Transcript Master Slide

Union, principally financed by the EU
A joint initiative of the OECD and the European
Case Study
Water and Waste Water
Infrastructure
Northern Ireland
Martin Darcy
United Kingdom
« Concessions and Public-Private Partnerships »
Ankara, 10-11 March 2008
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Drivers
EU Directives
 Scale of overall investment
needs
 Water reform and lack of internal
implementing resource
 Strategic Investment Board (SIB)
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Options
Mix of public and private sector
investment
 New build or renovate
 Greenfield or existing sites
 Low technology or new technology
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Preferred Solution
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Publicly financed investment only to the
credible limit of the public sector’s ability
to implement effectively
 Private sector investment would deliver
the rest - estimated at €350m of €1.4bn
total
 Private sector investment programme
(PPP Programme) broken into two major
multi-site procurements:
 Drinking
Water projects – named ‘Project
Alpha’
 Waste Water projects – named ‘Project
Omega’
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Project Alpha Objectives
To provide 50% of Northern
Ireland’s drinking water capacity
 To achieve quality standards
compliant with EU Drinking
Water Directive
 To achieve the above to meet
legal deadline
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Water Treatment – Project
Alpha
5 Existing sites
 Estimated €200m of investment
 No land acquisition issues
 Few planning difficulties anticipated
 Relatively straight forward contract
structure
 One procurement process for all five
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Union, principally financed by the EU
A joint initiative of the OECD and the European
Water Treatment Issues –
Project Alpha
The most attractive and bankable
structure had ‘balance sheet’ issues;
this led to a major crisis of
confidence amongst some
stakeholders
 Raw water data
 Raw water consistency
 Sludge management
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Preparation, Procurement
and Initiation– Project
Alpha
May 2003 – Inception
 January 2004 – Project Launch
 May 2004 – Call for competition
 May 2006 – Financial Close (ahead
of schedule by 3 months)
 March 2008 – construction work
almost complete and ahead of
schedule
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Outcomes – Project
Alpha
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Winning bid = €70m capital cost saving
over initial engineers estimates
Whole life savings of 19%
Project procured 3 months ahead of
schedule
Claimed by the advisers to be a ‘World
Record’ time for a major infrastructure
financing
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Waste Water – Project
Omega
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Renovation / new build and rationalisation
with investment requirement estimated at
€150m
Three key geographical areas
One procurement process for all three
areas
Rationalisation element gave great scope
for innovation
No preconceptions about which technical
solutions to use
Several bankable templates already in
existence
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Project Omega
Issues during Preparation
Stage
Sludge management
 Trade effluents
 Infiltrations
 Flow and Composition base data
 Planning issues concerning some
sites
 Land acquisition required on at least
one site
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Project Omega
Issues During Procurement Stage
Urgent investment need requiring
an Advance Works Contract – high
risk strategy for Authority
 Reform of the Northern Ireland
Water Service – ‘the Authority’
 The sale of the Preferred Bidder to
a private equity consortium
 Inadequate leadership from senior
management at Preferred Bidder
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Project Omega – Key
timings
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Advisers appointed January 2004
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OJEU December ’04
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Preferred Bidder appointed January ‘06
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Financial Close March ’07
Construction almost complete – on
schedule
© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Project Omega –
Outcomes
Project signed one month later than
forecast
 11% improvement in whole life vfm
compared to the Public Sector
Comparator
 Construction on Schedule
 Represented the successful
conclusion of a major PPP
Programme
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© OECD
Union, principally financed by the EU
A joint initiative of the OECD and the European
Main Lesson Learned on
the Entire Programme
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Investment in thorough evaluation
and good preparation pays back
through good results in:
 On
time delivery
 Value for money
 Avoidance of legal challenges
© OECD