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What is PPP?
Planning
+ Building
+ Financing
+ Operation
(+ Post-contract life)
= PPP
PPP-Sectors: PPP – construction, PPP – infrastructure
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Types of PPP contracts
- in German law -
Differences and core content
Acquisition model Hire-purchase of facility/asset
Owner model Planning, construction, financing, operation under ownership
of the principal
Leasing model Rent with option to buy
Rent model Contract for rent extending beyond 10 years
Contracting model Contract to operate the facility/asset
Licence model Operation of facility/asset with user fees collected privately
Company model Operation by way of project group
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PPP project structure
- example -
Licenser
Advisor Advisor
Fed / Land / Municipality
Construction
Concession
Service
Grant
Shareholder Equity capital Loan Loan provider
Licensee
Investors Banks/capital market
Return Project company Interest/re-
payment
Construction at agreed
price and timeframe
Remuneration
Maintenance Operator
Maintenance Operation
Provision of
General contractor
Rent or
service
fee
Construction planning
Public sector or
private sector use
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History of PPP at EU level
07 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.
21 May 2003 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.
30 Apr 2004 Commission adopts Green Paper
30 Apr 2004 Forwarded to the Council
30 Apr 2004 Forwarded to the European Parliament (EP)
27 Oct 2004 Opinion by the European Economic and Social Committee
17 Nov 2004 Opinion by the Committee of the Regions
End 2005 Commission announces resolution on further PPP legislation for the end of 2006
26 Oct 2006 Resolution by EP
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History of PPP at federal level
Apr 2001 Federal Chancellor sets up “Kanzler-AG”
Jun 2002 Federal Chancellor announces PPP competence centre
Jul 2002 Steering committee (SC): “PPP in public construction works”
Feb 2003 PPP federal study commissioned
Jul 2003 Bundestag adopts motion for PPP resolution
Dec 2003 Agreement by federal states ministers responsible for building
Dec 2003 SC: Recommendations for framework conditions
Nov 2004 Members’ initiative “PPPs Acceleration Act”
Dec 2004 Agreement by federal state ministers responsible for finance (FMK)
Jul 2004 PPP Task Force set up
May 2005 Creation of federal PPP competence network
Sep 2005 PPPs Acceleration Act comes into force
Sep 2006 FMK decision: Standard guidelines on examining profitability
Source: PPP Task Force, Federal Ministry for Transport, Building and Urban Affairs
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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
Admin. Education
Laws Regulations Models Transport
building Research
modify: Defence Health
Provision
amendments: Contracts
PC
Competition
Change in PSC
law
rules on Budget issues PB = Profitability calculations
Tax law awarding
System of NA
contracts PSC = Public Sector Comparator
Accounting law Double entry
Statistics law bookkeeping NA = National accounting
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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 g.e.b.b., Gesellschaft für
Task Force Entwicklung, Beschaffung
group PPP Dept. M / Group M I und Betrieb mbH
Project development co.
Roads Rail,
Sea,
Federal states Air
East West
Deutsche Einheit
Verkehrsinfrastruktur-
Fernstraßenplanungs- Deges VIFG entwicklungsgesellschaft mbH
und -bau GmbH
= Project management co.’s
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The PPP procurement process in Germany
Agreed procedure between central and regional government
The phases in the PPP procurement Steps in examining PPP profitability
process
Phase I 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
Determining the maximum amount to be appropriated in the
budget (budget readiness) Appropriation in budget and call for tender
Phase III Final profitability analysis
Final decision on awarding and signing of
Phase IV contract
Project controlling
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Requirements for collaboration
- Example -
Adequately shared risks between public and private sectors
Public Sector Private Sector
● Geological risks ● Financial risks
● Risk of differences in local ● Management risks
currency and currency of
the financial debt ● Income risks
● Financial risk in changes of
laws or in the contracts
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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.
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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.
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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 Agreement by Decision Decision by 1st reading 2nd reading 3rd reading
of for in the CWGs on by parliamentary in
the project working group outline paper CWGs key issues PWG party parliament Committees
Finances
Law on government support
Budget 4
X
Health 1 X
No need
Social infrastructure
recognised
Taxes X
Awarding of contract 2
Transport 3
X
No need
Defence
recognised
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
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Overview of standardisation work of central
and regional government in Germany
Field of competence Draft Agreement Publishing
Guidelines on examining profitability of
1
PPP projects O
2 Guidelines on awarding public contracts O
3 “PPP and government support legislation” O
study
PPP and budget appropriation
4 O
5 Guidelines on PPP and SME’s* O
6 PPP School study O
7 A-model awarding of contracts O
* SME = Small and Medium sized Enterprises
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Table of PPP Projects I
Federal Contract Administrative
No Project sponsor / location Contract model Project
state concluded unit
1 Bestensee BB Company model Mulit-function hall Aug 06 Municipality
2 Cottbus BB Operator model Public baths Dec 05 Municipality
3 Berlin BE Heinrich Böll Foundation building Dec 06 Land
4 Bodenseekreis BW Owner model County Hall Friedrichshafen Aug 05 Municipality
5 Leimen BW Heritable building right Swimming pool Apr 05 Municipality
6 Offenburg BW Owner model Detention centre Nov 06 Land
7 Fürth BY Operator model Thermal bath Jun 05 Municipality
8 Markt Kirchseeon BY Owner model School and sportshall (from the 20s) May07 Municipality
9 München-Stadlheirr BY Owner model Detention centre May 06 Land
10 Frankfurt am Main HE Rent model Training centre Ostend July 03 Municipality
11 Kassel HE Rent model Financial centre Kassel Altmarkt Nov 06 Land
12 Kreis Offenbach (Los Ost) HE Company model Schools Nov 04 Municipality
13 Kreis Offenbach (Los West) HE Company model Schools Mar 04 Municipality
14 Wetzlar HE Schools and sportshall Jan 07 Municipality
15 Wiesbaden HE Building and maintenance Thermal bath Feb 02 Municipality
16 Wiesbaden HE Rent model Judicial and administrative centre Mar 07 Land
17 Wiesbaden HE Licence model Parking centre Jan 05 Municipality
18 Hamburg HH Owner model 32 schools Feb 07 Land
19 Hamburg HH Owner model HafenCity primary school May 07 Land
20 Hamburg HH Owner model Elbphilharmony Feb 07, local Land
21 Schwerin MV Congress hall and sport academy Feb 07 Municipality
22 Achim NDS Owner model Schools Aug 05 Municipality
23 Buchholz i.d.N. NDS Owner model + School centre Buchholz I Nov 06 Municipality
24 Bückeburg, Faßberg, NDS Licence model Helicopter simulation centre Nov 05 Federation
25 Hannover NDS n.a. Public baths Sep 05 Municipality
26 Langenhangen NDS Playschool and family centre May 06 Municipality
27 Twistringen NDS Owner model New grammar school May 06 Municipality
28 Winsen NDS Owner model Extension to voational schools Mar 07
29 Bedburg NW Owner model Schools Mar 05 Municipality
30 Dortmund NW Owner model Logistics centre clinic May 05 Municipality
31 Düsseldorf NW PPP licence model (acquisition model) Parking lot at the University of Düsseldorf Apr 06 Municipality
32 Essen NW Owner model Proton therapy centre Jun 06 Land
33 Freundenberg NW Town hall Feb 07 Municipality
34 Gladbeck NW Owner model Town hall Sep 04 Municipality
35 Gütersloh NW Owner model Schools Jun 04 Municipality
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Table of PPP Projects II
Federal Contract Administrative
No Project sponsor / location Contract model Project
state concluded unit
36 Cologne NW Owner model Schools Apr 05 Municipality
37 Cologne NW Owner model Schools Aug 06 Municipality
38 Kreis Düren NW Schools Apr 07 Municipality
39 Kreis Lippe NW Owner model Lipperland Hall Jun 04 Municipality
40 Leverkusen NW Owner model Vocational schools Jun 05 Municipality
41 Lüdinghausen NW Owner model Swimming pool Jun 04 Municipality
42 Monheim NW Owner model Schools Jan 04 Municipality
43 Münster NW Rent model Münster-Roxel playschool Dec 05 Municipality
44 Münster NW Owner model Sportshalls Jun 04 Municipality
45 Neuss NW Owner model School Oct 06 Municipality
46 Rhein-Erft-Kreis NW Owner model Schools Feb 04 Municipality
47 Senden NW Operator model Indoor and outdoor pool Nov 05 Municipality
48 Unna NW Owner model District house Sep 04 Municipality
49 Witten NW Owner model Schools Aug 04 Municipality
50 Schwarzenbek SH Owner model Grammar school May 06 Municipality
51 Sylt-Ost SH Company model Keitum thermal baths Sep 06 Municipality
52 Chemnitz SN Owner model Chemnitz Sep 06 Land
53 Leipzig SN Licence model Parking lot at the Federal Consititional Court Apr 04 Municipality
54 Barleben ST Owner model Schools Feb 06 Municipality
55 Burg bei Magdeburg ST Owner model Detention centre Dec 06 Land
56 Halle ST Owner model Playschools Dec 06 Municipality
57 Halle ST Owner model Town schools Dec 06 Municipality
Overall no of projects 57
Total investment in €billion 1.85
Average investment in €million approx. 33
Average efficiency gain 15.10%
Cost-savings in €million 280.00
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PPP projects in Germany since 2003
No of Investment
Planning Contract
projects amount
Länder
Federation
Municipalities
I n f r a s t r u c t u re 8 6 2 1,012 m
Autobahn A-models 5 4
A 8 Augsburg - Munich 1 230 m
Autobahn F-models (here: tunnel) 2
Warnow crossing, Rostock 1 202 m
Trave crossing, Lübeck 1 90 m
HFTS Helicopter simulator centre 1 1 490 m
Construction 52 1,500 m
of which, schools:
Hesse 2 2 200 m
Lower Saxony 1 1 8.4 m
North Rhine-Westphalia 6 6 107 m
Saxony-Anhalt 2 2 61 m
further projects:
Fürst-Wrede-Barracks Munich 1 1
Training centre Frankf./M. 1 1 42 m
Judicial centre Free State of Saxony 1 1 74 m
County Hall, Lake Constance County 1 1 11.5 m
Swimming pool in Leimen 1 1 10.8 m
average efficiency gain of PPP project realised: 15.4 %
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PPP communal distribution in Germany*
- € 2.5bn invested -
Other
Culture 5.6 %
2.6 %
Schools
Administration 29.5 %
14.8 %
Transport
19.2 %
Sport, tourism
28.3 %
* Communal PPP survey 2005
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PPPs in France : a few figures
Sector % private
Water 71 %
Urban waste 73 %
District heating 93 %
Urban transport 16 %
Toll motorways ~100 %
Car parking 59 %
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