Public-Private Partnerships!

!   Presented at Transforming Transportation 2014!
!   Graham Smith!
!   HSBC!

Transforming...
What is PPP?
January 2014

Presented by: Graham Smith
What is PPP?

P3
P³
PFI
BOT
BOOT
BOO
BLT
DBFO
DCMF

2
What is PPP?

•  Public sector purchases services
•  Private Sector conceives, sets up, operates, assumes risks

3
Is it always appropriate for Governments?

•  Not for all projects, not appropriate for low capital value projects
•  Wher...
Is it going to be attractive to the private sector?

•  Is it potentially profitable?
•  Is there Government support?
•  A...
PPP’s in Urban Transport

•  UK, Colombia, Chile, South Africa, Panama, Malaysia
•  Which countries failed?
•  UK, Colombi...
Government

Public
Infrastructure
and Services

Performance/Contract Compliance

Capital Investment
Regulations

Taxes, Vo...
What should a BRT City be thinking of?

•  What do they want delivered
•  How to calculate value for money (VFM)
•  Will t...
What should a Concessionaire be thinking of?

•  Can risks be costed over all of project life
•  Minimum revenue support?
...
PPP payment structures used in BRTs

•  Transantiago, Chile
Payment per passenger transported but
Guaranteed minimum reven...
Who chose the buses?

The City
Johannesburg
The Operator
Santiago/Panama

or the financier?

11
Case Studies – Rea Vaya

• Rea Vaya

12
Case study – Rea Vaya

•  Clidet 957 – a strange name for a bus company
•  When is a Project not a PPP – then it is…
•  Wh...
Case studies - Transantiago
• Transantiago

14
Case study - Transantiago

• Estevez, Espejo, Cortazar, Morande, Errazuriz are all examples of?
• How many times can you c...
How to attract private capital

•  Maintain economic equilibrium
•  Respect the concession contract in word/spirit
•  Talk...
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Public Private Partnerships - Graham Smith - HSBC - Transforming Transportation 2014 - EMBARQ The World Bank

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Public Private Partnerships - Graham Smith - HSBC - Transforming Transportation 2014 - EMBARQ The World Bank

  1. 1. Public-Private Partnerships! !   Presented at Transforming Transportation 2014! !   Graham Smith! !   HSBC! Transforming Transportation 2014!
  2. 2. What is PPP? January 2014 Presented by: Graham Smith
  3. 3. What is PPP? P3 P³ PFI BOT BOOT BOO BLT DBFO DCMF 2
  4. 4. What is PPP? •  Public sector purchases services •  Private Sector conceives, sets up, operates, assumes risks 3
  5. 5. Is it always appropriate for Governments? •  Not for all projects, not appropriate for low capital value projects •  Where risks over project life cannot be costed •  Where demand for services in the future cannot be reasonably predicted •  Where private sector does not have the expertise to deliver 4
  6. 6. Is it going to be attractive to the private sector? •  Is it potentially profitable? •  Is there Government support? •  Are multiple Government Agencies involved? (fractured government •  How protective is PPP/concession contract law? •  Can risks be assessed/mitigated? •  Is financing available? 5
  7. 7. PPP’s in Urban Transport •  UK, Colombia, Chile, South Africa, Panama, Malaysia •  Which countries failed? •  UK, Colombia, Chile, South Africa, Panama, Malaysia 6
  8. 8. Government Public Infrastructure and Services Performance/Contract Compliance Capital Investment Regulations Taxes, Votes Debt payment Fares Lenders Operators Financing Taxpayers Level of Service Service users 7
  9. 9. What should a BRT City be thinking of? •  What do they want delivered •  How to calculate value for money (VFM) •  Will the market view a PPP as potentially profitable? •  Is there anything similar-tested/failed? •  Is there competition between service providers? •  Risk of “adventurers” •  Can they regain control of transport from the current operators in order to go for a BRT? 8
  10. 10. What should a Concessionaire be thinking of? •  Can risks be costed over all of project life •  Minimum revenue support? •  How will service quality be defined and measured? •  Profitability/competition/shareholding control/low cost, long term financing 9
  11. 11. PPP payment structures used in BRTs •  Transantiago, Chile Payment per passenger transported but Guaranteed minimum revenue, payments per km and per place offered, income increased in line with costs •  Rea Vaya, South Africa Payment per km but Undertaking to always cover financial and operating costs •  Metrobus, Panama Payment per passenger transported but Monopoly operator, income increased in line with costs, protection from competition from Metro 10
  12. 12. Who chose the buses? The City Johannesburg The Operator Santiago/Panama or the financier? 11
  13. 13. Case Studies – Rea Vaya • Rea Vaya 12
  14. 14. Case study – Rea Vaya •  Clidet 957 – a strange name for a bus company •  When is a Project not a PPP – then it is… •  When is an SPC ranked the same as a City? •  Will the bank steal my buses? 13
  15. 15. Case studies - Transantiago • Transantiago 14
  16. 16. Case study - Transantiago • Estevez, Espejo, Cortazar, Morande, Errazuriz are all examples of? • How many times can you change the rules? • How difficult can it be to measure performance? • Avoid Adventurers… 15
  17. 17. How to attract private capital •  Maintain economic equilibrium •  Respect the concession contract in word/spirit •  Talk to and work with the financiers •  Remember just how many BRT projects there are in the pipeline •  Be prepared to renegotiate the concession to make it financiable •  Local is not always best 16

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