National PPP Summit
June 2014
Victorian PPP Project Pipeline – Updates & Lessons Learned
An Nguyen, Assistant Director
Par...
Agenda
• 2014-15 Budget – Infrastructure Investment and Key
Metrics
• Current Victorian PPP projects
• PPP project pipelin...
Government Infrastructure Investment
0
1
2
3
4
5
6
7
1999-2000 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 201...
2014-15 Budget - Key fiscal aggregates
Source: Department of Treasury and Finance
General government sector
Unit of
measur...
Current PPP projects in Victoria
• There are currently 23 PPP projects in Victoria worth around
$12B
• 20 are in operation...
Current projects in market
East West Link – Eastern Section
• Availability PPP
• State to retain toll revenue risk, at lea...
CityLink – Tulla Widening
• Unsolicited proposal under negotiation - agreement in
principle
• Estimated value of $850 mill...
M80
M1
M3
M79
Extra lane in each direction
Upgrade subject to Commonwealth funding
CityLink-Tulla widening
M80
MANAGED MOT...
Cranbourne – Pakenham Rail Corridor
• Unsolicited proposal in negotiation - commitment deed
• Estimated value $2 – 2.5 bil...
PPP project pipeline
Construction Period Estimated Value
New Schools package
2015-2017 $191 million
East West Link – Weste...
New Schools package
• 11 new schools to address demand in growth areas
• $191 million estimated value
• Built on the succe...
East West Link – Western section
• Complete the East-West Link, to provide connection
from Eastern Freeway to Western Ring...
Eastern section
Port Connection
Western section
CBDSWANSON DOCK
WEBB DOCK
M1
M3M80
East West Link
Melbourne Rail Link
• Project scope:
• Rail tunnel from South Yarra to Southern Cross
• Two new underground stations at Do...
TOORAK
CBD
DOMAIN
YARRAVILLE
FISHERMANS BEND
Melbourne Rail Link
PORT MELBOURNE
Existing network
Existing station
Proposed...
Approach to PPPs – implementing PPP reforms
and lessons learned
Reduce bid costs
• Deferred certain requirements to prefer...
Alternative Financing Strategies for PPPs
Developments
Global Financial Crisis
- Reduced funding sources - Increased funding costs
Quick response for projects in ma...
Policy response - Future direction of Victorian PPPs
• A range of alternative financing structures assessed
against the tr...
New Bendigo Hospital (2013)
New Bendigo Hospital (2013)
Future challenges
• Governance
• Program approach for transport projects
• Dedicated offices for EWL – Western & Melbourne...
© State of Victoria 2014
This work is licensed under a Creative Commons Attribution 3.0 Australia licence.
You are free to...
An Nguyen - Victorian Department of Treasury and Finance - The Victorian PPP Projects Pipeline – Updates and Lessons Learned
An Nguyen - Victorian Department of Treasury and Finance - The Victorian PPP Projects Pipeline – Updates and Lessons Learned
An Nguyen - Victorian Department of Treasury and Finance - The Victorian PPP Projects Pipeline – Updates and Lessons Learned
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An Nguyen - Victorian Department of Treasury and Finance - The Victorian PPP Projects Pipeline – Updates and Lessons Learned

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An Nguyen delivered the presentation at 2014 National PPP Summit.

The National PPP Summit is the leading annual event for industry stakeholders to gather and discuss the issues across the national and global PPP markets. The 2014 agenda reviewed current and emerging financing models as well as showcasing best practice strategies for the procurement process, risk transfer and whole-of-life project management.

For more information about the event, please visit: http://www.informa.com.au/PPPSummit14

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An Nguyen - Victorian Department of Treasury and Finance - The Victorian PPP Projects Pipeline – Updates and Lessons Learned

  1. 1. National PPP Summit June 2014 Victorian PPP Project Pipeline – Updates & Lessons Learned An Nguyen, Assistant Director Partnerships Victoria Department of Treasury & Finance
  2. 2. Agenda • 2014-15 Budget – Infrastructure Investment and Key Metrics • Current Victorian PPP projects • PPP project pipeline – what is on the horizon • Approach to PPPs – implementing reforms & lessons • Future challenges
  3. 3. Government Infrastructure Investment 0 1 2 3 4 5 6 7 1999-2000 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 to 2017-18 $billion Cash funded infrastructure investment Debt funded infrastructure investment Residual cash to repay debt Net infrastructure investment
  4. 4. 2014-15 Budget - Key fiscal aggregates Source: Department of Treasury and Finance General government sector Unit of measure 2012-13 Actual 2013-14 Revised 2014-15 Budget 2015-16 Estimate 2016-17 Estimate 2017-18 Estimate Net result from transactions $ million 316 935 1327 3030 3183 3330 Net debt $ billion 19.8 21.5 23.4 18.5 19.0 19.5 Net debt to GSP per cent 5.9 6.1 6.3 4.7 4.6 4.5 Government infrastructure investment $ billion 5.4 5.2 7.5 7.1 6.4 6.4
  5. 5. Current PPP projects in Victoria • There are currently 23 PPP projects in Victoria worth around $12B • 20 are in operation - Bioscience Research Centre, Peninsula Link and Desalination Plant all reached Commercial Acceptance • 3 are in construction - Hopkins Correctional Centre, Victorian Comprehensive Cancer Centre and New Bendigo Hospital • In addition to the 23 contracted projects - Ravenhall Prison and East West Link (Eastern Section) are in tender
  6. 6. Current projects in market East West Link – Eastern Section • Availability PPP • State to retain toll revenue risk, at least initially • Contract close by end 2014, construction completion end 2019 Ravenhall Prison • Availability PPP • Full service offering including custodial, health, programs • Contract close by end 2014, construction completion end 2017 Unsolicited proposal framework • Two projects being negotiated for contract close by end 2014: – Cranbourne-Pakenham Rail Corridor; and – CityLink-Tulla widening
  7. 7. CityLink – Tulla Widening • Unsolicited proposal under negotiation - agreement in principle • Estimated value of $850 million • Project fully self-funded through a combination of: • traffic uplift, associated tolling revenue, increases in HCV multipliers and a one year concession extension. • Benefits: • 30% increase in capacity, reducing congestion • Travel-time savings of up to 16min between Melb Airport / West Gate • Taking 3000 commercial vehicles off local roads • Subject to VFM test, contract close by end 2014 • Construction completion in 2017
  8. 8. M80 M1 M3 M79 Extra lane in each direction Upgrade subject to Commonwealth funding CityLink-Tulla widening M80 MANAGED MOTORWAY TECHNOLOGY Speed signs, variable message signs, stop-and-go signals for on-ramps, CCTV to monitor for incidents. BOLTE BRIDGE Extra lanes on the Bolte Bridge and a section of the West Gate Freeway between Bolte Bridge and Power Street. MORE LANES Extra lanes in each direction between the Bolte Bridge and the Tullamarine Freeway north of English Street, Essendon Fields
  9. 9. Cranbourne – Pakenham Rail Corridor • Unsolicited proposal in negotiation - commitment deed • Estimated value $2 – 2.5 billion • Project scope: • 25 next-generation, high-capacity trains • high-capacity signalling on the Cranbourne and Pakenham lines • removal of four level crossings & planning for another four • new power substations to support the high-capacity trains. • new depot at Pakenham • Benefits include: • increase network capacity by 30% • reduce congestion & journey times • improve train reliability through high-capacity signalling • Subject to VFM test, contract close by end 2014 • Delivery in stages from 2015 until 2019
  10. 10. PPP project pipeline Construction Period Estimated Value New Schools package 2015-2017 $191 million East West Link – Western Section - potential packages 2015-2023 $8-10 billion Melbourne Rail Link - potential packages 2016-2026 $8.5-11 billion
  11. 11. New Schools package • 11 new schools to address demand in growth areas • $191 million estimated value • Built on the successful model in the Partnerships Victoria in Schools project • Benefits include: • Innovative design with potential for third party asset utilisation • Locked in whole of life asset management / condition • Frees up school principals to focus on education • Project development underway • Schools to be delivered by 2017-2018
  12. 12. East West Link – Western section • Complete the East-West Link, to provide connection from Eastern Freeway to Western Ring Rd • Estimated value $8 - 10 billion (including $1.5 billion Commonwealth contribution) • Likely to be procured in packages - potential for PPP • Benefits include: • alternate route to reduce reliance on West Gate Freeway • ease congestion and reduce journey times • improve reliability of transport network • Construction 2015 - 2023
  13. 13. Eastern section Port Connection Western section CBDSWANSON DOCK WEBB DOCK M1 M3M80 East West Link
  14. 14. Melbourne Rail Link • Project scope: • Rail tunnel from South Yarra to Southern Cross • Two new underground stations at Domain and Fishermans Bend • Construction of Airport Rail Link at the back end • Estimated value $8.5 - $11 billion • Benefits include: • increases capacity of Melbourne rail network by 30% • separates rail lines to improve reliability • mass transit option to the airport • frees up Tullamarine freeway • Detailed project development underway • Staged delivery, early works from mid-2016 • May include PPP DBFM package
  15. 15. TOORAK CBD DOMAIN YARRAVILLE FISHERMANS BEND Melbourne Rail Link PORT MELBOURNE Existing network Existing station Proposed underground rail tunnel Proposed underground station Urban renewal area RICHMOND PARKVILLE MONTAGUE SOUTHERN CROSS FOOTSCRAY TRAM-TRAIN INTERCHANGES Southern Cross, Domain, Montague and South Yarra stations SOUTH YARRA TRAM AND BUS IMPROVEMENTS Parkville precinct URBAN RENEWAL Fishermans Bend will become a new residential and commercial precinct
  16. 16. Approach to PPPs – implementing PPP reforms and lessons learned Reduce bid costs • Deferred certain requirements to preferred bidder • Streamlined and standardised contract (including builder insolvency protections) • Number of short-listed parties • Reimbursement of bid costs for specific projects Improve value for money • Modified financing structure - capital contribution • PSC as affordability benchmark / scope ladder • Independent review of PSC to increase assurance • Expanding scope of services • Interim submission of commercial departures
  17. 17. Alternative Financing Strategies for PPPs
  18. 18. Developments Global Financial Crisis - Reduced funding sources - Increased funding costs Quick response for projects in market -Desalination Plant (2009) - VCCC (2011) Policy Response - Consultation Paper: Future direction of Victorian PPPs - Market Response - Policy release Project contracted - New Bendigo Hospital (2013) Projects currently in market: - Ravenhall Prison - East West Link
  19. 19. Policy response - Future direction of Victorian PPPs • A range of alternative financing structures assessed against the traditional PPP model using a set of evaluation criteria • Looking at structures that enhanced potential liquidity and value for money • Partial capital contribution identified as preferred approach • Key considerations for a capital contribution: ‒ Timing ‒ Quantum ‒ Certainty
  20. 20. New Bendigo Hospital (2013)
  21. 21. New Bendigo Hospital (2013)
  22. 22. Future challenges • Governance • Program approach for transport projects • Dedicated offices for EWL – Western & Melbourne Rail Link • Central agency involvement • Resourcing • Attract and maintain the ‘A-team’ bidders & advisers • Coordination • Commonwealth contributions • Planning approvals • Interface between projects
  23. 23. © State of Victoria 2014 This work is licensed under a Creative Commons Attribution 3.0 Australia licence. You are free to re-use the work under that licence, on the condition that you credit the State of Victoria as author. The licence does not apply to any images, photographs or branding, including the Victorian Coat of Arms, the Victorian Government logo and the Department of Treasury and Finance logo. Copyright queries may be directed to IPpolicy@dtf.vic.gov.au
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