strategies and instruments for ppp development gabriele pasquini
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Strategies and Instruments for PPP Development Gabriele Pasquini PPP Task Force, Presidency of the Council of Ministers, Italy. Models and Strategies for Public-Private Partnerships (PPP): Experiences from Italy - PowerPoint PPT PresentationTRANSCRIPT
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Strategies and Instruments for PPP DevelopmentStrategies and Instruments for PPP Development
Gabriele PasquiniPPP Task Force, Presidency of the Council of Ministers, Italy
Models and Strategies for Public-Private Partnerships (PPP): Models and Strategies for Public-Private Partnerships (PPP): Experiences from Italy Experiences from Italy
Regional Workshop on Concessions/Public-Private PartnershipsTirana, 11-12 December 2007
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UAgendaAgenda
EU legislative framework: a focus on steps
Changes in the Legal Framework for PPP’s (2006 - 2007)
UTFP activity “on the field”: institutional framework
Italian PPP at a glance
The way forward: UTFP commitment for the near future
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EU legislative framework: a focus on steps
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EU legislative framework: a focus on steps
20002000 Interpretative Communication on Concessions under Community law
20032003 Guidelines for successful PPPs - EU Commission – DG Regio
20042004 EUROSTAT Decision on the accounting treatment of PPPs
20042004 EU Directives coordinating the procedures for award of public contracts
20042004Green Paper on PPPs and Community Law on Public Contracts and Concessions
20042004 White Paper on general interest services
20052005EU Communication on PPPs and Community Law on Public Procurement and Concessions
20062006EU Parliament resolution on PPPs and Community Law on Public Procurement and Concessions
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EUROSTAT decision on the accounting treatment of PPPs (2004)EUROSTAT decision on the accounting treatment of PPPs (2004)
The assets involved in a Public-Private Partnership should be classified as non-government assets, and therefore recorded off balance sheet for government, if both of the following conditions are met:
The private partner bears the construction risk, and
The private partner bears at least one of either availability or demand risk
“Construction risk” covering events such as late delivery, non-respect of specified standards, additional costs, technical deficiency, and external negative effects.
“Availability risk” whereby the partner may not be in a such position to deliver the volume that was contractually agreed or to meet safety or public certification standards relating to the provision of services to final users, as specified in the contract
“Demand risk” covering variability of demand (higher or lower than expected) irrespective of the private partner’s management
EU legislative framework: a focus on steps
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U Green Paper on PPPs and Community Law on Public Contracts and Concessions (2004)Green Paper on PPPs and Community Law on Public Contracts and Concessions (2004)
Definition of PPPs : forms of cooperation between public authorities and the business sector aiming to ensure either funding, construction, renovation, management or maintenance of an infrastructure or the provision of a service
The Green Paper addresses various topics directly linked to the public procurement aspect of PPPs, in particular:
The framework for the procedures for selecting a private partner, and, notably, the advantages in this context of the competitive dialogue procedure introduced by the new Directive on public procurement; Set-up of PPPs on the initiative of the private sector; The contractual framework and contract amendments over PPP duration; Sub-contracting
EU legislative framework: a focus on steps
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EU legislative framework: a focus on steps
EU Communication on PPPs and EU Law on Public Procurement and Concessions EU Communication on PPPs and EU Law on Public Procurement and Concessions (2005)(2005)
“PPPs are not a miracle solution: for each project it is necessary to assess whether partnership really adds value to the specific service or public works in question, compared with other options such as concluding more traditional contract”
Classification of PPP’s Contractual PPPs Award of Concession Insitutional PPPs Establishment of undertaking jointly held by both a public
and a private partner so as to perform public services
“The consultation (i.e. Green Paper) showed the demand for a stable, consistent legal environment for the award of concession at EU level, in particular to reduce transaction costs (by decreasing legal risk) and more generally to enhance competition”
Follow-up measures in the field of PPPs
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EU legislative framework: a focus on steps
EU Parliament resolution on PPPs and EU Law on Public Procurement and EU Parliament resolution on PPPs and EU Law on Public Procurement and Concessions (2006)Concessions (2006)
“Calls on the Commission to give serious consideration to regional self-government interests and to involve representatives of regional as well as local interests in drawing up future rules”
“Opposes the creation of a separate legal regime for PPPs but considers that there is a need for legislative initiatives in the areas of concessions and for clarification with regard to institutionalised PPPs ( IPPPs)”
“Opposes the establishment of a European agency for PPPs, but welcomes other ways of sharing experience concerning best and worst practices, such as the networking of national and regional authorities responsible for the management of PPPs”
Calls on the Commission to clarify the condition of ‘legal and financial complexity’ in which it is possible to adopt competitive dialogue scheme
Considers that a comprehensive approach to procurement (the life-cycle concept) and competition between tenderers in terms of innovation result in efficiency gains, when projects are carried out jointly, risk-sharing is optimised and there are functional specifications and a highly incentivising payment mechanism
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Changes in the legal framework for PPP’s (2006 - 2007)
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Changes in the legal framework for PPPChanges in the legal framework for PPP’’s - 2006s - 2006
Legislative Decree n. 163/2006 “Public Procurement Consolidated Text”Legislative Decree n. 163/2006 “Public Procurement Consolidated Text”
The new rules implement EU procurement directives (17&18/2004) and replace the previous set of regulation, thus consolidating in 257 articles the legal framework regarding public works, services and supplies both in traditional and special activities
ART. 30 Definition of service concessions ART. 58 Competitive Dialogue. A flexible awarding procedure for technical, legal or
financial complex contract particular suited for PPP scheme ART. 61 Special proceeding to develop housing infrastructures with PPP scheme ART. 142 Concession under public initiative ART. 153 Concession under private initiative
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Law n. 286/2006 and Budget Law 2007 - “New Rules for Motorway Concession Law n. 286/2006 and Budget Law 2007 - “New Rules for Motorway Concession ContractContract””
Such rules represent a valid pattern to any possible concession contract: Provision of dedicated public body monitoring and controlling concessionaire
obligations throughout the concession Provision of wide range of penalties relating different degree of defaults up to
revoke of entire concession Disclosure of existing extra-profits relating exploitation of secondary activities Retrocession of extra-profits not directly linked to the risk actually borne by the
concessionaire Tariff increase directly related and proportional to the investments planned and
actually performed
Changes in the legal framework for PPPChanges in the legal framework for PPP’’s - 2006s - 2006
Budget Law 2007 – LeasingBudget Law 2007 – Leasing
Introduction of Leasing as an available tool for the construction, purchase, management or maintenance of an infrastructure.
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Changes in the legal framework for PPPChanges in the legal framework for PPP’’s - 2007s - 2007
Law n. 223/2006 and Decree of the President of the Council of Ministers 1/31/2007Law n. 223/2006 and Decree of the President of the Council of Ministers 1/31/2007
Transfer of UTFP from Ministry of Economy and Finance to Presidency of the Council of Ministers following the transfer of Inter-ministerial Committee Of Financial Planning (CIPE)
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UTFP activity “on the field” : institutional framework
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UTFP activity “on the field” : the institutional framework
Policy StatementsPolicy Statements
2000-2003 Economic and Financial Planning Document2000-2003 Economic and Financial Planning Document “The involvement of the private sector in financing, building and operating
infrastructures and public utility services is a priority for the South of Italy and the rest of the Country”. It is recognised that Private Sector Participation (“PSP”) in public services brings better design, construction and operational skills, enhancing the quality of the services offered to the end-users.”
2001-2004 Economic and Financial Planning Document2001-2004 Economic and Financial Planning Document The Government expects to finance € 9 billion of new infrastructures through
private funds. The private sector is expected to provide debt financing as well as equity capital.2002-2006 Economic and Financial Planning Document2002-2006 Economic and Financial Planning Document Strong emphasis on infrastructure investment as one of the main drivers for
economic growth. Private Sector expected to play a pivotal role in the construction, financing and
management of new infrastructures, contributing € 25 billion over five years. Further progress in the process of liberalisation and privatisation of public
services.2007-2011 Economic and Financial Planning Document2007-2011 Economic and Financial Planning Document ”Optimising private co-financing and adjusting tariffs will make therefore it possible
to anticipate or expand priorities” 2008-2011 Economic and Financial Planning Document2008-2011 Economic and Financial Planning Document “It is necessary – within the limits of available financial resources – to develop a
regulatory framework in coordination with the regional regulatory framework to launch strategic programmes, mainly aimed at boosting the housing supply, to be built not only with public funds, but also through PPPs”
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UTFP activity “on the field” : the institutional framework
the Task-Force – Organizationthe Task-Force – Organization
Inspired by the UK PFI Taskforce
Established by law
Previous consultation with the main parties involved
Group of 15 professionals:
Legal, financial, technical expertise selected from both private sector and public sector.
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UTFP activity “on the field” : the institutional framework
the Task-Force - Missionthe Task-Force - Mission
Educational RoleEducational RolePromoting PPP techniques Developing a PPP Methodology Identifying workable PPP projects to be repeated Database of successful PPP deals
Assistance RoleAssistance Role PPP assistance for central, regional and local administrations From the identification of suitable projects to the evaluation of offers Multidisciplinary skills and expertise
“Policy Making” RolePolicy Making” Role Improvement of legal framework “Best practices” (standardisation of practices and contracts)
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OUR RESULTSOUR RESULTS
Developing PPP skills of the dedicated Officials at every government
level
Promoting a PPP cultural
breakthrough
Regulatory Framework
Implementation
Defining a set of successful experiences
PILOT PILOT PROJECTSPROJECTS
““4P COUNCIL”4P COUNCIL” PPP Task-PPP Task-Force Force
NetworkNetwork
““10 LEGAL 10 LEGAL ISSUES”ISSUES”
PPP PPP GUIDELINESGUIDELINES
COMPETITIVE COMPETITIVE DIALOGUE DIALOGUE SCHEMESCHEME
EUROSTATEUROSTAT
UTFP activity “on the field” : the institutional framework
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Successful experiencesSuccessful experiences
PILOT PROJECTS aimed to support the promotion of PPP techniques. This is one of the main activities of the UTFP and develops selected pilot projects at national level.
The UTFP has accompanied pilot projects, contributing and documenting project experience, helping to solve questions (legal, financial, etc.) which occurred during the project process and providing the results for future PPP projects.
The selected projects were: Salerno-Reggio Calabria (Motorway); Intermodal Terminals Roma-Napoli-Milano (Logistics infrastructures); Torino-Lione (Railway); Quadrilatero Marche-Umbria (Motorway).
UTFP activity “on the field” : the institutional framework
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PPP assistance for central, regional and local administrationsPPP assistance for central, regional and local administrations
UTFP aims to support the promotion of PPP techniques at any level.
In compliance with, law it supports administration “on request” in any phase of the procedure:
Three year infrastructure planning Evaluation of proposal (legal, financial, etc.) Bid prepation Contractual agreement Contract implementation
Between June 2004 and December 2006 UTFP assisted 74 public administrations and supported 110 projects. The request came:
84% from local administrations 9% from regional administrations 7% from central administrations
More than 330 projects assisted over UTFP’s life since 2000
UTFP activity “on the field” : the institutional framework
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UStrategic infrastructure assistanceStrategic infrastructure assistance
UTFP activity “on the field” : the institutional framework
Acquedotto Montescuro OvestPotabilizzatore di ConzaAcquedotto del SinniAcquedotto Molisano centraleAcquedotto Molisano destroCity of ParmaCity of NaplesCity of BolognaCity of Rimini-RiccioneCity of Naples - CapodichinoCity of Naples - line 6City of Milan - line 5City of TeanoCity Of ModenaBRE.BE.MI. - Brescia/Bergamo/MilanoCISA - Parma/La SpeziaArcea - Roma/Latina Nord
Motorway constructionMotorway constructionMotorway construction
Motorway
construction
Transport construction of metro stationconstructionconstruction
renewing station area
Water Supply
renewingconstruction
construction of a new tankincreasing powerincreasing powertransport system
railway metro change
2005-2006 UTFP STRATEGIC INFRASTRUCTURE ASSISTANCE
ACTIVITY
metro stationrailway connection
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PPP cultural breakthroughPPP cultural breakthrough
The 4P COUNCIL (Promotion of Public Private Partnership Council) was established by UTFP in 2004.
The organization is composed of representatives from both public and private sectors. The Council and UTFP conduct research, publish findings, facilitate forums for discussion to develop PPP’s techniques. The Council also provides support to political officials and decision-makers in investigating and developing partnerships with the private sector.
The PPP GUIDELINE is one of the UTFP special task. The goal of guidelines is to help ensure the success of future PPP projects.
UTFP develops guidelines on:
* PPP Test
* Risk Analysis and Project Rating;
* Private Participation in Infrastructure;
* Public Sector Comparator (“PSC”)
* Feasibility Studies
UTFP activity “on the field” : the institutional framework
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Developing PPP skills Developing PPP skills
Task Force Network (“Network”) was established by UTFP. Network and UTFP develop:
Solution proposals for the improvement of PPP framework conditions;
Uniform procedures and tools for the implementation of PPP projects;
Training programs for public sector representatives.
UTFP activity “on the field” : the institutional framework
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Regulatory Framework ImplementationRegulatory Framework Implementation
10 LEGAL ISSUES to improve private sector participation in financing, building and operating infrastructures and public utility services. This document recommends “soft-law” solution proposals to remove main burdens in national legislative framework and aimed at the proper use of PPP schemes.
A COMPETITIVE DIALOGUE SCHEME as an available option to select the business case by the public sector side.
Implementation of EUROSTAT Decision 11 February 2004 on the accounting treatment in national accounts of contracts undertaken by government units in the framework of PPP.
UTFP activity “on the field” : the institutional framework
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Other public stakeholderOther public stakeholder
UTFP activity “on the field” : the institutional framework
The “Cassa Depositi e Prestiti” società per azioni (CDP S.p.A.) is a joint-stock company arising directly from the transformation of the public institution set up in 1850. The share capital is held 70% by the Italian Ministry of the Economy and Finance and 30% by Italian banking foundations
The CDP’s mission is to foster the development of public investment, local utility infrastructure works and major public works of national interest, ensuring adequate returns for
its shareholders while preserving long-term financial and economic balance. A specific “business area” of CDP is devoted to the funding of works, plant, networks and equipment for provision of public services. The CDP may raise funds through the issuance of securities, borrowing and other financial operations without State guarantees. So as to perform such operations the CDP may deploy funds deriving from market placement of specific financial products
Italian Infrastructure Italian Infrastructure Fund SgrFund Sgr
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Italian PPP at a glance
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UPPP market constant growth compared to the public infrastructure market 2004 PPP market constant growth compared to the public infrastructure market 2004 –– 2007 2007
2007 shows a rise coherent with 2006
Italian PPP at a glance
% of PPP on Public Infrastructure Market
14%
22%
30%
22%
0%
5%
10%
15%
20%
25%
30%
35%
2004 2005 2006 Jan.-aug.2007
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UPPP Market Structure - 2006PPP Market Structure - 2006
Italian PPP at a glance
Work concession under private initiative is the most widespread procedure both in terms of number and value
Service concessions account for 23.6% in value of total PPP market
Work concessions under public initiative account for 12.2% in value of total PPP market
Other PPP forms represent only a residual part of the market
Year 2006n° % € %
Phase I - Prior Information Notice (PIN) 474 34.67% 6,257,062,501 39.13%
Phase II - Invitation to tender 128 9.36 % 3,709,129,895 23.20%
Total PIN + tender under private initiative) 602 44.04% 9,966,192,396 62.33%
Work concessions under public initiative 263 19.24% 1,953,711,108 12.22%
Service Concessions 384 28.09% 3,773,836,436 23.60%
Other PPP 118 8.63% 295,385,127 1.85%TOTAL 1,367 100% 15,989,125,067 100%
UTFP on infopieffe.it Data (PPP National Observatory)
Number Value
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U PPP Market Structure - 2007PPP Market Structure - 2007
Italian PPP at a glance
Major projects raising PIN values in 2007Major projects raising PIN values in 2007
II Semester 2007 ANAS PINSValue %
1Road connection Ancona harbour and main roads 472,100,000 11.63%2Road connection San Vittore(A1) – Bojano - Campobasso 1.460,100,000 , 35.97%3Road connection Catania - Ragusa 1,268,583,843 31.25%4Road connection Caianello - Benevento 708,378,318 17.45%5Plant Maintenance and Management of Lombardia Region Tunnels 150,000,000 3.70%
TOTAL 4,059,162,161 100%
Value
January - August 2007n° % € %
Phase I - Prior Information Notice (PIN) 434 40.45% 9,252,414,966 65.72%
Phase II - Invitation to tender 106 9.88% 3,766,361,980 26.75%
Total PIN + tender under private initiative 540 50.33% 13,018,776,946 92.47%
Work concessions under public initiative 160 14.91% 655,051,436 4.65%
Service concessions 310 28.89% 284,532,172 2.02%
Other PPP 63 5.87% 120,360,102 0.85%
TOTAL 1,073 100% 14,078,720,656 100%
Number Value
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UPPP Trends 2004-2007PPP Trends 2004-2007
Italian PPP at a glance
Years 2004 - 20072004 2005 2006 Jan.-Aug.2007
Work Concessions- Under private initiative - Art. 153 L.D. 163/06 841 750 602 540
- Under public initiative - Art. 144 L.D. 163/06 280 183 263 160Service Concessions 345 506 384 310
Other PPP 181 260 118 63
TOTAL 1,647 1,699 1,367 1,073
Years 2004 - 20072004 2005 2006 Jan.-aug.2007
Work Concessions
- Under private initiative - Art. 153 L.D. 163/06 8,373,091,089 8,600,827,804 9,966,192,396 13,018,776,946
- Under public initiative - Art. 144 L.D. 163/06 1,299,204,932 2,212,337,948 1,953,711,108 655,051,436Service Concessions 2,375,834,680 4,245,291,833 3,773,836,436 284,532,172
Other PPP 6,509,390,247 1,817,677,214 295,385,127 120,360,102
TOTAL 18,557,520,94816,876,134,79915,989,125,06714,078,720,656
Number
Value
A physiologically slowing down market
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PIN Average ValuePIN Average Value
Italian PPP at a glance
PIN by average value
12.152.220
14.313.940
18.018.369
0
2.000.000
4.000.000
6.000.000
8.000.000
10.000.000
12.000.000
14.000.000
16.000.000
18.000.000
20.000.000
2004 2005 2006
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Sectors by Average ValueSectors by Average Value
Italian PPP at a glance
Sectors by average amount - 2006
0
20
40
60
80
100
120
140
160
180
200
Mill
ion
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The way forward:
UTFP commitments for the near future
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Consider PPP approach systematically. Avoid stop-and-go-policies;
Complete the “cultural change” in the Public Administration: “From asset ownership to service delivery”;
Improve competence and know-how of Public Administration in considering and assessing PPP approach.
The way forward
General issues for the (near) future:General issues for the (near) future:
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Legal issues for the (near) future:Legal issues for the (near) future:
Reduce total duration and complexity of the actual concession PPP awarding process (from three-stage to one-stage procurement procedure), considering the opportunities of recent EU issues (i.e. “competitive dialogue” procedure);
Consider the option to set-up a tailored legal framework for PPP contracts.
The way forward
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Reduce the need of public granting introducing alternative sources of financing:
Private equity funds (Fin.OPI, CdP SpA, Banking Foundations, specialty funds – Galaxy -)
Public participations (see Fund for Healthcare investments made by Tuscany Region, advised by Merrill Lynch)
Revolving funds, quasi-equity and mezzanine New financial tools, in cooperation with international and EU financing institutions
(i.e. guarantee instruments, risk capital funding, managed by EIB)
In the PPP procurement, link the concession contract to the evidence of financial closing;
Implement a secondary market in PPP/PFI equity
Financial issues for the (near) future:Financial issues for the (near) future:
The way forward
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Operational issues for the (near) future:Operational issues for the (near) future:
Implement strong project control for PPP projects in construction phase;
Systematically implement accurate risk assessment and allocation
Possible stronger involvement of EU Commission and EIB in PPP (EPEC)
Need to have a clear picture of the risk transferred to the Government by PPP operations
The way forward
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CONTACTSCONTACTS
UNITAUNITA’’ TECNICA FINANZA di PROGETTO TECNICA FINANZA di PROGETTO
Presidency of the Council of Ministers
Head Office - Via della Mercede, 9 Head Office - Via della Mercede, 9 –– 00187 Rome, Italy 00187 Rome, Italy
Tel. +39 06 6779 6394 Tel. +39 06 6779 6394 –– Fax. +39 06 6779 6573 Fax. +39 06 6779 6573 –– www.utfp.it www.utfp.it
Gabriele PASQUINIGabriele PASQUINI –– Legal Advisor Legal Advisor
Tel. +39 06 6779 6534Tel. +39 06 6779 6534
Mob. + 39 335 58.58.313 Mob. + 39 335 58.58.313
Email: [email protected]: [email protected]