Delivering the PPP Promise

Transcription

1 Delivering the PPP Promise Adrian Howcroft 2005 LLP. All rights reserved. UNECE PPP Conference 25 October 2005

2 Delivering the PPP Promise PPPs in Context PPP Progress in Europe Realising the Promise Conclusions 1

3 PPPs in Context

4 What is the aim? Need to know why you are doing it various reasons for using PPPs value for money lack of public funding/speed of delivery off balance sheet investment clarity of objectives at programme and project level often lacking Judge success against objectives 3

5 Why are you doing it? value of infrastructure in real terms demand (GDP-led) infrastructure gap supply (net investment) time 4

6 How are you going to do it? Many different forms of PPP revenue generating projects availability based schemes PPPs with an element of public sector guarantee partnering techniques 5

7 How are you going to do it? Many different forms of PPP revenue generating projects availability based schemes PPPs with an element of public sector guarantee partnering techniques Need to ask is a PPP the right approach? what form should be used to achieve stated objectives? 6

8 PPPs Progress in Europe 7

9 Increasing use of PPPs across Europe Summary of PPPs by country and sector 8

10 Increasing use of PPPs across Europe Summary of PPPs by country and sector (cont d) New Member States Acceding Countries Candidate Countries and increasing institutional development 9

11 EIB involvement in PPPs EIB PPP Signatures Per Year (MEUR) /06 Source: EIB 10

12 PPPs and the EU PPPs identified as a means of delivering EU objectives PPPs fit with EU principles Increasing interest in PPPs funding instruments Green paper 2004 But No policy on PPPs procurement regulations and state aid PPPs and EU grants 11

13 PPPs and the EU PPPs are booming. They can be an important tool for improving the quality of public services and supporting growth in Europe. The EU needs a suitable regulatory framework for developing these partnerships in order to apply transparency and fair competition for the benefit of the taxpayer. There is a lot at stake, and I call upon all interested parties to respond to this consultation we will listen to what you have to say. Frits Bolkestein - Internal Market Commissioner but still awaiting a response to the Green Paper 12

14 Realising the Promise

15 PPPs can make projects affordable Direct Figure costs 2: Profile v PPP of a Annual PPP Transaction Payment Road Transaction Revenues / Costs 100,000 '000s 80,000 60,000 40,000 20,000 Annual Payment Operating Costs Capital Costs Year 14

16 PPPs can maximise the use of private sector skills Under traditional procurement the private sector is expected to deliver an asset to time and budget PPPs require the private sector to: deliver assets on time and budget ensure these assets deliver the services required over the long term project manage project delivery undertake integration risk maintain and refurbish assets take life-cycle risks 15

17 PPPs can allocate risks to the party best able to manage or absorb risks Private sector can manage some risks better than the public sector construction risk delivery risk project management However where the private sector cannot manage risks, they will price it badly carefully consider revenue/traffic risks level or nature of services (flexibility) labour issues 16

18 PPPs PPPs force the public sector to focus on outputs and benefits fundamental change Whole life costing approach Quality of service has to be maintained over the PPP s life PPPs deliver budgeting certainty - only pay a pre-determined amount when services are delivered PPPs can deliver better value for money: but there must be strong competition, private sector expertise and sensible risk allocation 17

19 But PPPs cannot absorb unlimited risk realistic allocation PPPs entail a loss of public sector management control The private sector has a higher cost of finance PPPs are long-term and relatively inflexible PPPs require enhanced capacity and capability private sector public sector 18

20 Conclusions 19

21 Conclusions Growing use of PPPs across Europe PPPs are a procurement approach the public sector should consider for major capital projects and services With the right expertise and competition, PPPs have the potential to deliver good value for money compared to traditional public sector alternatives But the qualitative factors that argue for a PPP approach need to be considered and bids need to be competitive Need for much better public sector understanding, capability and capacity 20

22 Conclusions PPPs are not a panacea They require skill, knowledge and understanding 21

23 PPP is not the answer to every solution but used and managed properly, it is a mechanism through which we can deliver a step change in public services across Europe. Rt Hon Alistair Darling MP Secretary of State for Transport. 22

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25 Coffee Break until Rooms C4 and C6 24