Commercial Value Capture (CVC):
CVC can be a way for governments to increase revenues to fund facility improvements, expand services and/or asset maintenance without increasing taxes or user fees. CVC revenues have, in many instances, proven to be successful in mobilizing additional funding for various infrastructure projects and help deliver better quality of public service. However, optimism bias and over-reliance on CVC revenues could also result in project delays or cancellation.
Annex 2 features over 100 case summaries of commercial value capture, categorized by sector, country, and CVC category. It is designed to provide a framework and aspirational ideas that can help government planners approach CVC opportunities in a practical way.
Concept of CVC:
- Public infrastructure creates opportunities for increased, improved, or different commercial activities in various places and spaces.
- Commercial activities generate new or additional revenue streams
- Government capture a fair share of the value created to fund the infrastructure
Stakeholders' Role:
- Government can plan for spaces and avenues that create commercial opportunities and tapping into private sector expertise
- Government can encourage CVC throughout project development (planning, designing of rights to be concessioned, design of procurement bid process)
- The private sector is typically better positioned in exploring and delivering commercial activities
- Communities/stakeholders can play an active role in identifying and implementing CVC opportunities.
Core Principles:
- Commercial revenues must never take the focus off infrastructure services
- Government can use a comprehensive planning to create demand for integrated solutions
- The right balance must be achieved without compromising the service level of the core infrastructure
- CVC need to be demand-driven
- Revenue should be directed back to funding core services
- CVC opportunities should avoid making a project more complex.
- CVC can offer various social and economic co-benefits not just financial benefits
Sectors:
To find more, visit the Guidelines on Innovative Revenues for Infrastructure (IRI) sections below:
