moving ahead with ppp - unece · 25th october 2005 4th ppp alliance meeting london moving ahead...
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25th October 20054th PPP Alliance Meeting
London
Moving Ahead with PPP
John DavieCo-Chairman, UKTI PPP Export Advisory Group
Chairman, BCCB Project Finance CommitteeDirector of International Business Development, Vector Management Limited
Economic and SocialCouncil
SectorsCulture, Media and Sport
Who are the parties in a PPP?
What must Government do in PPP?
The role of Contractors in PPP
The role of Consultants in PPP
Moving Ahead with PPPWhat should you know about PPP?
Moving Ahead with PPPPartnership for Success
BCCB
IFSL
UK Trade & Investment
+
HM Treasury
Partnerships UK
Most Government Departments
6 Private Sector Members
SectorsCulture, Media and Sport
Moving Ahead with PPPPPP Drivers
Infrastructure Gap
Demand (GDP – led)
Supply (net investment)
time
Value ofInfrastructureIn real terms
PPPInteraction
open marketpublic
procurement
protectingthe publicinterest
respect of stateand regional
interest
improvingperformance and
management
Moving Ahead with PPPThe Wider Perspective
Moving Ahead with PPPRange of Funding RoutesRange of Funding Routes
TraditionalPublic SectorProcurement
Design-bid-build
Design-build
Public Owner/Operator/Financier
Operator
ContractorEngineer
Build-Operate-Transfer
(BOT)
Turnkey Delivery
Design-build-operate-transfer
Public Owner/Financier
OperatorContractor
Engineer
Build-Own-Operate(BOO)
Divestiture
Asset Capitalisation
Private Owner
OperatorContractor
Engineer
Design-Build-Finance-Operate-
(DBFO) Concession
BOOT Concession
Public Owner
PrivateConcessionaire
OperatorContractor
Engineer
Maintenance Concession
Build-Own-Operate-Transfer
PublicResponsibility Private Sector
PublicResponsibility Private Sector
Moving Ahead with PPPRange of Funding Routes
TraditionalPublic SectorProcurement
Design-bid-build
Design-build
Public Owner/Operator/Financier
Operator
ContractorEngineer
Build-Operate-Transfer
(BOT)
Turnkey Delivery
Design-build-operate-transfer
Public Owner/Financier
OperatorContractor
Engineer
Design-Build-Finance-Operate-
(DBFO) Concession
BOOT Concession
Public Owner
PrivateConcessionaire
OperatorContractor
Engineer
Maintenance Concession
Build-Own-Operate-Transfer
Public PrivatePartnership
(PPP)
Divestiture
Asset Capitalisation
OperatorContractor
Engineer
Public / Private Owner
Political and economic stabilityCreate a competent PPP Task ForceAppropriate primary legislationCompetent and Independent RegulationUnderstanding the real costs of public sector activityUnderstanding which risks should be transferredAbility to produce output-based specificationsAbility to negotiate and handle private sector companies in a sophisticated and thoughtful way
Moving Ahead with PPPWhat must Government do in PPP?
Government must enable Conditions to Attract Investment and ensure long-term commitment to PPP among ALL political groups
Concessionaire/SPV
Government
Debt/EquityFunders
Moving Ahead with PPPThe Contracts
Equity
Equity
Equity – 5% - 10%• contractor• operator• bank
Security package
Performance/Payment
DirectAgreement
Loan Agreement
Build/Renew/Maintenance Costs
Construction &Maintenance
(Hard Services)
Operations(Soft Services)
Service/OperatorCharge
Insurance
They needAdvisors
They needAdvisors
They needAdvisors
Moving Ahead with PPPPayment Profiles
CostOverruns
EstimatedCapital
Cost
Tim
e O
verr
uns
Running Cost Overruns
Estimated Running Cost
105 15 20 Years
Constructionphase
Operation andMaintenance phase
Payment profile can be depicted as follows:
Traditional Government procurement
Source: PriceWaterhouseCoopers / National Audit Office
>167% <100%
Payment based on usage
Payment based on availability
Nopayment
untilfacilities
ready
105 15 20 Years
Constructionphase
Operation phase
Payment profile for the public sector
PPP procurement
Incentive to performpayments linked to
performance
Incentive to deliver to time and cost
responsibility transferredto private sector
Better allocationof risks
risks to those bestable to manage them
Integration of serviceneeds
responsibility transferredto private sector
Long-term governmentcash flowprivate sector
performance risk
Private sector designsolutionsfit for purpose
Output specification clarity in definition of services
to be provided
Financial efficiencylow coverage ratios
long maturities
Moving Ahead with PPPValue for Money
Value formoney
Strengthening of Infrastructure
Better Mobilisation of Capital
Value for Money
Provision of More Services
Innovation
Transparency
Elimination of Cost Overruns
Higher Maintenance of Assets
Moving Ahead with PPPReflecting Changing Needs
Competition in bidding
Integrated design, build and operations
Benefits of whole-life costing
Appropriate risk transfer
Linking management with performance incentives
Maximising scope for innovation
Alternative and additional uses/surplus assets
Use of output specifications
Moving Ahead with PPPConsultants/Contractors will Facilitate
Moving Ahead with PPPWorking Together
publicsectorneeds
privatesector
capability
Nationaland
International
REGULATORS mutualobjectives
&motives
improvedpublic
services
attractingcommercialoperators
securepayment
outputspecification
deliveringservices
providingskills
mobilisingfinance
improvingcapacity to
deliver
Moving Ahead with PPPReflecting Changing Needs
What is needed is not the alteration of some ideas in the current approach to public services …...
….. but a radical rethink and an overall culture change to reflect fundamentally different
attitude toward this sector
Contacts details for more information
about theUK PPP Export Advisory Group
UKTI – Kamala Sekar : [email protected]
IFSL – Stephen Harris : [email protected]
BCCB – Nigel Peters : email [email protected]
contact us:[email protected]
contact us:[email protected]
for information:www.vecman.com
for information:www.vecman.com
Mr.Mr. Vadim GurzhosVadim Gurzhos, , Chairman, State Road Administration, Chairman, State Road Administration, Ukraine Ukraine
““The perspective from a country on The perspective from a country on the prethe pre--PPP stagePPP stage””