Transcript Financial Institutions 2003

Infrastructure PPP Projects
EBRD Experience
April 2012
1
Case Study
Turkey: Istanbul Ferries Privatisation, Istanbul

Client:
TASS, a special purpose company, established by three Turkish
companies (Tepe, Akfen, Sera) and the UK’s Souter Investments to
acquire IDO, the world largest municipal ferry operator, transporting
50 million passengers p.a.

EBRD finance:
USD 150 million

Type of finance:
Limited recourse; mandatory cash sweep;
USD 100 million - long term senior loan, sculptured repayments
USD 50 million - mid-term junior loan, bullet repayment

Total Project cost:
USD 860 million

Year:
2011

Project
description
Financing acquisition of IDO by TASS

Impact

Demonstration effect of the private sector value-added:
introduction of new demand-driven ticket tariffs, creation of new
routes and intermodal passenger transportation services

Flexible financing structure with a sufficient grace period which
allowed the sponsors to introduce measures to turnaround the
company

Introduction of a gender action plan as a tool for inclusiveness
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Case Study
Russia: Pulkovo Airport, St. Petersburg

Client:
Northern Capital Gateway, a Project Company indirectly owned by
VTB Capital, Fraport and the Copelouzos Group

EBRD finance:
EUR 100 million

Type of finance:
Limited recourse, long-term senior debt with no government grants or
subsidies

Total Project cost:
EUR 1200 million

Year:
2010

Project
description
Construction of a new terminal as well as the refurbishment of the
existing infrastructure of the airport facilities at St. Petersburg airport.

Impact

Demonstration effect of the first major PPP project in Russia to be
financed without Government support.

Modernisation of airport infrastructure in Russia with very high
standards of energy management

Involvement of an international airport specialist company (Fraport)
to enhance the efficiency of the airport
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Case Study
Albania: Mother Teresa International Airport, Tirana

Client:
Tirana International Airport Sh.p.k. (“TIA” or the
“Concessionaire”), a limited liability company set up by
Hochtief AirPort GmbH, Deutsche Investitions und
Entwicklungsgesellschaft (“DEG“) and the AlbanianAmerican Enterprise Fund (“AAEF”) (together the
“Shareholders”)

EBRD finance:
EUR 30 million

Type of
finance:
Combined state guarantee and long term senior debt

Total Project
cost:
EUR 73.5 million

Year:
2005

Project
description
Rehabilitation of Phase 1 & 2 of Airport Terminal plus
construction of access roads

Impact

Demonstration effect of the PPP project in an early
transition country

Involvement of an international airport specialist
company to enhance the efficiency of the airport
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Case Study
Georgia: International Airport, Tbilisi

Client:
TAV Urban Georgia, the Concessionaire granted a 30-year
concession to manage Zvartnots International Airport

EBRD finance:
USD 25.9 million

Type of finance:
Long term senior debt parallel financed with IFC

Total Project
cost:
USD 120 million

Year:
2006

Project
description
Design and construction of Tbilisi International Airport and
upgrading of the passenger terminal Batumi Airport

Impact

First Build Operate and Transfer project undertaken In
Georgia

Involvement of an international airport specialist company to
enhance the efficiency of the airport
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Case Study
Armenia: Zvarnots International Airport, Yerevan

Client:
Armenian International Airports CJSC, the Concessionaire granted a
30-year concession to manage Zvartnots International Airport

EBRD finance:
USD 40 million

Type of finance:
Long term senior debt co-financed with Asian Development Bank
(USD 40m) and DEG (USD 20m)

Total Project cost:
USD 130 million

Year:
2009

Project
description
Financing of the second phase of the Airport Development, including
completion of passenger departure terminal.

Impact

Involvement of an international airport specialist company to
enhance the efficiency of the airport

First PPP project of its type in the country

International standard construction including intended BREEAM
certification
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Case Study
R1 Motorway, Slovak Republic

Client:
Granvia, A.S.

EBRD finance:
EUR 250 million

Type of finance:
Senior Term Loan Facility of EUR1,050 million

Total Project
cost:
EUR1.3billion

Year:
2009

Project
description
Design, construction, financing, operation and maintenance
of three sections of the R1 Expressway in Slovakia as well
as the Banska Bystrica Northern Bypass

Impact:

First concession contract awarded for a PPP structure for
motorway projects in the Slovak Republic

Supporting the private sector in the provision of
transportation services

Introducing the efficiencies of the private sector in the
provision of large scale infrastructure
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Case Study
M5 Motorway, Hungary

Client:
AKA ALFOLD KONCESSZIOS AUTOPALYA RT

EBRD finance:
EUR 100 million

Type of finance:
Senior Debt

Total Project
cost:
EUR 900 million

Year:
2004

Project
description
Financing of the construction of the M5 Motorway under
Phase 1, followed by refinancing of Phase 1 and new
construction of Phase 2, which was completed in 2005.

Impact:



EBRD’s timely refinancing put the Concessionaire on
sound financial footing in light of low traffic volumes
Supported the Government’s need to remove tolls and
bring the motorway into vignette system
Bank provided interim finance to allow negotiation of
availability payments based concession
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Case Study
M6 Motorway, Hungary

Client:
M6 Duna Autopalya Koncesszios RT

EBRD finance:
EUR 32 million

Type of
finance:
Senior Floating Rate Notes issued by M6 Duna

Total Project
cost:
EUR 482m

Year:
2005 (Phase 1), 2006 (Phase 2)

Project
description
The Bank first participated in Phase 1 - the
construction of a new 58km road opened to traffic at
the end of 2006. The Bank subsequently participated
in the re-financing of this first phase.

Impact:

First PPP tendered as an availability payments
concession in the region

Underwritten bid meant EBRD came in after the
award of the concession, with added value before
general syndication

The refinancing was the first such instance of a PPP
refinancing through the issue of wrapped Senior
Notes with the participation of a monoline insurer.
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Case Study
M6-M60 Motorway, Hungary

Client:
Mecsek Autopalya Koncesszios ZRt (“MAK”)

EBRD finance:
EUR 75 million

Type of
finance:
Senior Term Loan Facility of EUR 784.8 million

Total Project
cost:
EUR 962 million

Year:
2009

Project
description
Construction, operation and maintenance of (i) the 48
km long 2x2 lane section of the M6 expressway
between Szekszárd and Bóly, and (ii) the 30.2 km long
section of M60 expressway between Bóly and Pécs in
Hungary.

Impact:

Supporting the private sector in the provision of
transportation services

Introducing the efficiencies of the private sector in
the provision of large scale infrastructure
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Case Study
Bulgaria: Sofia Water

Client:
Sofiyska Voda, currently 77 per cent owned by Veolia Water and 23 per
cent owned by the City of Sofia

EBRD finance:
EUR 51.5 million

Type of finance:
Limited recourse, long-term syndicated tranched senior debt with no
government grants or subsidies, subsequently EBRD became an equity
investor and remains an indirect investor through its holdings in Veolia
Water

Total Project cost:
EUR 147 million

Year:
2000/2008

Project description
Investment in Sofiyska Voda’s priority investment programme, including
investment in water and wastewater treatment

Impact

A well balanced concession contract combined with efficient project
implementation and necessary tariff increases lead to an increase in
investment and higher service levels.

Project supported the development of the regulatory framework in the
water sector.

Transparency of investments combined with a public outreach
programme helps build consumer acceptance and satisfaction.
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Case Study
Romania: Apa Nova, Bucharest

Client:
Apa Nova Bucuresti, currently 84 per cent owned by Veolia

EBRD finance:
EUR 55.4 million alongside DEG

Type of finance:
Limited recourse, long-term senior debt with no government grants
or subsidies

Total Project cost:
EUR 155 million

Year:
2002

Project
description
Financing of the Crivina Water Treatment plant

Impact

A well designed engineering, procurement and construction
contract pushed the construction risk to the contractor and
resulted in cost savings.

Concession contract linked tariff increases to the concession
meeting technical performance criteria.

Transparency of investments combined with a public outreach
programme helps build consumer acceptance and satisfaction.
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Lessons Learnt – Key Elements for successful PPPs
1) Choice of Project - Is this project the right one?
• Undertaken for sound developmental and economic reasons.
• Positive economic internal rate of return; rigorous cost/benefit analysis
• Politically acceptable
• Environment/development balance
• Will it achieve the Government’s development objectives?
2) What do the concession granting authorities wish to achieve?
• Minimum cost to government and maximum use
• Low environmental impact
• Motor for development
• Private Sector Efficiencies
• Traffic diversion / free flowing traffic for road project
• Projects completed on time and within original budget
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Lessons Learnt – Key Elements for successful PPPs
3) National Policy Framework for Public Private Partnerships.
• Establishment of PPP unit at central government level to:
• Create and maintain know-how
• Introduce standardisation
• Clarity in market
• Speed in repeat transactions
• Maintain consistent government position
• Legal Environment
• Need for clarity in the law governing PPPs and a structure which avoids
loopholes
4) Procurement Procedure and Tender Process
• Legislation to allow for procedures appropriate for award of concessions
• Sensible and clear timeline with consistency
• Prequalification and equal treatment to all bidders with transparent and
objective process
• Timing and process (scoring process) developed to produce comparable
bids
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Lessons Learnt – Key Elements for successful PPPs
5) Security Issues: Whose money?
80% - BANKS
20% - SPONSORS
• If things go wrong the banks need to be able to fix it before the concession
is at risk (Step-in rights)
• Unilateral change or termination to be balanced by economic
compensation – even if termination for grantee’s fault (Debt Assumption)
• These could be achieved via Direct Agreements
6) Dispute resolution
• If things go wrong the banks need to be able to resolve disputes arising
within the structures of PPPs in a manner that would allow parties from
different legal and cultural backgrounds to resolve their disputes, generally
without the formalities of their respective legal systems. Therefore, the
requirement for international arbitration is crucial.
18/07/2015
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PPP Outlook in Turkey
Airports
• Third Istanbul Airport, Izmir Airport, Cukurova Airport
Seaports
• Derince Port, Galata Port, Izmir Port
Motorways
• Eurasia Tunnel BOT, Privatisation of Motorways and Bridges, Gebze Izmir
Motorway BOT, Third Istanbul Bridge BOT
Railways
•
Municipality Metro projects, Rail Station BOTs
Hospital PPPs
•
Kayseri, Etlik, Bilkent, Ikitelli and 24 others
Electricity Distribution
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Headquarter:
One Exchange Square
EC2A 2JN London
United Kingdom
Istanbul Office:
Contacts
Buyukdere Cad.No:185
Kanyon Ofis Kat:2
Levent-Istanbul
For all further enquiries, please contact :
Mike Davey
Thomas Maier
Sue Barrett
Jean Patrick Marquet
Director,Turkey
Managing Director, Infrastructure
Director, Transport
Director, MEI
+90 212 3861100
+ 44 20 7338 7924
+44 20 7338 6202
+44 20 7338 6957
[email protected]
[email protected]
[email protected]
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[email protected]