Transcript Title of presentation

1
Working with the Private Sector to
Support Investments in PPPs
Russian-French Forum
Svetlana Radchenko, Senior Banker
European Bank for Reconstruction and Development
June 2011
2
Section 1
Overview of EBRD in the
municipal sector
3
EBRD’s role in the municipal sector

Structuring the financing of municipal infrastructure

Promoting commercialisation and corporatisation of services

Supporting the development of regulatory structures and public
service contracts

Supporting private sector investment

Improving environmental, social, health and safety

Facilitating donor grant and commercial loan co-financing
EBRD helps municipalities meet their infrastructure needs
4
Key sectors covered




Water & Wastewater – improved
quality of service and environmental
compliance
Urban Transport – improved public
transport services (buses, LRT, metro,
ferries, etc.) and more efficient and
safe network design
Solid Waste Management – improved
efficiency and frequency of collection;
adequate disposal; prevention of
groundwater contamination
District Heating – renewal of
obsolete heating and distribution
systems to promote efficiency
gains
5
190 projects / EUR 3 billion invested
Multisector
5%
Solid Waste
and Other
9%
Private
28%
Water and
Wastewater
45%
District
Heating
17%
Urban
Transport
24%
Sovereign
20%
Poland
13%
Romania
15%
Baltics
Serbia &
3%
Montenegro
6%
Croatia
5%
Russia
26%
CA
1%
Other CE
7%
Ukraine/
Caucasus
24%
SubSovereign
52%
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Section 2
EBRD’s role in PPPs
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Latest EBRD’s track record in PPP
structures (Municipal Infrastructure)
#
Country
1. Regional
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Year
Project Name
PPP model
Sponsors
2007
Veolia Voda
Service Contracts
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(€
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8
Private Sector Participation

EBRD’s policy “Financing of Private Parties to Concessions”
requires competitive tendering and a specific process:
–

http://www.ebrd.com/downloads/procurement/concess.pdf
Which basic conditions foster PPP development:
– An adequate legal structure
– Political will to champion PPP processes
– Robust tariff methodologies and competent regulator
– Sponsors’ interest, dependent on market and PPP structure
– Sufficient capital market development (local and
international) for LT financing notably in Rubles

These conditions are partially achieved in Russia
9
EBRD support to bidders

EBRD can issue a general letter of interest to be included in the
tender

The Bank can have a pre-bidding dialogue with players
– Instruments offered: joint equity investment and/or capex loan
– Indicative terms: tenor, security

Until tender award, EBRD cannot commit to exclusivity with
anyone (‘open support’)
– Identical dialogue possible with all bidders
– Different teams established to guarantee Chinese walls

After tender award, EBRD negotiates detailed terms and
conditions with the preferred bidder subject to detailed due
diligence
10
EBRD Requirements

Open International Tender with pre-qualification (including no
discrimination on national grounds)

Balanced Contract between City and Operator in line with best
international practice

Good Corporate Governance and high integrity and transparence
standards of operators

Commitment to high environment, social, health and safety
standards

Objective of operational improvements (e.g. ticketing system, etc.)
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EBRD PPP pipeline in Russia
(Municipal Infrastructure):
St. Petersburg Neva Water PPP

DBFOT PPP Agreement for Northern Water Treatment Plant in St. Petersburg; The
Project is aimed at enhancing the quality of potablewater by choosing the most upto-date water treatment technology;

Roundtable for interested investors 9/10 December 2010 in the EBRD office in
London; Pre-qualification submitted 30 May 2011; prefered bidder

Pre-qualification results will be announced 20 June 2011, Bids submission 16 Jan
2012; 1 Oct 2012 – financial closing;
St. Petersburg Waste PPP - Yanino

DBFOT PPP Agreement for Waste Utilisation Plant with total capacity to
handle 350,000 tonnes of waste per year.

Preferred bidder was selected and PPPA is signed on 16 May;

Financial closing is expected in November 2012.
Perm Road PPP – EBRD financing Drafting of Regional PPP Law
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Section 3
Case Studies
13
Case study 1: Rosvodokanal
Signed 2008

Borrower: Group of companies Rosvodokanal,
provides water and waste water services to
5.5 mln. people

EBRD loan: 1.5 bln RUB

Maturity: 13 years

Use of funds: modernisation of water and
waste water infrastructure in Krasnodar,
kaluga, Tyumen, Orenburg, etc.

Tenders for construction contracts: private
procurement;

Transition impact: development of the new
agreements between Rosvodokanal and
municipalities in accordance with best
international practice
14
Case study 2: Dalkia Polska

EUR 70 million invested alongside the Dalkia Group for a series
of investments in Poland over the 1998-2004 timeframe.

EBRD holds a 35% stake in Dalkia Polska. Dalkia International
remains the controlling partner with a 65% stake.



EBRD’s funds allowed Dalkia Polska to invest throughout the
region in ESCO type projects as well as district heating
opportunities (privatisations, concessions, lease contracts).
EBRD exit in mid 2010 by selling shares back to Dalkia
EBRD’s involvement has enabled increased private sector
participation, as well as improved energy efficiency and cost
effectiveness at operating companies.
15
Case Study 3: United Utilities - Sofia
and Tallinn concessions

Equity investments in two water companies in Bulgaria and
Estonia with put option to UU at fair market value in year 7

Sofia
– 2000 – EBRD grants a loan to Sofia W to finance capex
– 2003 – EBRD indirectly becomes 19% shareholder of Sofia W
– 2008 – Revised Concession Agreement signed
– 2010 – EBRD sells to Veolia alongside UU

Tallinn
– 2002 – EBRD loan to newly privatised Tallinn W
– 2003 – EBRD becomes shareholder (12.6%) in Tallinn W
– 2005 – EBRD helps initiate IPO of Company for float on Tallinn
– 2010 – EBRD sells shares back to UU
16
Case Study 4: Veolia Voda Equity

EUR 160 million invested In Veolia Voda to finance a series of
investments in water and waste water concession in CEE,
including Russia, signed in 2007.

EBRD holds a 10% stake in Veolia Voda. Veolia Water remains
the controlling partner.


EBRD’s funds allowed Veolia Voda to acquire several
concession and lease contracts, including long-term lease
contract in Tomsk.
EBRD exit is envisaged in year 7 by selling shares back to
Veolia
17
Case study 5: ‘Aqualia new Europe’

Creation of a regional investment platform in common between
Aqualia (51%) and EBRD (49%) to allow for external growth,
acquisitions of concessions and management operation
contracts.

EUR 80m EBRD equity commitment to Aqualia New Europe

With the backing of the EBRD, Aqualia intends to expand across
eastern Europe, where an improvement in the water
management and infrastructures is in high demand.

Aqualia, a subsidiary of Spanish group FCC, currently provides
water and wastewater services to over 26,000,000 people in
more than 1,100 municipalities worldwide.

Signed in May 2009
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Contact details
Svetlana Radchenko
Senior Banker, Municipal and Environmental Infrastructure
Tel: +7 499 270 31 17
Fax: +7 495 787 11 11
[email protected]