Ministerio de Finanzas. Argentina ś PPP Plan Public Private Partnership Under Secretariat

Transcription

1 Ministerio de Finanzas Argentina ś PPP Plan Public Private Partnership Under Secretariat 1

2 Global infrastructure deficit Required investment (US$ trillion) Average annual need (US$ trillion) Aggregate investment (US$ trillion) 5 Ports 1,7 4 3,8 Airports 2,5 3 Water Telecom. 5,5 7,6 2 Railroads 9,9 1 Current trends Energy 24,8 0 Investment need Necesidad Roads 24,9

3 Argentina s infrastructure deficit Required investment (US$ billion) Average annual need (US$ billion) Aggregate investment (US$ billion) 50 Airports 7, ,9 Ports Railroads 16,0 29,4 30 Water 41,6 20 Telecom. 84,8 10 Current trends Energy 127,6 0 Investment need Necedidad Roads 483,0

4 Articulating a funding system The PPP framework Long term contract between a private entity and the State For supplying a good or a public service The good always belongs to the State The Private contractor assumes finance and operation management risk The repayment of the completed works is linked to the performance of the provided services. Public Design of a new contract for a new road Service contract High Construction contract Manage / Maintain Design / Building Other ways of involving the private sector Lease / Manage / Maintain Public sector degree of risk Design / Build / Mainatin Design / Build/ Manage / Maintain Examples of PPP contracts Concession Design / Build / Own / Manage / Transfer Private Privatization/ Regulation Low Licensing/ Regulation

5 Articulating a funding system The PPP framework PPP is not a new funding tool in the world Learn from positive experiences Avoid repeating past mistakes suffered by other countries Optimizing resources through the PPP tool allows to make more works with the same resources Cost overruns PPP 30% Public works within time and budget 80% PPP within time and budget Source: National Audit Office - UK Parliament Expenditure Auditor 4,3% Delays in PPP 1,4% Cost overruns Public Works 18,0% Delays in public works 25,9% Source: National PPP Forum, Benchmarking Study Phase II, The University of Melbourne

6 PPP framework: benefits and lessons learned Efficient distribution of risks between the State and the private contractor as a greater benefit of PPP This lowers the costs of the project compared to the public work alternative Lessons learned from successful cases from: Peru Mitigation of construction risk through quarterly progress milestones Chile Mitigation of the FX volatility through an FX Collar Australia PPP project development and prioritization framework

7 PPP framework development considering regional experiences Lessons learned Government iniciatives To promote short term political agendas is harmful for infrastructure and maintenance investment Infrastructure projects that are financed 100% by the public sector lead to structural disinvestment and cost inefficiency The government s priority is to promote sustainable development through infrastructure Legal frameworks and long term financing schemes have been implemented PPP law was passed on November 2016 The statutory decree was published on February 2017 The PPP Unit (Ministry of Finance) works aligned with other Ministries Assistance from CAF, World Bank and IDB for good practices recommendations

8 A new PPP legal framework to close the infrastructure gap Flexible legal structure Can be structured through incorporated or unincorporated joint ventures, with flexible PPP contracts El gobierno puede tener acciones en compañías contratistas de PPP Public sector contrubutions: grants, funds, collection rights, capital, tax exemptions, assets, guarranties Middleman: PPP payments can be originated from users and/ or the public sector Modern financing schemes Transparent process of PPP selection Improvements in private contractor protection Wide range of credit improvement structures Posibility of allocation of fund flow to repay financing Posibility of transfer of the contract position in favor of the creditors Use and creation of any type of guarantees Public bidding to select the private counterpart Publishing of draft bidding documents, period of inquiries, publishing of the tender terms, bidding documents available free of charge Evaluation process with several stages, including technical and económical evaluations Competitive dialogue mechanism Government intervention and State prerrogatives limited by contract and PPP regulations - Arbitration with limited appeal before courts of law, with posibility of international headquarters - Technical panels to solve disputes before instances of formal disputes

9 60 projects accounting for US$ 26,000 MM investment Capex US$MM Energy and Mining Transport, Communications and Technology Water, Sanitation and Housing 745 Health, Justice, and Education

10 Strategic pillars of the PPP program in Argentina Transparent Simple Homogeneous and dynamic

11 RenovAr as a witness case Round Power to be tendered MW Offered power MW Awarded Power MW Average Price U$S/MWh Payment Guarantee MM U$S WB Guarantee MM U$S months ,3 6 months 250

12 How we are structured Energy and Mining Transport, Communications and Technology Water, Sanitation and Housing Health, Justice, and Education

13 60 Projects for a US$ MM investment DESCRIPTION TERM ENERGY AND MINING TRANSPORT, COMUNICATIONS AND TECHNOLOGY EDUCATION, HEALTH, AND JUSTICE ENERGY EFFICIENCY ELECTRICAL TRANSMISSION ROADS AND HIGHWAYS RAIL ROADS RER PENITENTIARY FACILITIES HOSPITALS Public lighting replacement to LED lights Construction of new high voltage transmission lines Road design, construction, expansion, Improvement, maintenance, operation, managing and financing Improvement of existing tracks and construction of new tracks Interconection of metropolitan railway stations in Buenos Aires Construction of 2 new penitentiaries in Buenos Aires Construction of 6 hospitals in Buenos Aires y Neuquén National. Over lamps in the first 10 councils More than km in lines 12 months 33 months 2018Q3 Stg1 2018Q2 Stg2 2018Q3 Stg3 2018Q3 More than km in highways and km in safe roads 685 km in railroads months 48 months Stg1 2018Q1 Stg2 2018Q3 Stg3 2019Q1 2018Q2 20km of railroad to interconnect the existing 790km of railroads and 241 stations 50 months 2018Q inmates m 2 in hospitals and beds months months 2018Q3 2019Q1 MAGNITUDE TENDER

14 60 Projects for a US$ MM investment DESCRIPTION TERM AGUA, SANEAMIENTO Y VIVIENDA WATER PIPE SYSTEMS WATER TREATMENT PLANTS WATER PURIFICATION SYSTEMS WASTEWATER MANAGEMENT IRRIGATION HOUSING SOLUTIONS Construction of the Rio Subterraneo Norte and Norte water pipe systems Expansion of water - treatment plant in the City of Santa Fe Construction of purification plants in AMBA and Gran Rosario Power generation in wastewater treatment plants in Salta and Buenos Aires Development program of new irrigation areas Housing Development Program (ProDeVi) Benefits 6 million users 60 months Benefits users Benefits 2 million users 24 months 60 months More than tonsyear 24 months hectares houses 60 months 36 months 2019Q3 2018Q4 2018Q4 2018Q3 2018Q3 2018Q2 MAGNITUDE TENDER

15 Best practices for structuring a PPP project Efficient risk allocation Efficient risks allocation between the Private contractor and the State The risk is assumed by the part that can mitigate it at the lower cost for the structure Project Prep. Facility Project preparation through feasibility studies Allows to design high feasibility programs in private funding investments Market soundings Early institutional communications to the market describing the tentative structure Feedback on how feasible of funding the structure is, for its eventual optimization Clear goals Transparent definition about what needs to be achieved by structuring Design of instruments in order to add new actors and maximize competition

16 Best practices to mitigate construction and managing risks Payment of all costs incurred for the construction and management of the project Establishment availability payments for infrastructure and services, applying penalties in case of breaches Distinction between TPI and TPD: Total costs of the project CAPEX Payment for availability TPI Sources of payment TPI TPD Public contribution Linked to investment obligations, recoverable in the long term Linked to obligations to provide the service of operation and maintenance OPEX TPD Linked to the construction phase risks only Linked to the operational phase risks only Revenue on demand

17 Structure of investments and management spending repayment Works duration TPD TPI

18 Repayment schedule by construction progress milestones The State measures every month the progress of real construction that the private contractor has achieved Every three months it issues a certificate representing the progress made - This certificate grants the private contractor an unconditional right that is irrevocable and with a specific date to cash for 15 years, repayment of investments valued competitively and only according to quarterly construction progress The private contractor offers as necessary repayment US$10MM for 15 years % 25% 25% 25% 2,5 2,5 2,5 2,5 Trim. 1 Trim. 2 Trim. 3 Trim. 4 Works duration Year 1 Year 2 Year 3 Year 15 Repayment timeline

19 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 Reserve account PPP Trust PPP Contractor Payments under EPC contract Z% payment of TPI 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 Main + Interests Revolving working capital loans

20 Ministerio de Finanzas República Argentina