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- Title
PUBLIC-PRIVATE PARTNERSHIPS AND ENERGY SECTOR INVESTMENTS IN EMERGING MARKET ECONOMIES: CAN THE RISK MITIGATION INSTRUMENTS OFFERED BY INTERNATIONAL FINANCIAL INSTITUTIONS HELP PRIVATE INVESTORS FROM SMALL STATES?
- Authors
Hhlmarsson, Hilmar Þór
- Abstract
About fifty years ago most of Iceland's energy came from fossil fuel. A fundamental transformation has taken place in recent decades and now electricity production and space heating is primarily based on clean energy. Better utilization of natural resources and know-how could possibly be one growth area for Iceland, including in the hydropower and geothermal energy sectors. The private sector can play an important role here and some Icelandic companies are already getting engaged in emerging market economies. Such engagement can be rewarding for the Icelandic economy and the host country, but there are also risks, especially since investments in the energy sector tend to be large, capital intensive and long- term. Some of those risks can be mitigated by working in partnership with international companies/consortiums, international financial institutions, bilateral development agencies, etc. This article discusses Public-Private Partnerships and Build-Operate-Transfer projects conceptually. Those arrangements are complicated and time consuming to implement, but if well prepared, they can offer a fair and a sustainable sharing of the risks and rewards of utilizing renewable energy resources in emerging markets. In addition to the specific case of Iceland, the discussion in this article could also be relevant to other small states who intend to engage in capital intensive sectors in emerging market economies. The article is based on the review of theoretical literature, secondary data, and the experience of the author at the World Bank Group for 12 years in three continents.
- Publication
Bridges / Tiltai, 2010, Vol 51, Issue 2, p25
- ISSN
1392-3137
- Publication type
Academic Journal