Transcript The role of EIB in Public Private Partnerships in Europe

Multimodal Transport and Trade Facilitation
Southeast European Forum 2004
The EIB and the Financing of PPPs
Alexandroupolis, 5-7 December 2004
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Defining PPPs
The term PPP covers a wide range of
situations.
From the perspective of the public sector and
EIB the key feature of a PPP is that it
involves a risk sharing relationship
between public and private promoters,
based on a shared commitment to achieve
a desired public policy outcome.
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Policy Developments and Priorities
TENs / PPP Growth Initiative
Public Sector Accounting (ESA 95)
Public Sector Procurement (Green Paper)
Market Evolution
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Single market and monetary union
Critical role of TENs & TINA network
Integration of peripheral regions
Budget constraints required by
Maastricht EMU conditions
Need for increased efficiency
in public investment
New challenges for
both the public and
the private sectors
•Competition and transparency
•Deregulation
•Privatisation
* Public-Private
Partnerships (PPPs)
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Main Characteristics of PPPs
Risk-sharing between public and private
sectors
Long-term relationship between parties
Public service and ultimate regulatory
responsibility in public sector’s hands
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Main Characteristics of PPPs (cont.)
Utilising private sector skills
for public sector services via:
Contracts for services, not procurement of assets
Output, not input, specifications
Payments related to service delivery
Whole life approach to design, build and operation
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Criteria for PPPs
Economially viable for the Public Sector
Financially viable for the Private Sector
Appropriate Risk and Reward Balance for
Public and Private Sector
Public Sector: value for money
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PPP:
• Complexity &
transaction costs
• Financing costs
• Bidding process
Value for money
Cost/time
discipline

Innovation

Optimal risk allocation

Optimal lifecycle costs
 Competition (?)
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“Must” for successful PPPs
Public Sector Political Commitment
PPP Task Force - Leadership Forum by
focused, dedicated and experienced public
sector team
Clear legal and institutional framework
Transparent + competitive procurement
Realistic risk sharing
Government Partnership
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EIB role in PPPs
Advisor to Public Authorities, Member
States and EU Institutions
Supporting all players
Sharing experience from other PPP
environments
Applying best practice of successful PPP
EIB risk sharing
EIB benefit passed to Public Authorities
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EIB’s approach to PPPs
• Policy driven approach to PPPs (evaluation of
the benefits achievable)
• PPPs are an additional policy option (no bias)
• Expand expertise and financial resources
available for “infrastructure” investment
• Facilitating greater private sector investment
• Focus on strategic public services with clear
value added
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Key PPP sectors for EIB
Supporting PPPs in areas of critical policy
significance:
• TENs and modernising transport
infrastructure
• Environmental improvements
• Primary and acute healthcare services
• Primary, secondary and tertiary education
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EIB PPP financing principles
•
Competitive tendering
•
Non-exclusivity - support of all bidders through
bidding stage
•
Investment grade risks
•
EIB complementarity with and leveraging of
banks & capital markets
•
EIB benefits passed to end-users/taxpayer
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TIF-TENs Investment Facility
Strengthen and, where possible, accelerate
the investment in TENs
Increase the EIB resources available for the
development of TENs transport to 2010
Improve the range of financial instruments
available from the Bank
… in collaboration with the Commission,
Member State Authorities and the Private
Sector
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Typical PPP structure
Government
customer
Procuring
Authority
Operation
Services
Unitary
payments
Finance
Special
purpose
project
company
Construction
Contractor
Equity and
sub-debt
Construction
Investor
Operator –
investor
Debt
finance
3rd party
equity
Operator
Debt funders
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ESA 95 / Public Sector Accounting Decision Tree
Will government
make most payments
to the partner?
No
PPP is private
investment
Yes
Yes
Will the partner
bear most
construction risks?
Yes
Will the partner
bear the availability
risk?
No
No
Will the partner
bear the demand
risk?
PPP is government
investment
No
Yes
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Motorway Developments
With Tolls (user-pay)
PRIVATE
– Private Toll Concessions Companies:
Toll Free (tax-payer)
– Private Concessions:
•
• stand-alone BOT-PPP
(bridges, tunnels or motorways in
UK, ESP, P, GR, F, I …).
DBFO shadow tolls
(UK, FIN, P, ESP...)
– Other “off-budget” methods:
• German method: DBF
• Dutch method (D&B and F)
• Belgian ”Intercommunales”
– Public Toll Concession Companies:
• Toll Motorway Networks
in F, I, ESP (partial), P (former).
– Public ”Traditional ” Financing
– Public Toll Companies/Authorities:
• Road Fund: NL, B, L.
• and/or ”Vignette ”: (CH), A
• Pure ”traditional ” method: D, UK, ESP
autovias, I sud, DK, SWE...
• Complex stand-alone projects
(e.g. DK-SWE)
• Toll roads in A, GR
PUBLIC
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Learning Process
Risk-sharing
Value added
Extra costs
Benchmarking
Value added
Procurement
Extra costs
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EIB: PPP signatures (in EUR billion)
3500
3000
2500
2000
1500
1000
500
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
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EIB loans for PPP/Concession projects - Approvals
TOTAL
TRANSPORT
WATER
HEALTH/EDUCATION
MEUR
MEUR
MEUR
MEUR
28 845
24 883
1 146
2 549
AUSTRIA
170
170
BELGIUM
805
DENMARK
3592
3592
FRANCE
1838
1838
GERMANY
1048
1048
GREECE
2503
2503
IRELAND
482
377
NETHERLANDS
818
693
POLAND
275
275
PORTUGAL
3615
3531
84
SPAIN
4680
4620
60
SWEDEN
749
749
UNITED
KINGDOM
8270
5487
TOTAL
805
105
125
73
2444
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PPP : Loan Maturities
Loan Maturity
Exposure signed (nominal)
in EUR million
%
of total
Up to 19 years
2 490
17
20-25 years
8 580
58
26-30 years
3 339
23
312
2
Over 30 years
Total
14 721
100
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PPP financing by sector
UK 1995 - 2003
Transport
Water and Sewage
12%
Defence
CTRL
London Underground
Education
other transport
health
Hospital
defence
education
37%
police and prisons
others
95%
Others
8%
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Contact :
G. Papadopetrou-Tsingou
tel: 00 352 4379 6420, e-mail: [email protected]
www.eib.org
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