No Slide Title - European Commission by yurtgc548


									                                              TEN-T GI / 1

    Second International Workshop
       Building a valuable approach to PPPs

     Community Guarantee Instrument
          for TEN-T projects

               A brief presentation

                  J.M. Magnette
Directorate General Economic and Financial Affairs
              European Commission
                                                       TEN-T GI / 2


• European Initiative for Growth
    Trans-European Network and knowledge projects
    Mobilise financial support through public sources and
     leveraged private funding

• European Council of 12 December 2003
    Invited Commission to study the feasibility of a possible
     guarantee instrument for post-construction risks in TEN-T
                                                 TEN-T GI / 3

        Principal aims of the Instrument

• Facilitate the completion of TEN-T projects

• Encourage private participation and new approaches
  to financing

• Achieve high levels of leverage of EU budget
                                                                TEN-T GI / 4

                   Risks in PPP projects

Risk up to completion                 Post-construction risk
                             Short-term                   Long-term
       Design             Traffic (ramp-up)         Traffic (longer term)

    Construction             Availability

                        Regulatory/Contractual    Regulatory/Contractual

                            Latent Defect

                               Political                  Political

      Varying risk characteristics between projects
      Road -----------------Rail----------------Tunnel
                                                      TEN-T GI / 5

                Guarantees - principles

• Many forms of guarantees

• Generally rely on three characteristics:
    Clear definition of risks and their allocation

    Quantitative knowledge of behaviour of risks

    Portfolio of projects
                                                           TEN-T GI / 6

            Possible instrument design - I

• Projects in EU25
      TEN-T
      at or near investment grade
      suitable private sector involvement
      financial support from Member State public bodies

• Cover risk for limited period (“ramp-up period”)

• Charge made for the guarantee
                                                TEN-T GI / 7

         Possible instrument design - II

• If guarantee called, EU payment takes the form of
  mezzanine financing

• Relationship to senior debt and equity

• Claim is repayable over project-specific period
                                                  TEN-T GI / 8

                      Next steps

• Market testing completed

• Commission Communication on feasibility

• If appropriate, legislative proposal for the Instrument

• New financial perspective 2007-2013

To top