Transcript Public and Private Partnerships in the Baltic Region

Public and Private Partnerships
in the Baltic Region:
Experience of Riga City
The experience of Riga City
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Shortage of public infrastructure with shortage of
finance from public bodies the reason for seeing PPP
as one of solutions.
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On the action plan for possible PPP development:
 Water and lightning;
 Roads and rail;
 Public administration buildings;
 National Opera building;
 Schools.
Street Lighting Project for Riga City
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The aim of the project:
TO ENFORCE THE MAINTANACE, EXTENSION AND REHABILITATION
PROJECT OF RIGA STREET LIGHTNING NETWORK
Self governmental Agency of Riga “Rigas Gaisma” maintaining:
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43109 light points (total electricity power is 8000 kW);
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26805 poles;
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1722,5 km of cables and air-wire lines;
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46 electronic public clocks in Riga.
Main problems:
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Frequent failures and high cost penalties, owing to lack of periodic and
preventive maintenance;
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Lighting level widely below that available from equipment using modern
optical technologies;
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Poor illumination efficiency, for the following reasons:
There are worked out Technical and Maintenance programme which
includes:
 Set up of the Data base;
 Full technical renovation of the system;
 Development and implementation new Maintenance system.
Street Lighting Project for Riga City
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Perspective financial model worked out by consultants
for PPP model:
CURRENT BUDGET
PERSPECTIVE BUDGET
1.1
0.8
2.3
1.8
3.4
2.6
0.3
1.1
3.7
3.7
-
0.8
OPERATING COSTS
ENERGY
WAGES
OVERHEAD
MATERIAL & EQUIPMENT
SUBTOTAL
LIFE CYCLE INVESTMENTS
TOTAL (M LVL)
ESTIMATED SAVINGS PER YEAR
New administrative centre of Riga
Mainly inspired from the positive example from Vilnius City;
City
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Departments and other structural units of Riga City Council located
dispersedly;
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Building costs just for RCC building accounts 44.7 millions LVL (63.6
millions EUR)
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Some state institutions announced the interest to take part in the
project;
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Planned as a new administrative centre of Riga City including RCC
building, state institution offices, new congress centre, shopping malls,
hotels etc.
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Trilateral co-operation between municipality, state and private sector
needed to realise the project needed.
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Final decision planned to make still in this year.
RCC building
Investment
(~5%)
Municipality
- Land
Investment (~95%)
- Rent
Agreement
- design
- construction
- operation
- letting
Special Purpose Vehicle
- transfer
RCC building: municipality
Investments
Benefit
Land
Land remains as a property of
municipality
Funds from sales of real estate (if
necessary)
Latterly, building passes to municipality
(if Transfer is prescribed)
Possible funds from State investment
program and EU
Receivement of clearly defined service
and payment of adequate rent
Daily operational concerns transferred to
private sector
RCC building: private partner
Investments
Benefit
Design
Long term rent agreement with RCC
Construction of building and
infrastructure
Clearly defined long-term agreement
and profit from efficiency in operation
Operational costs
Potentially – RCC transfers land to SPV
remaining the ownership (if other
buildings in the territory are planned)
Potentially – collection of rent from other
organisations (if building is built
bigger than for RCC needed and rest
or the building leased)
RCC building: investments and sources of
financing
Sources of
LVL
financing
Investments
Land*
1 602 720
3.57%
421 200 Private partner
42 541 200
94.87%
697 000
1.55%
44 840 920
100%
42 120 000 SIF, EU
Infrastructure***
Total
%
1 602 720 Riga City Council
Design**
Construction***
LVL
697 000
44 840 920
* Potential market value 100 EUR/m2
** 1% from construction costs
*** Prices of October 2005
Location of new administrative centre of
Riga City
Riga Northern corridor - segments
54,4 M
EUR
96.2 M
EUR
6.1km
4.9km
434.6 M
EUR
Connections
4.6 km
123.3 M
EUR
Tunnel
1 km
8.2 km
1.segment
2.segment
Crossing
1.3 km
3.segment
4.segment
Completion of reconstruction of Latvian
National Opera building
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Reconstruction of LNO building split into 3 parts, 2 of the
already realized.
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Third (an last) part includes:
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Most of premises needed for artistic personnel;
Most of premises needed for administrative use;
Several technical premises;
Cattering service;
Undergroung level parking lot (as an additive).
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As an alternative: an open concession (LNO building +
underground level parking lot).
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Investments needed – up to 5 millions LVL (7.11 millions
EUR).
Development of Lucavsala Island
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Huge undeveloped territory located in the heart of
Riga.
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Location very attractive to investors.
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Must be seen in the context of transport
organisation aspects in the area (need for new
crossings of Daugava river).
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Planned the city-in-the-city concept to apply.
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Planned type of development: SPV or joint venture.
Decision still in this year.
Location of Lucavsala Island
Conclusion
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Riga City Council: next steps planned:
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introduction of PPP taskforce in the structure of Riga City
Council responsible both for strategic and day-to-day
responsibilities of implementation of PPPs.
to continue the work with projects mentioned and to
consider other possible projects of public infrastructure in
Riga City to apply the principles of PPPs.
Adoption of new versions of Law of concession and
Public procurement law will make the environment
and situation in the framework of PPPs more
obvious and will help Riga City Council with giving
more options to act.
Thank you!
Riga City Council