PPP seminar. High Level Regional Workshop on PPPs in the Middle East Jordan. June 2010

Transcription

1 PPP seminar High Level Regional Workshop on PPPs in the Middle East Jordan June 2010

2 Suez Environnement EMPLOYEES > 65,000 CONSOLIDATED REVENUES ,4 Billion SUEZ ENVIRONNEMENT IS THE SOLE PLAYER OF GLOBAL SIZE DEDICATED SOLELY TO THE ENVIRONMENT. Turnover by geographical area The diversity of SUEZ ENVIRONNEMENT s international positions is the result of a selective strategy aimed at seizing opportunities for profitable growth. Turnover by activity SUEZ ENVIRONNEMENT s business is based on two balanced activities: a solid and growing European base as well as an international platform geared towards profitable and growing markets. Employees by geographical area 65,000 employees, 30,000 of whom are in France (75,000 including AGBAR employees 2

3 WASTE Management Business Lines KEY FIGURES More than 400,000 industrials and commercial clients 42 millions tons of waste treated 1,024 waste treatment and reuse/recovery/recycling sites, including : 252 sorting centres 116 composting platforms 146 open landfills 133 hazardous waste platform 48 non-hazardous Energy from Waste units 11 hazardous Energy from Waste units 9 medical waste treatment sites 312 transfer stations 3

4 INTRODUCTION 1- CONTEXT An historic variation in the energy price and in the costs of raw materials The world financial and economic crisis The sustainable development have taken more and more place : * Economic model * In the society : stronger societal pressure (climate change) * Drivers for politics 2 CONSEQUENCES New models in the global waste management have been developing New regulations Promote sustainable use of material resource and managing waste is a common interest In this context, recognition is growing that PPP can help to relieve pressure on the public finances and help to improve the public services. 4

5 Definition of PPP PPP explore the way in which public and private sectors collaborate in a specific project. The main objective is to propose the funding, design, construction and management of an infrastructure or service traditionally supplied by public sector. The main elements of a PPP project are : A long duration in the partnership (20-30 years) The funding of the project : private fund with sometimes some public subsidies Risk sharing beteween both parties A clear objective defined by the public partner, manage by the operator and monitoring by the public sector. The development of PPPs in Europe has been concentrated more in the transport sector, public buildings than in the environment sectors. Things begin to change. 5

6 Benefits of PPP project for the waste sector The multiple benefits that PPP can bring to environmental services, notably through the establishment of explicit performance objectives and targets which the operator commits to through the PPP contract, and which may include: o Achieving fast compliance with health & environment regulations. o Improving operational efficiency and economic sustainability of public services. o Promoting an integrated approach to infrastructure design, sizing and financing. o Fostering know-how transfer and innovation. Moreover, open and fair competition between public and private management options is a level for better performance and governance, for the benefit of all consumers and the environment. 6

7 Some of the obstacles to the developement of PPP project in waste services * A lack of knowledge about PPPs among decision makers, and uncertainty about their compatibility with government funding. PPPs tend to be confused with privatisation schemes with sometimes the idea of massive layoffs in public utilities. * National measures such as VAT distortions and restricted access to structural funds, which discriminate against private operators and private participation in mixed companies. * A broad interpretation of the in-house concept, that allows a public operator to bypass competition obligations even if the entity has a private status. 7

8 Conclusion: how to promote PPP as an option for better waste services By mixing private and public sectors skills the efficiency gains help to deliver more and better public services. To obtain good results PPP programms needs : 1 a long term committment of the authority in charge of the project 2 explicit performance objective and targets for a better committments of the operator : define the drivers of the project 3 a definition of the projects focus in terms of objectives to be reached rather than in terms of technical means 4 a clear key performance indicators in order to facilitate the monitoring of the project 5 the bankability of the project has to be proved 8

9 EXAMPLE : PROJECT OF CORNWALL UK

10 Drivers for Change in UK EU Landfill Directive requires a reduction in the quantity of biodegradeable municipal solid waste (BMW) sent to landfill UK has traditionally relied on landfill; it has a long history of aggregate and mineral extraction leaving void space to be filled by waste (>80% landfill) Country has a mix of rural and urban centres; heavy traffic congestion Government has chosen to encourage investment in new waste treatment infrastructure by employing the PFI (Private Finance Initiative) idea previously used in UK to fund new prisons, hospitals, roads and schools Government make capital contribution available to local Authorities who invite competitive bids from the Private Sector on a DBFO basis 10

11 PFI Projects Based on principles of Value for Money (compares Public v Private options) and Sharing of Risks. Key Risks transferred to Private sector That the asset/s is delivered on time That the asset/s is built to budget That the asset/s successfully and reliably meet stated performance criteria Funding is not underwritten by the Local Authority The private sector bidder designs a new infrastructure of treatment technologies to meet landfill diversion criteria and raises the necessary finance privately (through corporate funds or private borrowing usually Project Finance). The Local Authority pay a simple Index linked Gate Fee per tonne of waste accepted and processed by the Private sector Operator. The Government grant offsets the cost to the Local Authority 11

12 CORNWALL example 12

13 Main objectives of the project Improved Recycling Technical and financial expertise (to DBFO new facilities) Reduced reliance on landfill Retained employment for 240 people A Long Term (25 year) service Safe Environment Value from all waste received through recycling, composting & energy recovery 13

14 Cornwall Example SITA UK was awarded one of the first PFI «waste» Contracts Partnership between SITA UK Royal Bank of Scotland and AXA to develop a SPV The SPV places an EPC Contract for the Energy from waste Plant Arms length contracts between SPV and O&M service provider (SITA), the Energy from Waste EPC Constructor and a Construction Manager First PFI Contract with Foreign Exchange Risk incorporated (technology supplied in Euros - Sterling in UK) 14

15 Typical Contracting Structure Client Project Agreement Funders Project Finance SPV Guarantees Third Party EfW EPC Works Contract Security Package SITA UK EfW Project Management Contract SITA UK Parent Security Package SITA UK (1) Operating Contract (2) Non-EfW Works Contract Non-EfW Works Contract Landfill Contract Misc. Contracts (e.g. Haul, Recycle, Compost) 15

16 Transferring Assets In Cornwall SITA took over the employment of 240 Local Authority employees to deliver the future service SITA took over the operation of 25 existing facilities (recycling centres, landfill sites and transfer stations) and a haulage fleet SITA fund the development, construction and long term (25 year) operation and maintenance of new facilities including a 240,000 t/year EFW plant ( 100m) 670,000 tonnes per year handled in total 18 months public procurement, 2 years for Consents, 3 years to Construct 16

17 Waste Projects are however. Not as easy to deliver as other PFI projects (schools, hospitals etc). Planning Consents are more difficult and locally controversial.often awarded to the preferred Private sector bidder in advance of the necessary Consents to build and Operate : permitting. Integrating different technologies (for Recycling, Composting, Mechanical Biological Treatment and Thermal Recovery) calls for indepth expertise Affected by continuous Changes in Environment law or standard need flexibility to adapt to law or changes in waste composition/volume Long term investments; seek a partner with a long and successful track record of designing, delivering and operating new technologies 17

18 CONCLUSION PPPs project in waste activity It seems not to be possible to say that there is only one scheme for PPP project in waste activity. The main driver in never the same and changes with the context and the requests. Best mix depends on: Regulation & taxes Environmental awareness Investment capacity Tonnage to be treated Long term security for outlets : materials recycling, compost, energy Objectives of the local authority in charge of the project Each project must take into account which form of management is the best, regarding a whole host of environmental, health and safety, economic and social criteria. The objectives of the authority have to be clearly defined and validated by the local political leaders in order to avoid the difficulties (permitting) 18