According to Investopedia a capital project is a project in which the cost of the product is capitalized or depreciated. The most common examples of capital projects are infrastructure projects such as railways, roads, and dams. In addition, these projects include assets such as subways, pipelines, refineries, power plants, land, and buildings.
Infrastructure is the term for the basic physical systems of a business or nation — transportation, communication, sewage, water and electric systems are all examples of infrastructure. These systems tend to be high-cost investments and are vital to a country’s economic development and prosperity.
The creation of renewable energy assets are infrastructure projects. They are often referred as sustainable infrastructure projects due to their environmental benefits.
Generally, most roads, major airports and other ports, water distribution systems, and sewage networks are publicly owned, whereas most energy and telecommunications networks are privatelyowned.
Publicly owned infrastructure may be paid for from taxes, tolls, or metered user fees, whereas private infrastructure is generally paid for by metered user fees. Major investment projects are generally financed by the issuance of long-term bonds. Government-owned and operated infrastructure may be developed and operated in the private sector or in public-private partnerships, in addition to in the public sector. As of 2008 in the United States for example, public spending on infrastructure has varied between 2.3% and 3.6% of GDP since 1950. Many financial institutions invest in infrastructure.
According to researchers at the Overseas Development Institute, the lack of infrastructure in many developing countries represents one of the most significant limitations to economic growth and achievement of the Millennium Development Goals (MDGs). Infrastructure investments and maintenance can be very expensive, especially in such areas as landlocked, rural and sparsely populated countries in Africa. It has been argued that infrastructure investments contributed to more than half of Africa’s improved growth performance between 1990 and 2005, and increased investment is necessary to maintain growth and tackle poverty. The returns to investment in infrastructure are very significant, with on average thirty to forty percent returns for telecommunications (ICT) investments, over forty percent for electricity generation, and eighty percent for roads.
The source of financing varies significantly across sectors. Some sectors are dominated by government spending, others by overseas development aid (ODA), and yet others by private investors. In California, infrastructure financing districts are established by local governments to pay for physical facilities and services within a specified area by using property tax increases. In order to facilitate investment of the private sector in developing countries’ infrastructure markets, it is necessary to design risk-allocation mechanisms more carefully, given the higher risks of their markets.
The spending money that comes from the government is less than it used to be. Compared to the global GDP percentages, The United States is tied for second-to-last place, with an average percentage of 2.4%. This means that the government spends less money on repairing old infrastructure and or on infrastructure as a whole.
In Sub-Saharan Africa, governments spend around US$9.4 billion out of a total of US$24.9 billion. In irrigation, governments represent almost all spending. In transport and energy a majority of investment is government spending. In ICT and water supply and sanitation, the private sector represents the majority of capital expenditure. Overall, between them aid, the private sector, and non-OECD financiers exceed government spending. The private sector spending alone equals state capital expenditure, though the majority is focused on ICT infrastructure investments. External financing increased in the 2000s (decade) and in Africa alone external infrastructure investments increased from US$7 billion in 2002 to US$27 billion in 2009. China, in particular, has emerged as an important investor.
According to the infrastructure investor, the top 50 infrastructure investors in 2018 were :
- Macquarie Infrastructure and Real Assets Brookfield Asset Management
- Global Infrastructure Partners
- IFM Investors
- Stonepeak Infrastructure Partners
- I Squared Capital
- Colonial First State Global Asset Management
- Energy Capital Partners
- AMP Capital
- KDB Infrastructure Investments Asset Management Company
- Antin Infrastructure Partners
- EQT Partners
- ArcLight Capital Partners
- Copenhagen Infrastructure Partners**
- Partners Group
- Hermes Investment Management
- The Carlyle Group
- InfraRed Capital Partners
- LS Power Group
- Dalmore Capital
- Sunvision Capital
- Greencoat Capital
- Ping An Asset Management
- Morgan Stanley Infrastructure
- Axium Infrastructure
- Meridiam Infrastructure
- Capital Dynamics
- Digital Colony
- iCON Infrastructure
- Goldman Sachs
- Infrastructure Partners
- Starwood Energy Group***
- China Communications Construction Company
- Aviva Investors
- Oaktree Capital Management
- Northleaf Capital Partners
- Basalt Infrastructure Partners
- 3i Group