Public-Private Partnerships

Transcription

1 Public-Private Partnerships

2

3 2009 Skikda, Argelia 2010 Chennai, India Under construction (2012) Qingdao, China

4 Overview Terminology Quick History Basic Rules Financing Structures Closing

5 Terminology

6 PPP A Public-Private Partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. Through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. In addition to the sharing of resources, each party also shares the risks and rewards potential. Source: Council for Public-Private Partnerships

7 PPP (crayon version) A Public-Private Partnership is private financing of public infrastructure.

8 Quick History

9 United States

10 United States First privately-owned water system; Water Works Company of Boston agreed to provide drinking water to local citizens.

11 United States th and 19 th Centuries Predominantly private water systems (domestic, industrial and agricultural).

12 United States th Century Broad trend of public acquisition and consolidation of privatelyowned water systems as a means of reducing water-borne disease and improved standards.

13 Benefits of Public Systems Dramatic improvements in public heath. Significant increase in public revenues. Low customer rates. Excess revenues available to supplement the general fund. Increase in public sector employment.

14 Challenges for Public Systems Established an effective public monopoly on water resources and customer bases. Inherent political pressure to keep rates low. Budgetary competition with other public financial obligations. Low investment in long-range planning and capital replacement programs.

15 Opportunities for PPP Today Public Sector Significant new capital investment is needed: To replace aging infrastructure To develop new infrastructure to meet new demand To meet increasing stringent drinking water standards Diminishing amount of public funding is available

16 Opportunities for PPP Today Sources: EPA

17 Opportunities for PPP Today Sources: EPA

18 Opportunities for PPP Today Drinking Water Wastewater Total Annual Capital Spending $12 billion $10 billion $22 billion Sources: EPA, CBO, AWWA, WIN and DWNS.

19 Opportunities for PPP Today Drinking Water Wastewater Total Annual Capital Spending $12 billion $10 billion $22 billion Annual Capital Need $12 to $24 billion $15 to $23 billion $27 to $47 billion Sources: EPA, CBO, AWWA, WIN and DWNS.

20 Opportunities for PPP Today Drinking Water Wastewater Total Annual Capital Spending $12 billion $10 billion $22 billion Annual Capital Need $12 to $24 billion $15 to $23 billion $27 to $47 billion Annual Gap $0 to $12 billion $5 to $13 billion $5 to $25 billion Sources: EPA, CBO, AWWA, WIN and DWNS.

21 Basic Rules

22 1. Service is Paid For Consumers Service Payment Infrastructure

23 1. Service is Paid For Consumers Potable Water Payment Desalination Plant

24 2. PPP Needs a Reason Financial Need: Public entity is unable (or unwilling) to use public financing options. Technical Need: Technology solution requires skills for design, construction and/or operation not held by the public entity. Both

25 3. Risk Drives Cost Risk = Increased Cost

26 Financing Structures

27 Public Financing Consumers

28 Public Financing Consumers Service Fees and Taxes Public Entity O&M

29 Public Financing Consumers Service Fees and Taxes Lenders Loan P&I Public Entity O&M

30 Public Financing Consumers Service Fees and Taxes Lenders Loan P&I Public Entity O&M Design Designer

31 Public Financing Consumers Service Fees and Taxes Lenders Loan P&I Public Entity O&M Design Construction Designer Builder

32 Public Financing Consumers Service Fees and Taxes Lenders Loan P&I Public Entity O&M Design Construction Designer Builder Infrastructure

33 Private Financing Consumers

34 Private Financing Consumers Service Fees and Taxes Public Entity

35 Private Financing Consumers Service Fees and Taxes Public Entity Water Supply SPV

36 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Water Supply

37 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Design Builder Water Supply Design- Build

38 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Water Supply Design- Build Design Builder Infrastructure

39 Private Financing Consumers Service Fees and Taxes Public Entity Lenders Partners P&I Loan Dividends SPV Water Supply O&M Design- Build Operator Design Builder Infrastructure

40 Private Financing Consumers Service Fees and Taxes Public Entity Lenders Partners P&I Loan Dividends SPV Water Supply O&M Design- Build Operator Design Builder Infrastructure

41 Private Financing Consumers Service Public Entity Fees and Taxes Demand Risk Lenders Partners P&I Loan Dividends SPV Water Supply O&M Design- Build Operator Design Builder Infrastructure

42 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Water Supply O&M Design- Build Payment Risk Operator Design Builder Infrastructure

43 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Design Builder Water Supply O&M Design- Build Operator Performance Risks Infrastructure

44 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Design Builder Water Supply O&M Design- Build Operator Engineering Risk Infrastructure

45 Private Financing Lenders Partners Currency Risk P&I Loan Dividends Consumers Service Public Entity SPV Fees and Taxes Water Supply O&M Design- Build Operator Design Builder Infrastructure

46 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Design Builder Water Supply O&M Design- Build Operator Legal Rights Risk Infrastructure

47 Private Financing Consumers Service Fees and Taxes Lenders Partners P&I Loan Dividends Public Entity SPV Water Supply O&M Design- Build Regulatory Risk Operator Design Builder Infrastructure

48 Closing

49 Risk Responsibility Development Design Construction Financing Maintenance and Lifecycle Operations

50 Public Financing Risk Responsibility Development Design Public Sector X X Private Sector Construction X x Financing X Maintenance and Lifecycle X x Operations X

51 Private Financing Risk Responsibility Development Public Sector Private Sector X Design x X Construction X Financing X* X Maintenance and Lifecycle x X Operations X

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