Opportunity Assessment

At a Glance
  • Benefits of shared use could include: economies of scale; unlocking extractive industry projects that may otherwise be unviable; non-extractive industry development, if projects are developed due to multi-purpose access; regional integration; and improved service delivery.
  • Costs of shared use could include: higher capital cost; loss of efficiency; limited access to finance; delays in negotiations; and the added time and costs associated with establishing and operating the relevant regulatory body.

A cost-benefit analysis should be undertaken to decide on the relative importance of achieving open access transport infrastructure. Benefits of shared use could include:

  • Economies of scale, as it is cheaper to build one transport solution at a higher capacity than two separate ones
  • Unlocking extractive industry projects that may be unviable without multi-user infrastructure access
  • Non-extractive industry development if projects are developed due to multi-purpose access
  • Regional integration where infrastructure solutions lead to greater cross-border trade
  • Improved service delivery if the local population has improved access to markets and service delivery points due to multi-purpose shared use. This is particularly relevant for road transport investments

On the other hand, costs of shared use could include:

  • Higher capital cost if shared-use requires additional capacity to cater for other users Furthermore, different users may require additional infrastructure investments to cater their specific needs
  • Loss of efficiency as operating one vertically integrated customer is easier than if several users need to be accommodated. For a mine – rail – port system it has been estimated that shared use can lead to an efficiency loss of a magnitude of 10-20%
  • Access to finance given that banks prefer a single-use model that reduces the risk of the loan being repaid
  • Delay of negotiations if shared use is against the interest of the extractive company with the anchor investment for the infrastructure
  • Time and costs related to setting up and operating the regulatory body that monitors shared-use requirements

Key Resources