Jarosław Waszkiewicz - IBTTA · 2017. 5. 2. · Old EU Member States New EU Member States Private...
Transcript of Jarosław Waszkiewicz - IBTTA · 2017. 5. 2. · Old EU Member States New EU Member States Private...
Project Finance – which way to go?
View of the decision-maker
Berlin, 14th September 2011
Jarosław Waszkiewicz
Ministry of Infrastructure, Republic of Poland
European background
Lessons learnt from the past
The project
Current practice and market opportunities
Financial crisis and public deficit and debt
The dilemma
Overview
Financial and economic crisis - goals
• stabilise financial sector
• limit the impacts of the recession
• maintain economic activity
Recovery programmes
• invest in infrastructure projects
• develop effective ways of delivering projects
• innovate and modernise
• explore additional sources of capital
Leverages
• provide safeguards for investors
• stabilize cash flows
Background
Sources of financing of Infrastructure investments
in the EU by sectors
2006-2009 EU Average, in GDP %
2006-2009 EU Average, participation in
total
Education Education Health Health
Public services Transport Public services Transport
Private Financing
other than PPP
PPP Corporation Government
Źródło: Eurostat, Projectware, EIB/EPEC
Sources of financing of transport investments in
the EU in some old and new EU Member States in
the period 2006-2009
Old EU Member States New EU Member States
Private financing
other than PPP PPP Corporation Government
Źródło: Eurostat, Projectware, EIB/EPEC
PPP in 2010 in the EU
value of PPP transactions in the EU, which achieved financial closure amounted to 18,3 bln euro
(about 75,8 bln PLN*)
number of projects: 112
Following countries were PPP leaders:
by number of contracts: Great Britain (44), France (19), Germany (14), Spain (13);
by value: Spain, Great Britain, Portugal (all above 3 bln euro)
value of transport projects amounted to nearly 50% of the value of all PPP projects
Źródło: Market Update - Review of the European PPP Market in 2010, EPEC
* According to avaerage rate of NBP (01.09.2011)
Źródło: EIB, „Public –Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, Lipiec 2010
Number of PPP projects realised in the EU
in following sectors
Average 2001- 2006 2007 2008 2009
Universal
public
services
Defense
Public order
and security
Transport Environment
Health Recreation,
culture,
religion
Eduction
Source: Data comparison from : EIB, „Public–Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, July 2010;
EPEC, Market Update Review of the European PPP Market in 2010
The PPP projects implemented in the EU in the
period 1990-2010
0
20
40
60
80
100
120
140
160
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Liczba projektów, które uzyskały zamknięcie finansowe
number of
projects with financial closure
Source: Data comparison from: EIB, „Public–Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, July 2010;
EPEC, Market Update Review of the European PPP Market in 2010
Value of the PPP projects implemented in the UE
in the period 1990-2010
0
5000
10000
15000
20000
25000
30000
35000
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Wartość w mln euro projektów, które uzyskały zamknięcie finansowe
value of
projects with
financial
closure
M Euro
PPP system is applied on A1, A2 & A4 motorways
Negative impact of the economic crisis on PPP; example of A1 motorway
(Stryków – Pyrzowice)
Challenges: crisis on financial market and more demanding banks’ requirements
Motorways in the PPP system in Poland
(concessions):
Constructed: 299,5 km Gdańsk – Grudziądz (A1)
Nowy Tomyśl – Konin (A2)
Katowice – Kraków (A4)
Under construction: 168,3 km Grudziądz - Torun (A1)
Świecko - Nowy Tomyśl (A2)
Lessons learnt from the past
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PPP - Current Situation (sections in operation)
A4 Katowice – Kraków
61 km Real Tolling Scheme
A2 Nowy Tomyśl – Konin
149 km Real Tolling Scheme
A1 Gdaosk – Grudziądz
90 km Availability Payment
Scheme
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PPP - Current Situation (sections under construction)
A1 Grudziądz - Toruo
62 km Availability Payment
Scheme
A2 Świecko - Nowy Tomyśl
106 km Availability Payment Scheme
A1 Gdańsk-Grudziądz & Grudziądz-Toruń
SPV
Gdańsk Transport Company S.A. (Skanska, John Laing, Intertoll, NDI)
Contract period
2004/2008-2039
1. Gdańsk – Grudziądz (89,9 km)
in operation since 2008
Debt financing: €500 mln (EIB),
€140 mln (NIB)
Toll rate: ~0,20 PLN/km (~0,05€)
2. Grudziądz – Toruń (62,3 km)
under construction
operation start - 2011
Debt financing: €575 mln (EIB),
€150 mln (NIB),
€345 mln (Svensk ExportKredit)
Subsections
Clearing system: availability payment
A2 Świecko – Nowy Tomyśl
& Nowy Tomyśl - Konin
SPV
Autostrada Wielkopolska S.A.
& Autostrada Wielkopolska II S.A.
(Kulczyk Holding, Strabag, Meridiam Infrastructure, etc.)
Contract period
1997-2037 (AW S.A.)
2008-2037 (AW II S.A.)
A2 Nowy Tomysl junction (construction site)
A2 Świecko – Nowy Tomyśl
& Nowy Tomyśl - Konin
Subsections
1. Nowy Tomyśl – Konin
(148,7 km)
in operation since 2004
Toll rate: ~0,24 PLN/km (~0,06€)
Clearing system
Real toll (cars, LGV) / Shadow
toll (HGV) now back to real tolls
2. Świecko – Nowy Tomyśl
(105,9 km)
under construction
operation start – 2011
Clearing system
availability payment
SPV
Stalexport Autostrada Małopolska S.A. (Atlantia)
Contract period
1997-2027
Section:
Katowice – Kraków (60,9 km)
in operation since 2000
Toll rate
~0,26 PLN/km (~0,065€)
Clearing system
Real toll (cars, LGV) / Shadow toll (HGV)
now back to real tolls
A4 Katowice – Kraków
A4 Katowice-Kraków (s: www.autostrada-a4.pl)
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18/2004 Eurostat decission issue
Construction risk
• construction costs
• permits
• design
• opening date
• quality
Availability risk
• penalties (stringent or not)
Demand risk
• availability payment & traffic fluctuation
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PPP - Terminated Projects
A1 Stryków - Pyrzowice
180 km Contractual Payment
Scheme NO FINANCIAL
CLOSURE
A2 Stryków - Konotopa
92 km Contractual Payment
Scheme NO COMMERCIAL
CLOSURE
The crisis impact on the projects:
Rocketing cost of debt & equity risk premium
Volatility of currencies exchange rates
Update of Traffic & Revenue Study (GDP – 10%)
We could not overcome all above, but…
PPP - Terminated Projects
With regards to A1:
We decreased the capital costs
Excluding 38 km greenfield section out of the project (design&build project currently commissioned by GDDKiA)
Excluding the construction design out of the project
(currently commissioned by GDDKiA)
We are working on
swapping the contractual payment for availability payment scheme •the right to set toll tarrifs remains with the Government
•the Eurostat off-balance sheet treatment of the Project (ensuring proper risk allocation)
changing the law to simplify the tender procedure
PPP - Forthcoming Projects
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PPP - Forthcoming Projects
A1 Tuszyn - Pyrzowice
141 km Availability Payment Scheme
A2 Warszawa – (Kukuryki)
±165 km
Remuneration systems in the PPP projects
Source: EIB, „Public –Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler,
Mathieu Nemoz, July 2010
Number of the PPP projects agreements by the remuneration mechanism
used, implemented in the period 2007 – 2009 for roads, bridges and tunnels.
Real toll Shadow toll Availability fee Mixed
The Project
The A1 motorway (European Road E75) is part of the priority Trans European Network (Axis N° 25) providing a motorway connection from Gdansk (Baltic seaport) in Poland to Vienna in Austria via Katowice and Brno.
Discussed Project is related to the road section of total length of 141 km between Tuszyn and Pyrzowice and consists of two parts:
1. improvement of the existing dualcarriage way between Tuszyn and Rząsawa to international motorway standards (84km),
2. construction of a new motorway between Rząsawa and Pyrzowice (57 km).
Construction and operation of tollled motorway.
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Overview
Overview
As stipulated in recently adopoted National Roads Construction Programme 2011-2015 the A1 Tuszyn-Pyrzowice section may be implemented as Public – Private Partnership project.
The Project is to be structured as single PPP contract on the basis of which the private partner receives the remuneration in the form of availability payment.
The private partner will be responsible for financing, construction and maintenance of the motorway, and for collecting tolls on behalf of the State.
The State Treasury will lease the land for the motorway and will provide the construction design. The motorway will be transferred back to the State at the end of the PPP contract.
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Objective
The key objective of the Government is to achieve the Eurostat off-balance sheet treatment of the Project
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Payment Mechanism
Traffic studies contracted not only by the Government showed average to low traffic volume which qualifies the project rather for the availability payment scheme not real tolling. Recently done General Traffic Count in 2010 shows significant increase in traffic but we have to be very careful on the subject.
The periodic payments (availability payment) will commence only after completion of the motorway and will be subject to deduction for unavailability and/or insufficient level of service. There will be no fixed payment element in the remuneration.
The Government will be entitled to additionally penalize the private partner for poor or non-performance and to terminate the contract in case of private partner’s consistent default.
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Penalty System
If the private partner fails to meet the contractual quality requirements in any of the O&M phase periods, the availability payment will be reduced proportionally by a pre-determined formula taking into account the duration and the severity of the incident.
Lenders and the equity investors are expected to accept the operational risk of the private partner and effectively to finance the project solely based on the expectation of repayment by the private partner through the successful earning of the future payments. There will be no fixed payment element in the remuneration which would be exempt from any deductions or reductions (e.g. covering the debt repayment). Poor performance will reduce the payment stream and place expected revenues / profits at risk.
Given this, we believe that the availability payments will not be viewed as the repayment of debt owed by the public entity to the lenders (and hence as binding obligation, subject to budget appropriation). 28
Risk Transfer
As mentioned the key objective of the Government is to ensure such risk allocation, resulting from overall contractual provisions in the overall Project documentation, which will achieve the Eurostat off-balance
sheet treatment of the Project
Accounting treatment of the A1 PPP project according to ESA95 rules
RISK TYPE ON or OFF
Government Balance
Sheet
Who bears the risk ? Construction risk Demand risk Availability
Government
Government
Government ON
Private ON
Private
Government ON
Private ON
Private
Government
Government ON
Private OFF
Private
Government OFF
Private OFF
Risk Transfer
Guided by the Manual on Government Deficit and Debt, 2010 edition, we have identified certain contractual provision which shall be included or avoided in the contract in order to achieve the risk allocation, as highlighted in the table, and consequently the off-balance treatment of the project according to the ESA 95:
• Construction Risk
Construction Risk will be allocated to the private partner. The contract will provide for fixed completion deadlines and technical parameters in respect of each section. If the deadline or technical requirement is not met, there is no payment to the private partner.
There will be no provision for the partial payment (e.g. to cover the loan repayment obligation) should the project be not completed. The Private Partner will also be responsible for the cost overrun.
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Risk Transfer
• Demand Risk
Demand Risk will be allocated to the Public Partner. Availability payment will be irrespective of the traffic level.
• Availability (Operation and Maintenance) Risk
O&M risk will be allocated to the Private Partner. Availability payment will be paid only for the completed and available motorway subject to agreed maintenance schedule and quality standards with deductions and penalties as described above (Payment Mechanism and Penalties).
• Inflation Risk
Inflation risk will be allocated to the Public Partner. The availability payment will be indexed by the CPI.
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Risk Transfer
• Foreign Exchange Risk
Exchange risk allocation will be set during the negotiations after the financing plan principles are established. This matter will be addressed appropriately in the tender documentation to allow for required flexibility during the tender proceedings.
• Change of Law Risk
In case of change of Law the project’s parameters will be adjusted in order to put parties in the economic position, in which they would have been had such change not occurred.
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Financing Plan Principles
Total value of the project (BOT formula): 1 bln EUR plus
• Financing structure
We expect the project to be financed in X by equity and Y by bank debt. It is envisaged that the bank debt would be sourced from EIB and commercial banks.
• State Guarantee
No State Guarantee is envisaged at this stage.
Should the State Guarantee be required by the financing institutions, the amount of the guarantee should not exceed 50% (or less if the brownfield component is treated by Eurostat as construction risk reduction) of the project costs as per Eurostat requirements for the off balance sheet projects.
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The dilemma
Real toll concession
versus
Availability based PPP
Recent Member States experiences (Portugal) and
EUROSTAT decision 18/2004
from the 11 of February 2004 r.
Investments & Market Activities
Total road network of 385 000 km
3 TEN-T corridors (A1 motorway as EU priority axis)
Prospects regarding engineering, construction and O&M as well
Public procurement & environment law in line with EU regulations
Being among global infrastructure investment funds (John Laing, Meridiam
etc.) & European key contractors (SKANSKA, STRABAG, etc.)
Doing Business in Poland - Roads