What is PPP

Folie 1 What is PPP? Planning + Building + Financing + Operation (+ Post-contract life) = PPP PPP-Sectors: PPP – construction, PPP – infrastructure Types of PPP contracts - in German law Differences and core content Acquisition model Hire-purchase of facility/asset Folie 2 Owner model Planning, construction, financing, operation under ownership of the principal Rent with option to buy Leasing model Rent model Contracting model Licence model Company model Contract for rent extending beyond 10 years Contract to operate the facility/asset Operation of facility/asset with user fees collected privately Operation by way of project group PPP project structure - example Licenser Advisor Fed / Land / Municipality Construction Concession Grant Service Folie 3 Advisor Shareholder Investors Equity capital Loan Loan provider Licensee Return Banks/capital market Interest/repayment Project company Construction at agreed price and timeframe Remuneration Maintenance Maintenance Operator Operation Provision of service Rent or fee General contractor Construction planning Public sector or private sector use Folie 4 History of PPP at EU level 07 May 2003 21 May 2003 Commission publishes “Internal market strategy – priorities 2003 – 2006”, which highlights the need to clarify legal issues relating to PPP. The publication of a green paper on PPP is announced. Commission publishes Green Paper on services of general interest. This paper entails a substantial review of the Commission's service policy and asks whether a general legal framework should be created at Community level for services of general interest. The Commission plans top publish a green paper on public procurements and on PPP in the second half of the year. Commission adopts Green Paper Forwarded to the Council Forwarded to the European Parliament (EP) Opinion by the European Economic and Social Committee Opinion by the Committee of the Regions Commission announces resolution on further PPP legislation for the end of 2006 Resolution by EP 30 Apr 2004 30 Apr 2004 30 Apr 2004 27 Oct 2004 17 Nov 2004 End 2005 26 Oct 2006 Folie 5 History of PPP at federal level Apr Jun Jul Feb Jul Dec Dec Nov Dec Jul May Sep Sep 2001 2002 2002 2003 2003 2003 2003 2004 2004 2004 2005 2005 2006 Federal Chancellor sets up “Kanzler-AG” Federal Chancellor announces PPP competence centre Steering committee (SC): “PPP in public construction works” PPP federal study commissioned Bundestag adopts motion for PPP resolution Agreement by federal states ministers responsible for building SC: Recommendations for framework conditions Members’ initiative “PPPs Acceleration Act” Agreement by federal state ministers responsible for finance (FMK) PPP Task Force set up Creation of federal PPP competence network PPPs Acceleration Act comes into force FMK decision: Standard guidelines on examining profitability Source: PPP Task Force, Federal Ministry for Transport, Building and Urban Affairs Folie 6 Market structure of PPP in Germany More PPP More private capital for public tasks More co.’s in the provision of public services Framework More/bigger projects Laws Regulations Models Admin. building Transport Education Research Provision amendments: Competition law Tax law Accounting law Statistics law Change in rules on awarding contracts modify: Contracts PC PSC Budget issues System of NA Double entry bookkeeping Defence Health PB = Profitability calculations PSC = Public Sector Comparator NA = National accounting Folie 7 PPP organisation of the govt in Germany Ministry of Finance Ministry of Transport Ministry of Defence Ministry of Economics Construction Transport Civil Defence Project working group PPP Task Force g.e.b.b., Dept. M / Group M I Rail, Sea, Air Gesellschaft für Entwicklung, Beschaffung und Betrieb mbH  Project development co. Roads Federal states East West Deutsche Einheit Fernstraßenplanungsund -bau GmbH Deges VIFG Verkehrsinfrastrukturentwicklungsgesellschaft mbH = Project management co.’s Folie 8 The PPP procurement process in Germany Agreed procedure between central and regional government The phases in the PPP procurement process Phase I Steps in examining PPP profitability Determining needs, financeability and profitability of measures PPP test for suitability Preliminary decision for or against continuing to pursue varies PPP options Phase II Drawing up conventional comparative values (Public Sector Comparator – PSC) Provisional examination of profitability Preliminary decision for or against publishing call for tender Appropriation in budget and call for tender Determining the maximum amount to be appropriated in the budget (budget readiness) Phase III Final profitability analysis Phase IV Final decision on awarding and signing of contract Project controlling Folie 9 Requirements for collaboration - Example - Adequately shared risks between public and private sectors Public Sector ● Private Sector ● Geological risks Risk of differences in local currency and currency of the financial debt Financial risk in changes of laws or in the contracts Financial risks Management risks ● ● ● Income risks ● Folie 10 ABC modules of tender I Module A: Construction Mostly invitation to tender as a general contractor subject to the provisions of the guidelines on awarding contracts; to be built, for example, on a piece of land owned by the party issuing the invitation to tender Module B: Financing part A B1: conventional lease financing via the budget B2: pure finance leasing (no equity capital of private investors, thus no tax effects), sometimes with forfeiting. B3: tax-optimised fund leasing models with equity capital of private investors. Module C: Investor model Same-source construction and financing on the basis of the conditions of modules A and B with a fixed-price model without disclosing the details of the calculation. Folie 11 ABC modules of tender II In addition to parts A, B und C, additional tenders can be invited in suitable cases: Module D: Similar to Module C, but using functional description of construction and with the bidder’s own planning, possibly also on a piece of land owned by the party inviting tender. Module E: Offers to buy, hire-purchase of simply rent suitable objects which have already been built or which are in the process of being built. Folie 12 Overview of the current status of the PPP Simplification Act Project working group consisting of the majority parties in the German Bundestag and including representatives of German industry As of May 2007 Competence working groupsAdvisor proposals Consultation of the project working group Finances Law on government support Budget Health Social infrastructure Taxes Awarding of contract Transport Defence No need recognised 2 1 Agreement by CWGs on key issues Decision by PWG Decision by parliamentary party 1st reading in parliament 2nd reading Committees 3rd reading for outline paper in the CWGs X X 4 No need recognised X X 3 Note: The original timeframe for the legislation, which provided for a first reading of the PPP Simplification Act in the Bundestag in May 2007, no longer applies. No new timeframe has yet been submitted (1) The members of the CWGs consistently regarded the proposals by the advisors was not viable. Key issues where appropriate once proposals of the "Hesse study" has been looked at by the Ministry of Health and the Länder working group "Hospital finances" (2) Advisors recognised no absolute need for regulation (3) Advisor proposals concentrate on further development of the Transport Infrastructure Financine Company (VIFG) and on its becoming authorised to borrow (4) Advisors see no specific need for action. Proposed amendments to the Federal Budget Ordinance were sent to the CWG "Law on government support"/"Budget" Need for legislation is covered by the amendments to the Investment Act and the Law on Public Procurements Folie 13 Overview of standardisation work of central and regional government in Germany Field of competence 1 2 3 Guidelines on examining profitability of PPP projects Guidelines on awarding public contracts “PPP and government support legislation” study 4 5 6 7 PPP and budget appropriation Guidelines on PPP and SME’s* PPP School study A-model awarding of contracts Draft Agreement Publishing O O O O O O O * SME = Small and Medium sized Enterprises Folie 14 Table of PPP Projects I No Project sponsor / location 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Bestensee Cottbus Berlin Bodenseekreis Leimen Offenburg Fürth Markt Kirchseeon München-Stadlheirr Frankfurt am Main Kassel Kreis Offenbach (Los Ost) Kreis Offenbach (Los West) Wetzlar Wiesbaden Wiesbaden Wiesbaden Hamburg Hamburg Hamburg Schwerin Achim Buchholz i.d.N. Bückeburg, Faßberg, Hannover Langenhangen Twistringen Winsen Bedburg Dortmund Düsseldorf Essen Freundenberg Gladbeck Gütersloh Federal state BB BB BE BW BW BW BY BY BY HE HE HE HE HE HE HE HE HH HH HH MV NDS NDS NDS NDS NDS NDS NDS NW NW NW NW NW NW NW Contract model Company model Operator model Owner model Heritable building right Owner model Operator model Owner model Owner model Rent model Rent model Company model Company model Building and maintenance Rent model Licence model Owner model Owner model Owner model Owner model Owner model + Licence model n.a. Owner model Owner model Owner model Owner model PPP licence model (acquisition model) Owner model Owner model Owner model Project Mulit-function hall Public baths Heinrich Böll Foundation building County Hall Friedrichshafen Swimming pool Detention centre Thermal bath School and sportshall (from the 20s) Detention centre Training centre Ostend Financial centre Kassel Altmarkt Schools Schools Schools and sportshall Thermal bath Judicial and administrative centre Parking centre 32 schools HafenCity primary school Elbphilharmony Congress hall and sport academy Schools School centre Buchholz I Helicopter simulation centre Public baths Playschool and family centre New grammar school Extension to voational schools Schools Logistics centre clinic Parking lot at the University of Düsseldorf Proton therapy centre Town hall Town hall Schools Contract concluded Aug 06 Dec 05 Dec 06 Aug 05 Apr 05 Nov 06 Jun 05 May07 May 06 July 03 Nov 06 Nov 04 Mar 04 Jan 07 Feb 02 Mar 07 Jan 05 Feb 07 May 07 Feb 07, local Feb 07 Aug 05 Nov 06 Nov 05 Sep 05 May 06 May 06 Mar 07 Mar 05 May 05 Apr 06 Jun 06 Feb 07 Sep 04 Jun 04 Administrative unit Municipality Municipality Land Municipality Municipality Land Municipality Municipality Land Municipality Land Municipality Municipality Municipality Municipality Land Municipality Land Land Land Municipality Municipality Municipality Federation Municipality Municipality Municipality Municipality Municipality Municipality Land Municipality Municipality Municipality Folie 15 Table of PPP Projects II No Project sponsor / location 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 Cologne Cologne Kreis Düren Kreis Lippe Leverkusen Lüdinghausen Monheim Münster Münster Neuss Rhein-Erft-Kreis Senden Unna Witten Schwarzenbek Sylt-Ost Chemnitz Leipzig Barleben Burg bei Magdeburg Halle Halle Federal state NW NW NW NW NW NW NW NW NW NW NW NW NW NW SH SH SN SN ST ST ST ST Contract model Owner model Owner model Owner model Owner model Owner model Owner model Rent model Owner model Owner model Owner model Operator model Owner model Owner model Owner model Company model Owner model Licence model Owner model Owner model Owner model Owner model Project Schools Schools Schools Lipperland Hall Vocational schools Swimming pool Schools Münster-Roxel playschool Sportshalls School Schools Indoor and outdoor pool District house Schools Grammar school Keitum thermal baths Chemnitz Parking lot at the Federal Consititional Court Schools Detention centre Playschools Town schools Contract concluded Apr 05 Aug 06 Apr 07 Jun 04 Jun 05 Jun 04 Jan 04 Dec 05 Jun 04 Oct 06 Feb 04 Nov 05 Sep 04 Aug 04 May 06 Sep 06 Sep 06 Apr 04 Feb 06 Dec 06 Dec 06 Dec 06 Administrative unit Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Municipality Land Municipality Municipality Land Municipality Municipality Overall no of projects Total investment in €billion Average investment in €million Average efficiency gain Cost-savings in €million 57 1.85 approx. 33 15.10% 280.00 Folie 16 PPP projects in Germany since 2003 No of projects Federation I n f r a s t r u c t u re Autobahn A-models A 8 Augsburg - Munich Investment amount Länder Municipalities 2 1,012 m Planning Contract 8 5 6 4 1  230 m  Autobahn F-models (here: tunnel) Warnow crossing, Rostock Trave crossing, Lübeck 2 1 1 1 52 1 202 m 90 m 490 m 1,500 m    HFTS Helicopter simulator centre Construction of which, schools: Hesse Lower Saxony North Rhine-Westphalia Saxony-Anhalt 2 1 6 2 2 1 6 2 200 m 8.4 m 107 m 61 m     further projects: Fürst-Wrede-Barracks Munich Training centre Frankf./M. Judicial centre Free State of Saxony County Hall, Lake Constance County Swimming pool in Leimen 1 1 1 1 1 1 1 1 1 1 42 m 74 m 11.5 m 10.8 m      average efficiency gain of PPP project realised: 15.4 % Folie 17 PPP communal distribution in Germany* - € 2.5bn invested - Culture 2.6 % Other 5.6 % Administration 14.8 % Schools 29.5 % Transport 19.2 % Sport, tourism 28.3 % * Communal PPP survey 2005 Folie 18 PPPs in France : a few figures Sector Water Urban waste District heating Urban transport Toll motorways Car parking % private 71 % 73 % 93 % 16 % ~100 % 59 % Folie 19