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PPP projects in the Netherlands

Advisory Group on Privatisation

19-20 september 2000Budapest, Hungary

Daniel Loschacoff

PPP Knowledge Centre

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Content• PPP policy of the Dutch Government

– Background– Objectives of PPP

• Case study: High speed rail link (HSL)

• Lessons Learned

• Summary

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Why PPP in the Netherlands

• Increases value for money for taxpayers (PPP is not off-balance sheet financing)

• Instrument to focus government on its core business

• EU policy

Po

licy

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Value for Money

What?– Higher quality (1st)– Less costs– Faster realisation

How?– Output orientated approach– Scope optimalisation– Risk transfer (incentive)

Po

licy

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Back to Core Business

• Let parties do what they are good at– Government: from player

to referee/purchaser– Leaving room for

innovation by the market

This means institutional changes(more private sector supply, different role

for the government)

Po

licy

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The EU factor

• Increased deregulation & third party access

• Increased competition

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Outline High Speed Rail Link

• Links Amsterdam to the Belgian border

• Trains will run at 300 km/h

• Total costs Euro 5.0 billion

• Tendering in three parts

• Separate and different tendering procedures

HSL-Zuid

Civil WorksDesign and construction

contractors

PPPs for commercialdevelopments

of railway stations

Government

Private financiers

Passengers

In frastructure Provider

Building Capita l costs Construction

period

O peration of line M aintenance costs Replacem ent

investm ent Repaym ent Financing/tax

HSLStation Areas

Train Operating Companies• Operating costs• Rolling stock and maintenance• Financing/tax/dividends

Funding forcivil works

Access fees

Fares

Repaymentof loans

Loans

Performancefees Access fees

payment during construction phase

payment during operations

transfers

Coordination/cooperation

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HSL (IP) contract• DBFO-contract for infrastructure; train

operation separated out (NS first refusal)

• risk transfer: not market risk

• performance fee based on availability of railway service

• 30 year period

• IP contract award by the end of the year

• completion of infrastructure by 2005

Pro

jects

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Key bottlenecks

• Limited experience of PPP

• Public and private parties have to adapt to their new role (some reluctance)

• No easy pilots (complex projects + projects with budget constraints)

Result: progress is slow

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Opportunities

• Bottlenecks can - and will - be solved within the next few years

• Strong political commitment to PPP

• Private sector involvement is not controversial

• PPP is in line with international policy development

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Summary• Objective: value for money, not private

finance

• Case by case-approach: is PPP better?

• Bottlenecks can be removed soon

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And Remember:in the Polder Model…

all parties want to be involved in the decision making process.

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For more information:

Internet: www.minfin.nl/pps

or

d.p.loschacoff@minfin.nl