Transcript ENA_routes - International Transport Forum

Joint OECD/ECMT transport research center
Working group on
transport infrastructure investment
ROLE OF INNOVATIVE
FUNDING IN
INFRASTRUCTURE
Alain FAYARD
French Directorate general for roads
April 2006
The views expressed in this presentation are those of the author
and not necessarily those of the organizations which the author belongs to.
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SPECIAL FEATURES OF
INFRASTRUCTURE

Important initial investment

Duration (construction, operation)

External effects (positive and negative)
economic profitability ≠ financial profitability
how “ polluter pays?”

Pricing at marginal cost/budget balance

Long-term financial return and strong need
of cash, in particular at the beginning

Multiple users / one - few buyers
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A CONTINUUM OF ALTERNATIVES
Public private partnership : the usual situation
Back to the future : a centuries old story
The key issue : co-operation / competition
Works &
Services
Contracts
low
General
Contracts
Turnkey Concession
Contracts
B.O.T.
Extent of Private Sector Participation
Full
Privatisation
high
Labels used in PPP jargon such as Turnkey contracts,
BOT, DBFO or performance-based maintenance contract
have no single and clear definition. Each PPP solution is
too complex and too unique to be characterized in one
word or acronym.
Adapted from World BankToolkit
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A MATRIX APPROACH OF THE
TOLL AND THE PPP
No Toll
Toll
Risks not
shared
Govt.
Administration
Autonomous
Org.
Risks
shared
’’Concession’’
Construction
and/or
Operation
*
With Traffic
Risks :
Shadow Toll
Without Traffic
Risks : Lease
Govt.
Administration
Autonomous
(e.g., so called
concessionaire)
’’Concession’’
Construction
and/or
Operation
A THIRD DIMENSION : A COMPREHENSIVE VIEW FROM
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INVESTMENT TO SERVICES TO USERS THROUGH MAINTENANCE
PPP : RATIONALE
(1/2)
THREE CORE ISSUES :
 Partnership  “ CORPORATIZATION ”
• Autonomous public or quasi public body
• Delegated management
 More efficient organization of service
Earmarking of resources
Benchmarking
Management Discipline with/without privatization
Public private-partnership / public-public partnership

A COMPREHENSIVE & LONG RANGE APPROACH
• Performance criteria / means obligations
• A set of tasks including services
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PPP : RATIONALE

(2/2)
RISKS reasonably and a priori shared
• Political and legal risks
• Economical and financial risks
• Technical risks : construction and operation
• Commercial risks (tariff x traffic) (?)
One indicator : balance of profits and losses account
(commercial risk is only a part of it)
• Risk for the Gvt in case of default of the private partner

A POSSIBILITY : TOLL




User pays
Supplementary resource
Leverage effect by borrowing
mutualization (competition issue to be addressed)
Diversion of traffic (lower economic profitability)
shadow toll (to avoid traffic diversion) + toll (for resources)
PPP : an organisation process
a financing mechanism
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PPP EQUALIZER
Scope of work : tasks assigned to the private sector
Autonomy : initiative left to the private actors
Pooling : number and type of projects concerned by the
agreement
Risks : how to share them among actors
Cost recovery : how to pay back, mainly users/tax payers
Finance : project/corporate finance ; Gvt involvement
World bank Toolkit : http://rru.worldbank.org/toolkits/highways
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KEY ELEMENTS OF A
CONCESSION MECHANISM
Package size
- Risk of monopoly
- Backing by collateral
alleviating risks
Duration
- Risk of "overprofit"
- Financial safety
Choice criteria
- Not a contract with a contractor
- What place for contractors ?
- Openness/so called objective award
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PRICING: CORE QUESTIONS
 THREEFOLD PRICE ROLE :
• cost recovery
• demand orientation
• financing
are these roles compatible?
• High demand=low price (cost recovery)
high price (offer and demand)
• Marginal eco. (or social) cost?
what about financial balance constraint?
what about “external effects” charges?
 CROSS-SUBSIDIZATION ?
 MAY PRICING BE FREE?
• natural monopoly & non disputable market
• competitiveness, spatial planning, equity….
• Tariff elasticity of traffic  lower social utility
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ORGANIZATIONAL CHANGES
 Breakdown of road network between
central government and local authorities
Focus on core network (E, F, I, Ö…..)
Clarification of responsibilities (CH : NFA….)
No link with political organization (central./fed.)
 Delegated management
Private concessions (E, F, I….)
Institutionalized PPPs (IPPPs)
≠ only toll operators (D, N)
 State-owned companies (Ö, SF, SK…)
 Executive agencies (England, EU comm.’s proposal)
 In-house contracts
≠Road funds (CH, CZ, SF…) only for earmarking resources
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A STRENGTHENED GOVERNANCE
Different roles for different bodies
Strategic plan, programming, resources allocation,
project design, project management, political and
adm. process management….
Contractualization

Global contract
Medium term contracts (embedded) for fine tuning



 / ≠ renegotiation
Regulations & best practices
Audits and users’ surveys
How to reconcile competition
and partnership?
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“COMMERCIALIZATION”
& PARTNERSHIP
 Procurement
Less direct labor (even in maintenance)
Performance-based contracts
Design & build
Purchase of infra. services and not infra. asset
but asset-based financial securities and ESA?
Life-cycle cost savings by bundling const.& op.
“competitive dialogue”
 Quest for new resources
“fiscal” toll (D, N, S, UK….)
“concession” toll
Time spreading of financial burden
 PPP as a management process
a financial process
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THANK YOU
[email protected]
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