Seizing the Urban Moment: Reflections from the New Cities Summit
By Najeeb Haider, Managing Director, Head of Project & Infrastructure Finance, Asia Pacific Capital Markets June 25, 2015 04:00 PM
The 2015 New Cities Summit themed “Seizing the Urban Moment” held in Jakarta this month was well attended, with more than 700 participants from various parts of the world. The summit provided a great opportunity to interact and meet with decision makers as well as clients from the public and private sectors. The summit provided an opportunity to present Citi’s initiatives to support infrastructure development globally, in connection with our Citi for Cities platform, which aims to help the world's leading cities manage their growth and thrive.
The panel I was part of, “Bridging the Urban Investment Gap,” had more than 150 attendees. Other panelists were: Gabor Bagdy, Deputy Mayor of Budapest; Ian Neilson, Deputy Mayor of Cape Town; Dr. Julie Kim, Senior Fellow at the New Cities Foundation based at Stanford University; Elena Bourganskaia, Global Head of the water sector at the International Finance Corporation; and Arvind Satyam from Cisco who acted as the panel moderator.
The two mayors spoke about the ways their cities currently finance infrastructure projects. Though they were both aware of the benefits of public private partnership (PPP) models as a means of social infrastructure financing, they found it easier to borrow against the balance sheet of government. The national budget allocation process is quicker in their circumstances. Julie Kim spoke about new ideas in financing infrastructure projects relating it to successful PPP projects being implemented in Australia.
I spoke about the factors that resulted in successful infrastructure financings. These include:
- The allocation of risks to parties that are best able to bear them;
- An economic requirement for the infrastructure being financed;
- A supportive regulatory regime;
- A legal system that works;
- A set of bankable contractual arrangements; and
- A transparent project/concession award process.
I gave the example of the Banten Power Project in Indonesia that Citi financed recently. This project won five deal of the year awards from major publications. The Government of Indonesia is trying to replicate Banten’s success and another 2,000 MW of capacity have been launched on the same terms as Banten. Banten brought together equity from Malaysia and equipment from China to a project in Indonesia. Citi facilitated in connecting three important regional geographies and implementing a value added financing solution for our clients including Genting, PLN and Harbin.
One of the interesting questions from the audience was about the environmental impact of coal-fired power plants and under what circumstances Citi supports these. My response was that Citi, as one of the four founding banks of the “Equator Principles”, will only finance projects that adhere to these environmental and social risk management standards. Citi, through its $100 billion environmental finance goal, is a market leader in financing solar and wind power projects and also works with our clients and countries around the world to identify the best power solutions for their situations. In this instance, Citi worked with our client to ensure Equator Principles compliance, including that best-in-class technology was being used, that a climate change alternatives analysis was completed, and that reporting requirements on greenhouse gas emissions are being fulfilled.
Central to our growing business with cities around the world is ensuring that we are helping to facilitate robust and sustainable economic growth. The New Cities Summit was a useful opportunity to engage with leaders and decision makers on the range of solutions to make that happen.