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1
PPPs and Public Works
The standardisation of build-and-operate Concession contract
&
the Monitoring System of Public Wor...
Agenda
2
The draft of a standardized PPP contract
- Main purpose and essential features
The new Monitoring System of Publi...
The Standard Model Agreement
3
 What type of contracts has been standardized?
- Build-and-operate Concession contract wit...
4
2
3
1
PPPs from a public finance point of view
ON/OFF GOVERNMENT BALANCE SHEET
(% distribution)
The total value of the o...
Providing a reference tool to be used by both public and
private agents in order to ensure a proper allocation of risks
be...
The Standard Model Agreement
a composite structure
ANNEXES
CONTRACTUAL DOCUMENTS
DEFINITIONS
RISK MATRIX
2
3
1
6
Annual Me...
Document Structure
RISK MATRIX - AN EXTRACT
RISK OF DEMAND
Risk related to changes in demand for services, not dependent o...
This report has been prepared in
order to provide a guideline for public
and private operators, to the reading
of the high...
MAIN FEATURES OF THE STANDARDIZED CONTRACT
 Provide a clear system of rules on parties’ obligations,
responsibilities and...
- Meeting deadlines, starting from
the planning
- Penalty for delays, but also
incentives for recovery
- Certainty on the ...
TYPE OF SERVICES DESCRIPTION AND CHARACTERISTICS
REFERENCE
DOCUMENT
DISCIPLINARYOFMANAGEMENT
SERVICES RELATED TO
THE AVAIL...
Authorizations Controls Payments
PECUNIARY OBLIGATIONS OF THE GRANTOR
2
3
1
Certainty in the availability of resources
12
...
2
3
1
THE NEW
MONITORING SYSTEM OF PUBLIC WORKS IN ITALY
The Ministry of Economy and
Finance launched a new
monitoring sys...
2
3
1
THE NEW
MONITORING SYSTEM OF PUBLIC WORKS IN ITALY
The goal is to collect data from any subject in
charge of a publi...
2
3
1
THE NEW
MONITORING SYSTEM OF PUBLIC WORKS IN ITALY
The dataset is growing and the Italian NSI (ISTAT) is
exploring a...
Financial close
Analisys of risks
Feasibility study
2
3
1
The system integrates data
from several sources
(payments, publi...
2
3
1
Feasibility
study
The PPPs dataset is designed to collect data from the beginning
to the phase of management of the ...
Risks
2
3
1 Allocation of risks is a multidimensional variable, we
will collect data all along the lifecycle of the PPP in...
EXPECTED RESULTS
Standard
PPP
contract
Monitor
PPPs
Evaluate &
Decide
19
Annual Meeting of Senior Infrastructure and PPP O...
Thank you very much!
20
Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
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PPPs and Public Works - Grazia Sgarra, Giovanni Coletta, Giovanni Rizzo, Italy

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Presentation made by Grazia Sgarra, Giovanni Coletta, Giovanni Rizzo, Ministry of Economy and Finance, Italy, at the 9th annual network meeting of Senior Infrastructure & PPP Officials held at the OECD, Paris, on 1 March 2016

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PPPs and Public Works - Grazia Sgarra, Giovanni Coletta, Giovanni Rizzo, Italy

  1. 1. 1 PPPs and Public Works The standardisation of build-and-operate Concession contract & the Monitoring System of Public Works in Italy The activities of the WG on PPPs Grazia Sgarra - Coordinator of the WG on PPPs Giovanni Coletta and Giovanni Rizzo – Members of the WG on PPPs Ministry of the Economy and Finance – State General Accounting Department (RGS)
  2. 2. Agenda 2 The draft of a standardized PPP contract - Main purpose and essential features The new Monitoring System of Public works in Italy (MOP) The data set on PPPs All these things are connected! 2 3 1 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  3. 3. The Standard Model Agreement 3  What type of contracts has been standardized? - Build-and-operate Concession contract with a SPV - PPP infrastructure projects mainly intended for the direct use by the PA  What are the key objectives pursued by the WG? The usual goals plus… - the consultation with all stakeholders (http://www.mef.gov.it/focus/article_0017.html) - the control of public finances 2 3 1 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  4. 4. 4 2 3 1 PPPs from a public finance point of view ON/OFF GOVERNMENT BALANCE SHEET (% distribution) The total value of the on-balance-sheet transactions is € 5.7 billion. The total value of the 7 off-balance-sheet infrastructures is €500 million. Source: Italian National Statistical Institute Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016 24% 76% Off On
  5. 5. Providing a reference tool to be used by both public and private agents in order to ensure a proper allocation of risks between parties. The Main objective of the Standard Model Agreement 2 3 1 5 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  6. 6. The Standard Model Agreement a composite structure ANNEXES CONTRACTUAL DOCUMENTS DEFINITIONS RISK MATRIX 2 3 1 6 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  7. 7. Document Structure RISK MATRIX - AN EXTRACT RISK OF DEMAND Risk related to changes in demand for services, not dependent on the quantity and quality of the service provided by the private partner. Specific type of risk Descrizione Effects Allocation to public subject Allocation to private subject Not allocat ed Main references in the convention Risk of declining demand Risk of a contraction in demand in the case of premium-rate services on the user/business Decrease in revenues X Art. 15.1, paragraph 2 Art.23 Risk of offer Risk that arises a competitive offer of other operators Decrease in revenues X Art.15.1, paragraph 2 Art. 23 2 3 1 7 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  8. 8. This report has been prepared in order to provide a guideline for public and private operators, to the reading of the highlights of the Articles, and to explain the rationale of the choices made by the WG in the development of the articulated same. Document Structure EXPLANATORY REPORTCHAPTER 3: EXPLANATORY REPORT 2 3 1 8 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  9. 9. MAIN FEATURES OF THE STANDARDIZED CONTRACT  Provide a clear system of rules on parties’ obligations, responsibilities and benefits;  Identify the Concessionaire with a special purpose vehicle (SPV), a private entity;  Specify conditions and indicators ensuring Economic and Financial Equilibrium. The rebalancing hypothesis is strictly limited;  Regulate the Management phase;  List the items to be quantified in case of termination of Contract, due to a “pathological” contractual relationship 2 3 1 9 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  10. 10. - Meeting deadlines, starting from the planning - Penalty for delays, but also incentives for recovery - Certainty on the availability of resources - Automatic reductions of availability fees and structured system of penalties OBLIGATIONS OF THE CONCESSIONAIRE Designing Construction Management 2 3 1 Service’s requirements 10 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  11. 11. TYPE OF SERVICES DESCRIPTION AND CHARACTERISTICS REFERENCE DOCUMENT DISCIPLINARYOFMANAGEMENT SERVICES RELATED TO THE AVAILABILITY OF THE ASSET (Planned maintenance, energy service, etc.) Services to be performed respecting precise levels of performance (optimum and minimum). Scheduled automatic deduction of the Availability Fee in proportion to the reduction in the level of performance, from a optimal level to the minimum level. Below the minimum level are applied penalties and if the breach persists, can get to the resolution of the concession. TECHNICAL MANAGEMENT SPECIFICATIONS ADDITIONAL SERVICES IN CONNECTION WITH THE AVAILABILITY (laundry, canteen, etc.) These are services that can even be managed separately from the construction and management concession contract. The amount of the remuneration is predetermined and the fee is paid only at the achievement of the optimum level of performance. If the service provided does not reach that level, penalties are applied. TECHNICAL MANAGEMENT SPECIFICATIONS TARIFF SERVICES. (parking) These are services that may be subject to tariff and as such included in the Economic and Financial Plan. TECHNICAL RATE SERVICE SPECIFICATIONS COMMERCIAL SERVICES (bar, refreshments, etc.) Normally these services are not paid by the Grantor (but leased to third parties) and subject to demand risk. TECHNICAL COMMERCIAL SERVICE SPECIFICATIONS 2 3 1 11 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  12. 12. Authorizations Controls Payments PECUNIARY OBLIGATIONS OF THE GRANTOR 2 3 1 Certainty in the availability of resources 12 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  13. 13. 2 3 1 THE NEW MONITORING SYSTEM OF PUBLIC WORKS IN ITALY The Ministry of Economy and Finance launched a new monitoring system (MOP) in October 2014. This system is aimed at collecting and prospecting detailed data on all public works in Italy. The collection of data is part of a whole mechanism designed in Legislative decrees 228/2011 and 229/2011. Evaluate Public Accounts Monitoring System Plan 13 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  14. 14. 2 3 1 THE NEW MONITORING SYSTEM OF PUBLIC WORKS IN ITALY The goal is to collect data from any subject in charge of a public work in Italy. Hence, we deal with about 10.000 users, ranging from big entities (e.g. ANAS, RFI) to little municipalities. # Users 9.560 # Public works 97.157 Value € 154.995mln Last update 24/02/2016 14 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  15. 15. 2 3 1 THE NEW MONITORING SYSTEM OF PUBLIC WORKS IN ITALY The dataset is growing and the Italian NSI (ISTAT) is exploring a subset of data to use the system as a potential source in the estimation of investment of local municipalities according to the accrual principle. 15 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  16. 16. Financial close Analisys of risks Feasibility study 2 3 1 The system integrates data from several sources (payments, public tenders, ect.) in order to minimize the administrative burden on monitored subjects and guarantee coherence between databases. The current dataset will be implemented within the year with a specific set of data for PPPs. Financement Payments Timing Total cost Current dataset Specific PPPs 16 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016 THE DATA SET ON PPPS
  17. 17. 2 3 1 Feasibility study The PPPs dataset is designed to collect data from the beginning to the phase of management of the Public Work. Collecting standard data will help detecting crucial information about on-off balance classification of operations. Choose partner Subscribe contract Build Release Management phase THE DATA SET ON PPPS 17 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  18. 18. Risks 2 3 1 Allocation of risks is a multidimensional variable, we will collect data all along the lifecycle of the PPP in order to insure transparency and guarantee the correct classification of the operation. Construction Demand Availability Other Feasibility study Contract Financial close Management phase THE DATA SET ON PPPS 18 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  19. 19. EXPECTED RESULTS Standard PPP contract Monitor PPPs Evaluate & Decide 19 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
  20. 20. Thank you very much! 20 Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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