Critical Analysis of Bus Financing in Bus Rapid Transit...
17
www.worldbank.org Dr. Abel López Dodero Critical Analysis of Bus Financing in Bus Rapid Transit Projects
-
Upload
hoangtuyen -
Category
Documents
-
view
219 -
download
2
Transcript of Critical Analysis of Bus Financing in Bus Rapid Transit...
www.worldbank.org!Dr. Abel López Dodero!
Critical Analysis of Bus Financing in Bus Rapid Transit Projects!
! Public transport in Mexico!
! Progress in public transport in Mexico!
! Common practices in bus improvements!
! Bus financing!
! Risks in bus financing !
! The concept of “Project Finance”!
Content!
Public Transport Provision in Mexico!
Se realizan en transporte público
! Prevails man-and-his bus model. Problems in areas off:!! Human resources!! Financial management!! Operation and maintenance!
! Service provision without regulation (frequency, service hours)!! Prevails informality in all areas associated with the operation and
management!! Verbal agreements between the driver and concession holder!! Income management and taxes!! Route schedule and alignment !
! Transit units/buses in poor conditions !
Problems with service provision!
Compe33on in the market and oversupply of service
Low level of comfort and safety
Problems with service provision!
Externalities!
Contribu3on to air pollu3on
Improvements in public transport!
1,754,000!Pax/day!
237,000 Pax/day!
497,000!Pax/day!
552,000!Pax/day!
964,000!Pax/day!
1,304,000!Pax/day!
2003!
26 km!1 system!
46 km!2 systems!
55 km!2 systems!
92 km!3 systems!
128 km!5 systems!
1,354,000!Pax/day!
156 km!6 systems!
2005! 2008! 2009! 2011! 2012! 2014!
215 km!8 systems!
2.5% of all total trips made by public transport!
Common practices in bus improvements!
8!
Elements of bus improvements and !their impact on the Tariff!
Infrastructure costs and its associated financial costs are covered by the
government!(Federal Government + Municipality) !
Bus financing is critical for the financial viability of
the Tariff!
No impact on Tariff!
Up to 50% for technical !studies!
Up to 50% for the cost of the infrastructure!
Credit !Guarantees !
!
Federal Government Support (PROTRAM)!
Bus financing!
1. Commercial Bank !nancing 2. Armadoras / Ensambladoras !nancing 3. Project !nance
! Local banks with a clear idea of who operators are and of their business !
! Local banks evaluate cash flows and cascade of payments!
! Assets of the companies / or the buses as collateral. !! Buses as collateral do not have an impact on risk
reduction !! Partial guarantee !!
Commercial Bank financing!
ü Interest rate: 10% - 15% !ü Include the cost of a partial
guarantee!ü 6 years maturity term !ü 6 months grace period!
Characteristics:!
ü Expensive!ü Only available when the operator can
proved credit history and has assets that can be used as collateral. !
ü Assets cannot be used for any other financial operation!
Disadvantages!
! Bus assemblers give financial options for the operators!
! Evaluate cash flows and cascade of payments!
! Buses as collateral. There is a secondary market. !
! Partial guarantee !
Armadoras financing!
ü Interest rate: 6% -‐ 10% ü Maturity and grace period can be
nego9ated
Characteristics!
Very attractive credit conditions but these conditions are offset by having
a high initial cost of transit units!!
Cheap financing for costly buses!
Disadvantages!
How to deal with the cost of financing?!
To ensure "project !nance" all associated risks with public transport provision need to be covered
Demand Forecast
Trust and Fare Collection
System
Management of the company
Tariff Policy
Mismatch between
infrastructure and transit units
Legal Framework
Understand the risks associated with transport projects !
Corporate Risks
Commercial Risks
Risks with cash flows
Regulatory Risks
Project Finance!
Concession Right!
Regulator – Public Entity!
Fare collection and Trust!
Legal Framework!
Guarantee!
Project !Finance!
Tariff !Policy!
Transparency and good practices!
Gov
ernm
ent
Act
ions!
Concessionaire Actions !
Smart cards / no cash !
Project Finance: Social Policy vs Bancability!
Concession Right!
Regulator – Public Entity!
Fare collection and Trust!
Legal Framework!
Guarantee!
Project !Finance!
Tariff !Policy!
Transparency and good practices!
Gov
ernm
ent A
ctio
ns!
Concessionaire Actions !
Political Decision!
Socially VERY REASONABLE!
For Banks VERY UNRESANOBLE!
How can we promote "Project Finance" and achieve social
goals?
Par3al Guarantees • Government covers
the cost of the guarantee
• Government secures any issue with the system through federal transfers
Smart cards / no cash !
Government!
Conclusions!
Se realizan en transporte público
! Project finance for buses offers an important opportunity to lower the total financial cost of BRT systems and helps to lower Tariffs!
! Project finance requires a rethinking of BRT design and structuring and a different role for governments to make financial institutions comfortable!
! A key issue is Tariff Policy !!What is eminently sensible from a public policy perspective poses a risk that Bankers are not comfortable taking !
! Creating project finance for buses will require government create more transparency and assurance in Tariff adjustment and perhaps complement a project finance approach with guarantees that cover for Political Risk!
Thanks !!
Abel López DoderoDepartamento de Desarrollo Sostenible Región de América Latina y el Caribe!
[email protected] | Tel: (52-55) 5480-4247 | Fax: (52-55) 5480-4222 | @abeldodero!
With the support of Shomik Mehndiratta, Alejandro Hoyos, Antonio Huerta y the National Bank for Public Works in
Mexico (BANOBRAS)!
