As recent events such as the collapse of the I-35W bridge in Minneapolis, Minnesota, show, public infrastructure around the world urgently requires investment to make necessary safety repairs and maintenance. The private sector could provide a major part of the solution for governments struggling to fund these projects, according to Investing in Global Infrastructure 2007: An Emerging Asset Class, a report released by leading professional services provider Ernst & Young.

The huge capital demands of large-scale infrastructure projects around the world - running into the US$ trillions over the next decade - will likely create intense competition among governments to attract private investment. The report estimates private sources could account for 10% to 15% (US$240 billion to US$360 billion) of the capital needed for infrastructure projects annually worldwide.

"There are good opportunities to create win-win situations," explains Dale Anne Reiss, Ernst & Young's Global Real Estate Director. "Governments urgently need funding and private-sector expertise to improve or replace aging infrastructure. And investors can benefit through the steady, long-term returns infrastructure investments can provide."

"The growing need for private capital for infrastructure is caused by the budget shortfalls municipal and national governments around the world have faced in recent years," says Reiss. "Private capital supporting public infrastructure is not new. But what is new is the extent and the sophistication of private investment. It is truly emerging as a new asset class. Governments wanting to embrace private finance need to educate the public about the benefits, and overcome fears of losing control of public assets."

Governments with the political will and a coordinated approach to building and preserving key infrastructure will attract the most attention from private investors and be offered the best terms, according to the report. "In many cases private investors bring tremendous experience in managing large scale projects, potentially at lower costs than public agencies," Reiss concludes.

Other key points of the report include:

* In the United States the American Society of Civil Engineers (ASCE) estimated in their 2005 Infrastructure Report Card that US$1.6 trillion needs to be spent over a five-year period just to bring the nation's infrastructure up to 'good' condition.

* In Australia, the average cost of toll road construction has doubled in the past few years from US$427 million (A$500 million) to US$854 million (A$1 billion) per road project.

* In Brazil, public funding of infrastructure has been severely constrained by the fact that the country already has a huge national debt running roughly 50 percent of Gross Domestic Product (GDP).

* In China, the government is investing state funds heavily in infrastructure development but is also inviting foreign investors and their advanced technologies to take part in toll road, water supply, and renewable energy projects.