Content
•About EBRD•Has the moment come for private operators?•Can private contribute to a better service quality?•Things important to banks financing public transport•Conclusions
European Bank for Reconstruction and Development (EBRD)
• Owned by 64 shareholder countries and organisations
• Active in 36 countries of operation
• Annual business volume EUR 9 billion
Estonia Latvia Lithuania
Number of projects 79 71 76
Investment to date, in EUR million 595 585 629
Value of current portfolio, in EUR million 104 249 120
Private sector share 86% 64% 62%
Municipal & Environmental Infrastructure
About half of portfolio is urban transport projects
Department finances:•District heating•Solid waste•Water and waste water
Kaunas Public Transport Project (2004)
• Bank’s first loan to a municipal bus operator in Kaunas without a municipal guarantee
• Based performance-based gross cost Public Service Contract
• Corporate Development Programe of UAB Kauno autobusai (Lithuania) with impressive performance improvements
Content
•About EBRD•Has the moment came for private operators?•Can private contribute to a better service quality?•Things important to banks financing public transport•Conclusions
UT Challenges at a City Level
•Lack of borrowing capacity for investment needs
•High agenda toward sustainability goals in the context growing car ownership
•Call for liberalization of services
•Growing diversification in technology
Public Operators Dominate the Market
• Stagnating quality of service
• Strong trade unions and ever growing cost
• Weak lobby when it come to tariff adjustment
• Delayed investments
• Often focus on technology rather than on passenger and service quality
At the same time…
Minibus era left bad association about private operators
Context Delaying Private Operators Involvement
• Regulatory framework
• Know-how and experience in contract management
• Lack of equipment to sustain system’s integration (AFC and AVL)
• Inefficient network
• Weak private operators
Currently many cities has these issues behind
Private operators could
• Provide good benchmark of PT service cost and quality for public operators
• Reduce bargaining power of trade unions
• Facilitate timely adjustments in tariffs
• Bring more investment into public transport
• Attract more passengers and revenue to the system
Content
•About EBRD•Has the moment came for private operators?•Can private contribute to a better service quality?•Things important to banks financing public transport•Conclusions
Delivery of busesTender for buses
Advance payment for buses
Advance payment for buses
Remaining payment Remaining payment
Project Assessment by the Bank
Tender
OperatorContract CityMarket
• Controlled,• Competitive• Controlled,• Competitive
Project Assessment by the Bank
Tender
OperatorContract CityMarket
• Controlled,• Competitive• Controlled,• Competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
Project Assessment by the Bank
Tender
OperatorContract CityMarket
• Controlled,• Competitive• Controlled,• Competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Well structured,• Balanced• Well structured,• Balanced
Project Assessment by the Bank
Tender
OperatorContract CityMarket
• Controlled,• Competitive• Controlled,• Competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Well structured,• Balanced• Well structured,• Balanced
• Experienced,• Creditworthy• Experienced,• Creditworthy
Project Assessment by the Bank
Tender
OperatorContract CityMarket
• Controlled,• Competitive• Controlled,• Competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Prepared by experienced consultant,
• Open, transparent and competitive
• Well structured,• Balanced• Well structured,• Balanced
• Experienced,• Creditworthy• Experienced,• Creditworthy
• Capable• Has sector
strategy
• Capable• Has sector
strategy
Things to consider in the contract
• Ensure strict payment mechanism, including penalties for delayed payments
• Clearly defined scope of service with flexibility to amend it
• Indexation formula
• Strong and balanced contract termination clauses
• Dispute resolution mechanism
Things that also help…
•The longer the contract – the better
•Part of operator’s payment comes from fare revenue
•Penalties not too excessive
•Clear reporting and information exchange requirements
EBRD’s Technical Cooperation Funds
Available for project preparation and implementation
Project development stage:•Preparation of PSC and tender document package•Feasibility studies for larger projects (PPP)•Investment and Business plans
Implementation stage:•Corporate development programmes•SUMPs•Market liberalisation strategies•Gender inclusion and environmental for companies strategies•ITS projects, etc.
Summary
• Private operators can contribute to overall public transport service improvement
• Engagement with financiers early increases chances of success
• Time constrains needs to be properly assessed
• EBRD can still be source of financing in Baltics in particular for private operators
Matthew Jordan-TankHead of Infrastructure Policy
European Bank for Reconstruction and Development
One Exchange Square, EC2A 2JN London,
United Kingdom
Tel: +442073386000
Email: [email protected]
Presentation by:
Karolis DekerisUrban Transport Consultant to EBRD
LT-48334, Kaunas, Lithuania
Tel: +370 640 15 406
Email: [email protected]
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