Looking for new opportunities of investment for the PPPs projects. The keys of the success for PPPs in railway sector

Transcription

1 Looking for new opportunities of investment for the PPPs projects The keys of the success for PPPs in railway sector Doris CHEVALIER Paris 14 Juin

2 2 French expertise for railway PPPs

3 French expertise for rail PPPs Since 2004 to railroads PPP 2004 LGV Perpignan Figueras Concession agreement, 1,1bn, 50 years 2010 GSMRail availability agreement 1, 5bn, 15 years 2011 LGV Tour Bordeaux concession agreement 8bn, 50 years 2011 LGV Le Mans Rennes availability agreement 3,4bn, 25 years 2012 LGV Nîmes Montpellier availabilityagreement 2bn, 25 ans A global portfolio of the projects in PPP representing more than 15 billions 3

4 French expertise for rail PPPs High Speed Railroad Perpignan-Figueras, 44.4 km railway between France and Spain. The HSR can welcome 350 km/h speed HST as well as well as 120 km/h speed freight trains, mixing which constitues the first one for such an infrastructure. The PPP of the GSM-Rail (Global System for Mobile communication for Railway) is a system of digital telecommunication based on the wireless standard of the GSM. It allows all the actors of the rail transportation (regulators, team on site, on trains, station masters) to communicate alltogether. It also allows the exchanges of data of road marking between trains and posts of regulation The HSR Sud Europe Atlantique, 303 km new line between Tours and Bordeaux, biggest been signed under a concession contract. Its amount, approx8 billion euros, is in fact the most important PPP lead by Réseau Ferré de France, and it is the most important in France. The HSR Bretagne Pays de Loire project, between Le Mans and Rennes, 182 km, availability based contract The Nîmes-Montpellier by pass, availability based contract. It is a high-speed line used both for freight and passengers. 4

5 Feedback of the French PPPs France dominated the market of the PPP in 2010/2011 with 19 financed projects and 62% of the total of the European PPP. The sector of the Transport represented 58 % of the European market. Since 1990, only 2 % of the projects in PPP went into default. 71% of the projects were delivered on time. 91 % of the projects faced additional costs of less than 3 %. The average duration of the financing is around 22 years. One billion euros of equity was mobilized for the railway projects. 5

6 Concession and Availabilty agreement : a French specifity 6 Source RFF

7 Concession and Availabilty based contract : a French specifity 7 Source RFF

8 8 Benefits of the railway PPPs

9 Two contractual schemes : Public procurement and PPP The PPP is procurement tool by which a public entity relies on the skills and performance of a private entity to implement a project. The main difference with standards public procurement projects lies in the project management. Under a standard public procurement scheme, the public authority of the project, has to manage by itself several independent contracts (design, studies, civil work, maintenance, etc ), and endorse the responsibility to optimise the interfaces and the interactions between all the contracts signatories Under a PPP scheme there is a unique contract between public and a private company created on purpose to manage all the aspects of the contract. The private party is responsible for the global service and for optimizing the interfaces between all parties involved in the project. 9

10 A better management large railway projects The PPP brings incentive to enhance performance of railway sector PPP gives the opportunity to : Realize more projects in a shorter time, and to reduce the operating dates Optimize the uses of public money by mobilizing private financial resources Reduce the timing and the costs of the project by a global approach, which integrates the conception, the construction and the maintenance, a better global planning, management of the project and the logistic organization. Anticipate the evolutions of technology and services and their financing Transfer a part of the risks from public sector to private sectors with an incentive on performance 10

11 A better management large railway projects Main differences between PPPs and Public procurement projects Within a Public Procurement the management of the contractual interfaces amongst parties involved is treated through several contracts and deadlines Within a PPP the management of the interfaces is delegated to the private partner, incentivized in the performance of the work and of deadlines 11

12 12 Keys of success

13 Pro s and Con s Pro s PPP ensures the costs and accelerates the realization of the work PPP maximizes the use of the technical and financial capacities of the private sector The risks are assigned to whom is most available to manage or stand PPP allows a capped budget on a long term basis PPP imposes to the public partner to anticipate its long term needs and creates valuable assets. The quality of service is maintained for the duration of the contract as well as the technological evolution of the project The private partner is paid according to the performance of the service Con s PPP scheme does not change project into profitable PPP is not a total transfer of the risks to the private partner (technical, financial, legal) PPP can lead to a loss of control of the public sector when badly structured PPPs are structures tailor for long terms not much flexible once signed : projects must be duly studied selection process for a PPP can be long and expensive for all if it is badly driven The public partner need the support of an experimented team in order bring and check the «value for money» of the project while keeping it attractive to private sector The private sector bears financing costs more expensive than the public sector 13

14 Keys of the success of a railway PPP A strong political support : Railway PPPs are complex and large projects which require a strong political support to lead them to achievement The project must be inserted into the local economic network and into the global offer of transport (urbanization, multimodality) An existing and precise legal framework : A railway PPP is specific in risk sharing because of the high level of industrial matters & content A railway PPP is specific because it includes a legal aspect on safety (ex transport of passengers ) The legal framework must be clear and precise to satisfy expectations of the financial market 14 A good evaluation of the technical project in order to optimize the future performance Public sector has to define the private sector objectives during construction period but also during operation period. Railway PPPs mobilize front ended financial resources during construction period because of the particular needs of industrial sector, ( vs road or building PPPs) One should decide whether or not to include operation within the PPP scope One should decide whether or not to include purchase of Rolling stock within the PPP scope Purchase of Rolling Stock should not be separated from Rolling stock maintenance The performance of the railway PPP is a fine-tuned balance between all the actors

15 Keys of the success of a railway PPP A fair sharing of the risks according to the capacities of the actors to ensure the bankability and the performance : the project has to remain attractive : both for the sponsors and the financiers The management of the interfaces should be done in a way not to increase the cost of the project. The industrial partner is a industrial guarantor but not a financial guarantor A contract duration long enough : min 20 years In connection with the depreciation of the rolling stock, In order to face the hazards of the project and still remunerate the private partner. In order to anticipate technological evolutions and life cycle costs In order to anticipate risk of refinancing A preliminary budgetary validation : A railwayppp requires a minimum from 30 to 40 % of subsidy A candidates selection process clear, precise and concise Select candidates as high as the stakes in the project Manage a transparent and precise procedure Limit tender process in time Hire advisers with a strong know how of PPPs structures but also of railway sector. 15

16 10 errors not to be committed Badly define the project Endless tender process Think of making profitable a project which it is not by the use of a PPP structure Confound / mix risk spreading and competitive dialogue Try to anticipate everything and any risk Push aside / disempower the public partner of the contract life Not incentivise the industrial partner in the project company life Focus only construction period and its actors Get weak or no advisers Create extra contracts polluting the main PPP contract to deal with forgotten matters 16

17 Alstom expertise in PPP Alstom s references Arlanda Airport Link Manchester Metro Line 1 Nottingham LRT Line 2 Rouen Metrobus Line 1 Barcelona LRT Ph 1 & 2 Milan metro Line 5 + extension Florence LRT Lines 2&3 Jerusalem LRT Line 1 Reims LRT Line 1 SIG Alicante / Albacete Contournement Nîmes-Montpellier 17 Participation sold In operation In construction Awarded to us

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