ERES 2011 INDUSTRY Seminar " Public Private Partnership – Magic bullet or danger "

Public Private Partnership Must Knows

ERES 2011 INDUSTRY Seminar"Public Private Partnership Magic bullet or danger"21 October 2011Bernhard MuellerAssociate Professor University of Vienna, School of LawPartner and Head of the Public Law Desk of DORDA BRUGGER JORDIS Rechtsanwlte GmbH

www.dbj.at

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.20110

5IntroductionDefinition and Characteristics of PPPBasic forms of PPPLimited risk transfer to private sectorfull risk transfer to private sectorContracting outLeasingPublic Private Joint VenturesPFIBOT, DBFO, BOOT, etcConcessionsDivestiture and PrivatisationPFI: Private Finance InitiativeBOT: Build Operate TransferDBFO: Design Build Finance and OperateBOOT: Build Own Operate Transfer


5Overview

IntroductionDefinition and Characteristics of PPPMain Drivers of PPPParties of PPP Projects Structures of PPP Projects

Practical Examples


5IntroductionDefinition and Characteristics of PPPThe following elements characterize PPPs:

Long duration of the relationship (up to 30 years; life cycle models);Relationship involving intensive cooperation between public partner and private partner on different aspects of a the project;Alternative methods of financing the project (project financing; forfeiting with waiver of defences);The important role of the economic operator (private partner), who participates at different stages in the project (design, construction, operation, financing);Public partner concentrates primarily on defining the objectives to be attained in terms of public interest, quality of services provided and pricing policy; Risk-sharing between public and private partner (i.e. transfer of certain risks from public sector to private partner);


5IntroductionMain Drivers and scope of PPPValue for money and risk transfer as main Drivers of PPP

Scope of PPP projectsRail infrastructureRoad infrastructurePrisonsHospitalsWaste managementWaste water treatment

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.20114RisksTechnolgical risksElementary risksTechnical risksEconomical risksForcemajeurGlobal risksPlanning risksCompletion risksGeological risksOperation and Managment risksFinancial risksMarket risksPolitical risks

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.20115Contractual aspectsAllocation of risksPrivate PartnerPlanning CompletionTechnologicalOperation and managementFinancialMarketForce majeur

Public SectorPlanning (permits, authorizations)GeologicalInflationForce majeur


5Introductionparties of PPP projects Public sectorStatutory bodies under public law (e.g. State, Austrian provinces, communities and outsourced entities controlled by them);

Tasks of public sectorDefinition of scope of servicesDetermination of prioritiesDetermination of goals and resultsRegular quality acceptance Partial financing of the project (in particular by giving guaranties to reduce financing costs [interest rates])


5Introductionparties of PPP projects Private sectorConstructorOperatorConcessionaire Banks

Tasks of private sectorDesign, construction, operation etc.Financing functionSupply of value for money to the public sector


5 How does PPP work?

Public Sector


5Contractual ModelContract with Project Company

Public Sector

Project company100% ownership


5Contractual Model Financing Contract

Public Sector

Project company100% ownershipConsortium of banksfinancingsecurities


5Contractual ModelConstruction contract / Works Concession

Public Sector

Project company100% ownershipConsortium of banksfinancingsecuritiesBuilding companyPublic tenderSub contractorconstruction


5Contractual ModelOperation Contract / Services Concession

Public Sector

Project company100% ownershipConsortium of banksfinancingsecuritiesBuilding companyPublic tenderSub contractorconstructionOperating companyPublic tenderOperation for 30 years


5 Institutional Model

Public Sector

Project companyConsortium of banksfinancingsecuritiesBuilding companyPublic tenderSub contractorconstructionOperating companyOperation for 30 years Public SectorBuildingcompanyoperatingcompanyshareholder


5Success Factors for Life Cycle Management Models

Construction + operation = 1 teamConstruction + operation = 1 priceThe team wins the tender / the awardSame interestsOptimized total cost of ownershipSustainability is rewardedAll partners are connected for a long period

Construction: planning and realizationOperation: operation, service, repairing, replacement capital investments, energy costs.

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201115PPP-projects examples IPPP-Ostregion (Austria)project volume: 944.18 mFinancing model: Project Finance: For planning, construction and operation financing by the Concessionaire through equity, subordinated debt (bank guarantee to safeguard capitalization of Concessionaire until start of operation) and mezzanine and senior facilities, senior bondOperational period30 yearsAwarding authority ASFINAGDescription of project planning, construction, financing (Concessionaire); refinancing out of the revenues of the project (shadow toll)

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201116PPP-projects examples IIHeavy Vehicles Toll System (Austria)project volume: 1,200 mFinancing model: Project Finance: For planning, construction and operation financing by the Concessionaire through equity, subordinated debt and mezzanine and senior facilitiesOperational period10 years (call option of ASFINAG)Awarding authority ASFINAGDescription of project planning, construction, financing, operation; refinancing out of annual fees

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201117PPP-projects examples IIIPsychosomatic Rehabilitation Hospital Eggenburg (Austria)

Project volume: 15 mFinancing model: Project FinanceOperational period30 yearsAwarding authority Province of Lower AustriaDescription of project planning, construction and financing of special hospital;Technical operation of prison (e.g. wastewater disposal, technical maintenance etc)

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201118PPP-projects examples IVPrison Mnchen-Stadelheim (Germany)

Project volume: 54 mFinancing model: Forfaiting with waiver of defencesOperational period20 yearsAwarding authority The Free State of BavariaDescription of project planning, construction and financing of new building of a women's and juvenile detention facility of prison Mnchen-Stadelheim;Technical operation of prison (e.g. wastewater disposal, technical maintenance etc)

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201119Financing ModelsForfaiting with waiver of defences:

DORDA BRUGGER JORDISwww.dbj.atSeite Nr.21.10.201120PPP-projects examples VSchools in Eppelheim (Germany)

Project volume: 62.5mFinancing model: Forfaiting with waiver of defencesOperational period: 25 yearsAwarding authority The City of EppelheimDescription of projectRenovation, construction and operation of five schools and two sports halls


KontaktDORDA BRUGGER JORDIS Rechtsanwlte GmbH Dr-Karl-Lueger-Ring 101010 Wienwww.dbj.at

Austrian Law Firm of the Year 2010,Chambers Europe Awards for ExcellenceDiese Unterlage wurde sorgfltig ausgearbeitet, kann jedoch individuelle Beratung im Einzelfall nicht ersetzen.Priv Doz Dr Bernhard MllerT: +43 1 533 47 95-57F: +43 1533 47 95-5057E: [email protected]


ERES 2011 INDUSTRY Seminar " Public Private Partnership – Magic bullet or danger "

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