PPP in Practice High Speed Line...
Transcript of PPP in Practice High Speed Line...
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
PPP in PracticeHigh Speed Line Netherlands
Infraspeed Maintenance
Ruud Schellekens
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Goal• HSL-line Facts & Figures• The Parties• Two examples (problem/change)
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Track Description
Shield-driven Tunnel “Groene Hart”
Noordelijk Holland
Barendrecht
Zuid Holland Zuid
BrabantZuid
Breda RAS
Rotterdam Lombardijen
Rotterdam West RAS
HoofddorpRAS
Zuid Holland Midden
BrabantNoord
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
HSL Facts & Figures
Shield-driven Tunnel “Groene Hart”
Noordelijk Holland
Barendrecht
Zuid Holland Zuid
BrabantZuid
Breda RAS
Rotterdam Lombardijen
Rotterdam West RAS
Hoofddorp RAS
Zuid Holland Midden
BrabantNoord
- Amsterdam - Schiphol: 17 kilometer- Schiphol - Hoofddorp: 5 kilometer- Hoofddorp - start High Speed Track: 2 kilometer- start High Speed Track - end High Speed Track : 42 kilometer- end High Speed Track - Rotterdam Station: 4 kilometer- Rotterdam Station - Rotterdam Lombardijen: 7 kilometer- Rotterdam Lombardijen - start High Speed Track : 5 kilometer
- start High Speed Track – Belgium Border: 43 kilometer.25% at surface level;75% HSL-Zuid-tracé 170 civil works
•viaducts, 4 tunnels,dive-unders•one aquaduct A few bridges
Investment•Civil works 6. Billion EURO•Otherworks 1. Billion EURO PPP
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
First: The good news• Project delivered ON-TIME• First 5 years availability OK!• No serious safety incidents• …..• …..Conclusion:===PPP-works for all parties===
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
But…. Monthly Availability
94,00%
95,00%
96,00%
97,00%
98,00%
99,00%
100,00%
101,00%
jan-07
apr-07
jul-07
okt-0
7jan-0
8
apr-0
8jul
-08
okt-0
8jan
-09
apr-0
9jul-0
9
okt-0
9jan-1
0
apr-1
0jul
-10
okt-10
jan-11
apr-1
1jul-1
1
okt-1
1
Availability without Bonus minutes(%)
Availability with Bonus minutes(%)
Start Operation AMS-ROT 160Km/h
Start Operation AMS-PAR 300/160 Km/h
Full line 300 Km
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
PPP Challenges• Many parties involved >20
– Different roles– Different Interests/Goals
• Risk allocation is Key• System integration• Partnership (Cooperation)
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail Parties
SPCInfraspeed
EPCMaintenance
Rai
lway
Man
ager
: PR
OR
AIL
Saf
ety
Auth
ority
: IVW
STA
TE
Sha
reho
lder
s
Institutionals
Industrials
Lend
ers
Advi
sors
•Rabobank •ING Bank•KBC Bank•KfW •Dexia Credit Local•HypoVereinsbank•BNG + •20 Syndicated Banks
Allen & Overy (Legal)Scott Wilson (Techno)Heath Lambert (InsurePKF (financial auditor)
Infraspeed Advisors
•Freshfields Bruckhaus Derringer (Legal)•Ernst & Young (Accounting, Fiscal)•Marsh UK (Insurance)•Delta Rail (Independent Safety Assessor)
PUBLIC PRIVATE
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
• Risk mitigation: which party can best control the risks ?
• Fit for purpose Service Level Agreement – Functionality and Quality of the Systems
• Value for money (to the taxpayer) • Public Sector Comparator• PFI: Time is money• budget stability for the Public Sector
• Long term stability & contractual relationships• Private sector risk improves quality• Lump Sum, Turn Key, date certain contracts• Safety/environment
What does the State, look for?
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
• Risk aversion• Allocation : which party can best control the risks ?• Reflected in contracts and insurance
• Predictable• Investments• Revenues CASHFLOW• costs
• Reliable• contract parties• “Stick to the rules“ - no surprises !
What do Lenders look for?
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
• Risk aversion• Allocation : which party can best control the risks ?• Reflected in contracts and insurance
• Predictable• Investments• Revenues CASHFLOW• costs
• Reliable• contract parties• “Stick to the rules“ - no surprises !
• Return on Investment• Profit
NB: view of Lenders and Institutional investors is alike!
What do Institutional investors look for?
29-11-2011 15:30 PPP in Practice
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• Manageable Risks• Allocation : which party can best control the risks ?• Reflected in contracts • Scope of work to different parties
• Return on Sales• Positive Cash flow• Margin/Profit
• Reliable• contract parties/partners
• Protect Reputation
What do Industrials look for?
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
My view on PPP
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
PROFITREPUTATION
RELIABILITYRETURN ON INVESTMENT
COMPETITIVEBEST IN CLASSAVAILABILITY
ADVISOR
ADVISOR
ContractsRisk
distribution
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Risk AllocationState – Infrastructure Provider
• General Principle: – IP takes all the risks subject to exceptions
• Exceptions:– Delay Events (time + money)– Non-Attributable Events (time + money)
eg civil defects <10 yrs – Relief Events (time) eg force majeure,
strikes > 48 hrs– Compensation Events (money)
eg change in law
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Risk AllocationInstitutionals/Lenders – Industrials
• General Principle: – Contractual risks/obligation towards the STATE are
forwarded (back to back) to the Industrials.– Industrials takes all the risks
subject to exceptions
• Exceptions:– Risks that belong to the STATE– Finance/Tax risks– Risks above CAPS
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Allocation of risks
State Infraspeed EPC MCGround RiskCivils assetsOther interface risksConstruction cost overrunsDelay in completionConsentsTrafficDefects in system assetsPerformance DeductionsOperating cost overruns/renewalsDerailmentDiscriminatory change in law/taxesOther change in taxForce MajeureCaps insufficientInfraspeed is only responsible for limited residual risk
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Examples of Non-Attributable Events• State breach• Civils Assets / Connecting Systems Defects• Contamination• Sound emission levels• Train not compliant with requirements• Failing traction power supply (in-feed 150kV)• Failure by task organisations (Prorail VL, Infra)• Soil settlement
PUBLIC(STATE)
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
PPP Cash-flow model Infraspeed
100
0
100
200
Euro
(milli
ons)
2005 2010 2015 2020 2025 2030
Development Period Availability Period
Construction Costs
Performance Payments
Maintenance & Renewals Costs
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Availability• Duration of trains on track = X• Delay of trains due to errors = Y• Availability = 1- Y/X %
Time table
Error
SimulationAccuracy < 2% Availablity
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Monthly Availability Penalty
€ 1.000.000
€ 2.000.000
€ 3.000.000
€ 4.000.000
€ 5.000.000
€ 6.000.000
€ 7.000.000
€ 8.000.000
€ 9.000.000
penalty
perfo
rman
ce p
aym
ent
Performance Fee
100 %99 %
98 %97 %
96 %95 %
94 %93 %
92 %91 %
90 %
Availability (%)
availability penalty
Tra
in D
elay
Pen
alty
(€)
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
First Example: a planned changeor new requirement
PUBLIC(STATE)
COMPETITIVEBEST IN CLASSAVAILABILITY
POSITION OF THE STATE
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Response to a ChangeRELIABILITYRETURN ON INVESTMENT
Everything worksI do not want a ChangeThis changes the cashflowThe risk increasesRisk must be accepted by Industrials
The lenders must approveIt jeopardizes the Loan..price up
PRIVATELENDERS
PRIVATEINSTITUTIONALS
ApproveNecessary
Risk toIndustrials
Everything worksI do not want a ChangeThis changes the cashflowThe risk increasesRisk must be accepted by Industrials
The lenders must approveIt jeopardizes the Loan
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Response to a Change
PRIVATEINDUSTRIAL
PROFITREPUTATION
Risk increases… need more profit
I am the only one that can execute the change ;-)
I will not take the magnitude of the risk (whole system)On a “small” change
Everything worksI do not want a ChangeThis changes the cashflowThe risk increasesRisk must be accepted by Industrials
The lenders must approveIt jeopardizes the Loan..price up
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Result
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
Changes are:•Expensive (high risk no competition)•State needs to take the availability risk•Lenders need to approve•Process is complex and time consuming•Many advisors get involved•What to do with the financing?•…….•…….•…….
Changes do not benefit from PPP
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
PRIVATEINDUSTRIAL
PRIVATEINSTITUTIONALS
LENDERS
PUBLIC(STATE)
Problem
Second Example: a problem
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Example ETCS Level 2Problem: Trains now and then loose connection to RBC and
come to a stop
Involved parties
• Train Operating Company (OBU)• GSM-r Operator• Infrastructure Provider (RBC)
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
SolutionIt is Public Private PartnershipParties need each other to solve the problem
• Bring all involved parties together:– Suppliers OBU and RBC and GSM-r– Train Operating Company– Infrastructure Provider
• Share knowledge !CONTRACT! Is a forbidden word
• Define an approach to analyse and solve
29-11-2011 15:30 PPP in Practice
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ResultRBC communication Loss HSL-Z south section
WalClock STreinOverigGSM-RGrensTraxx én ThalysVL_lifesign
0
5
10
15
20
25
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Week 2011
num
ber
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
What is needed for Partnership• It all starts with TRUST• TRUST starts with Transparency• TRANSPARENCY starts with communication• COMMUNICATION starts with People
PEOPLE need to communicateThe goal is simple
29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Did you ever do a communications training together with your -external- customer?If you are “married” for 30 years: Do It!
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29-11-2011 15:30 PPP in Practice
I Foro Internacional Ferroviario BCNRail
Maybe it works different in Spain…
“There is unity now, in principle everybody here does what I ask them. Because they are not Dutch….as soon as you take a breath Dutch say: “yes but…..” “
Johan Cruijff about his work in Spain: