Argentine PPP Plan PPP RER Project Structure. March 2018

Transcription

1 Argentine PPP Plan PPP RER Project Structure March 2018

2 Risk structure and mitigation Contract term Country risk Demand risk Construction risk Liquidity prime impact Sovereign debt breach risk Currency real variation risk Conversion risk Controversies solution mechanism Payment and funding risk Surplus liquidity capture Transparency risk

3 Risk structure and mitigation Contract term MMUSD MMUSD/year Contract term Better balance between installment value and repayment duration Posibility of reliciting ahead of time, under macroeconomic conditions and demand fluxes different to the current ones 5 years 10 years 15 years 20 years 25 years 30 years Nominal cost Installment cost

4 Risk structure and mitigation Country risk Country risk Issuing of ARAI with each monthly construction update Termination payment Issuing of Monthly Investment Progress Recognition Acts (ARAI) only to be able to calculate investment not yet repaid End of construction Month 1 Month 60

5 Risk structure and mitigation Demand risk Demand risk Different concepts of O&M are repaid, Each of them in constant installments throughout the contract term Costs of operation and maintenance are linked to availability User fee repayments become independent Repament variability linked to demand changes is mitigated TPD Maint-1 TPD Maint-2 TPD Maint-3

6 Risk structure and mitigation 5 year construction term Construction risk Issuing of with each quarterly investment update Issuing of unconditional and irrevocable recognition certificates of quarterly They are issued when temporary milestones are reached They include the ARAI of the corresponding quarter They enable different types and sources of private funding End of construction 1 20 Month 1 Month 60

7 Risk structure and mitigation Sovereign debt breach risk Sovereign debt breach risk rise adjustment, due to breach increase fall adjustment, due to breach compression Adjustment PPP Contractor mitigation Mutual cover mechanism for variation of debt breach risk, from offer to financial close D Breach Breach compressions adjust offer on the fall and viceversa Liquidity prime PPP Trust mitigation Sovereign breach risk US Treasury bond return

8 Risk structure and mitigation Project liquidity prime Liquidity prime impact 21% It is cheaper to do PPP instead of public works in Argentina, than doing PPP instead of public works in DC To equal project risk prime, the additional financial cost for PPP in Argentina is less than half of that of DC 44% 56% 79% Prime additional liquidity cost Sovereign issuing risk basal cost UK PFI ARG PPP DC: developed countries

9 Risk structure and mitigation Currency real appreciation - depreciation risk Currency real variation risk Adjustment on PPP Trust mitigation Optional mutual cover mechanism during construction, by real exchange rate variation -10% +10% D TCR Using UVA Local currency real appreciation will be mitigated by FPPP Real depreciations will be mitigated in favor of FPPP PPP Contractor mitigation

10 Risk structure and mitigation Conversion risk Conversion risk Total project cost Availability payments Repayment funding sources Investments in USD will be repaid in USD Expenses and investments in ARS will be repaid in ARS CAPEX [USD] Public compensation TPD will be adjustable OPEX [ARS] TPD

11 Risk structure and mitigation Controversies solution mechanism Controversies solution risk Technical panel The affected party will possibly go to: Technical panel 3 specialists: technical, legal and financial, selected as a whole and at the beginning of the contract Judicial court International arbitration Judicial court Controversies solution International arbitration

12 Risk structure and mitigation Funding and payment mechanisms Funding and payment risk Gasoil tax (SIFER) Specific application resources such as the SIFER PPP Trust as means of payment and guarantees Other sources Contingency contribution FPPP 12-month reserves account TPD Financing entity PPP Contractor National Budget

13 Risk structure and mitigation Funding and payment mechanisms Funding and payment risks Quarterly issue Payments every 6 months for 10 years repayment groups upon completion of different constructions Construction period -I -II -III -IV

14 Risk structure and mitigation Funding and payments mechanisms Funding and payment risk Savings by optimization Quarterly issue Payments every 6 months for 10 years repayment groups upon completion of different constructions Repayment date optimization to mitigate payment of interests Construction period -I -II -III -IV

15 Risk structure and mitigation Surplus liquidity capture Surplus liquidity capture The Ministry of Finance will offer investment instruments according to the due date of each awarded project To place surplus liquidity during construction period At convenient prices for both parties PPP Trust SPE PPP Capex Subcontractor Capex Bond 144A or other investors Capex Financing SPE IDI PPP Liquidity Available potential liquidity profile in the RARS Financing SPE Tíitles Funds IDI: Investment Instruments to measure Ministry of Finance

16 Risk structure and mitigation Process and document transparency Transparency risk Early alarm mechanism from the Anticorruption Office and OCDE Bicameral Congress comission AGN Follow up Free specifications SSPPP website publications

17 Ministerio de Finanzas República Argentina