transport consultancy and engineering The 3rd of may of 2012

Transcription

1 P3: A Strategic Decision for Infrastructure Development Spanish Ministry of Civil Works The 3rd of may of

2 INTRODUCCION DEVELOPED COUNTRIES HAVE NEW CHALLENGES Governments budget constraints: They have strong budgetary restrictions to infrastructure investments, having other priorities in this crisis scenario Increase of Global Competitiveness: The developing countries have clearly in mind the strong relation between infrastructure and economic development. Emerging g and in transition economies will be more competitive. Obsolescence of Infrastructure and, in cases, new bottlenecks: Developing countries authorities have to upgrade infrastructure networks and invest in its operational and maintenance plans. Fast Increase of Population: since 1950 it has grown from 2,500 to 6,500 million inhabitants P3 CAN BE ONE OF THE TOOLS TO THIS CHALLENGES (EFFICIENCY GAINS AND BUDGET ALLOCATION) 1

3 Index 0. INECO : A BRIEF OVERVIEW 3 1. P3 DEFINITION 5 2. EFFICIENCY GAINS BUDGET ALLOCATION VALUE FOR MONEY AND P RISK ALLOCATION AND RISK MANAGEMENT CASE STUDY: SHADOW TOLL CONCESSION SPANISHLEADERSHIP WORLDWIDE 24 2

4 0. INECO : A BRIEF OVERVIEW Part of the Ministry of Public Works and Fomento Group ineco is a company integrated in the Ministry of Public Works and Transport. Its shareholders are public companies responsible for the management of Spain s transport systems. With more than 3,100 people, ineco has experts in consultancy & Engineering (Roads, railways, aeronautics, urban transport, telecommunications and environment). OUR TEAM Our greatest strength 3

5 0. INECO : A BRIEF OVERVIEW We export our know-how abroad FLEXIBLE Ability to adapt 4

6 1.DEFINITION: RANGE The range of P3 arrangements Public procurement Management and lease Contracts Design, Build, Finance, Operate, Transfer Build, Own, Operate Privatization/ Divestiture Madrid d Barcelona HSR Parking spaces Palma de Mallorca Airport, Frankfurt Handling Sao Paulo Toll motorways I 595 Motorway BAA & TBI /Florida Port Terminals Airports (UK) Public P3 Private Source: Based on Akash Deep. (Harvard)

7 1. DEFINITION: PREREQUISITES Prerequisites for goodppps: Clear legal framework EFFICIENCY GAINS BUDGET ALLOCATION Design of the National Infrastructure Investment Plan and updating from VALUE FORMONEY the perspective of users (citizens, freight and businesses) and other stakeholders khld Alignment between P3 contracts and the needs of the industrial sector/credit institutions who have to promote the project RISK ALLOCATION AND MANAGING 6

8 1.DEFINITION: SPANISH FRAMEWORK EVOLUTION Spanish Legal Framework Motorway concession Law 1972 Public Works Concession Law 2003 Spanish Public Contracts Law 2007 Current Spanish Public Contracts Law Today Roads Sectorial Plans Roads Sectorial Plans National Transport Plan National Transport Plan National Transport Plan National Transport & housing Plan Spanish National Infrastructure Investment Plan Other Highlights in P3 Process 1 st railway concession (demand risk) Today 1st toll Motorways concessions Start up of Public Airports Company and Port Authorities 1st shadow Toll motorway 1st motorway with availability payments Railway concessions (availability payments) 7

9 1.DEFINITION: TENDERING PROCCES EVOLUTION EVOLUTION NATIONAL SCOPE toll Motorways Today Shadow toll motorways Structure P Highways (availability payments) Airports Commercial Areas / parking / real state Railway lines and station malls 6 Port Terminals 8

10 1.DEFINITION: HIGWAY NETWORK EVOLUTION Evolution of Spanish Highway network (milles) Toll motorways Shadow toll motorways and highways

11 1.DEFINITION: SECTORS Not only in the transport sector: Ports, airports, roads, railways, tramways, etc. Examples: Train manufacturing with Renfe mixed societies, railways works concessions and electrification systems operation, handling services, parking, hotels Also in: Water supply and treatment. Police station Health service Prisoni systems Desalination plants Energy efficiency installationsinpublicbuildings. 10

12 1.DEFINITION: SECTORS Not only in the transport sector: Ports, airports, roads, railways, tramways, etc. Examples: Train manufacturing with Renfe mixed societies, railways works concessions and electrification systems operation, handling services, parking, hotels Also in: Water supply and treatment. Police stations Health services Prisoni systems Desalination plants Energy efficiency installationsinpublicbuildings. 11

13 2. EFFICIENCY GAINS P3 is a method to procure infrastructure services over life cycle of the assets (construction, operation & maintenance) to pay for the services contingent on the quantity (tolls) and/or quality of those services (availability payments) to bring a wider range of expertise and capacity for innovation that is procured through a competitive process 12

14 2. EFFICIENCY GAINS P3 achieves these goals by transferring to the service provider Managementofkey risks Construction Operation & maintenance Traffic Demand Financing Cost overruns and dl delays significant control of the asset A private service incentivized by performance indicators (availability payments) or economic growth expectations (tollsandshadow tolls) 13

15 3. BUDGET ALLOCATION Traditional public procurement Capital cost (Investment) and operation assumed by the public sector. $ TYPICALLYRISKS ASSUMEDBY THEPUBLIC Cost Overruns SECTOR Deviations of investment cost. Management of delays and its side Investment effects payment. Forecast Operation costs variation, including those derived from technological obsolescence. Delays in services, in related projects, EPC contract and increased costs resulting of nonexpected investments (planning with signature incertitude). Cost Curve in a traditional procurement D e l a y s 2 Years Cost Overruns O&M Forecast O & M Contract Signature 15/30 years 14

16 3. BUDGET ALLOCATION PublicPrivate Partnership /P3 Concession / P3 require the private sector to design, build, finance, and operate public sector installations or services. Contract term tipically years for infrastructure, but7 15 years for CAPEX technology Little or inexistent initial investment 2 years for the public sector Deferred payments include payment Public sector reduced d for using the private sector financing payment during construction phase resources. Risk of service failure or delay in projects TRANSFERRED to the private sector. Construction O&M New services Availability payment for new services Availability payment 15/30 years 15

17 3. BUDGET ALLOCATION: CONTRACTUAL FRAMEWORK Traditional publicprocurement: procurement: Flows Taxpayers Taxes or revenues Payment for assets Private companies Assets provided Government Payment of user chargers Direct Driect Users users Service delivered Debt btissued Finance provided Finance markets Source: Akash Deep

18 3. BUDGET ALLOCATION: CONTRACTUAL FRAMEWORK Taxpayers Public Private Partnership: Flows Taxes or revenues Government Availability payments Service delivered Payment for assets Private companies Assets provided Special purpose vehicle Entity Special Purpose Payment of users charges Payment of user chargers Service delivered d Debt, equity issued Direct users Finance markets Source: Akash Deep

19 4. VALUE FOR MONEY AND P3 2 approaches to assess the economic effects and Joint Financing: Private participation. Financial Objectiveses Financial Performance: includes benefits and costs from the point of view of the promoter Internal rate of return (IRR) versus risk assumptions Public participation. Socio economic goals Promoter Final users and + + Externalities = Social profitability other stakeholders FINANCIAL PROFITABILITY Shadow Pricing Other stakeholders Externalities SOCIAL AND ECONOMIC PROFITABILITT (CBA) Source : Support to Spanish Ministry of Civil Works in the review of the Spanish Strategic Infrastructure Plan. INECO 18

20 4. VALUE FOR MONEY AND P3 3. Economic and Social Performance (Cost Benefit Analysis CBA): includes the benefits and costs for the developer, other transport operators, users, and the externalities generated by the project. 4. Socioeconomic analysis: Aims at evaluating the impacts of infrastructure over Domestic Product and Employment. (National Imput output Matress) Direct Effects Indirect Effects Induced Effects Impact of 1 million EUR invested ( 09 ) Overall goods employment &services GDP increase increase production 3, Million 1,320 Million Source : Support to Spanish Ministry of Civil Works in the review of the Spanish Strategic Infrastructure Plan. INECO 19

21 4. VALUE FOR MONEY AND P3 Evolution of accessibility

22 5. RISK ALLOCATION AND RISK MANAGEMENT Risk structure of a project It is essential for the success of a project to identify, analyze and allocate all risks in each of the phases of the project RISKS CONSTRUCTION TECHNOLOGICAL OPERATION DEMAND MAINTENANCE SUPPLY MARKET FINANCIAL POLITICAL LAND USE TRANFORMATION COMPLEMENTARY REVENUES LEGAL ENVIRONMENTAL FORCE MAJEURE Contract Documentation PARTICIPANTS BUILDER OPERATOR SUPPLIER BUYER INSURANCE COMPANY FUNDED BORROWER PROMOTERS CITY COUNCILS (REAL ESTATE DEVELOPMENTS) OTHER SERVICE PROVIDERS (PARKINGS, OFFICE, COMERCIAL AREAS) OBJECTIVE: allocating the risk to the party who can best control it 21

23 5. RISK ALLOCATION AND RISK MANAGEMENT: Common Features Strong government support, tpicall typically involving: ing Concession agreement with government undertakings Responsabilidad Patrimonial (Compensation upon early terminationof concession) Specific terms (tenors of concessions, tendering criteria, maximum tolls, potential subsidies, etc) on a case by case basis 22

24 6. CASE STUDY: SHADOW TOLL CONCESSION Main Features of Shadow Toll Concessions: Granting authority (either central government or regional authorities) makes payments to the concession company according to: the use of the road (Risk of traffic transferred). Corrections due to indicators of service quality and condition of the highway with a measuring frequency, minimum threshold values and / or media and response times. (Availability risk transferred). Typically, upside for investors is limited (reduction of toll payments upon achieving certain traffic volumes; reduction of concession tenor upon meeting certain returns, etc) Lower traffic uncertainty may allow for more efficient financing schemes (bond financing, securitisation and secondary markets operations) 23

25 7. SPANISH LEADERSHIP WORLDWIDE 24

26 7. SPANISH LEADERSHIP WORLDWIDE 25

27 7. SPANISH LEADERSHIP WORLDWIDE 26

28 Development of transport infrastructures: Boost of competitiveness of real economy. David Maté Sanz es Ineco Headquarters Paseo de la habana, 138. Madrid