South East Europe Rail conference - Jean Patrick Marquet

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South East Europe Rail conference - Jean Patrick Marquet

  1. 1. South East Europe Rail & PublicTransport Development Conference 2013Jean-Patrick Marquet, DirectorMunicipal & Environmental Infrastructure5 June 2013
  2. 2. 2Contentso 20 years of municipal finance at EBRDo EBRD approach towards Urban Transport Financingo EBRD’s Urban Transport Projects in Western Balkans
  3. 3. 320 years of municipalfinance at EBRD
  4. 4. 4010020030040050060070019941995199619971998199920002001200220032004200520062007200820092010201120120500100015002000250030003500400045005000Business volume Net Cumulative Business Volume€ billionAnnualbusinessvolumeNetcumulativebusinessvolumeActivity started in 1994300 projects signed• 50% municipal (sub-sovereign) clients• 30% private clients/ PPPs• 20% sovereign€5bn invested by EBRDEBRD and municipal finance
  5. 5. 5AnnualbusinessvolumeNetcumulativebusinessvolumeFocus sectorsWater & Wastewater – improved quality ofservice and environmental complianceUrban Transport – improved public transportservices (buses, LRT, metro, ferries, etc.) andmore efficient and safe network designSolid Waste Management – improvedefficiency and frequency of collection;adequate disposal; prevention of groundwatercontaminationDistrict Heating– renewal of obsoleteheating and distribution systems andsignificant efficiency gains
  6. 6. 6Our principles of lendingTransitionImpactSoundBankingEBRDAddition-alityPromotes transition to market-basedsolutions, ‘commercialized’approaches, good corporategovernance, international standards,private ownership where appropriateSupports, but does notreplace/underpriceprivate investmentand/or commercialfinanceInvests infinancially viableprojects, preferrevenuegeneratingprojects, co-financing withprivate sector(banks/sponsors)
  7. 7. 7Matching Client Capacity:Not all products are suitable for all clientsSovereign-backed loansCheap but canbecomepoliticisedMunicipal loansor utility loansguaranteed bymunicipalityIndependence forself-financing cityBut higher costand burden onpublic debt bookQuasi corporateutility loansOff-balance sheetborrowing for cityNeed backing ofPublic ServiceContract + SupportAgreementLoans to private/PPP companiesPrivate sectorindebtednessNeed robust legal,regulatory andcontractualframeworkEBRD is flexible and has risk appetite-- we structure projects across the wholespectrum, e.g., from sovereign loans when legally necessary, municipal loans,public utility loans backed by municipal guarantee, operational concessions(DBOM), PPPs based on DBFO to full privatizations
  8. 8. 8EBRD’s approach tourban transport financing
  9. 9. 9EBRD Urban Transport VisionThe core themes of the Bank’s actions are• decentralisation,• commercialisation and• environmental improvement.UT infrastructure and services projects should• promote cost effective capital improvements,• ensure regular maintenance of existing assets,• provide environmentally and financiallysustainable services for users.”
  10. 10. 10EBRD Complements UT Financing withPreparation and Implementation SupportInvestment projects:• Fleet and rolling stock renewal• Track, power supply andsignalling• Depot refurbishment andconstruction• Automated Fare Collection• Vehicle location and real timepassenger information systems• Metro, LRT, BRT, Tram systems• Urban roads• BridgesTechnical assistance:• Feasibility studies• Project Structuring• Tender strategy and procurement• Technical monitoring and contractsupervision• Regulatory framework improvementand institutional capacity building• Corporate development andrestructuring assistance• Assistance with preparation of follow-on investments
  11. 11. 11Approach to Public Transport FinancingEBRD’s typical financing structure is:• Lending to a transport operator directly• Financing structure preferably without municipal guarantee• Based on Public Service Contract (PSC) supplemented withMunicipal Support Agreement (MSA)• Investments strengthened with adequate TechnicalCooperation programmes• Comprehensive corporate restructuring• Steps towards sector reform
  12. 12. 12Common Situation in Public Transport:Sub-optimal unsustainable arrangementsFAREREVENUETRANSPORTOPERATORCITYAnnual, ad hocsubsidy payment(Dependent onbudget availability,other priorities)SERVICESPASSENGERSChronic financial gap
  13. 13. 13Needed Foundations for lastingimprovement in Urban Transport Create a stable revenue and define revenue sources for public transport –key for creditworthiness Focus on operating cost and service quality for users Invest in new rolling stock & infrastructure Give citizens real alternative to private transport Strengthen regulationHOW? Public Service Contracting (PSC) between public owner and publictransport operator Can be used for either municipal or private operators
  14. 14. 14EBRD Proposed Structure for MunicipalOperator FinancingFAREREVENUEGUARANTEEORMUNICIPALSUPPORTLOANTRANSPORTOPERATORINSURANCECOMPANYCITYPUBLICSERVICECONTRACTSERVICESPASSENGERSBUSINSURANCECOMPENSATIONBASED ONOBJECTIVES
  15. 15. 15Roles and Responsibilities within PSC Municipality as the Client: Defines network, policy, service standards, tariffs Sets & enforces regulatory framework Formally agrees amount and quality of services Makes compensation payments to cover differencebetween tariff revenues and full operational costs,(due to social nature of services) Operator as Service Provider: Takes on operational and managerial risks Provides services according to key PSC performancelevels (reliability, punctuality, safety, cleanliness,customer satisfaction); Operates & maintains new and improved rolling stock
  16. 16. 16Financing of Urban Road InfrastructureTypes of projects Emphasis for project structuring• Rehabilitation and constructionof urban roads and bridges• Output and Performance BasedRoad Contracts• Assistance for road institutioncapacity building• Automated Traffic Managementand ITS• Private sector for long termmaintenance• Parking Management with on-street and off-streetsubsystems• Private build and operated facilities• Integrated parking strategies forbetter traffic management• Street Lighting • Privately operated under ESCO’s
  17. 17. 17Some projects
  18. 18. 18EBRD financed UT projects in WBExisting EBRD projects:• Serbia: Belgrade Ada Bridge• Serbia: Belgrade InfrastructureReconstruction• Serbia: Belgrade Traffic Management• Serbia: Belgrade Public TransportInfrastructure• Serbia: Belgrade GSP Rolling Stock• BiH: Sarajevo Urban Roads Development• Albania: Tirana Municipal Transport Project Management• FYR Macedonia: Skopje Urban Transport Project
  19. 19. 19EBRD UT projects under preparation2014 and beyond:• Serbia: Sabac off-street parking PPP• Serbia: Belgrade off-street parking Project• Montenegro: Kotor-Cetinje Cable Car PPP• Montenegro: Kotor Fortress Urban Regeneration PPP• Albania: Tirana Bus Terminal PPP
  20. 20. 20New concept: WB MunicipalInfrastructure Development Fund•A €100m specialised investment fund established by EBRD and KfW•Dedicated to finance creditworthy municipal or private sector projects•Target sectors: water and waste-water, district heating, solid wastemanagement, energy efficiency, public transport, social infrastructure•Fund to be managed by an independent Investment Manager•Loans prepared and processed by participating local banks•Products include loans to municipalities or private entities in amountbetween €0.5-5.0 million and maturity of up to 10 years•Pricing to reflect municipal credit risk in respective countries•Project preparation through donor-funded technical assistance•Fund closing expected 2nd half 2013
  21. 21. 21ContactsJean-Patrick MARQUETDirectorMunicipal & Environmental InfrastructureTel: +44 20 7338 6849Email: MarquetJ@ebrd.comEuropean Bank forReconstruction and DevelopmentOne Exchange SquareLondon EC2A 2JNwww.ebrd.com/mei

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