forging successful ppps in puerto rico
TRANSCRIPT
Forging Successful PPPs in Puerto Rico
Mr. David AlvarezExecutive Director
Puerto Rico Public-Private Partnerships Authority
June 8, 2010
DisclaimerThe Studies here presented seek to determine whether the establishment of certain proposed private-publicpartnerships (or “PPPs”) is advisable.
The Studies were prepared pursuant to the requirements of the Public-Private Partnerships Act (the “Act”)and the Regulation for the Procurement, Evaluation, Selection, Negotiation and Award of Public-PrivatePartnership Contracts under Act No. 29 of June 8, 2009 (the “Regulation”), adopted by the Public-PrivatePartnerships Authority (the “Authority”) on December 19, 2009. The Studies were commissioned to differentadvisors (the “Advisors”) as part of financial, procurement and technical advisory engagements between theAdvisors, the Partnering Government Entities and the Authority for the evaluation of the proposed PPPs. ThePartnering Government Entities and the Authority assisted the Advisors in the preparation of the Studies. Thecompensation of the Advisors was not conditioned in any way on the outcome of these Studies.
The Studies are based on estimates, assumptions and market information obtained from sources believed tobe reliable. Actual results may vary from those anticipated in the Studies. Changes in the different relevantindustries (education, energy, toll roads, potable water distribution and airport operations) and the generaleconomy may occur which can alter the assumptions and conclusions presented in the Studies. The Authoritymakes no representation or warranty whatsoever, including representations and warranties as to the accuracyor completeness of the information contained in the Studies, including estimates, forecasts or extrapolations.The Authority expressly disclaims any liability for any representations or warranties, expressed or implied,contained herein or for any omissions from the Studies or for any other matter related to the Studies.
The Act and the Regulation, as well as all applicable Puerto Rico and federal laws and regulations, will governthe dissemination of the Studies.
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Puerto Rico’s PPP Framework
• The Government approved Act No. 29 of June 8, 2009, known as the Public-Private Partnership Act (“Act”).
• Favor the establishment of PPPs in order to complete projects that develop and maintain infrastructure,
• Share the risk of developing, operating and maintaining PPP projects, and
• Place responsibility on the P.R. Public-Private Partnerships Authority for implementing the public policy on PPPs.
The PPP Act
A PPP Public Policy
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Priority Projects under the PPP ACT
• Landfills
• Water reservoirs
• Power plants that use alternative sources of energy
• Transportation systems
• Health, security, education, correctional and rehabilitation facilities
• Low-income housing projects
• Facilities for sport, recreation and cultural activities
• Ground and wireless communication systems
• High technology information and mechanical systems
Priority Projects
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PPP LEGISLATION
BOARD OF DIRECTORS
DEDICATED TEAM
REGULATIONS
PROJECT ANALYSIS
PPP PUBLIC POLICY
PROJECT SELECTION
PROCUREMENT
AWARD
PPP
Bottom-up development
Full framework implemented by a dedicated PPP Authority
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Significant progress since the approval of the PPP Act
6 months for the implementation of the Program
Approval of PPP Act Jun-2009
PPP Conference Oct-2009
8 Projects and Regulations Dec-2009
Project Teams Formation Jan-Feb 2010
Desirability StudiesMar-May 2010
PPP Pgm. Progress
Procurement Begins June-Sept 2010
Board of Directors / TeamSept-2009
6 months dedicated to preparation of projects for procurement
phase
Progress in the P3 process
• Analysis to determine if the P3 project is convenient for Puerto Rico.
• Desirability and Convenience Study is posted on the P3 website.
Desirability & Convenience Study
RFQ* Selection of Winning
Bid
RFP** Final Proposals
• Proponent Qualification process.
• RFQ is posted on the P3 website
• Proposals are submitted by a handful of qualifiers.
• Q&A sessions are held.
• RFP is posted on the P3 website.
• Qualifiers submit there final proposals.
• Winning bidder is posted on the web.
Getting ready for Procurement
Procurement Process Winning Bidder
1 2 3
COMPLETED
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* NG = Natural Gas..
• PR-22: busiest toll road in PR • PR-52: longest toll road in PR• PR-66: only corridor in the East
• Natural Gas Plant: Costa Sur
• LMM Int’l Airport: busiest airport in the Caribbean
• Water Metering: improvement of water metering system
5 Infrastructure Areas = Great Opportunities
• There is a clear need and consensus that investment in core infrastructure is needed
• Mix of Brownfield and Greenfield opportunities
• Favorable asset sizes
• Clear legal and regulatory framework
• Transparency through the public release of desirability studies, RFQs and RFPs.
PPP Opportunities in Puerto Rico
Factor Description
Description of the Project
• Concession toll roads in Puerto Rico in four phases:
• P3 Project Model: DBFOM¹
Status:
• Desirability Study has been completed.
• Partnership Committee has been established
• Preparing for the RFQ phase.
Next Steps:• Launch RFP
• Finish drafting RFP and PPP Agreement
Toll Road PR-66
Toll Road PR-22
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Toll Roads Project
– Phase 3: Brown/Green: PR-66 & PR-53
– Phase 4: PR-22 Greenfield
– Phase 1: PR-22 & PR-5
– Phase 2: PR-52 & PR-20
¹ Design Build Finance Operate Maintain
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Toll Roads Program
1
5
20
1 Brownfield – Phase I
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2 Brownfield – Phase II
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3 Brownfield/Greenfield
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4 Greenfield
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LMM International Airport
Airport PPP Opportunity
xxxxxx Cargo and Hangar RevenueFood & Beverage Revenue
(per enplanement)xxxxxxTotal Enplanements at LMM
In millions
4.71
5.225.34
5.235.15
4.64
2003 2004 2005 2006 2007 2008
$2.29
$1.23$1.07 $1.04
$0.70 $0.57
$0.16
JFK MIA ORD LAX DFW ATL SJU
$5.2
$1.6 $2.8 $2.8
$10.4 $9.3
$11.6
2002 2003 2004 2005 2006 2007 2008
per enplanement In millions
• LMM is the busiest airport in the Caribbean
• Stable growth in its cargo and hangar operations
• Brownfield core infrastructure
• LMM is the gateway to the Caribbean and has the capacity to became a mayor hub to Central and South America
• Puerto Rico’s PPP of LMM would be the first of its kind as a FAA regulated airport
Aerial Pictures Luis Munoz Marin International Airport
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LMM International Airport Project
Factor Description
Description of the Project
• Concession of the Luis Munoz Marin International Airport to a Private Operator.
• P3 Project Model: DBFOM¹
Status:• Desirability Study has been completed.
• Partnership Committee has been established.
Next Steps:
• Preparing for the 65% airline agreement required by FAA
• Drafting of RFQ
¹ Design Build Finance Operate Maintain
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Energy Project
•Puerto Rico has a clear need to diversify its fuel sources
•Project with strong construction component
•The new natural gas plant will reduce PREPA’s oil consumption by 9%
•The project is capable to deliver substantial saving to PREPA
•Positive outlook for Natural Gas prices
Source: Public Building Authority, Public-Private Partnership Authority Department of Education and Desirability and Convenience Study for “Schools for the 21st Century”., •Data corresponds only to the Public Building Authority
35.74
22.18 19.71 17.9613.75 13.40 12.12 12.10
HI PR MA NY CA TX IL FL
Second highest cost per KH Jurisdiction in the US
Positive outlook for Natural Gas vs. Oil
$4.50
$8.75
$80.61
$223.83
2010 2016 2022 2028 2034
Price for Natural Gas
Crude Oil Prices2
Oil is near 70% of the fuel consumed by PREPA
67.5%16.2%
15.7% 0.6% Oil Natural
Gas Coal Hydroelec
tric
Energy PPP Opportunity
Aerial Pictures Costa Sur
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Factor Description
Description of the Project
• The construction of a New Natural Gas Combined Cycle Plant with a capacity of 270 MW replacing units 1-4 of Costa Sur complex
• P3 Project Model: DBOOT¹
Status:• Desirability Study has been completed.
• Partnership Committee has been established.
Next Steps: • Drafting of RFP
Energy Project
¹ Design Build Own Operate Transfer
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• 63% of PRASA’s production is unaccounted relative to an average of 10% in US.
• Outdated metering technology affects PRASA:
• Water monitoring system
• High level non-revenue water
• Commercial inefficiencies
• Recovering these commercial losses represents the largest single opportunity for PRASA‘s improvement.
Percent of Meters Read
99.9% 99.6% 99.8%
77.5%
Best Performer Full
AMR
Best Performer
Minimal AMR
Water Industry Avg.
PRASA
Low reading from meters Compared to other Technologies
Non Revenue Water Trend for PRASA
% of reading from the meters
0
100
200
300
400
500
600
700
1945 1955 1965 1975 1985 1995 2005 2015
Mill
ion
Gal
lons
per
Day
Year
ProductionDeliveries
1981 From 1981 to 2009 metered deliveries reduced by 9 mgd
Una
ccou
nted
-for
Wat
er (
63%
)
From 1981 to 2009 water production increased by
262 mgd
2009
Source: Public Building Authority, Public-Private Partnership Authority and Desirability and Convenience Study for “The Implementation of Advanced Technologies for the Reduction of Non-Revenue Water for PRASA”.,
Water Metering Project
Water PPP Opportunity
Manual Metering System
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Water Metering Project
Factor Description
Description of the Project
• Implementation of advanced technology system to reduce non-revenue water and re-engineering of commercial services.
• P3 Project Model: DBO¹
Status:
• Desirability Study has been completed.
• Partnership Committee has been established.
• Preparing for the RFQ phase
Next Steps:• Drafting of RFP and PPP Agreement
¹ Design Build Own
1. Infrastructure investment is essential for economic development. Puerto Rico has clear needs to restore investment in infrastructure through PPPs.
2. The P3 Authority is committed to making progress the reap the benefits of the implemented PPP framework.
3. Puerto Rico is an island of opportunities with a pipeline of P3 projects in a variety of sectors.
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Concluding Remarks
Visit: www.app.gobierno.pr