ministry of finance the division of ppp projects the division of ppp projects ppp/pfi projects in...

Ministry of Finance TThehe Division of PPP Projects Division of PPP Projects

PPP/PFI ProjectsPPP/PFI Projects in Israel in Israel

Ministry of FinanceMinistry of Finance

Mr. Hagai MillerMr. Hagai Miller

Senior Deputy Accountant GeneralSenior Deputy Accountant General

2 Ministry of FinanceMinistry of Finance 22 TThehe Division of PPP Projects Division of PPP Projects

PolicyPolicyIncreasing investments in infrastructure will help

sustain Israel’s economy growth

Increasing private sector involvement in government supplied services, mainly in the infrastructure sector

Enhancing efficiency and increasing resources available for financing infrastructure projects

Optimizing Risk allocation between Public and private sectors


The government’s decision is to focus on six fundamental sectors:The government’s decision is to focus on six fundamental sectors:

Railroads

Transportation

Water desalination and sewage treatment

Electricity manufacturing & Gas delivery

Construction

E-Gov


• Cross Israel Highway

• LRT’s

• Highway No 431

• Highway No 531

• Qrayot bypass road

• Desalination facilities

• IPP

• Prison

Map of PPP/PFI Projects in IsraelMap of PPP/PFI

Projects in Israel


Volume of Operations in the PPP/PFI SegmentVolume of Operations

in the PPP/PFI SegmentDistribution of planned investments by sectors

Transportation: $ 5 billion

Water: $ 0.6 billion

Accommodation: $ 0.3 billion

Energy: $ 0.25 billion

83%

4%

8%5%

Transportation Energy

Water AccommodationTotal $ 6 billion

Details & Status


Projects’ StatusProjects’ Status(■ Early stage; ■ After Short List; ■ After Agreement)


Transportation:

• Cross Israel Highways• Jerusalem Light Railway• Carmel Tunnels

• Highway no. 431• Tel-Aviv Mass Transit System• Qrayot Bypass- toll road • Highway no. 531- toll road• Tel-Aviv Fast Lane

Energy:

• IPP - Mishor Rotem • IPP’s several locations

Status:

• operation

• Financial close

• Financial close

• RFP published• RFP published, Responding questions • Model under consideration• Model under consideration• RFP to be published

Status:

• PQ in process


Water:• Ashkelon desalination facility• Palmachim desalination facility• “Western Galili” desalination facility

• Hadera desalination facility

Penitentiary :

• Prison - Be’er Sheva

Status:• Under construction• Financial close• Financial close

• RFP published

Status:

• RFP published, Responding

questions




Project Feasibility StudyProject Feasibility Study Project Feasibility StudyProject Feasibility Study Project is

economically feasible

Project meets PPP/PFI criteria

Phase 1 - economic

feasibility study:Cost/benefit

analysis

Phase 2 - prior to onset

of tender process and during tender

process

Phase 3 - decision & implementation

No

No

Yes

Yes

Project will not be implemented

Public sector implementation

using alternative method

החלטת ממשלה

Analyzing the bids compared

to the PSC

YesSigning the

concession agreement &

following its execution

Business environment is

suitable for PPP/PFI

No

Yes


Implementing Authority

Authorities involved Authorities involved throughout the processthroughout the process

Authorities involved Authorities involved throughout the processthroughout the process

Inter-Ministerial Inter-Ministerial Tender CommitteeTender Committee

The Tender

Steering Committee

Designated Company

Managing the Concession Agreement

Ministry of FinanceRelevant Government Ministries

Inbal – The Division of PPPExternal Consultants

WDA, JPTA, CTA

Cross Israel Highway,

Tel Aviv Mass Transit


The Tender ProcessThe Tender Process Decision to execute project in PPP/PFI method

Appointing a Tender Committee by the Accountant General

Establishing Work Teams

Studying the material \ Structuring the risk matrix

Preparation of tender documents

Tender publication - widespread distribution

The tender process is “transparent”

Foreign entities are invited to participate in the tenders.


The Division of Public-Private Partnership Projects

The Division of Public-Private Partnership Projects

The Division is in charge of managing, coordinating, planning and executing the tender processes, and the concession agreements.

The division’s main tasks are:

Creating a professional body in the PPP/PFI field in Israel

Making the tender process as efficient and speedy as possible

Being a leading force in the implementation of the Concession

Agreement during the concession term

Setting the Standards in the PPP/PFI field in conjunction with

governmental authorities and the private sector


Risk AllocationRisk AllocationRisk Public PrivateShared

Land acquisition

Detailed design

Cost overruns

Completion delay

Archaeological findings

Maintenance costs

Force Majeure

Interest. Rate

Legislation changes

Political risks

Collection risks

Demand risks


Water Water DesalinationDesalination

PPP/PFI ProjectsPPP/PFI Projects



Water in Israel: Key FactsWater in Israel: Key Facts

• Israel’s utilization of its natural water sources is complete• Main natural source (Coastal Aquifer) is under risk of contamination• Almost full brackish water utilization and wastewater reuse

Year2005201020152020

Increasing demand*2,0602,5052,5582,805

Limited natural sources1,470

* All figures in million m3/year

Seawater Desalination: One of the solutions for meeting future demand


PPP/PFI – A Strategic InstrumentPPP/PFI – A Strategic Instrument

• Desalination technology (RO) has been improved significantly within the recent decade

• Israeli private sector plays a key role within the global industry of desalination

• Large scale projects

• Lack of experience & capabilities within the public sector

PPP/PFI Method : The right thing in the right time


Current Main ProjectsCurrent Main Projects

Desalination Desalination FacilitiesFacilities

Million m3 Million m3 p/ap/a

$US $US (m)(m)MethodMethodStatusStatus

Ashkelon (South of Israel)

100270BOTConstruction

Finish 12/2005

Hadera(North center of Israel)

100220 (est.)

BOTTender

Palmachim(South center of Israel)

3080BOOFinancial Closing1/2005

“Western Galili”(North of Israel)

3075 (est.)

BOOFinancial Closing6/2005


Ashkelon Sea Water Desalination FacilityAshkelon Sea Water Desalination Facility

World’s largest facility based RO technology

IPP based natural gas

First Israeli project that raised finance from institutional lenders

JV between I.D.E – Israeli firm & a

leading global player

Veolia Water S.A.

Israelis investors


Mr. Marc HanhartMr. Marc Hanhart

Projects Management DirectorProjects Management Director

Roads Roads PPP/PFI ProjectsPPP/PFI Projects


Transportation / RoadsTransportation / Roads


Highway No 431Highway No 431 Toll free suburban highway constituting the southern part of the Circular Highway

around the Tel Aviv metropolitan area, 20 km long with 3 basic lines in each direction, inc. 12 interchanges

Concession period of 25 years, inc. 3 years construction phase Private sector investment (cost of construction) assessment - $ 300 M Public sector investment assessment: $ 120 M (Including land expropriation) Payment scheme to the Private sector:

Fixed periodic payment (Subject matter for competition) $ 90 M Construction Grant to be disbursed at completion of construction Variable payment (Shadow toll) is to be paid as an incentive to maximize the demand Bidders may request payment in Shekels, Dollars and/or Euro, according to cost/

financing structure. Bids to be submitted on February 3, 2005 4 Bidders qualified for tendering :

• Denya Cebus group• Shapir Civil & Marine Engineering group• Ashtrom,,Solel Boneh, Housing & Construction group• Arenson, Ramet, Roichman group

Foreign companies invited to be either member of bidding groups or subcontractor.


Fast Line projectFast Line project Construction of a one way lane from Lod interchange (near Ben Gurion

Airport) to Kibbutz Galuyot interchange (Tel Aviv entrance ) on Highway no 1 ( Jerusalem-Tel Aviv ) , construction of Park and Ride facility for 2000 cars and operation of bus shuttle service (free of charge for passengers) to the Business Center of Tel Aviv.

Fast line of about 9 km for Public Transportation Vehicles, and excess capacity will be offered to private car drivers willing to pay a toll, which amount will be constantly adjusted according to demand.

A Fast Lines Law was legislated and its purpose is to encourage the use of public transportation instead of private cars. This project will serve as a model for further similar expected projects.

Concession period of 30 years, incl. 3 years construction phase.

Private sector investment (cost of construction) assessment - $ 75 M.


Fast Line project (continued )Fast Line project (continued )

Payment scheme to the Private sector: Fixed periodic payment (Subject matter for competition) Construction Grant ( amount to be decided ) to be disbursed at completion of

construction 25% of toll income fixed amount for each private car left at the Park and Ride facility during morning peak

hours. Income from additional commercial activities to be approved by the State. Bidders may request payment in Shekels, Dollars and/or Euro, according to cost

structure. Tender documents expected to be published in February 2005.

4 Bidders qualified for tendering : • Africa Israel, Housing & Construction, Egged (Public Transportation), Aecon group• Shapir Civil & Marine Engineering, Nahor( Dan Transportation Company ) group• Tahal Consulting Engineers, Kavim (Public Transportation) group• Malrag Engineering, Terre-Armee, Connex group

Foreign Companies invited to be either member of bidding groups or subcontractor.


Highway No 531Highway No 531 suburban highway constituting the nothern part of the

Circular Highway around the Tel Aviv metropolitan area, 13 km long, incl. 9 interchanges ( half of the way will be executed in partnership with the private sector ).

Private sector investment (cost of construction) assessment - $ 300 M.

Public sector investment assessment: $ 50 M (Including land expropriation).

Toll payment concept is currently under review, based on traffic forecast.

Construction of the highway to be coordinated with the planned construction of a new railways track in the central part of the highway.



Mr. Yaron KestenbaumMr. Yaron Kestenbaum

Projects Management DirectorProjects Management Director

TransportationTransportation Mass Transit SystemMass Transit System

PPP/PFI ProjectsPPP/PFI Projects


Railways Transportation Solutions

The Division of Public Private Partnership projectsThe Division of Public Private Partnership projects

The promotion of the Tel-Aviv LRT Red Line is an integral part of the Israeli government policy to expand the sub-urban railways services and to develop and promote urban railways transportation solutions, both being complementary transportation crisis modes.

The Israeli government acknowledges that investments in railways transportation infrastructures can provide an appropriate solution to the transportation crisis in the country. Lately the government of Israel has decided to invest a sum of 20 billion NIS in Israeli railway.

This acknowledgment is reflected in increased long run budgetary investments in railway solutions in the recent and in the coming years.


Network of Planned Lines

Petah Tikva - Tel Aviv - Bat Yam

Holon To Red Line in Tel Aviv

Kfar saba, Raanana, Herzliya and Ramat Hasharonto the Red Line in Ramat Gan

Bikat Ono to Tel Aviv



The Red Line


Serves 5 cities - Bat Yam, Jaffa, Tel Aviv, Bnei Brak, Ramat Gan andServes 5 cities - Bat Yam, Jaffa, Tel Aviv, Bnei Brak, Ramat Gan and

Petah TiqvaPetah Tiqva

Length of the line is 22 km, of which: Length of the line is 22 km, of which:

11 km are at grade 11 km are at grade

11 km are underground 11 km are underground

10 U/G stations10 U/G stations

21 at grade stops21 at grade stops

Crosses 55 intersections at gradeCrosses 55 intersections at grade

Travel time from Petach Tikva to Tel Aviv (Arlosoroff) - 19 minutesTravel time from Petach Tikva to Tel Aviv (Arlosoroff) - 19 minutes

Travel time from Bat Yam to Tel Aviv (Arlosoroff) - 28 minutesTravel time from Bat Yam to Tel Aviv (Arlosoroff) - 28 minutes


The Concessionaire is required to:

Undertake Final Design & Construction

Supply Rolling Stock and Electro-Mechanical Systems

Implement & Manage Operations and maintenance

Finance the Project

Prove Experience in Specified Areas

B.O.T- Build Operate Transfer



A 32 year commitment

Eligible for all derivative

income

during this period

After concession period

expiry,

ownership transfers to the

state

The Concession Period



Public Sector Commitments


Financial Contribution

The State undertakes to pay the Concessionaire a State Grant in accordance with a structured milestones progress payment mechanism

Sharing Ridership Revenue Risks

The state is willing to share with the Concessionaire the risks related to variations between the actual ridership revenues and the state’s ridership revenue reference set out in the Concession Documents

33 Ministry of FinanceMinistry of Finance 3333 TThehe Division of PPP Projects Division of PPP ProjectsThe Division of Public Private Partnership projectsThe Division of Public Private Partnership projects

Project’s Risks Allocation The Contract Documents allocate the following risks:

Antiquities Contamination Ground Condition Special Circumstances Site delivery Changes in the Statutory Plan

Government support : Limited competition along the LRT line Priority at traffic intersections Traffic regulation

Public Sector Commitments


Red Line - Project Status

Engineering Design completed

Statutory Process - completion

Utility relocation and advance works - in

progress

Bat Yam, Jaffa, Ramat Gan, Bnei Brak, Petach

Tikva.
