PPP RER. February 2018

Transcription

1 PPP RER February 2018

2 Growing popular support 2015 legislative primaries 2015 legislative elections 2017 legislative primaries 2017 legislative elections Cambiemos has shown strong and sustained growth in the electoral base in most recent elections Cambiemos FPV

3 President Macri s new administration has a clear plan to unveil full potential Key reforms and initiatives Consensus and support on key regulations Removed capital control and repatriation restrictions Floated exchange rate and recovered monetary reserves Resolved defaulted debt and regained access to financial markets Introduced Central Bank independence Re-launched the National Statistics Bureau Instituted inflation targeting policy to reduce inflation Antitrust Law Capital Markets Law Labor Reform Law Tax Reform Law Pension Reform Law Fiscal Responsibility Law Established plan to eliminate the primary fiscal deficit New Public-Private Partnerships (PPP) regulatory framework Implemented an unprecedented tax amnesty scheme

4 Economic recovery breaking historic patterns Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Monthly Estimator of Economic Activity (EMAE) Index (2004 = 100) seasonally adjusted 152 Aug 2013: Maximum Jun 2015: Maximum +2.03% Nov 2011 FX Controls Dec Source: INDEC, Ministry of Finance

5 Convergence to fiscal balance Quarterly accumulated primary deficit and targets (% of GDP) Primary deficit and targets (% of GDP) Target Primary Deficit 4,2% Target Primary Deficit 3,2% 0,2% 2,0% 5,4% 4,6% 4,2% 0,6% 1,4% 2,2% 3,2% 2,2% 0,4% Q Q Q Q Source: Ministry of Finance

6 2017 in perspective: we have not seen this type of reform First time in 100 years that these results have occurred simultaneously Primary fiscal deficit/gdp decreases Real public expenditure decreases Tax pressure decreases Inflation decreases GDP grows

7 How to mitigate construction and operational risks Repayment of investments incurred both during construction and operation of the project Establishment of service and infrastructure availability payments, applying penalties and fines in case of breaches Separate repayment, with distinction between TPI and TPD: Total costs of the project Payment for availability Sources of payment TPI TPD CAPEX TPI Public contribution Linked to investment obligations, recoverable in the long term Linked to the construction phase risks only Linked to obligations to provide the service of operation and maintenance Linked to the operational phase risks only OPEX TPD User fees

8 PPP RER capex & opex repayment scheme TPD Construction length

9 PPP RER capex & opex repayment scheme TPD Construction period

10 PPP RER capex & opex repayment scheme Construction length TPD TR-PI-I

11 PPP RER capex & opex repayment scheme TPD TPI-I TPI-II Construction length

12 PPP RER capex & opex repayment scheme TPD TPI-I TPI-II TPI-III Construction length

13 PPP RER capex & opex repayment scheme TPD TPI-I TPI-II TPI-III TPI-IV Construction length

14 PPP RER capex & opex repayment scheme Construction length TPD TPI

15 PPP Trust to manage issuance and payment of TPI s and TPD s Gas Oil Tax TPI holders Other sources PPP Trust TPI Top up payment account 12-month reserve account TPI TPD PPP concessionaire Government budget

16 A structure to enable the optimization of multiple financing sources Loan Multilateral loan Long term bank loans Payments TPI Buyer Y Bridge loan for construction VAT loan Principal + Interests TPI SPA PPP Contractor sells Y% of its TPI in exchange of the payment of a purchase price Y% payment of TPI Pre financial closing cash Principal + Interests Costs during construction Principal + Interests Tariffs / Charges TPD payment Issue of TPD Payments under EPC contract Reserve account PPP Trust Z% payment of TPI PPP Contractor EPC Subcontractor Contracting party TPI TPD Issue of TPI Certificates of construction progress under EPC contract X% payment of TPI International Bond Payments TPI Buyer X Principal + Interests TPI SPA PPP Contractor sells X% of its TPI in exchange of the payment of a purchase price Post financial closing cash Principal + Interests Revolving working capital loans

17 Structural Considerations Bidding and award criteria Performance Bonds Termination payment Financial close and equity Currency risk Penalties and fines

18 Structural Considerations Bidding and award criteria Performance Bonds Financial closing and equity Penalties and fines Currency risk Termination payment Lowest annual repayment bid wins Bid bond until contract signing Financial closing bond up to 12 months Main works performance bond Main services performance bond 6-month initial deadline 2 consecutive 3- month extension at the option of PPP contractor Rising financial close bond with every extension Evidence of availability of funds needs to be presented 100% irrevocable and unconditional TPI s with penalties and fines backed by on-demand bonds TPI s paid in US dollars Optional FX collar offered to mitigate deviations above and below 10% real FX fluctuation TPD s paid in local currency, adjusted by official indices Monthly investment advancement acts (ARAI s) issued by DNV ARAI s included automatically in the calculation of the termination payment Dispute resolution mechanisms through Technical Board, then Arbitration Court

19 Thank you