Cityscape jeddah jun 2011
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This is the presentation that I made at Cityscape Jeddah in June this year. Some comments are available on several Middle East web sites such as Arab News link attached http://arabnews.com/economy/article453469.ece )
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Semelhante a Cityscape jeddah jun 2011
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Cityscape jeddah jun 2011
- 2. Citycsape Jeddah Effective Partnerships Structuring “win-win” Public-Private Partnerships (PPP) in real estate and infrastructure projects 11 June 2011 John Davie Chairman, Altra Capital Limited Past Chairman, UK Government PPP Advisory Group Member, Saudi British Joint Business Council
- 5. an expectation of service improvement
- 6. a commitment to transparency
- 7. the dismantling of monopolies and the reform of public services
- 8. A PPP project typically involves a long-term arrangement in which the public sector will contract with the private sector to deliver a service in exchange for regular performance-based paymentswww.altracapital.com
- 9. Maintenance Concession BOOT Concession Design-build Design-build-operate-transfer Asset Capitalisation Design-Build-Finance- Maintain-Operate Design-bid-build Turnkey Delivery Divestiture Traditional Public Sector Procurement Build-Operate- Transfer (BOT) Private Finance Initiative (PFI) UK PPP Model Build-Own-Operate (BOO) Public Owner/ Operator/ Financier Public Owner/ Financier Public Owner Private Concessionaire Operator Operator Contractor Operator Contractor Contractor Engineer Engineer Engineer Operator Contractor Engineer What is PPP? Private Sector Leading Public Responsibility Private Sector Privatisation Private Owner www.altracapital.com
- 12. Public services must be defined in terms of their intrinsic nature, rather than how they are delivered. A more appropriate definition is....‘… any service provided for large numbers of citizens, in which there is a potentially significant market failure (broadly interpreted to include equity as well as efficiency), justifying government involvement – whether in production, finance or regulation’ www.altracapital.com
- 14. an ECA tranche
- 17. an equity bridge tranche
- 18. All projects are different but a typical repayment profile might be as follows:
- 19. Conventional and Islamic term facility ; 20 years
- 20. ECA facility; 14 years
- 21. EBL-bullet payment, repayable 5 years after FC
- 22. Working Capital facility ; revolving credit facilitywww.altracapital.com
- 24. operator
- 25. bankInsurance/ Guarantees Project Company (SPC) Operations (Soft Services) Holding Company Senior Debt Equity Service/Operator Charge Build/Renew/ Maintenance Costs Equity Construction & Maintenance (Hard Services) How PPP Works Loan Agreement Concession/ Project Agreement Debt Repayment Debt Equity and sub-debt Sub-contractors Sub-contractors www.altracapital.com © Altra Capital Limited 2011
- 26. Total nominal cash flow 100% PFI - % Total cash flows to equity partners 80% % Remaining 60% PFI - % Total payments remaining 40% 20% DBMO - % Total payments remaining 0% 0 3 6 9 12 15 18 21 24 27 30 Time Percentage of total nominal cash flow remaining in a typical DBMO and PFI model and percentage of total cash Flows to equity remaining in a PFI model
- 27. UK – signed PFIs by financial year www.altracapital.com
- 28. UK – signed PFIs by financial year www.altracapital.com
- 30. Scrutinise the deliverability of a project before real engagement with the market.
- 33. Mix of mandatory procedures and support
- 34. Proper attention paid early on to the operational phase of projects
- 35. A view about what you want the market to look like in 5 -10 years’ time.www.altracapital.com
- 37. 2002 the SEC approved a series of measures aimed at promoting the activities of the private sector with the aim of achieving greater national economic growth.
- 38. 80s /90s UK initiatives brought private sector into activities once considered preserve of Government
- 39. first privatizing state-owned industries,
- 41. the monetary system is stable
- 42. government commitment is strong
- 43. government movement toward private sector and investors to participate in the development process is encouraging
- 44. experience of local and international banks in funding projects has been successful
- 46. PPPs are all embracing panaceas that can be implemented all at once irrespective of the competence, knowledge and skills on the part of governments
- 47. PPPs provide a number of infrastructure assets, roads, bridges, power plants etc., to Governments either free or little cost and no risk
- 48. PPPs are sophisticated technical financial transactions
- 49. Using a PPP can bring private money into public coffers and be an additional source of payment for government departmentswww.altracapital.com
- 51. To mirror this simply by eliminating interest is missing an opportunity
- 52. Islamic finance cannot be reduced to its economic components
- 53. Islamic finance carries ethical, social, political and religious dimensions that informs its structure.
- 54. Islamic financial institutions should foster social justice as well as generate wealth
- 55. Similar to the wider objectives of many of the commissioning agents of PPP projectswww.altracapital.com
- 57. operator
- 58. bankInsurance Concessionaire/ SPV Debt/Equity Funders Operations (Soft Services) Loan Agreement Securitypackage Service/Operator Charge Build/Renew/ Maintenance Costs Construction & Maintenance (Hard Services) How PPP Works Hiba – gift? Ijara – lease? Istisna – custom manufacturing? Musharaka – partnership ? www.altracapital.com
- 60. operator
- 61. bankInsurance Concessionaire/ SPV Debt/Equity Funders Operations (Soft Services) Loan Agreement Securitypackage Service/Operator Charge Build/Renew/ Maintenance Costs Construction & Maintenance (Hard Services) How PPP Works www.altracapital.com
- 63. operator
- 64. bankInsurance Concessionaire/ SPV Debt/Equity Funders Financing SPV Mudarib Operations (Soft Services) Loan Agreement Investors / Subscribers Rabb Al-Mal Securitypackage Service/Operator Charge Build/Renew/ Maintenance Costs Construction & Maintenance (Hard Services) How PPP Works Mudaraba www.altracapital.com
- 65. Government Direct Agreement Performance/ Payment Insurance Concessionaire/ SPV Financing SPV Mudarib Operations (Soft Services) Loan Agreement Security package Service/Operator Charge Build/Renew/ Maintenance Costs Construction & Maintenance (Hard Services) How PPP Works Mudaraba Investors / Subscribers Rabb Al-Mal www.altracapital.com
- 66. Government Direct Agreement Performance/ Payment Return on Investment (no interest) Financing SPV Mudarib Insurance Project SPV Sponsor/Developer Operations (Soft Services) Investors / Subscribers RabbAl-Mal Service/Operator Charge Build/Renew/ Maintenance Costs Construction & Maintenance (Hard Services) How PPP Works Debt & Equity (Muharaba, Istisna Salem, etc) Mudaraba www.altracapital.com
- 67. Thank Youwww.altracapital.comLondon : jamesdavie@altracapital.com Abu Dhabi: aimanarbab@altracapital.com
Notas do Editor
- An agreed drawdown schedule is agreed to cover the initial EPC costs over a construction period of say 2-3 years. Once the construction phase has been completed and the facilities fully drawn down, you move into the operations phase. During the operations phase debt service repayments are made from dividend receipts on a fairly uniform basis over the remaining tenor of the relevant facility.
- The difficulty is that in some emerging economies and/or economies in transition such principles are often ignored at the time when PPP appears to the government as an alternative to the public financing of infrastructure due to some misconceptions. The most frequent misconceptions are the following:Contracts are sufficient for getting started In PPPs, only a strong contract between the parties is needed. Putting in place the overall legal, policy and institutional framework can wait: In an effort to start a PPP programme quickly, governments have been under a wrong assumption that it was sufficient to put in place a strong contract with the private sector and that establishing the legal, policy and institutional framework could begin afterwards. This misconception has resulted in insufficient attention to policy, legal and institutional frameworks in PPPs. Projects once started often unravel. Such a practice cannot work if governments wish to develop a deal flow. The success or failure of PPPs can often be traced back to the initial design of PPP policies, legislation and guidance or the lack thereof. PPPs are all embracing panaceas that can be implemented all at once irrespective of the competence, knowledge and skills on the part of governments: PPPs are very complex but Governments have been eager to start as quickly as possible without pacing themselves. Such a myth lead to countries with no experience of PPPs to launch numerous projects before they have the capacity and knowledge, leading them often to repeat the mistakes of those who started earlierPPPs provide a number of infrastructure assets, roads, bridges, power plants etc., to Governments either free or little cost and no risk: Often sponsors have tended to ‘over sell ‘the promise of PPPs to countries and to hide the extent to which governments share risks and provide support to projects. The misconception that the private sector can do everything itself leads to a poor understanding of the Government’s own role in PPPs, which is critical. Governments do need to share costs and accept certain risks with the private entity. Such a perspective can induce poor risk optimization, which in turn will lead to higher costs of projects PPPs are sophisticated technical financial transactions. PPPs are certainly highly technical. However the risk is that governments view them solely as financing instruments when in fact they represent a very different way of working. This sometimes leads to a failure to ask whether the project is acceptable to the public. Do they want it? People tend to be overlooked and projects go ahead with it being assumed that the projects will be socially acceptable. Policy makers need to give emphasis to shareholder returns but must also focus on improving the delivery of essential services to the general public. Using a PPP can bring private money into public coffers and be an additional source of payment for government departments. In countries with weak experience of mixing private funding with public funding, there is sometimes little understanding on the need of governments to let the private sector obtain a return on their investments. The funding provided is not a fund to be used either part or in whole for public civil servants. The financing provided has to earn a return for the private sector. It is not an extra fund for public sector use untied to specific projects. This myth has been the basis for corruption