Page 1 Regional PPP Workshop Riga, March 6-8 2007 The French PPP Experience in the Rail Sector...
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Transcript of Page 1 Regional PPP Workshop Riga, March 6-8 2007 The French PPP Experience in the Rail Sector...
Page 1
Regional PPP WorkshopRegional PPP WorkshopRiga, March 6-8 2007Riga, March 6-8 2007
The French PPP Experience in The French PPP Experience in the Rail Sectorthe Rail Sector
Thomas VIEILLESCAZES
Director France & Southern Europe
DIF (Dutch Infrastructure Fund)
www.dif.eu
Page 2
1. Introduction
2. Objectives of the PPP in the Rail Sector
3. The Perpignan-Figueras Project
4. Future Developments
Page 3
1. Introduction
2. Objectives of the PPP in the Rail Sector
3. The Perpignan-Figueras Project
4. Future Developments
Page 4
Introduction
• French rail sector a fully public-administered sector so far … progressively opening (1st private freight train operated on june 2005)
• A sector that heavily relies on public financing, heavily indebted
• Few participation of the private sector
• Laws & regulation provide for monopoly of State & public companies for project undertaking and infrastructure operation & maintenance
Project financing
• Infrastructure manager (RFF) pays the NPV of the free cash flows
• Railway undertaking (SNCF) pays for rolling stock
• State & regional public authorities pay for the rest (~70 % of investment)
Allocation of Risks
• All risks (construction, traffic, maintenance) borne by public sector
• Use of subsidies (during construction period) for Public part of financing
• Important assymetry of information, few direct control on execution from administration
French Public Sector Organization Is Likely to EvolveAllocation of Risk Clearly Not Optimal for Public Sector
French Public Sector Organization Is Likely to EvolveAllocation of Risk Clearly Not Optimal for Public Sector
Page 5
French Public debt as a % of GDP
0
10
20
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50
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70
1978
1979
1980
1981
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1988
1989
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1991
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1994
1995
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1997
1998
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2004
Central governmentVarious central administrationsLocal governments & administrationsSocial security administrationsPublic administrations total
Maastricht treaty limit
An amibitious High Speed line 8yrs, €15 BN investment program … with ever-shrinking budgetary capabilities
• 2004 : setting up of a government agency for transport infrastructure financing, to use money from the road (dividends initially) to finance rail
• Use PPP as alternative means of financing projects & transfer project ownership to private companies to seek for efficiency => More for less!
• Mediocre project profitability a major drawback (good projects done already!)
Introduction
Page 6
1. Introduction
2. Objectives of the PPP in the Rail Sector
3. The Perpignan-Figueras Project
4. Future Developments
Page 7
Objectives for PPPs in the Rail Sector
• Leverage new ressources for the rail sector with the usage of private funds;
• Optimize global investment costs, construction and allocation of risks on rail infrastructure projects with a better integration of construction, operation and maintenance tasks=> Lower the cost for the National community and lower the
impact of the debt of RFF;
• Accelerate the development of the National rail network by constructing more projects in lesser time – enforce the decision taken by the Government on dec. 18th 2003=> Improve competitiveness of rail mode
Page 8
Three Schemes to be Contemplated
« Classical » scheme (HSL East, Rhin-Rhône ): RFF is project undertaker, subsidies to be put in place ab initio
Infrastructure PPP: RFF is contracting authority, public availability payments occur during the life of the contract, demand-traffic risk generally borne by Public sector
Concession: Gov't or RFF as contracting authority, Public subsidies ab initio, Project undertaking, financing and operation at the own risks of the concessionaire
Page 9
Risk Sharing Matrix
PrivateSNCF-GID
PrivateRFF/SNCF GID
RFF/SNCF-GID
Availability(performance)
Privatesector
Privatesector
RFFPublic authoritiesFinancing
Private(railways
undertakings)
RFF(railways
undertakings)
RFF(railways
undertakings)
Revenues(Infra charges)
RFF/SNCF-GID
RFFPublic authorities
Public Tenders
Privatesector
Privatesector
PPP
Privatesector
Privatesector
ConcessionRisk
Operation &Maintenance
Design/Construction
Page 10
Changes with the law 2006-10 of Jan. 5 2006 on the Security and Development of Transports
• The State and RFF are allowed to use the PPP contract (contrat de partenariat) or the Concession for the provision of National rail infrastructure
The contract can contemplate the construction, maintenance and operation of part or all infrastruction, with the exception of trafic asignment procedures and operation and maintenance of safety installations, which continue to be undertaken by SNCF.
• Creation of the Rail Safety Agency, independent from RFF and SNCF, in charge of all (PPP and non PPP) projects, in charge of authorizations regarding safety, interoperability (safety certificates, safey agreements, etc.)
Page 11
1. Introduction
2. Objectives of the PPP in the Rail Sector
3. The Perpignan-Figueras Project
4. Future Developments
Page 12
Perpignan-Figueras Project
Page 13
• France & Spain have different rail gauges (1.435m -UIC gauge- in France & Europe, 1.676m in Spain)
• Since 1988, Spain has progressively developed a UIC gauge network
•The Perpignan-Figueras project will directly link the spanish rail network to the rest of Europe (European TEN-T top priority project)
•Relieving this bottleneck will have major impact on both freight & passenger transport:
•10 hours for freight (4.2 MM added tons p.a.)
• 2 hours for passengers (2.6 to 3.5 MM added passengers p.a.)
• Project under discussion/study on a Franco-Spanish basis since 1992
1995 Madrid Treaty : Perpignan-Figueras will be constructed as a Concession (Treaty Also Sets Up Concession Framework)
1995 Madrid Treaty : Perpignan-Figueras will be constructed as a Concession (Treaty Also Sets Up Concession Framework)
Project Rationale
2 MM inhab.2 MM inhab.
0.2 MM inhab.0.2 MM inhab.
0.5 MM inhab.0.5 MM inhab.
Page 14
Project description
A 50 km-long freight & High-Speed link, the first of its kind in Europe
A 50 km-long freight & High-Speed link, the first of its kind in Europe
• Freight trains : 100-120 km/h• High-Speed trains : 300-350 km/h• 5 bridges• Links to French UIC network at Perpignan
• Links to Spanish new UIC line (under construction) Figueras-Barcelona
a 8 km-long tunnel• dual-tube with safety galleries
A ~ € 1 Bn investment
Page 15
The Concession
1. The concession has been granted through a bi-national tender process (EEC Directive – 93/37)
• under the aegis of the French & Spanish States
2. The Concessionaire will Build & Operate the rail link (as an Infrastructure Manager), then Transfer it back to the States
• Design of the Project was undertaken by States (subcontracted to a JV formed by the 2 public railways companies – no infra managers)
• Concessionaire will build & finance the project at its own risk
• Concessionaire will receive a subsidy for the construction of the project
• Concesionaire will operate and manage the infrastructure (maintenance, availability, performance, security, …) at its own risk
• Concessionaire will levy tolls on Train Operating Companies (SNCF, RENFE, others) operating freight, passenger & high speed trains – tolling scheme will be specified in the Concession contract
• At the expiry of the Concession period, project will be transferred to the States in the exact shape it was at the opening of the line
Page 16
Tender Organization
Inter-Government Commission
France Spain
Selection Commitee
Technical group Legal group Economics & Finance group
Construction Exploitation
Contract issues TarificationFinancing
Technical support Legal counsel Financial advisor
Negociation Commitee
• Representatives of 2 administrations• In charge of 1995 Treaty implementation• Assists the 2 Govt’s during tender preparation & process
• Evaluates & selects candidates & bids• Experts from 2 countries
• Negociates the contract• Experts from 2 countries
Tendering and Contract Negotiation Were Undertaken Directly & Jointly By The Two Administrations
Tendering and Contract Negotiation Were Undertaken Directly & Jointly By The Two Administrations
Page 17
The Tender Process1. Tender preparation was launched in May 2000 (Santander
Franco-Spanish summit• Technical preparation• Legal framework – preparation of the Consultation Rules/ terms of
reference/ draft of the Concession contract
2. July 2001 : Tender published at the OJEC
• Oct. 1st, 2001: 6 candidates
• Nov. 2001: all candidates are permitted to submit bids
• April 2002: 6 bids received
• July 2002: EUROFERRO (Bouygues- Dragados) selected as « preferred bidder »
• Sept. 2002: negotiations start with EUROFERRO, …
6 bidders, mostly major civil works constructors in Spain & France (Bouygues-Dragados, Eiffage-ACS, SPIE-FCC, Acciona-
Sacyr, Vinci-Ferrovial) and the incumbent infrastructure managers (RFF-GIF)
6 bidders, mostly major civil works constructors in Spain & France (Bouygues-Dragados, Eiffage-ACS, SPIE-FCC, Acciona-
Sacyr, Vinci-Ferrovial) and the incumbent infrastructure managers (RFF-GIF)
Page 18
April 16th 2003 : negociation with Bouygues-Dragados interruptedMay 8th 2003 : new tender published in OJEC
April 16th 2003 : negociation with Bouygues-Dragados interruptedMay 8th 2003 : new tender published in OJEC
The Tender Process (Cont’d)
1. A Tender as « closed » as possible• Benefit from Tender 1 experience• Major innovation : candidates are invited to bid on an non-negociable draft
contract (except a few clauses), based on Tender 1 contract as finally negociated
• No technical options allowed to ease comparison• Objective : reach a conclusion as fast as possible• But doubts about number of candidacies and level of subsidies demanded
2. July 2003 : 4 candidacies
• RFF-GIF, ACS-Dragados-Eiffage (ACS bought Dragados during Tender 1), Bouygues-FCC, Ferrovial-Vinci
• All candidacies accepted, bids received October 7 2003
• November 13: TP Ferro (ACS-Dragados-Eiffage) and Ferromed (RFF-GIF – the two State-owned companies) are invited to negociate with the two governments
Page 19
Concession contract signed in Madrid February 17th for a 50-year duration
Concession contract signed in Madrid February 17th for a 50-year duration
The Tender Process (Cont’d)
• December 26, after ameeting of the Council of Ministers in Spain, the two governments announce they are about to conclude with TP Ferro
• Construction costs = 952 M€ (Jan 03). 32% of costs related to tunnel
• Planning = 60 months delivery starting Feb. 17th 2004
• Tolling scheme in the contract, with first 3 years of operations limited fee to allow for build-up of traffic (as set in terms of reference)
• State Subsidy = 540 M€ (57% of construction costs), shared by France & Spain (50%/50%) & EU, paid during construction
• Sponsor equity = 102,9 M€, closing had 1 year to take place
• No guarantees : concesionaire will operate the concession at its own risk
• Penalty system : for construction, performance, termination, etc.
• Contract is made public (integrally published in French official journal)
Debt = financial closing took place Feb 10th 2005 with a « project finance » scheme, 520 M€ with limited recourse on the sponsors
Debt = financial closing took place Feb 10th 2005 with a « project finance » scheme, 520 M€ with limited recourse on the sponsors
Page 20
The Concession (Cont’d)
Inter-government Commission (CIG)Inter-government Commission (CIG)
Security commitee (tunnel)
Concessionaire
Construction company
Construction company
StatesStates
European UnionEuropean Union
SponsorsSponsors
BanksBanks
InsurancesInsurances
Train Operating Companies
Train Operating Companies
RFF(France)
RFF(France)
GIF(Spain)
GIF(Spain)
Toll Payments
Subsidies
99.8 % regularity
Route definition &
Interfaces
Equity
Debt
Contractual relationship
Page 21
Lessons Learned• Excellent collaboration between the administrations of the 2 countries on a
cross-border project
• Technically, a major project within the pan-european rail network
• A breakthrough project for the rail sector :
• Application of the highway concession model to rail, a success so far for a project that was found difficult from the very beginning
• New player – private – between two public Infra managers
• Interaction with incumbent train operating companies (SNCF, RENFE) for both train operation and infrastructure management
• Proof that PPP in the rail sector is feasible, with effective & full transfer of risks to a private operator:
• Construction/completion risks
• Operational/traffic risk & maintenance risk
• Tender procedure was long and difficult but :
• Administrations learned (so did the candidates)
• Major innovations have been successfully introduced
• Challenges still ahead : traffic, operation, completion of national connecting lines
Page 22
Project on Track for Opening in 2009Project on Track for Opening in 2009
Page 23
1. Introduction
2. Objectives of the PPP in the Rail Sector
3. The Perpignan-Figueras Project
4. Future Developments
Page 24
• LGV Sud-Europe-Atlantique, a High-Speed line project linking Paris to Bordeaux in 2 h is the next infrastructure project to be launched as a concession
• Challenges: Size of the project, over 300 km, €4,5
BN Project economics : are they strong
enough to make the project bankable? Interfaces with existing network (several
connexions) and future projects Project divided into two phases, long
period of civil works, risks Co-financing with regional authorities
needs solidarity on the long run, way over polical rythms
• Concession prequalification launched in February
Tours – Bordeaux HSL Project
TGV SEA Will Be a Test on How Innovative Schemes Can Be Put in Place in France For Very Large Scale Projects
TGV SEA Will Be a Test on How Innovative Schemes Can Be Put in Place in France For Very Large Scale Projects
ParisParis
SpainSpain ToulouseToulouse
BordeauxBordeaux
Existing High-Speed
Line
Existing High-Speed
Line
Page 25
Nîmes & Montpellier Bypass
• Existing line crossing Nîmes and Montpellier is saturating progressively
• The new 70 km line will create a pair of lines allowing freight trains to run out of cities
• Mix High-Speed – Freight trains
• TEN-T top priority project (along with Perpignan - Figueras
• Cost of € 1,2 billion
• Project ready, land control under way
• Will be launched as a PPP (contrat de partenariat, DBFO) where RFF will pay an availability fee to the project owner
• Preparation of the tender underway
Will Be a Test of The PPP (DBFO) Model on Linear And Costly Infrastructure
Will Be a Test of The PPP (DBFO) Model on Linear And Costly Infrastructure
Page 26
About DIF
• An independant, continental Europe-based, Equity investment fund focusing on PPP projects in Europe
• €150 MM closed in March 2006 (investors: individuals, Dutch pension funds, Helaba, Sumitomo Mitsui Bank, European investment bank)
• An experienced team of professionals with a background in Project Financing and PPPs
• Today’s focus on Western Europe, primarily Benelux, France, UK, Germany
• New markets, especially Eastern Europe, to be considered in the future
• A flexible, aggressive, independant fund, acquiring majority/minority positions in both Greenfield and Brownfield projects in the PPP sector
• 7 projects already acquired in France, UK (including France’s first PPP project)
• Participating in several tenders across Europe
• Core team in Amsterdam; branch just set up in Paris
Page 27
Thank you for your attention
Thomas VIEILLESCAZES
Director France & Southern Europe
DIF (Dutch Infrastructure Fund)
Mobile (France) +33 6 87 96 66 61
Phone (Holland) +31
mailto : [email protected]
www.dif.eu