REFERENCE GUIDE Connectivity Across Borders: Leading practices for cross-border infrastructure projects February 2021 Cover image: Drago Prvulovic/Øresundsbron Foreword We live in a period of rapid and ongoing globalisation. Although the COVID-19 pandemic has at the time of this writing led to decreased physical connectivity, “Globally, it is an important other connectivity has increased and become more important than ever before. time for us to provide a resource Digital connectivity has reshaped daily life, and strong and secure trade links devoted to the unique challenges and regional cooperation have proven critical to ensuring supply chains remain of planning and delivering cross-border infrastructure. operational and economies do not come to a standstill. In this sense, the pandemic Increasing physical and digital has heightened awareness of the continued need for connectivity across borders. connectivity between nations Cross-border infrastructure plays an important role in facilitating economic and is vital to enlivening trade and social connectivity. In addition to enabling physical and virtual/digital connectivity, improving the socioeconomic cross-border infrastructure projects can be instrumental in achieving higher-level realities of populations socioeconomic goals, giving rise to knowledge diffusion, technology transfer and worldwide, and ensuring fair cultural exchange. They also create value through integration of markets and distribution of benefits of projects communities beyond what could be achieved via a collection of national projects. across countries.” Given these benefits, it is not surprising that the G20 Development Working Group Marie Lam-Frendo (DWG) has identified regional connectivity as a priority topic, with the aims of Chief Executive Officer, promoting dialogue on connectivity issues and raising awareness of bottlenecks Global Infrastructure Hub and challenges. Cross-border infrastructure assets are crucial in facilitating this regional connectivity, both physical and digital, but by the very nature of involving two or more countries, these projects face specific challenges. They generally have many of the same risks and require the same elements as national-level projects to achieve bankability, but cross-border project elements and risks are amplified by the scale of the project, the wider spectrum and increased number of parties involved and the need to harmonise the rules and regulatory frameworks of participating countries. Cross-border projects involve, in particular, higher transaction costs, more political risk and increased institutional coordination. “This guide offers all countries In line with our mandate to address information asymmetries and identify knowledge a meaningful support in resolving tools that will assist countries in dealing with frequently encountered but challenging challenges associated with issues in infrastructure delivery, the Global Infrastructure Hub (GI Hub) recently planning and implementing reviewed the cross-border infrastructure praxis. We found that, although there is a infrastructure across wealth of accumulated global experience on cross-border infrastructure, which is national borders.” documented in literature that effectively highlights the challenges associated with cross-border project planning and delivery, very few sources distil key lessons on how to address these challenges. This Reference Guide seeks to fill this gap by Peter Heymann Andersen providing infrastructure planners and policymakers with a document that: Managing Director, Ramboll Transport • contains a complete overview of issues and complexities involved in the cross-border project lifecycle • summarises learnings from the research on how these might best be dealt with • illustrates the learnings through a series of deep-dives into actual cross-border projects. Importantly, this guide seeks to complement the G20 DWG’s work on this topic. The DWG has examined the economics, development strategies and cooperation required to support connectivity infrastructure. Here, we aim to share practical and project-level learnings through the project lifecycle to complement the DWG’s Jukka-Pekka Pitkänen strategic work. We also aim to address many of the G20 Quality Infrastructure Global Division Director, Investment (QII) Principles, particularly Principle 1: Maximising the positive impact Ramboll Smart Mobility of infrastructure to achieve sustainable development and growth, through setting off a virtual circle of economic activities and promoting sustainable development and connectivity. Mainstreaming regional connectivity through infrastructure is important for countries to achieve sustainable development goals and drive global economic growth. Our hope is that this Reference Guide will be a useful aid to infrastructure practitioners to manage the challenges associated with the successful implementation of cross-border infrastructure projects. CONNECTIVITY ACROSS BORDERS | 1 Contents Part A: Guidance 1. Introduction .......................................................................................................................................... 6 2. Methodology ......................................................................................................................................... 9 3. Definition Of Cross-Border Projects ................................................................................................... 13 4. Key Considerations in Delivering Cross-Border Projects .................................................................... 17 4.1 Adopting policy, planning and prioritisation frameworks for efficient regional cooperation ............................................. 19 4.2 Creating legal, regulatory and stakeholder alignment to enable cross-border delivery ...................................................... 27 4.3 Optimising the financial structure to properly allocate risks and benefits ........................................................................... 37 4.4 Establishing effective governance structures ........................................................................................................................... 47 4.5 Managing efficiently throughout the project lifecycle ............................................................................................................. 53 Appendix A: Glossary ................................................................................................................................... 61 Appendix B: Literature Reviewed ................................................................................................................. 63 Appendix C: Reference List .......................................................................................................................... 67 Part B: Case Studies 5. Case Studies ....................................................................................................................................... 69 Addis Ababa–Djibouti Railway ................................................................................................................................................................ 72 Channel Tunnel ..........................................................................................................................................................................................78 Coral Sea Cable System ........................................................................................................................................................................... 88 Gordie Howe International Bridge ........................................................................................................................................................... 96 Itaipu Hydroelectric Dam ........................................................................................................................................................................106 N4 Toll Route ............................................................................................................................................................................................116 The Øresund Fixed Link ..........................................................................................................................................................................126 2 | GLOBAL INFRASTRUCTURE HUB List of Figures Figure 1: Reference Guide development process …………………………………………………………………………… ................................................... 10 Figure 2: Growth trajectory for cooperative governance arrangements in a cross-border project …… ...................................... 20 Figure 3: TEN-T core network corridors ……………………………………………………………………………………………………………………............................ 24 Figure 4: Guiding questions to determine the optimum stakeholder governance format ………………… ........................................ 48 Figure 5: An ownership model and contractual scheme for the Channel Tunnel .....................................................................……49 Figure 6: The Rail Baltica project structure ………………………………………………………………………………………… ................................................ 50 Figure 7: Organisational structure of the Rhine–Alpine Corridor EGTC ………… ............................................................................... 56 Figure 8: Environmental and social impact factors in the due diligence framework for cross-border projects ………… ........... 58 List of Tables Table 1: Summary of Reference