Are Returns To Private Infrastructure In Developing Countries Consistent With Risks Since The Asian Crisis?

This paper presents a basic assessment of the financial performance of infrastructure service operators in developing countries. It relies on a new database of 120 companies put together to track the evolution of the cost of capital, the cost of equity and the return to equity for electricity, water and sanitation, railways and port operators in 31 developing countries distributed evenly across low-income, low-middle income and uppermiddle-income countries. The paper shows that between 1998 and 2002, the average cost of capital in developing countries varied from less than 11% to over 15% across regions and sectors while the cost of equity varied from around 13% to over 22%. Low-middle-income countries have recovered relatively well from the East Asia crisis, while low-income and upper-middle-income countries have seen their situation deteriorate since the crisis.