Asia-Pacific Forum on Public-Private Partnerships (PPP) for Transport Infrastructure Development

Jan van Schoonhoven Program Leader of the

UN PPP

International Centre of Excellence

UNITED NATIONS PPP INTERNATIONAL CENTRE OF EXCELLENCE

We collect Best Practice on PPP Together with National Specialist Centres around the world (India, Philippines, Russia etc) and IFI’s We develop global standards on PPP Together with project team globally UNECE Business Advisory Board IFI’s We test and implement these standards Together with WB and ADB Together with UNITAR and IP3

Faster delivery of successful projects by reducing mistakes, time to Financial close by using international standards, which make the attractive for investors and MDB’s

QUESTION: TO PAY OR NOT TO PAY

USER PAYMENT

Probably 90% of our spending

is related on user payment - Electricity bill - House rent - Road tax - No budget

PPP: Toll Road Mother of all PPP’s

AVAILABILITY PAYMENT

If there is no financing Road (no BC) there are three options - No road - Tradition with budget - PPP-Availability - Need Budget

PPP/DBFMO A WISE ALTERNATIVE

Shadow toll will be excluded for simplicity

INVESTMENT = COMPETITION!

MY PRESENTA TION WILL TRY TO A NWSER; I . A N A LTERNTIVE, FOR WHA T? I I . WHY IT IS SO SUCCESFUL? I I I . HOW DOES IT WORK? I V . WHA T IS NEEDED? V . HOW CA N WE HELP?

D I S C L A I M E R : S H A D O W T O L L N O T I N C O R P O R A T E D , B U T C A N B E E A S I L Y D O N E I N B O T H P P P M O D E L S ( T O L L & D B F M ( O ) )

GOVERNEMENT’S VIEW AVAILABILITY /DBFM(O)

DREAM BUSINESS CASE NIGHTMARE BC

SETTING THE SCENE

I- AN ALTERNTIVE, FOR WHAT?

NO BC for Toll Road - Budget, but not sufficient - No room for;

- Budget overruns - Serious time delays - Quick decay of asset

FOR ECON. DEVELMT Road Econ. Development Key demands are Match the demand Safety Prevent Reduce time of travel

II- WHY IT IS SO SUCCESFUL?

POLICY Investment in infra Long term solution Clear project line

BUDGET Spreads costs Prevent cost overruns Long term investment

USERS Investment in infra Better quality Less traffic jam

Taxpayer In long term less costs No severe project costs

overruns Canada: Invest in Infra last 3 years, with 800 Million CAN$ in saving

Netherlands; over 20 projects in DBFMO: 300 Million EUR saving

III -HOW DOES IT WORK (1)

Financial drive: reduction Payment for service Payment starts on completion

Lifecycle Costs: benefit Clever ideas Costing system In the End Cheaper

Borrowing vs Risks: reality Drawing Board vs Reality

A. Government advantage as more projects can be done

B. Compensate largely for costs of borrowing

C. Prevents costs overruns due to bank involvement

It works like a mortgage, the government pays for the asset (Designing, Building, Maintenance, Operating and the Borrowing costs) over 20-30 y D B F M O

III – HOW DOES IT WORK ? (I)

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 TOTAL 50 100 150 100 5 5 10 5 20 5 5 5 5 5 5 475 0 0 0 25 40 40 40 40 40 50 40 40 40 40 40 475

III – HOW DOES IT WORK (LC-I)

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III – HOW DOES IT WORK (LC-II)

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III – HOW DOES IT WORK (LC-III)

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III - HOW DOES IT WORK (C- Reality)

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PROJECT REAL PPP

CONTRACTRISKCO$MAINTAINBUILDDESIGN

Cost Overruns: Not Me?!?

VI- WHAT IS NEEDED?

Highly trained and professional Staff At Government Level (with Civil Servants)

System Integration is success Take out parts will ruin the idea

VI- WHAT IS NEEDED

How much does it costs today? - This our budget Is very thing included? - Energy, Own Staff, Building How much service do you have now? - We have a contract What does it include - 24/7 or only working hours How much did it costs the last 10 years? - ????????? How much service do you want? - 24/7 of course not 8am-5 pm If 24/7 is 4 times more expensive? - No 8am-5pm is good

Understand your own business: think like a Business

UNECE PPP INTERNATIONAL CENTER OF EXCELLENCE

The UNECE PPP International Centre of Excellence has the aim: Disseminate excising successful knowledge on PPP to governments in clear and easy language and provide as much as possible standardisation in their PPP policy, implementations and especially projects so that all stakeholders (government, private sector, financiers) will gain trust and confidence in this powerful instrument. The UNECE PPP ICoE hopes this will in contribution to the development of countries by: - Successful PPP projects (less to no failures); - Less loss of time and money (follow the road of success); - Increase the development of a country; and - Contribute to the Post 2015 agenda.

To achieve this goal, the UNECE PPP ICoE will in close partnership with key stakeholders to deliver: - The Best Practice Guide in every area of PPP - Develop standards and reference models for each sector - Assist and motivate government to use these standards for success

PROCESS CONTENT

Standards Zero tolerance corruption Health Procurement Roads, Rail and Airports Water and Sanitation PPP Pro Poor insurance

Advice Business Advisory Board IP3 / UNITAR Training Pilot Projects (WB-Ghana) Specialist Centres

Philippines, Ghana, Russia, Aruba, Azerbaijan, India, Morocco

V- HOW CAN WE HELP?

Faster delivery of successful projects by reducing mistakes, time to Financial close by using international standards, which make the

attractive for investors and MDB’s

THANK YOU

Jan van Schoonhoven Executive Program Leader UNECE PPP Centre of Excellence Economic Cooperation, Trade, and Land Management Division Jan.vanschoonhoven@unece.org / ppp@unece.org Palais des Nations , CH - 1211 Geneva 10