1 application on the spanish concessional model to central and estern europe world bank workshop on...
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APPLICATION ON THE SPANISH CONCESSIONAL MODEL TO CENTRAL AND ESTERN EUROPE
WORLD BANK WORKSHOP ON PPP IN HIGHWAYS: INSTITUTIONAL, LEGAL, FINANCIAL AND
TECHNICAL ASPECTS
Antonio M. López CorralProfessor of the Polytechnic University of Madrid
Washington, April 3rd, 2006
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- 10.000 km of state and regional motorways
- 4,400 km of toll
motorways
- 2,200 km tendered during last 8 years and 600 during last 3 years
- 10.000 km of state and regional motorways
- 4,400 km of toll
motorways
- 2,200 km tendered during last 8 years and 600 during last 3 years
MOTORWAYS MAP OF SPAIN MOTORWAYS MAP OF SPAIN
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INVESTMENT AND FINANCING TRANSPORT INFRASTRUCTURES OF STATE IN SPAIN
INVESTMENT AND FINANCING TRANSPORT INFRASTRUCTURES OF STATE IN SPAIN
20%20%Private Capital
Public Budgetary
40%40%
FF.EE
5%FF.EE
5%
20%20%Public non Budgetary
FF.EE
15%
FF.EE
15%
Ministry30%30%
Public Companies
50%50%
20%20%Private Sponsors
EXECUTION
TOTAL FINANCING 2000-2006 : 60.3 BILLION €
60%%
60%%
20%20%European Funds
20%20%Private Capital
FINANCING
Public (Budgetary and not
Budgetary)
Public (Budgetary and not
Budgetary)
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- All the projects to be executed in
concession regime will have the same
indispensable conditions of maturity that
any other project that use any other
route of financing
- Additionally they will require a feasibility
study that will have also to be put under
public information
- Definition of concessional formula
- All the projects to be executed in
concession regime will have the same
indispensable conditions of maturity that
any other project that use any other
route of financing
- Additionally they will require a feasibility
study that will have also to be put under
public information
- Definition of concessional formula
PREPARATION OF CONCESSIONAL PROJECTS FOR TENDERING
PREPARATION OF CONCESSIONAL PROJECTS FOR TENDERING
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- It is reflected in the law of concessions, in
the sector law, in some cases, in their
regulations decrees and, specially, in the
terms of references that considers the
feasibility study
- Possibility of cross financing
- Application of the progress clause
- It is reflected in the law of concessions, in
the sector law, in some cases, in their
regulations decrees and, specially, in the
terms of references that considers the
feasibility study
- Possibility of cross financing
- Application of the progress clause
DEFINITION OF CONCESSIONAL FORMULA (1)
DEFINITION OF CONCESSIONAL FORMULA (1)
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- Different alternatives to the project
- Prizes and penalties associated to quality
- Possibility of operating businesses related
with the goal of concession
- Possibility of public financing
- Contract known with few opened clauses,
most of them of economic content
- Different alternatives to the project
- Prizes and penalties associated to quality
- Possibility of operating businesses related
with the goal of concession
- Possibility of public financing
- Contract known with few opened clauses,
most of them of economic content
DEFINITION OF CONCESSIONAL FORMULA (2)
DEFINITION OF CONCESSIONAL FORMULA (2)
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- Normally in the Spanish model the open competition made in a single phase is preferred
- Criteria of awarding are transparent and quite objective: they looks for, between the projects of quality in reliable hands, the one that guarantees the best economic conditions for the public interests
- It tries to assure the competitive tension in all the process.
- Normally in the Spanish model the open competition made in a single phase is preferred
- Criteria of awarding are transparent and quite objective: they looks for, between the projects of quality in reliable hands, the one that guarantees the best economic conditions for the public interests
- It tries to assure the competitive tension in all the process.
TENDERING OF CONCESSIONAL PROJECTS
TENDERING OF CONCESSIONAL PROJECTS
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– Time for maturity: 2 years (4 years to mature the ordinary projects)
– Time for bidding and awarding: 7 months - 1 year
– Beginning of the construction after the awarding: 4 - 6 months
- Costs of participation in a bidding process: 0,5 million €
– Time for maturity: 2 years (4 years to mature the ordinary projects)
– Time for bidding and awarding: 7 months - 1 year
– Beginning of the construction after the awarding: 4 - 6 months
- Costs of participation in a bidding process: 0,5 million €
TENDERING AND AWARDING RESULTS IN SPAIN (IN MEDIUM TERMS) (1)
TENDERING AND AWARDING RESULTS IN SPAIN (IN MEDIUM TERMS) (1)
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– Number of bidders: 6 - 10
– Number of alternatives by bidder: 3
– Internal Rate of Return offered by the
winner: 6,5 - 7,5%
– Cost of the risks assumed by the
concessionaires: 2,5 - 3,5%
– Number of bidders: 6 - 10
– Number of alternatives by bidder: 3
– Internal Rate of Return offered by the
winner: 6,5 - 7,5%
– Cost of the risks assumed by the
concessionaires: 2,5 - 3,5%
TENDERING AND AWARDING RESULTS IN SPAIN (IN MEDIUM TERMS) (2)
TENDERING AND AWARDING RESULTS IN SPAIN (IN MEDIUM TERMS) (2)
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– Closing of the financing by the
concessionaire: before the six previous
months to finish the construction
– Cost of the financing of the investment
by the concessionaire: 5,0 - 6,5%
- Time for execution: 3 years
– Closing of the financing by the
concessionaire: before the six previous
months to finish the construction
– Cost of the financing of the investment
by the concessionaire: 5,0 - 6,5%
- Time for execution: 3 years
TENDERING AND AWARDING RESAULTS IN SPAIN (IN MEDIUM TERMS) (3)
TENDERING AND AWARDING RESAULTS IN SPAIN (IN MEDIUM TERMS) (3)
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PPP FUNDING WITH EUROPEAN FUNDSSantiago de Compostela-Alto de Santo
Domingo Motorway
PPP FUNDING WITH EUROPEAN FUNDSSantiago de Compostela-Alto de Santo
Domingo Motorway
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RATE OF ERDF COFINANCINGRATE OF ERDF COFINANCING
–Investment 300 Million euros (2/3 sponsor; 1/3 public fund)
–Public investment 100 Million euros (2/3 Region; 1/3 State)
–ERDF contribution: 55% of public investment
–Investment 300 Million euros (2/3 sponsor; 1/3 public fund)
–Public investment 100 Million euros (2/3 Region; 1/3 State)
–ERDF contribution: 55% of public investment
Millions of Euros FOMENTO XUNTA
Total investment to
be granted
33,3 66,6
ERDF contribution 18,3 36,6
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TEN-T IN EU AND NEIGHBORING COUNTRIESTEN-T IN EU AND NEIGHBORING COUNTRIES
Investments foreseen TEN-Ttill 2020:• 600 billion € Priority projects:• 230 billion € To be executed as PPP:• 120 billion €
Priority projects in EU neighboring countries till 2020:• 45 billion €To be executedas PPP: • 9 billion €
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- Lack of a coherent long-term policy of
infrastructures financing
- Lack of continuity and broad political
consensus on the use of PPPs for roads
- Unclear and unstable laws, difficult to
interpret
- Lack of institutional stability
- Insufficient staff (number, capacities)
- Lack of a coherent long-term policy of
infrastructures financing
- Lack of continuity and broad political
consensus on the use of PPPs for roads
- Unclear and unstable laws, difficult to
interpret
- Lack of institutional stability
- Insufficient staff (number, capacities)
SOME EXPERIENCES IN CENTRAL AND EASTERN EUROPEAN COUNTRIES
SOME EXPERIENCES IN CENTRAL AND EASTERN EUROPEAN COUNTRIES
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- The whole project preparation process takes up to 10 years- Lack of a feasible project pipeline - Insufficient knowledge of expected results- Long tenders- Long negotiations- No competitive tension during the negotiation process- Tenders are not perceived to be transparent
- The whole project preparation process takes up to 10 years- Lack of a feasible project pipeline - Insufficient knowledge of expected results- Long tenders- Long negotiations- No competitive tension during the negotiation process- Tenders are not perceived to be transparent
SOME EXPERIENCES – CONCESSION TENDERS
SOME EXPERIENCES – CONCESSION TENDERS
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- Insufficient control in some cases by the Ministry of Infrastructure- Insufficient coordination between different departments in relation to implementation of policy- Lack of long term strategies and plans - Poor relationship between the administration and private partners- No structure for monitoring implementation and ongoing operation of projects
- Insufficient control in some cases by the Ministry of Infrastructure- Insufficient coordination between different departments in relation to implementation of policy- Lack of long term strategies and plans - Poor relationship between the administration and private partners- No structure for monitoring implementation and ongoing operation of projects
SOME EXPERIENCES – INSTITUTIONAL WEAKNESSES
SOME EXPERIENCES – INSTITUTIONAL WEAKNESSES
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As a consequence:
- Confusing signal for the market
- PPP are seen as a source of corruption
- PPP are seen as an ineffective way of
infrastructure provision and not applicable
in Central & Eastern Europe
However the problems with correct
implementation of Public Private
Partnership should not be confused with
the PPP instrument itself
As a consequence:
- Confusing signal for the market
- PPP are seen as a source of corruption
- PPP are seen as an ineffective way of
infrastructure provision and not applicable
in Central & Eastern Europe
However the problems with correct
implementation of Public Private
Partnership should not be confused with
the PPP instrument itself
PPP APPLICABILITY IN CENTRAL AND EASTERN EUROPEAN COUNTRIES
PPP APPLICABILITY IN CENTRAL AND EASTERN EUROPEAN COUNTRIES
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- Precise definition of the PPP mechanism by the administration- Use of open tendering procedure- Easy participation in the tendering process to increase competition for the contract- Simplified evaluation of proposals- Bidding proposals can not be negotiated- Financial closure not required before awarding- Fixed deadlines for awarding
- Precise definition of the PPP mechanism by the administration- Use of open tendering procedure- Easy participation in the tendering process to increase competition for the contract- Simplified evaluation of proposals- Bidding proposals can not be negotiated- Financial closure not required before awarding- Fixed deadlines for awarding
MAIN FEATURES OF THE RECOMMENDED SYSTEM
MAIN FEATURES OF THE RECOMMENDED SYSTEM
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A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
A2 Konin - Stryków (Łódź) [103 km]• delivered by the State to the concessionaire as a payment in kind - a form of public support• O&M by the concessionaire• covered by tolls
A2 Stryków (Łódź) – Konotopa (Warsaw) [94 km]• built by the concessionaire • O&M by the concessionaire• covered by tolls
A2 Konin - Stryków (Łódź) [103 km]• delivered by the State to the concessionaire as a payment in kind - a form of public support• O&M by the concessionaire• covered by tolls
A2 Stryków (Łódź) – Konotopa (Warsaw) [94 km]• built by the concessionaire • O&M by the concessionaire• covered by tolls
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
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A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
All sections:• built by the concessionaire • O&M by the concessionaire• cross-financed from A2 revenues.• free for users
All sections:• built by the concessionaire • O&M by the concessionaire• cross-financed from A2 revenues.• free for users
Additional sections:• S8 Konotopa – Powązkowska [11 km]• S8 Powązkowska – Piłsudskiego [12 km]• S7 Northern Exit from Warsaw [approx. 15 km]
Additional sections:• S8 Konotopa – Powązkowska [11 km]• S8 Powązkowska – Piłsudskiego [12 km]• S7 Northern Exit from Warsaw [approx. 15 km]
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
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A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
A2 Konin - Stryków (Łódź) - Konotopa (Warsaw) motorway+ additional Warsaw bypass sections
Because of high financial profitability of the projectno public support is required.
Concession period may be used as the main bidding variable.
Because of high financial profitability of the projectno public support is required.
Concession period may be used as the main bidding variable.
Type of project real toll Total length 235 km
Toll section brought in by the State 103 kmToll section to be built by the concessionaire 94 kmFree sections to be built by the concessionaire 38 km
Total construction cost 796 € million0%
0 € million Concession period 30 Avearge toll per veh-km
Toll section brought in by the State 0,07 €Toll section to built by the concessionaire 0,07 €Free sections to be built by the concessionaire 0,00 €
Internal Return Rate 12,0%
Public support for construction
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
RECOMMENDED PPP MECHANISMS
AND PILOT PROJECTS IN POLAND
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Thank you
Antonio M. Lopez Corral
Professor of the Polytechnic University of Madrid
Tf.: (+34) 91 533 44 96
Fax: (+34) 91 533 44 96
E-mail: [email protected]