Toll road concessions : the Chilean experience

Over the past decade growing demand for infrastructure has driven the private provision of roads, power, telecommunications, water and sanitation, and other public services in developing countries. Governments short of resources have sought alternative methods of financing transport improvements without affecting their fiscal situation. Charging tolls, too, has become an attractive option for managing traffic on increasingly congested roads. Although the benefits of involving the private sector in building and operating toll roads are apparent, some countries have faced difficulties in managing the processes involved. Like any private infrastructure project, toll roads require sound partnerships between the public and private sectors. A fair allocation of responsibilities and a fair distribution of risks are key elements in any such partnership. The toll road concession program implemented in Chile during the 1990s has shown very positive results. This study reviews the Chilean experience of involving private firms in upgrading about 2,000 kilometers of expressways-with an overall investment in excess of US$3 billion. The report focuses on the regulatory framework established, the bidding process used, and the distribution of risks in the financial schemes adopted by private concessionaires.