-end fibre connection.

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Six Asset Classes, If by Sea, Air and Road

Robert J. Froehlich wants to mess with the minds of investors. For years, there have been just three main asset classes: stocks, bonds and cash. Two other investment options -- commodities and real estate -- are in the mix as alternative asset classes. Now Froehlich, the chief investment strategist at DWS Investments, wants to crash the party with a third alternative class reserved for infrastructure. That would mean that when you allocate your investments for a diversified blend, you would consider putting a portion in each of the six -- rather than five -- asset classes.

Infrastructure as an asset class boggles the mind of some investors. "I have basically been under attack by financial advisers and the general public saying that infrastructure can't be a stand-alone asset class," Froehlich says. His critics contend that investing in infrastructure is just another way to invest in stocks. Froehlich, who has outlined his views in two reports this year, counters that infrastructure is a unique investment focusing on seaports, airports and toll roads. Those assets -- when privatized -- are something quite different from other stocks because they generate an almost monopoly-like revenue stream.

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Infrastructure goes unloved at U.S. conventions

By Emily Kaiser and Ed Stoddard - Analysis

ST. PAUL (Reuters) - Not far from the site of a deadly Minnesota bridge collapse, infrastructure investment was hardly mentioned when Republicans gathered to nominate Sen. John McCain for president.

It was a similar story at the Democratic National Convention last week in Denver where Sen. Barack Obama accepted his party's presidential nomination with a speech that spoke only in passing of rebuilding U.S. cities.

Both political parties acknowledge that modernizing transportation, power grids, air traffic control and other public services is vital but the task of paying for it all is falling increasingly to cities, states or the private sector rather than the U.S. federal government.

Municipal governments are struggling to meet existing obligations because the housing bust and weakening economy have hurt property and sales tax revenues, and the credit crisis has made borrowing costlier.

Many states are looking at selling or leasing highways, bridges or airports to fill budget holes.

"The real story is there's no money," said Norman Anderson, chief executive officer of CG/LA Infrastructure in Washington, which consults on infrastructure projects. "The federal budget is obligated to the tune of 70 to 75 percent at the start of every year. There's very little discretionary money available."

Anderson said infrastructure was not among the top five priorities for either candidate. That may be because it isn't first and foremost in voters' minds either, falling well behind wider economic worries and the Iraq war.

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Infraestructura Construyendo la próxima generación latinoamericana de la infraestructura

Por Norman Anderson, presidente y fundador de CG/LA

Latinoamérica se encuentra en la cima de una oportunidad única: dejar una generación atrás, después de casi 30 años de falta de inversión, y desarrollar infraestructura de clase mundial. Existen signos de un renacimiento de la infraestructura a cada paso: el Canal de Panamá y el 10% de su PBI invertido en infraestructura hasta 2012; el ambicioso sexenio de la infraestructura de México; la máquina de exportación de doble vía brasileña (minería y agricultura), junto con su escalada a un grado de inversión; y la confianza recientemente desarrollada por Colombia, con un nivel de demanda de infraestructura masivo y reprimido. De ahí la pregunta: los líderes latinoamericanos, responsables de tomar decisiones tanto en el sector público como en el privado, ¿responderán a esta oportunidad evidente?

No todos los signos resultan positivos, ya que la visión "optimista del vaso medio lleno" se combina sin dificultad con la impresión "poco optimista del vaso medio vacío". En un estudio reciente de CG/LA, se llegó a la conclusión que Latinoamérica cubrirá menos del 4% de la demanda de infraestructura mundial del 2030, debajo del 12-14% de 1980. Esta es una caída radical e histórica de la competitividad relativa: si en los próximos 20 años el mundo invertirá un billón de dólares anuales en infraestructura, la porción latinoamericana, incluidas todas las fuentes tanto internas como externas, sólo será de 40.000 millones de dólares de un total que debiera ser cuatro veces esa cifra.

Entonces, ¿de qué se trata? Cuatro desafíos definen el problema de la creación de una nueva generación de infraestructura estratégica:

1: Estrechez de miras. América está estancada en una estructura de preglobalización, en la cual cada uno de los países compite por obtener una ventaja. Ese mundo ya no existe; hoy en día toda la región se ve como una unidad de competencia. En este contexto, el surgimiento de una nueva clase de proyectos de integración, esto es, energía, transporte y autopistas, resulta vital para fomentar el crecimiento sostenido de la inversión.

2: Se deben entender las prioridades más importantes relacionadas al desarrollo de infraestructura. La globalización crea ganadores y perdedores de la infraestructura: se cancelan o "demoran" los proyectos vinculados a la procedencia de la producción y exportación de materias primas (puertos y logística, plantas de energía determinadas), a la vez que están manejados por las tarifas de servicios (transporte público, agua y obras sanitarias). Se necesita realizar un esfuerzo especial para crear y financiar proyectos de infraestructura centrados en la gente, ya que esta es la clase de proyectos que forjan a las sociedades exitosas.

3: Enfrentar la crisis del combustible. La región cuenta con recursos invalorables, pero no en lo que hace a los combustibles necesarios para la generación de electricidad. Tras el derrumbe del mercado de gas natural de la región, todos los países, a excepción de México, corren peligro. La cooperación entre los países necesita incrementarse a través de proyectos para el transporte del combustible, la creación de tecnología energética renovable regional y la revitalización de los planes para generar energía nuclear en la región.

4: Impulsar al sector público. El mayor desafío es reconstruir el sector público de manera tal que resulte el socio principal de la región en la creación de proyectos. La caída de la inversión en la infraestructura se refleja en la caída de la capacidad del sector público. Para desarrollar la capacidad del sector en lo que hace a la planificación, el financiamiento, la negociación, la diagramación y el control de los proyectos clave se requiere de un nivel importante y preciso de inversión.

La infraestructura es una inversión a largo plazo, una inversión estratégica: crear oportunidades para generar empleo, generar negocios y generar competitividad a 20 ó 30 años. Al tratar cada uno de los cuatro desafíos mencionados, esto es, presentar al mundo un costado regional que convenza, garantizar que los beneficios de la infraestructura de clase mundial son distribuidos a todos, crear una matriz de energía confiable y desarrollar la capacidad del sector público para que pueda liderar de manera eficiente y singular, comenzará a llenarse el vaso de la infraestructura latinoamericana. Las ventajas de la competitividad serán enormes, así como la generación de negocios y la generación de empleo (casi 1,8 millones de puestos de trabajo directo con salarios altos por año y esa cifra multiplicada por tres en lo que hace al nivel de empleo total).

Quizá llenar el vaso es sólo una cuestión de tiempo.

* El autor es presidente y fundador de la consultora CG/LA, con sede en Washington, DC
En internet: www.cg-la.com

Japan: New Leader, Little Change

With a recession looming, will Fukuda's surprise resignation set the stage for economic reform, or will it be more of the same?

by Ian Rowley (BusinessWeek.com)

Yasuo Fukuda's surprise resignation was perhaps the most interesting thing about his 11-month stint as Japan's Prime Minister. A lot like the tenure of his predecessor, Shinzo Abe, who quit suddenly after barely a year in charge last September citing ill health, Fukuda's short-lived reign was characterized by a weakening economy, stumbling stock prices, and political deadlock. And Fukuda's response to reporters' questions following his resignation announcement highlighted the extent to which he, like Abe before him, lacked the common touch (BusinessWeek.com, 9/1/08).

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MOP (CHILE), US treasury seek to expand concessions model in LATAM, Caribbean

Chile's public works (MOP) minister Sergio Bitar and the undersecretary of the US treasury department, Clay Lowery, are considering creating a bi-national committee to provide guidance on the implementation of the Chilean concessions model, a MOP official told BNamericas.

Bitar and Lowery were scheduled to meet in capital Santiago on Monday to discuss the creation of the work group, comprising members of both entities, to assist other countries.

The initiative could facilitate funding provided to public-private development initiatives by the US government, the official added.

Authorities expect the Chilean concessions model to be used by the rest of Latin America and the Caribbean. The infrastructure development in the country is seen by US experts as the best model worldwide and its expansion in the rest of the region could benefit the public and private sectors dramatically, the official said.

Minimum income guarantees to private operators, partial coverage of project costs in some instances and the fact that in some cases the awardee is chosen for its project plan and not for submitting the lowest offer are some of the most praised aspects of the Chilean model.

In less than 20 years, Chile overcame a US$12.5bn connectivity infrastructure deficit.

The country's interurban highway concession program was developed by authorities between 1990 and 2001, extending Chile's 80km highway network in 1990 to the network that today travels along 1560km of territory. In just 10 years, highway development benefitted about 80% of the population.

Other forms of transport infrastructure whose development has been the result of the successful model include ports and airports.

Some of the countries that are already adapting Chile's concession model to their own needs include Uruguay, Colombia, Peru, El Salvador, the Dominican Republic, Mexico and even Cuba, according to interviews held by BNamericas in the past with government officials from each of these countries.

Eva Medalla
Business News Americas

India to follow PPP model for better infrastructure

With a view to increasing public-private partnership (PPP) in the development of infrastructure facilities in the state and to ensure selection of private investors for infrastructure projects, talks were held between senior officers of the transport department and investors in New Delhi on Tuesday. On the initiative of UP transport department , 30 transport expert private investors of the country participated in the talks.

According to reports reaching here, chief secretary Atul Kumar Gupta, while addressing the investors, underlined the need of construction of world class road network in the state, provision of transport facilities through expressways and link expressways .

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