Italian PPP applications: A theoretical framework

Transcription

1 Symposium: Public Private Partnerships in Transport: Trends & Theory Research Roadmap Lisbon, 12 January 2011 Italian applications: A theoretical framework Nunzia Carbonara Nicola Costantino Roberta Pellegrino Fabio Sciancalepore Dipartimento di Ingegneria Meccanica e Gestionale Politecnico di Bari

2 Agenda Aims of the paper The theoretical framework for in Italy Some data The framework analysis Conclusions and further research

3 Aims of the paper Propose a framework describing projects Useful tool for comparing projects among different sectors and different countries Characterize the main features of the Italian projects Comparison between Italian applications and such partnerships in the Europe and in the world

4 The theoretical framework (1/2) Dimensions Variables Values arrangement s structure Contract type Based on the legal structure of the transaction Based on operational aspects Use of private resources and expertise Time horizon of contract Revenues sources Special purpose vehicle (SPV) Risk allocation Payments based on usage volumes or demand Public financial contribution Institutional s Contractual s Management contract, Leasing model or Build-Lease- Transfer, Design-Build (and Design-Build with warranty), DBOM, DBFO, BOT, BOOT, BOO Degree of involvement of the private sector in the lifecycle of the project (from design to management) Long term (25-30 years) By private sector By public sector By public and private sectors Lump sum payment by public sector Private company Publicly- and privately-held company Private sector Public sector Shared between public and private sector

5 The theoretical framework (2/2) Dimensions Variables Values arrangement s financing Public Leverage on Use of private finance Type of funding options Financing in whole by the private sector Financing partially by the private sector Government-funded projects (no private capital) Bank debt Equity Bonds Loan from shareholders Mezzanine finance Debt to equity gearing High (debt exceeds 70%) Investment value Scope Legislation High Assuring Value for Money Degree of formalization by a Government legal/statutory framework

6 in Italy projects in Italy from 2002 to 2010 Incidence of projects on the total amount of bids for national public works

7 in Italy Extensive use of for power projects Other sectors: sporting facilities, hospitals, urban developments The transportation sector is the most relevant in terms of expenditure

8 in Italy: The framework analysis (1/2) Dimensions Variables Values arrangement s structure Contract type Based on the legal structure of the transaction Based on operational aspects Use of private resources and expertise Time horizon of contract Revenues sources Special purpose vehicle (SPV) Risk allocation Payments based on usage volumes or demand Public financial contribution Italian law allows both contractual s and institutional s Build-Operate-Transfer, Build-Own-Operate-Transfer, Design-Build-Finance, Public-Private Companies Factors like uncertainty on the rules, complex procedures and the lack of private competences on hinder the involvement of private operators Italian contracts are generally long-term Revenues in projects like hospitals, schools, etc. are mainly constituted by an annual fee by the public authority, and only partially by end-user s payments Italian often uses grants as main financial support In many projects, the SPV is mainly or totally held by Government and /or public companies Italian law, based on a civil law tradition, does not guarantee a certain risk allocation. Public authorities do not still use tools to best evaluate and allocate risks.

9 in Italy: The framework analysis (2/2) Dimensions Variables Values arrangement s financing Public Leverage on Use of private finance Type of funding options Debt to equity gearing Investment value Scope Legislation Private funding is used, but lenders give funding only in exchange for traditional guarantees. But s are usually financed also by a quote of public funding The use of capital market for such projects is not spread in Italy. The financing is generally granted by banks with a deep experience of such projects Generally, Italian projects are characterized by high leverage projects are characterized by little or medium economical dimension Italian law does not prescribe the estimation of VfM, route is chosen on the basis of other reasons, like making off sheet balance investments Italian s are ruled by Code of Works, Services and Supplies Public Contracts

10 Drawbacks of Italian Complexity of administrative procedures Difficulty of regulating through contracts a proper allocation of risks High administrative risk characterizing the adjudication procedures Funding system: Financing mainly granted by banks Scarce use of capital market High interest rates Value for Money not evaluated High presence of public in SPV capital

11 Conclusions Development of a theoretical framework for projects Application of the proposed framework to the Italian context Comparison and identification of drawbacks

12 Further research Assess the expected performance of projects Associating to the qualitative framework a quantitative approach Using the fuzzy logic The value of a variable can be considered bad or good at a point: fuzzy logic expresses this reasoning Example: the use of private expertise can be considered low, medium or high at a certain point A Fuzzy Inference System (FIS) can be designed in order to determine the project performance based on the values of each input variable