Transcript Slide 1

Financing urban transport
projects
NICHES+ findings
Questions to the CCs
1. Is there budget available to ensure the implementation of the measure
envisaged in NICHES+? (how much financial resources are we discussing,
and are they an issue?)
Within your administration, or other public authorities.
2. Is there the need to involve external parties for the following aspects of the
project implementation:
Design, Build, Finance, Operate, Maintain, (Own)
3. Do you have access to experts on the financing issue? In-house, external?
4. Do you see the possibility to have revenue from the system, and do you see
ways this could be enhanced?
Fee, local taxes and charges, etc.
5. What kind of guidance is needed/useful?
Inspiring examples, guidelines, information about EU funding sources…
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• What can we learn from
– Large scale projects
– Infrastructure projects
– International setting
• Information available geared towards
– Internationally relevant infrastructures
– Or domestic , playing a significant role in making a place globally
more competitive
– Not to domestic services/infrastructures that address local
transportation needs
– Road and PT investments, infrastructure, hardware and rolling
stock
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Objectives
• Maximise socio-economic benefits through implementation of the
most cost effective option for urban transportation
• Capture value from direct benefits to project users and as well as
value from significiant positive externalitieis that will accrue indirectly
from the project
• Ensure affordability to encourage usage and maximise consumer
welfare
To enable
• Financial success (+/-)
• Policy success (+)
• Durability success (-)
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Success factors
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Project environment and turbulence
Political control and sponsorship
Role of national government
Effectiveness of planning
Organising for operations
Effectiveness of procurement and financing (most important!)
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Good procurement and financing structure in place
At the appropriate time
Including a performance contract that incentivizes effective delivery
And good operations
Managing costs
• Careful advance planning
• Careful monitoring of expenditure
• Flexibility – contingency plan
– Reduce scale of the project
– Divert funds internally
– Increase total budget, by acquiring increased funds
• If success of the project relies on behaviour change,
remember to allow funds for promotion and campaigning
• Different funding needs in different steps of the project
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Managing costs: long term
budget planning
• Staff costs estimates should include salary
increases which may be due during the
project’s lifetime
• Overheads need te be included in the
estimates of staff costs
• Allow for inflation when estimating the cost
of materials
• Include delivery or storage costs if
applicable
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Private capital
Awareness of true costs and risks
Efficiency gains:
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reduced cost
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less schedule overruns
Private investments costs are recovered by future
revenue streams or public support (one-off
capital grant, or periodic payments, earmarked
taxes (cross-subsidies)).
End goal for public authority is to stay involved in
the measure implementation (own the
infrastructure, data rights, etc.)
Collaboration forms
• DBFMOT (Design, Build, Finance, Maintain, Operate,
Transfer)
• Public procurement or Privatisation (Build Own Operate)
• SPC (special purpose company): opportunity to set up
transactions outside balance sheet
• Alternative forms of procurement can be compared to
derive the most advantageous for the public interest.
• The procurement method should not be chosen too
early, but after the developmetn of a robust business
case and/or feasibility study
Risk sharing
Losses (downside risks) or rewards (upside risks)
• Risk allocation
– Commercial risks vs non-commercial risks (political)
• Risk sharing
– Commercial risk shared: public sector intervenes directly
(shadow payments) or indirectly (guarantees)
• Mixed forms
– DBFT, privately placed long term bonds
– Private pre-financing of the construction (Bundmodell, D)
challenges
• Asymmetry of information
– Verification of contractor’s information by
independent engineers
• temporary and local monopoly of
concessionaire
– Detailed contracts
– Based on clear public sector goals and
requirements
• Availability of private funds (financial
crisis)
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Instruments for financing
Conventional
• Public funding
• Fare box revenues
• Advertising revenu
• License fee from business activities
• Real estate development rights
• Access rights (e.g. BRT lanes, parking)
Proximity benefit value
• Additional property tax
• Employer contributions
• Betterment levy
Indirect benefits value
• Congestion pricing
From the point of view of
the investor
Do the investmenst offer monopolistic or oligarchy
opportunities?
Do they provide sustainable revenues?
Is the long term revenu generation of such investments
both stable and predictable?
Does the regulatory framework for investment provide
adequate investment security?
Ar there opportunities to go back and re-negotiate
contracts?
Donors, funding
instruments
GEF
EIB: ELENA - JESSICA
EU
ERDF
CF
TEN-T fund: LGTT
EBRD: JASPERS
CIP
Contact Info
• Ivo Cré
– [email protected]
– phone: +32 2 5005676
• Karen Vancluysen
– [email protected]
– phone: +32 2 5005675
– absent from 19/05/08 – 05/10/2008