march 6, 2018 beirut a… · global infrastructure facility and ifc) across the ppp infrastructure...
TRANSCRIPT
Reflections on PPPs, Project Preparation, and Risk Mitigation
March 6, 2018
Beirut
OFFICIAL USE
EBRD in Turkey (1) Key EBRD figures
The EBRD has been investing in the PPP market since 1993 with EUR 3.4 billion in direct
investments and 54 projects signed
Dominant sectors: Roads, Facilities Management (Hosp.), Airports, Water/Wastewater
Infrastructure PPP market in EBRD region
TOP 5 COUNTRIES/REGIONS OF EBRD INVESTMENT IN
PPP PROJECTS
Note: Cross-regional refer to investments in companies or SPVs which sponsor various PPP projects in EBRD Countries of Operations
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Diversified structures, with 18 PPP deals signed in Turkey, Greece, Croatia, Hungary, Serbia,
Slovakia, and Armenia
PPPs in period included EUR 1.0 billion in own account financing, mobilising (through
syndication) EUR 671 million, and an additional EUR 2.0 billion in commercial co-financing
EBRD in Turkey (1) Key EBRD figures Crowding-in: EBRD Infrastructure support,
2015-2017
3
8%
35%
33%
34% PPP (loans or equity to sponsor), 15 deals
Sovereign or sov. Guaranteed (ministries,
SOEs, municipalities, utilities), 51 delas
Non-sovereign state (SOEs, municipalities,
utilities), 71 deals
Private (corporate), 75 deals
EBRD’s Transport and Municipal signings by loan financing
structure: 2015-2017 = 214 deals for EUR 7.3 billion
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EBRD’s Key Lessons Learned
from PPP Experience
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PPPs: Interplay between public sector, private
sector, duration and risk
Degree of Private Sector operational involvement
De
gre
e o
f P
riva
te S
ecto
r R
isk
Public Sector
Service Contracts
Management Contracts
Design-Build
Operational Concession
Design-Build-Operate-Maintain
Design-Build-Finance-Operate
Build-Operate-Transfer
Build-Operate-Own
Privatisation
Realm of PPPs
Adapted from P. Livesly.
($) Degree of Private Sector investment ($$$$$)
Du
rati
on
of
Pri
va
te S
ecto
r co
ntr
actu
al
invo
lve
me
nt
& f
ina
ncin
g n
ee
ds
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Creating the environment for private sector
participation in infrastructure: the EBRD approach
PPP preparation and investment
Regulatory and legal reforms to support private sector involvement:
clear understanding of risks between the public and private sectors; business case & VfM analysis
Commercialisation pathway for public entities: tariffs and user fees set at cost recovery levels; full cash flow / opex
analysis; IFRS accounting; performance contracting; some outsourcing (e.g., management contracts)
Planning framework established; first engagement at sovereign level >> then sub-sovereign >> then public sector ‘corporate utility’ lending, with legal
reforms to create environment for commercial principles
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Is a PPP doable and justified?
Key Questions? Key Considerations
Is the project
needed and
essential?
Political will and long-term ‘essentiality’ of infrastructure. PPPs should
be pursued first and foremost where a project’s underlying business
case is sound, and not because of a desire to place the investment
off-balance sheet for the public sector.
Is there Value for
Money vs. the public
procurement
alternative?
Risk-adjusted cost of the proposed project as a PPP must be lower
than the cost of the same delivered by traditional public procurement,
i.e., value of ‘risk transfer’ from the public sector to the private sector
(e.g., construction risk, technology risk, completion delay risk, O&M
risk, etc)
Can you afford it,
and is there political
will to pay?
The credibility of the underlining sources of funding of PPPs is crucial,
with the stability and ‘political economy’ of both user charges and
direct government (availability) payments coming into play.
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Preparation of bankable PPPs and commercialised public sector projects
EUR 40m Facility, directly funded by EBRD, applicable to all
Countries of Operation of EBRD
Efficient mobilisation using pre-selected ‘framework consultant’ approach
Dedicated EBRD IPPF team, operational since September 2015
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IPPF’s architecture
EBRD (EUR 40m)
IPPF Unit
manages Framework Consultants
Prepared Projects
PPP Window
Sustainable
Infrastructure
Window (SIW)
Public Sector Clients
Policy Dialogue
Window
Policy Initiatives
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Delivery approach is designed for quality and
efficiency
PPP Window for mobilising private sector finance
Usage of 4 pre-selected Framework Consultant Consortia: world-class quality, ready for mobilisation
KPMG (financial advisor)
Mott MacDonald (technical)
DLA Piper (legal)
PWC (financial advisor)
Arup (technical)
CMS Cameron McKenna (legal)
Mazars (financial advisor)
Ecorys (technical)
Allen & Overy (legal)
Castalia (financial advisor)
D’Appolonia (technical)
Clifford Chance (legal)
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IPPF Results (through Feb. 2018) (2)
Since operational start in October 2015, IPPF has committed EUR 5.3m (and mobilised an additional EUR 3.0 from
Global Infrastructure Facility and IFC) across the PPP Infrastructure Window to date, for a total of 6 PPP projects
Healthy potential pipeline of additional PPPs in Kazakhstan, Jordan, Bosnia & Herzegovina, Poland, and Greece
Bulgaria: Sofia
Airport (with IFC) EUR 454,000
9%
Jordan: Marka Airport - Technical and
Institutional Feasibility EUR 348,000
7%
Ukraine: Port Olvia (with IFC) EUR 500,000
9%
Ukraine: Port Kherson (with IFC) EUR
500,000 9%
Belarus: M-10 Road Concession EUR
1,700,000 32%
Egypt: 6th of Ocotber Dry Port EUR
1,773,000 34%
PPP Window Awarded
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Use of the PPP Window:
IPPF ‘fee plus reimbursement’ approach
IPPF
IPPF Contribution Agreement
(signed between EBRD & public sector
promotor)
PPP Prepared and Tendered
(approx.18 months)
Financial Close
No financial close
– all costs written
off
Public Sector
Promotor
(government)
Transaction Support Fee (TSF)
(3 % to 10% on top of IPPF’s prep cost)
Reimbursement of PPP preparation cost
Reimbursement of cost of TSF
Private Sponsor
(concessionaire)
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Scaling PPFs
True scale requires ‘national PPFs’ – can be based on MDB PPF model
The handful of MDB PPFs can act as catalysts for national PPFs –
MDBs can support with design and initial capitalisation
Scaling up: If 50 new national PPFs each were to produce a pipeline of 10 well-prepared, bankable PPPs, the resulting 500 PPPs would move
the needle on private sector investment to help reduce global infrastructure gap
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Innovating on Risk Mitigation
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tet
Requirements for IFI risk mitigation instruments for
institutional investors
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tet
Risk Mitigation Scheme (“RMS”)
Overview
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tet
First RMS Greenfield Bond for
Elazig Hospital PPP, Turkey
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tet
Application and Benefits
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Matthew Jordan Tank
Head of Infrastructure Policy and Infrastructure Project Preparation Facility (IPPF)
One Exchange Square
London, EC2A 2JN UK
Tel: +44 20 7338 7498
Email: [email protected]
Marcos Martinez
Senior PPP Specialist
Manager, PPP Window
Infrastructure Project Preparation Facility (IPPF)
One Exchange Square
London, EC2A 2JN UK
Tel: +44 20 7338 6000
Email: [email protected]
Marek Waskiewicz
Analyst
Infrastructure Project Preparation Facility (IPPF)
One Exchange Square
London, EC2A 2JN UK
Tel: +44 20 7338 6000
Email: [email protected]
IPPF Contact details
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