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The role PPPs can play

in helping to deliver the CEF

6 March 2012, Lisbon

Andy Carty

epec@eib.orgwww.eib.org/epec

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Established in September 2008

A unique cooperative initiative of the EIB, the European Commission and EU Candidate and Member States

International team of 18 professionals

Membership: Initially 20, EPEC now numbers 35 Members

Excellent engagement from Members with more than 120 participations annually in EPEC working groups

The European PPP Expertise Centre

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EPEC’s mission: To help the public sector deliver more, and better, PPP deals

Collaborative Working – Information sharing through member working groups.

Institutional Strengthening – Policy and programme support through bilateral working with member organisations.

Helpdesk – Service offered to members providing rapid responses to enquiries.

Sharing information, experience and expertise

Strengthening the organisational capacity of public authorities to develop PPP programmes

Promoting good practice across the public sector

EPEC’s activities: EPEC works by:

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EIB Transport Sector Lending in the EU

EIB loans to Transport reached EUR 75 billion in the period 2006-2011*

Transport Lending

The EIB has lent an average of EUR

12.5 billion p.a. to the transport

sector in the EU during the period

2006-2011.

EUR

m

*

* 2011 figures are annualised YTD figures as of 30/09/2011

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Transport58%

Public Order and Safety

12%

General Public Services

11%

Education6%

Healthcare3%

Other (Housing, Telecoms,

Energy)2%

Environment8%

Transport represents half of the market volume, though outnumbered in terms of deal numbers.

PPP Financing per SectorWith 66 projects in 2011, Education and General Public Services PPPs outnumbered Transport PPPs (12 projects). However, in terms of value, with EUR 10.3 million invested, transport still represents more than the half of the market volume.

The European PPP MarketKey sectors in 2011

0 5 10 15 20 25

Education

General Public Services

Transport

Public Order and Safety

Environment

Healthcare

Other (Housing, Telecoms, Energy)

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EIB PPP Financing and Support

Since 1990, EIB has progressively broadened geographic and sector spread of its PPP lending. The Bank is now one of the major funders of projects in Europe with a portfolio of about 140 projects and investment of around EUR 30 billion. Annual signatures averaging above EUR 2.5 billion since 2000, reaching EUR 3.8 billion in 2010 with EUR 2.6 billion in the transport sector. In 2011 signatures reached EUR 3.6 billion of which EUR 2.7 billion in the transport sector.

EIB has provided substantial policy support and organisational capacity to support the development of PPP markets and investments since the 1990s

EIB lending has been a key source of medium and long term debt for the European PPP market since 2007

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Major European Transport PPP Projects

Austria

Ireland

Koskenkylä-Kotka

Poland

Germany

UKLondon Orbital Netherlands

HSL(High Speed

Line)

BelgiumLiefkensh

oekRail Tunnel

Finland

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Delivering the next generation internet through PPPPrivate sector involvement (both in terms of capital and expertise) is key in meeting the ambitious targets set by the Digital Agenda

The PPP model has enabled NGA deployment in areas where it would not otherwise have been feasible, or would have been significantly delayed

Digital Agenda for Europe

A strategy for achieving a

flourishing digital economy by 2020

Targets

100% Internet coverage by 2013

--100% coverage at more than 30Mbit/s

by 2020--

50% household take-up at more than

100Mbit/s by 2020

Lessons learned from past experiences shows how no single PPP model suits all circumstances

It is necessary to understand the attractiveness of a project to the private sector before deciding on the required level of public sector involvement

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Initiative with the European Commission in connection with the Financial Facility to Support Energy Efficiency and Renewable Energy Initiatives

EPEC will support the EC in raising the awareness of local, regional and national authorities to ensure optimal use of EU Structural and Cohesion funds, particularly improving the energy efficiency of the public sector

PPPs for Energy Efficiency (EE)

Events:-Workshops-Round tables-Regional seminars-ConferencesKnowledge-sharing:-Dedicated website-Case-study database-Contacts database

Guidance materials on:-PPPs in EE for public buildings-Street-lighting -EE and renewables use in housing and other types of buildings-Reallocation of ERDF-funds -ESCOs and EPC contracting-Linking projects with sources of support at the EU level (ELENA, JESSICA, EEEF)

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Transaction Financial Advisory (TFA)Lending, Blending & Advising

EIB’s TFA department provides advice to public sector clients to help them develop their:

• Absorption capacity and leverage of EC and EIB resources

• Design and management of joint financial instruments

• Project preparation and implementation capabilities

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EU Structural Funds and sector-specific budgetary programmes for TEN-T, TEN-I and CEF are major source of infrastructure finance

EU programmes require co-financing funds which must come from private sources and/or public authorities.

PPP structures are eligible for EU Budgetary grant-funded projects

The development of appropriate mechanisms and rules to facilitate joint PPPs and EU funding is necessary in order to meet the next EU budgetary period policy objectives

Combining EU Budgetary Funds with PPPs

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Subordinated Project Bond Instruments

Project Bonds

Target rating

minimum A-

Bond Issue and underwriting

SPV

ProjectCosts

EIB Sub-debt

Equity & Quasi-equity

EIB Sub-debt participation can be combined with different types funding sources (bonds and other senior loans)

EIB Unfunded Sub-debt participation can be flexibly used and structured in order to ensure target rating.

Project Bond

Investor

up to 20% of total

Bond issue

“Project Bonds” have points in common with LGTT, but they extend the LGTT experience to:

All categories of project related risks, including construction, operations, performance, traffic etc. ;

A wider eligibility range across sectors, potentially extending to: transport, energy, environment, and ICT;

Can be both unfunded and funded, depending on the project’s characteristics and requirements. As in the LGTT, in the unfunded version, once EIB guarantee is called it will crystallise into a subordinated debt.

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Thanks for listening…

Andy Cartycarty@eib.org

* * * *

European PPP Expertise Centre

epec@eib.org

www.eib.org/epec