ppp schemes and railways financing (geneva) 121107 (vdef ...€¦ · the standard model of public...

Public Private Partnership Schemes and Railways FinancingPPP Projects for the Railways Network in FranceGeneva / November 07, 2012

Gweltaz GUIAVARC’HHead of Major Projects & PPP Support ServiceMajor Projects Division

PPP Projects for the Railways Network in France

1) GSM-Rail (Telecoms) : around 14,000 km to cover by GSM-R

2) HSL Brittany Pays-de-Loire (BPL) between Le Mans and Rennes : 180 km (and 30 km of connexions)

3) HSL South Europe Atlantic (SEA) between Tours and Bordeaux : around 300 km (and 40 km of connexions)

4) HSL Nîmes-Montpellier Bypass (CNM) : 70 km (Mixed Link HSL / Freight)

5) Montpellier Odysseum New Railway Station

RFF Majors Projects

ContractsType Planning Amount of the

transactionContractDuration

GSM-RailDBFMAvailabilitypayment

Closing in March 2010 1,5 b € 15 y

HSL SEA(Tours / Bordeaux)

Concession contract Closing in June 2011 8 b € 50 y

HSL BPL(Le Mans / Rennes)

DBFMAvailabilitypayment

Closing in July 2011 3,4 b € 25 y

HSL CNM(Nîmes / Montpellier)


Closing in June 2012 1,8 b € 25 y

ODYSSEUM(New RailwayStation in Montpellier)


Tender launch in July 2012 75 M€ 30 y

Railway Majors Projects in PPP

RFF's portfolio of PPP projects : around € 15 billion

Why PPPs for the French Rail Network ?

The Standard Model of Public Procurement is under a specific law to the public'sowners (buildings or infrastructures) : « loi MOP » n°85-704 from July 12 1985.

● Constraints:− Separate contracts (design, build, maintenance, …) and management of all thosecontracts− Short term contracts− Payment in full upon completion− Fully financed by the public sector− Commercial risk remains with public authorities− Allows for limited risk transfer to private contractors

The firsts French HSL were built under this scheme of public procurement, andcurrently, the HSL East European II toward Strasbourg is built under the MOP law.

Public Private Partnerships (PPP) is one of the answers to those constraints.

RFF has the will to continue keeping this two schemes, and use PPPs when it appearsrelevant : it is important to know what you delegate as owner and infrastructuremanager, especially when it is a complex system, as the railway system

Two schemes for Railway PPP in France

remuneration based on performance and availability (reliability, regularity, etc.).

SPV Concessionaire

Train Operating

Companies

Grant and Availability Payment

Design, Build, Maintenance, Renewal

remuneration based on the level traffic / revenue and on performance and

availability (reliability, regularity, etc.).

Train Operating

Companies

Grant

Operating

Train path

BOT ("Concession")DBFM ("Contrat de Partenariat")

Infrastructure Tolls

1 2 3 4 5 6

20

40

60

80

100

Durée du voyage TGV en heures

Part de marchéaérien / rail

Paris – Bruxelles (Thalys)Paris – Lyon (TGV Sud-Est)

Madrid – Séville (AVE)

Paris – Bordeaux (TGV Atlantique)

Paris - Montpellier

Tokyo - Hiroshima

Paris – Toulouse / Toulon

Paris - Nice

1 2 3 4 5 6

20

40

60

80

100






Paris - Montpellier

Tokyo - Hiroshima


Paris - Nice

1 2 3 4 5 6

20

40

60

80

100






Paris - Montpellier

Tokyo - Hiroshima


Paris - Nice



Durée du voyage TGV en heuresDurée du voyage TGV en heures






Paris - Montpellier

Tokyo - Hiroshima


Paris - Nice

Socio-economic value of HSL Projects

HSL SEA example :Traffic increase expected = around 4 millions passengers

Railway market share

Transport time (hours)

Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)

Zonage géographique

MODULE TRAFIC

Données de la situation de base (2004) (tous modes)Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)Hypothèses générales : population, trafic (route, fer , air)

Hypothèses macro‐économiques : PIB, élasticité des trafics au PIB, baril de pétrole, prix routiers, prix aériens,

Simulation de l’opérateur ferroviaire : marge, prix du billet voyageur, …



Tarification d’infrastructure de la situation de base

Trafic par OD : situations de référence et en projet

Coûts d’exploitationType de matériel roulantGrille d’exploitation

MODULE EXPLOITATION

Grille aux différents horizons

MODULE PEAGES

Péages RFN et SEA

Trains.kmMODULE PRE‐DIAGNOSTIC FINANCIER

MODULE CAPACITE CONTRIBUTIVE

MODULE BILANS

EBE concessionEBE RFF (hors SEA) EBE transporteur

Architecture du modèle stratégique Rail Concept

Données péages (barèmes, inflateurs, modulations)

Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)

Zonage géographiqueZonage géographiqueZonage géographique

MODULE TRAFICMODULE TRAFIC

Données de la situation de base (2004) (tous modes)Données de la situation de base (2004) (tous modes)Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)

Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)Hypothèses générales : population, trafic (route, fer , air)Hypothèses générales : population, trafic (route, fer , air)













Données de la situation de base (2004) (tous modes)Données de la situation de base (2004) (tous modes)Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)

Hypothèse d’augmentation du produit moyen et de croissance du trafic (fil de l’eau)Hypothèses générales : population, trafic (route, fer , air)Hypothèses générales : population, trafic (route, fer , air)



Tarification d’infrastructure de la situation de baseTarification d’infrastructure de la situation de base







MODULE EXPLOITATION

MODULE EXPLOITATION

Grille aux différents horizons Grille aux différents horizons Grille aux différents horizons

MODULE PEAGESMODULE PEAGES

Péages RFN et SEAPéages RFN et SEAPéages RFN et SEA

Trains.kmTrains.kmTrains.kmMODULE PRE‐DIAGNOSTIC FINANCIER

MODULE PRE‐DIAGNOSTIC FINANCIER

MODULE CAPACITE CONTRIBUTIVEMODULE CAPACITE CONTRIBUTIVE

MODULE BILANSMODULE BILANS

EBE concessionEBE concessionEBE RFF (hors SEA)EBE RFF (hors SEA) EBE transporteurEBE transporteur

Architecture du modèle stratégique Rail Concept




Economic Modelization of Railway System

Risk Sharing

Design

ConstructionAdministrative permits (post Public Enquiry)

Technological evolution

Risk of soil

Commercial / traffic risk

« Force Majeure »

RFF / Public sector

Private sector

Project management

Operation/maintenanceLand acquisition

Litigation risk against contract

Unforseen changes

Change in Law

Infrastructure renewal

Quality and service availibility

Ris

k to

priv

ate

sect

orSh

ared

risk

Ris

k to

RFF

Availability based contract : cost and remuneration profile

Taxes

Flux de trésorerie Java

0,0

500,0

1 000,0

1 500,0

2 000,0

2 500,0

3 000,0

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

2041

2043

2045

2047

2049

2051

2053

2055

2057

2059

IS et Taxes Prélèvements sur RURA et DSRAPrélèvements sur MRA Service de la dette senior Service de la dette subordonnée DividendesRecettes

Cash Flows

TaxesMRAMezzanine Debt Service Revenues

RURA and DSRA drawdownsSenior Debt ServiceDividends

Concession : operating period

HSL Financial Plan

Senior debt Construction : € 850 M

(11 commercial banks)

EIB Credit : € 300 M

Senior debt Project life : € 250 M , same commercial banks

Equity bridge credit : more than € 100 M

VAT Credit : 19 m€

CDC Credit : € 550 M

ClosingFirst drawdown project debt

Completion Contract end

2 years

+ 23 years

Commercial debt end

+ 25 years+ 5 years and 3 months+ 10 monthsComing into force

Construction phase

5,25 years

Operating phaseabout 20 years

− Respect of delays and costs : Project on time and on budget ; lump sum contract

− Bundling of asset construction and operation ; life cycle cost (LCC) optimization

− Risk allocation

− Performance based

− Brownfield risk : extension of existing network

− Jumbo PPPs requiring large upfront investments but :

- Jumbo PPP in one phase (HSL SEA was studies in 2 parts)- Several projects in the same time (4 HSL under construction 2012-2017)

− Competition during tender

− Innovation capacity & operating performance of the private sector

− Financial costs (mainly after financial crisis) :- club deal vs syndication- liquidity issues : limited final take- rising of commercial bank margins and fees (project finance debt from 70 bps to 250 bps and more)

− Reduction in number of financial institutions active in the market− Shorter maturities of bank lending : from 35 years to 10-15 years, not covering entire project life (except public banks)

− Transaction costs− Widening gap between the “private” WACC and the cost of public debt

− Complexity of interfaces with the existing network (connections, systems, …)

− Heaviness of tender procedure− A lot of time to prepare the tender documentation

Balance of advantages and disadvantages

The majors issues of PPP : key points for a win-win PPP

Technical issues :− Interfaces management (specialy with the existing network : connexions,régulation center, GSM-R, …)

Contractual & Tender issues :− Tender documentation (technical, financial, commercial, …),− Structuring the project documentation with a main goal : the bankability ; theproject must be attractive for sponsors and also for the lenders.− A balanced contract for the bankability of the project

Financial issues :− Public cover for Swaps in case of litigation against the Contract− Risk Aversion : increase of margins after the financial crisis (despite the StateGuarantee for SEA HSL)

Commercial issues (in Concession) :− Traffic risk transfered (but "non-real greenfield" due to traffic on the existingnetwork since several years)− Market share of the "historic operator" (SNCF in France)− For the TOC, ability to pay tolls vs ticket price policy and profitability of transportactivity

Contact :

Mr Gweltaz GUIAVARC’HHead of Major Projects & PPP Support ServiceMajor Projects Division

Réseau ferré de France92 Avenue de France75013 PARIS

e-mail : [email protected]él : (+33) 1 53 94 31 17

Public Private Partnership Schemes and Railways Financing

www.rff.fr

End of presentation

Public Private Partnership Schemes and Railways Financing

www.rff.fr

ppp schemes and railways financing (geneva) 121107 (vdef ...€¦ · the standard model of public...

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