Transcript Diapositive 1 - European Investment Bank
2 nd June 2010, EPEC Private sector forum Borschette center
Leveraging EU grants: the case for PPPs « A perspective from the road concessions’ industry »
Outline
•
Presentation of ASECAP
•
EU Legal framework / concessions
•
Leveraging EU funding: the case for PPPs
ASECAP
ASECAP, the European professional Association of
Tolled Road Infrastructures Concessionaires
• • • •
21 NATIONAL
(mainly TEN’s) MEMBERS OPERATING
45.068 km 149
TOLLED MOTORWAYS OPERATORS
19.000.000
OVER
23
ETC SUBSCRIBERS BILLIONS EUROS OF REVENUES
Motorways concessions in Europe Range of practices
Shadow Toll Pre-financing State Budget UK Finland Netherlands Portugal Germany Belgium Sweden Denmark
Real Toll Concessions Italy France Portugal Greece Slovenia Croatia Spain Austria Hungary
Operators of tolls Norway Germany Netherland UK
PAYMENT by all (tax payers) by users
ASECAP main agenda & mission
ASECAP's mission is to promote concessions schemes (DBFO model) and toll as the most efficient tool to finance the construction, operation and maintenance of safer, greener and smarter road infrastructures.
…High cost of infrastructure + Public budgets scarcity !!! Private investment
= cost-efficiency, time-frame, risk sharing
!!!
1st sector in Europe that understood the merits of PPP
at EU level, a preferred partner of the European institutions & major stakeholders:
Financing
(PPPs, Tolling, EETS Interoperability)
Safety & Environment
ITS
ASECAP vision
• There are
no free roads
(direct charging vs indirect taxation) ; • Motorways are
expensive
to build : to operate to maintain • Socially,
tolls are the fairest system for road financing
; • Toll conceeded roads have delivered
excellent results worldwide
based on « Fair charging » and « Direct road user charging » ; Immediate and stable source of funding; Tariffs regulated by performance and quality indicators; Optimal (fair, effective and efficient) risk transfer and allocation;
Real tolls are the answer !
• Use of roads produce externalities that need to be internalized; • Road pricing can be flexible: (time of the day, vehicle category, level of pollution); • Users have to pay for the
quality of the service
offered (and in the future will have to pay for the
externalities
they cause for the society); •
Earmarking
of collected revenues to the road infrastructure is the key!
=
Concessions (and user payer’s principle) provide adequate solutions to match EU goals
EU legal framework / concessions
•
The EC Treaty
(general principles = only solid basis!) •
« Public procurement » Directives
(2004/18/EC, 2004/17/CE) = distinguishing public contracts vs concessions (service concessions?) •
Interpretative communications (COM2005/569, COM2000/C 121/02) on Public Procurement and Concessions
•
Case-law of the European Court of Justice
324/98) identifying notions such as (i.e.: TeleAustria, C “
remuneration
” (economic activity), “
right of exploitation
” and “
transfer of risk
” as main characterizing elements for «Concessions».
EU legal framework / concessions
•
Strong political commitment:
Establishment of the
European PPP Expertise Centre (EPEC)
by the Commission and the EIB; EU Commission’s
Communication
on
« Mobilising private and public investment for recovery and long term structural change: developing Public Private Partnerships »
.
But…
Many Member States do not yet have clear public sector rules; Recent examples prove the undermining future initiatives;
EC could act
to prevent uncertainty = Lack of legal certainty at EU level detrimental to Internal Market ?
Towards new EU rules in the field of PPPs and concessions?
• By favouring
legal clarity
, the EU can serve as the leverage/sponsor to foster political readiness in Member States to adopt a “PPP agenda” and explore more efficient ways to develop infrastructure.
EU should:
• Keep a flexible approach; “Clarifying” vs. “Stricter” approach • Guarantee compliance with the principles of equal treatment, non discrimination and transparency, while ensuring respect of confidentiality and intellectual property; • Limit the possibilities for unilateral alteration of the contractual position; • Establish a list of best practices & concepts underpinning the various types of PPP found in Europe; • Establish EU guidelines to clarify rules on provision of Funds.
Leveraging EU funding: the case for (roads) PPPs
Crisis !!!
The recession and the credit crisis created problems for: •
Existing concessions:
= = Dramatic HGVs traffic decline (Jan 08/09)
- 33.9 %
Spanish tolled network, -
20.27 %
Austria,
- 19.31% CZ Rep...
Strong correlation with GDP which is sharply declining.
Earnings lower than forecast, difficulties to repay interest and loans. •
Future concessions contracts:
= Radical change in the banking sector (part or full nationalisations, collapses, etc.) Sponsors panic & shortage of capital
Leveraging EU funding: the case for (roads) PPPs
Strong impact on market players:
• Banks: less cash flow prospects, higher financial costs, higher uncertainty; • Grantors (Governments / State agencies): less brownfield projects being tendered, postponements and cancelations;
but
, some governments are fighting recession by promoting investment in infrastructure (Keynesian policies for greenfields projects); • Construction companies’ focus on the short-term construction business; •
Operators
’ focus on existing assets, domestic market, protecting cash flow levels and mitigating risks;
= Need to quickly adapt, restructure and focus on financial strength
Leveraging EU funding: the case for (roads) PPPs
= Hybrid PPPs
:
added value / current shortage of public funding and private liquidity
+ 2000-2010: Increasing attention to the potential role that private finance can play in helping the investment challenge in the EU; + Significant available funding:
Cohesion/Structural funds/TEN funds
+
EIB
NEW
= Emergence of public authorities/multilateral lending for PPPs… …but
no discernable EU PPP policy Today PPPs are carried out without EU funding, while EU money is spent on traditional projects
Leveraging EU funding: the case for (roads) PPPs
EIB
financial instruments: Senior debt, SFF reserve, LGTT
EIB
support: JAPERS/JESSICA, EPEC
EIB
=
Key financer of transport infrastructure
(1994-2007:
85% PPP funding
to transport projects, € 25 bn.) EIB lending to roads & motorways PPP (MEUR) 4000 3500 3000 2500 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008
EIB financing for PPPs 85% to the transport sector EIB signatures for PPP projects (1994-2007) EUR 25.2 bn in total
6% 4% 4% 2% 1% 15% 36% 31% Roads and Motorw ays Social Infrastructure (Education & Health) Traditional and High Speed Trains Water Urban Development, Renovation & Transport Tunnels and Bridges Airports Energy 4
Leveraging EU funding: the case for (roads) PPPs
•
Advantages
Maximising absorption of EU grants by pursuing direct lending and PPPs/concessions; Presence of public players as « catalyst » for commercial banks and « comfort » for private operators; •
Main obstacles
More complex procedures to be managed jointly; EU Public procurement procedures to be flexible enough/nuances of PPP Time issue: (budgetary period is limited = uncertainty of available funding? Increased risk? Require governments underwriting for financial close?); Institutional and legal framework; Lack of information (& limited successful precedents)
Succesfull exemples (toll concessions) 1/2
1/
The
Rion - Antirion bridge
– West Greece: the longest cable stayed bridge worldwide - 2.880 m • Built: 1999-2004 (five months ahead of schedule) • Total cost: €803.000.000
EU Grant: €256.000.000 (32%) State budget: €108.000.000 (14 %) Private financing: €438.000.000 (54 %) • Duration: 35 years A significant role in the development of the region; 1.5 bn € influence to Greece economy (source: DG REGIO); Reduced crossing time to 5 min; Engineering masterpiece (remaining in operation whatever the weather conditions).
Other successful examples (toll concessions) 2/2
N1-M1 Dundalk bypass
(Ireland) – Dublin Northern border route Construction Drogheda bypass – 21.5 km. (
Public procurement
) Operation and maintainance Drogheda bypass + other 43 km. Dundalk bypass = 11 km new section of motorway + 7 km of new link roads (DOBF model) • Built: 2000 – 2003 (Drogheda bypass); 2004 – 2006 (Dundalk bypass) (4 months ahead of schedule) • Total cost: € 246 M (Drogheda bypass); € 500 M (Dundalk bypass) Drogheda bypass: Irish Government + EU grants ( € 61 M. ≈ 25 %) Dundalk bypass: 30-year concession (no EU funding)
Other successful examples (toll concessions) 2/2
Procured separately, but became hybrid through combined O & M concessioning
The Dundalk Western By-pass is not only an integral link between Dublin and Belfast but is also part of the TERN (Euroroute E01) ; Significant project: 1.25 million m3 of earthworks + 14 major structures; 1st of the new generation of PPP road schemes in Ireland; Extensive ecological mitigation measures; Intense archeological scrutiny.
Conclusions
• A mix of
legal uncertainty
(national and EU level),
complexity of combining procurement requirements
of PPPs with those for grant funded projects, and
lack of precedents
have hampered undertaking of « hybrid » PPPs; • Need new success stories !
• EU funding (ex.: « new » Member States) shall
not be in conflict with a stronger involvement of the private actors
; • EC, EIB/EPEC have an crucial role in
fostering EU and national public sectors’ expertise
, promoting result-oriented culture in the management of public services, and eliminating administrative bottlenecks;
Coordinated action at EU level to improve leverage of EU funds would be beneficial to state of EU infrastructures
.
“
Not our wealth created our transport infrastructure; It is our transport infrastructure, which created our wealth
”
J.F.Kennedy, former US President, 1960
Thank you for your attention !
www.asecap.com
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