abengoa project finance
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Innovative technology solutionsgyfor sustainability
ABENGOA
I i t i f t t l i f i
Project Finance: the most suitable tool to faceglobal water challenges through PPP
Improving water infrastructure learning from experience
Aranzazu MencíaVP Business Development
Houston (TX), October 2014VP – Business Development
Once upon a time
PPP and Project Finance, the new old friends
Despite Public Private Partnerships and smart private financial tools as
Th d b t P3 i th iddl
Despite Public-Private Partnerships and smart private financial tools as Project Finance become more popular nowadays and seem very trendy…
There are records about P3 since the middle ages
The use of “Project Finance” has existed for centuries
h li h i d l f b ldi• In 1299 the English Crown negotiated a loan from Frescobaldi, Florentine merchant bank, for which payment was to be made in the form of output from the Devon silver mines for one year
I F th ki j t fi d d d b id i XVII• In France the king project financed roads and bridges in XVII century
• In 1777 Perrier brothers got the permission to collect and distribute water to households in parts of Paris for 15 yearsdistribute water to households in parts of Paris for 15 years
• Many roads in the USA during XIX century were working under the P3 model
and they work where other instruments
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… and they work where other instruments and management models have proved to be unsuccessful.
Timeline
Project Finance evolution
The PF had a new rise since 70’s of 20th century because of the 1973 oil crisis. But was in the 90’s when PF definitely was established and spread out to diverse sectors.
• Electricity plantsOil fi i• Oil refining
• Toll roads• Water treatment
• Heavy industry, petrochemical• Bridges, tunnels, airports• Telecomunications• Theme parks
• Oil and gasOil i li• Oil pipelines
• Mining• Toll roads, transports (planes, boats)
1960 1970 1980 19903
How to make a PPP
Framework for building successful PPP
S i f li i l Security of politicalchampions
Build stakeholder support
PoliticsPolitics Assess and manage social & environmental impacts
Foster a stable and supportive
Ensure sound economicfundamentals – PPP cannot create economic
EconomicsEconomics ExecutionExecution
ppregulatory environmentmiracles
Structure a partnershipthat optimizes cost, q alit and in estorsquality and investorsreturn
Use a disciplined approach – Time and complexity are your enemies
Secure the right mix of global and local expertise
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Source: Florizone R, Carter L Support a trasparent, competitive bid process
Plan for ongoing monitoring and review
PPP maturity level
Not all the countries are the same
Source: World Bank Group
Abengoa has been successful to develop PPP projects under challenging conditions
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Abengoa has been successful to develop PPP projects under challenging conditions
Integrated Product projects
1. Advantages for the public side
Externalized management Externalized management
No specific finance is needed from the utility
Required investment is taken out from the client balance sheet
Technical risk is assumed by private partner
Joint management of the users necessities
No increase of water price due to a more efficient private management
2. Advantages for private side
o Assets with regulated revenues with long term sales contracts or price agreements
I i P3 i f j i h i h h lo Investment in P3 infrastructure projects with in-house technology as a competitive advantage
o Shared financial risk: both public and private partners
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o Allows both parties to take part in “bigger than expected projects”
Risks are always allocated in the scope of the most suitable partner
Abengoa´s PPP track record
Achievement of a ~€ 4 bn portfolio by 2016 expected with current backlog plans
In Operationin 2014 Key Highlights
250 MW in South Africa
In Operationin 2016
1 503
Total AbengoaEquity 2016
CSPCSP250 MW in South Africa
New projects in Israel, Chile & US
1,863 MW1,503 MW
2,239 M€
Electric Transmission
Electric Transmission
5,783 km new in Brazil
355 km new in Peru
12,400 km
1,234 M€2,768 km
Cogeneration & Other
Cogeneration & Other
2 additional wind farms totalling 120 MW in Uruguay
470 MW
350 MW 244 M€
WaterWater
2 water desalination projects in Algeria and Ghana
2 water transmission projects in USA* and Mexico
820 Ml/day
560 Ml/day 252 M€
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USA and Mexico
3,969 M€3,969 M€*confidential
Abengoa´s assets at a glance
Diversified portfolio by geography and sector reaching critical mass of operating projects
10%
Total # assets (construction & operation)
32%21%
y se
cto
ry
sect
or
37%
+41 assets in 41 assets in
By
By
~ 18 assets expected to
t t
~ 18 assets expected to
t t+operation*operation*10%17%
rap
hy
rap
hy
start operations up to 2016
start operations up to 2016
41%
32%
By
geo
gr
By
geo
gr
North America South America Spain RoW
8(*) Operating portfolio as of 2013 FY and projects with construction substantially completed as of March 2014
How water projects are financed?
Contract models: private financing vs. traditional models
Source: GWI reuse tracker (2009)
Source: McKinsey
There is a growing trend of private financing in water projects that
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There is a growing trend of private financing in water projects that mostly involves PPP and Abengoa has capitalized on this
Project Finance structure
SPV Outline
ABENGOA
Construction (EPC)
Partners
Construction (EPC)-Turn key-
Operation and
EquityEquity
SPE
Maintenance (O&M)
Special – Purpose VehicleSPE
Debt Refund Insurance Prime
p p(SPV)
Debt Refund
Financial Entities Insurance Companies
Insurance Prime
SPV Sales
p
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Water Project Finance References
Integrated product experience: Abengoa Water P3s
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Water Project Finance References
Integrated product experience: Abengoa Water P3s
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Water Project Finance References
Abengoa Water P3: new references
Desalination
Transportation and pdrinking water
treatmentAgadir
MoroccoMorocco
Agadir
Mexico
Mexico
El Zapotillo
ONEE
Financial closure
Comisión Nacional del Agua (CONAGUA)
In construction
20 years
82 M€
20 años
82 M€
25 years25 years
Water treatment
$ 566 million566 M USD
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82 M€ $ 566 million
328,000 m3/d
Leadership through technology
The virtuous path in Abengoa
Asset base
1,223 MW solar power
348 MW ti348 MW cogeneration
1,723 km of electricitytransmission lines
102.1 ML/year
transmission lines
R&D+i allows Abengoa to develop competitive advantages as compared to its
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R&D+i allows Abengoa to develop competitive advantages as compared to its competitors to keep PPP market leadership through attractive technology based products and services
Our business
Abengoa’s business structure allows to make it real
Engineering and construction
• 70 years of experience in energy infrastructures
1 We perform these three activities in two high-growth sectors
We can do it• Proprietary know-how
• Leading international contractor in T&D
Energy Environment
Concession-type infrastructures
• Solar, transmission lines, desalination, cogeneration and others
2
We can handle it…• Very low market risk
• Average contract term: 25 years
R h D l t d i tiIndustrial production
• Biofuels
• High growth markets
3
and we will do iteven better
Research, Development and innovation
• Knowledge to develop new technology
• Support for industrialization of the technologies
4
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• High-growth markets
• Market leaderseven bettertechnologies
• Technology strategy aligned with business strategy
Innovative technology solutionsgyfor sustainability
Thank you!
Water solutions for a sustainable world
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