Owing to the large sunk costs required to set up infrastructure, in both developed and
developing countries, government-owned enterprises have traditionally provided
infrastructure services. However, on the strength of evidence gathered over much of the
1980s and 1990s across the world, government ownership of infrastructure has proved
disappointing in that increases in coverage have been limited, the quality of services has
been deficient and the levels of operational efficiency have been low (see Guasch, 2004).
In addition, given the scarcity of public funds for infrastructural investment, the reliance of
most state-owned enterprises on government funding to achieve increase in performance
and coverage has often conflicted with competing demands from the social sector.
Infrastructure services’ heavy demand for subsidies, coupled with their potential for cost
recovery, has forced a number of countries to explore the potential for transferring the
provision of infrastructure services to the private sector.