Infrastructure Impact and Challenges P3s in the Water/Wastewater Sector. Stefan Dery, PPP Canada June 8, 2016 Ottawa, ON

Transcription

1 Infrastructure Impact and Challenges P3s in the Water/Wastewater Sector Stefan Dery, PPP Canada June 8, 2016 Ottawa, ON

2 Introduction

3 PPP Canada Leading the Government s P3 Agenda Acts as a Source of Expertise Advances Federal P3 Projects Supports Other Levels of Government 3

4 Improving Delivery of Public Infrastructure P3 Screening and Advice Supporting Strong Public Procurement Maintaining Support into Delivery/Management 4

5 P3s: A Different Approach to Infrastructure Delivery About delivery not funding Address weaknesses in traditional delivery Benefits assessed in relation to cost of procurement 5

6 Canadian Context: Water/Wastewater Infrastructure

7 Municipal Infrastructure Needs Source: 2016 Canadian Infrastructure Report Card 7

8 P3 Canada Fund Support Regina Wastewater Treatment Plant, SK $58.0M Kananaskis Evan Thomas Water and Wastewater Plant, AB $10.0M Lac La Biche Wastewater Treatment Facility, AB $3.8M Saint John Water Treatment Plant, NB $57.3M Hamilton Biosolids Management Facility, ON $22.9M Sudbury Biosolids Management Facility, ON $11.0M 8

9 P3 Structuring and Delivery

10 Value for Money 2, , , , % VfM Risk Adjustment Transaction Cost Competitive Neutrality Financing Costs Lifecycle Costs - PSC PPP Operating and Maintenance Costs 10

11 P3 Characteristics Financing > Most P3s financed by debt and equity > Financing anchors risk transfer to Project Co. Equity > Injected into the project before or at substantial completion > Necessary to anchor risk throughout the Project > Deductions come out of equity returns first Short-term Debt Long-term Debt > Finances construction of asset > Corresponds to substantial completion and paid off at substantial completion > Finances remaining capital cost > Necessary to anchor risk throughout the Project > Re-paid gradually over the concession period 11

12 Risk Allocation > Risk allocated to the party best able to manage or mitigate the risk > All risk allocation must be specified in Project Agreement and Schedules Project Co. Risks allocated to Shared Sponsor 12

13 Incentivizing Performance Lifecycle planning Lender due diligence Deductions Handback requirements 13

14 Procurement Timeline Issue RFQ RFQ submission date Issue RFP RFP submission date RFQ Open Period RFP Open Period RFP Evaluation Commercial and Financial Close Evaluate RFQ and short-list proponents Nominate preferred proponent 14

15 Managing P3 Implementation > P3 concession management during the period of time between the start of the Construction Phase and the end of the Project Agreement > Value-for-Money can only be realized through proper and diligent management of the Project Agreement Handback 15

16 Closing Remarks

17 Impact and Challenges Experience Pitfalls Benefits 1. P3s continue to gain acceptance in Canada 1. P3s considered when VfM shows that the P3 provides the lowest cost 1. Infrastructure investment is gravely needed in Canada. P3s can be part of the solution. 2. Strong operations management key to the overall success 2. Procuring P3s requires a different process than traditional project delivery 2. Value-for-Money is driven by risk transfer to the private sector 3. PPP Canada demonstrates leadership, expertise, and builds capacity 3. Risk allocation communicated to bidders and clearly outlined in the project agreement 3. Long term private finance better anchors risk through stronger securities, contract terms, due diligence and partnerships 17

18 PPP Canada Tools > Water/Wastewater Sector Study > Risk Workshop Guide and Sample Risk Matrices > Standardized Procurement Templates > Project Specific Output Specifications (PSOS) Guide for P3 Water/Wastewater Projects 18

19 Contact Us Queen Street Ottawa, Ontario K1P 1J9 Canada Telephone: Fax: Toll Free: Web: