PPPs in the Road Sector Presented by: Mauricio Ribeiro IFC Infrastructure Advisory Services Policies and Strategies to Fac...
Summary  Case Study – BA 093 Road PPP, Brazil Benefits Lessons Learned  (that could be interesting for the Caribbean count...
Alternative Road Finance Methods Road Funds Budgetary Sources Private Finance Public - Private Partnerships Construction R...
Benefits of PPP’s in the Road Sector <ul><li>Improved Service Levels </li></ul><ul><ul><li>Shorter travel times, lower veh...
Most common problems with the implementation of Transport Projects <ul><li>Successfully concluding a transport PPP can be ...
Pilot IFC/IADB/BNDES facility to fund infrastructure advisory to do PPPs Caracter í sticas Gerais do Convênio Implica ç õe...
BA-093 Road PPP, Brazil  Area of the Road Studies and Project MAIN INDUSTRIAL HUBS <ul><li>Salvador and its metropolitan a...
Studies Commissioned <ul><li>Traffic Studies </li></ul><ul><ul><li>Road Volume count </li></ul></ul><ul><ul><li>Origin-Des...
Traffic Counting Sites Sites of the Road System Site Road AADV Total 1 BA-093 11,033   2 BA-093 6,756  3 BA-093 7,409  4 B...
Highlights on the Users Profile Willingness to pay Trip Distance as Declared by Users Vehicle Ownership Trips Total Users ...
Number of people in the passenger cars of the BA 093 system Age of the Passenger Cars Frequency of Trips Reason of the Tri...
Main Enhancements <ul><li>Pavement condition </li></ul><ul><li>Security (construction of side lanes and third lanes) </li>...
Pavement <ul><li>3 contract phases:  </li></ul><ul><ul><li>Initial Works –  Until the 6 th  month of the concession </li><...
Security Enhancement: Side Lanes and Third Lanes Construction Third lanes – Required work Side lanes construction – Requir...
Third Lanes Maps Road Segment Extension (km) BA-093 4 1.60 1.40
Side Lanes Maps Road Segment Extension (km) Execution BA-093   1 14.13 1 Year BA-093   2 4.16 BA-093   3 5.43 BA-526   15 ...
Capacity Analisys using HCM 2000 Service Levels Level A Level B Level C Level D Level E Level F
Level of Service by road segment
Capacity Enhancement – Required Works Capacity Enhancement – conditioned to traffic volume Capacity Enhancement - Dualizat...
Dualization Works Required Work Works conditioned to traffic triggers Road Segment Extension Year of Execution BA-093 1 14...
Toll System Placement Plaza Road Segment Municipality 1 BA-093 5 Mata de São João 2 BA-093 1 Simões Filho 3 BA-524 13 Simõ...
Structuring Results and Next Steps <ul><li>RESULTS </li></ul><ul><li>Concession term  - 25 years </li></ul><ul><li>Investm...
Lessons Learned  That could be interesting for Caribbean countries <ul><li>To have strong political decision to do the pro...
Lessons Learned That could be interesting for Caribbean countries <ul><li>Develop high quality feasibility studies </li></...
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Barbados Road Pp Ps Mauricio Ribeiro Final Version3

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  • Barbados Road Pp Ps Mauricio Ribeiro Final Version3

    1. 1. PPPs in the Road Sector Presented by: Mauricio Ribeiro IFC Infrastructure Advisory Services Policies and Strategies to Face the Global Downturn - The Way Forward in the Caribbean Bridgetown Barbados, October 15 & 16, 2009
    2. 2. Summary Case Study – BA 093 Road PPP, Brazil Benefits Lessons Learned (that could be interesting for the Caribbean countries) Lessons Learnt from Transportation Projects
    3. 3. Alternative Road Finance Methods Road Funds Budgetary Sources Private Finance Public - Private Partnerships Construction Rehabilitation Maintenance Construction Rehabilitation Maintenance
    4. 4. Benefits of PPP’s in the Road Sector <ul><li>Improved Service Levels </li></ul><ul><ul><li>Shorter travel times, lower vehicle operating costs, and improve comfort for road users - improving road design, expansion of capacity and maintenance; </li></ul></ul><ul><ul><li>Increases safety (reduction of accident rates) - improving road geometry, signaling, lighting and provision of emergency services. </li></ul></ul><ul><li>Improved Efficiencies </li></ul><ul><ul><li>Lower cost and make the implementation time of projects more predictable - careful risk allocation to provide adequate incentives; </li></ul></ul><ul><ul><li>Better use of available capacity - improved traffic management and road user information; </li></ul></ul><ul><ul><li>Improved equity and efficiency of tolls - introduction of an adequate tariff structure and toll collection technology. </li></ul></ul><ul><li>Mobilization of Private Sector Financing </li></ul><ul><ul><li>Lower upfront capital expenditure by the government for roads frees resources for other sectors. </li></ul></ul>
    5. 5. Most common problems with the implementation of Transport Projects <ul><li>Successfully concluding a transport PPP can be a challenge: </li></ul><ul><ul><li>Complex projects due to several stakeholders (government, private sector, financiers, users, regulatory agencies, etc.) </li></ul></ul><ul><ul><li>Lack of preparatory studies before taken projects to market </li></ul></ul><ul><ul><li>Government commitment can disappear in periods of financial stress </li></ul></ul><ul><ul><li>As a result of unrealistic and aggressive bids, a large number of projects face re-negotiation </li></ul></ul><ul><ul><li>Access to local currency funding is a critical success factor for infrastructure projects with local currency revenues: Currency mismatch between toll revenues and debt </li></ul></ul><ul><li>Cost recovery is a major challenge: </li></ul><ul><ul><li>Willingness of users to pay the required tolls has to be assessed carefully </li></ul></ul><ul><ul><li>Revenue projections often suffer from a bias towards optimism </li></ul></ul><ul><ul><li>Full cost recovery is only achievable in some transport sub-sectors </li></ul></ul><ul><li>Particular attention should be given to the allocation of volume risk and to the introduction of proper performance incentive mechanisms </li></ul><ul><li>Vulnerability of PPP projects to changing political, financial and economic circumstances is often underestimated </li></ul>
    6. 6. Pilot IFC/IADB/BNDES facility to fund infrastructure advisory to do PPPs Caracter í sticas Gerais do Convênio Implica ç ões <ul><li>Focus on inovative sectors </li></ul><ul><ul><li>Irrigation </li></ul></ul><ul><ul><li>Road networks </li></ul></ul><ul><ul><li>Hospitals </li></ul></ul><ul><ul><li>Diagnosis centers </li></ul></ul><ul><ul><li>Amazon forest sustainable management concession </li></ul></ul><ul><li>Take project development risk </li></ul><ul><ul><li>Get reimbursed only by the private partner in the award of the project </li></ul></ul><ul><li>IFC and BNDES team work together as only one team </li></ul><ul><ul><li>Outsources technical studies </li></ul></ul><ul><li>Pilot initiative </li></ul><ul><ul><li>BNDES has announced willingness to grow it after closing of first projects </li></ul></ul>
    7. 7. BA-093 Road PPP, Brazil Area of the Road Studies and Project MAIN INDUSTRIAL HUBS <ul><li>Salvador and its metropolitan area has about 4 million habitants, it is the biggest city in the Northeast of Brazil </li></ul><ul><li>Project includes 125 km of roads in more than 10 segments in the Metropolitan Area of Salvador ; 263 km were originally studied </li></ul><ul><li>Connects the main industrial rubs, port and airport </li></ul><ul><li>Area of influence: encompasses 17 Municipalities , with 3.4 million people that accounts for more than 50% of the State GDP </li></ul>
    8. 8. Studies Commissioned <ul><li>Traffic Studies </li></ul><ul><ul><li>Road Volume count </li></ul></ul><ul><ul><li>Origin-Destin </li></ul></ul><ul><ul><li>Declared preference </li></ul></ul><ul><ul><li>Willingness to pay </li></ul></ul><ul><ul><li>Toll options </li></ul></ul><ul><li>Engineering Studies </li></ul><ul><ul><li>mapping and documenting </li></ul></ul><ul><ul><li>Capacity increase studies </li></ul></ul><ul><ul><li>Road enhancement and service standards </li></ul></ul><ul><ul><li>Costs of investment (capex) and operation (opex) </li></ul></ul><ul><li>Environment and social studies </li></ul><ul><ul><li>Environment due diligence </li></ul></ul><ul><ul><li>Expropriation and relocation studies and program </li></ul></ul><ul><ul><li>Communication plan and public consultation </li></ul></ul><ul><ul><li>Environmental liabilities </li></ul></ul><ul><li>Legal Studies </li></ul><ul><ul><li>Legal due diligence </li></ul></ul><ul><ul><li>Draft terms of reference and contract </li></ul></ul>Traffic Engineering Legal Consultants Resettlement Environment IFC/IADB/BNDES Lead Advisors
    9. 9. Traffic Counting Sites Sites of the Road System Site Road AADV Total 1 BA-093 11,033 2 BA-093 6,756 3 BA-093 7,409 4 BA-093 6,022 5 BA-093 5,427 6 BA-512 5,480 9 BA-521 1,602 12 BA-524 2,029 13 BA-524 5,429 14 BA-526 18,585 15 BA-526 20,707 17 BA-535 12,055 Sites of the Road System Site Road AADV Total 7 BA-512 786 8 BA-519 6,277 10 BA-522 10,340 11 BA-523 3,022 12 BA-524 2,029 16 BA-531 7,101 18 BA-505 520 19 BA-093 719 20 BA-093 458 21 BA-400 1.280 22 BA-506 365 23 BR-101 5,739 24 BR-110 9,737 18.585 20.707 12.055 11.033
    10. 10. Highlights on the Users Profile Willingness to pay Trip Distance as Declared by Users Vehicle Ownership Trips Total Users priorities for the enhancement of the road Passenger Cars Trucks Pay tolls 80.2% 86.9% Do not pay tolls 19.8% 13.1% Distance Passenger cars Trucks More than 100 km 9.5% 24.7% 50 km to 100 km 21.0% 24.1% Less than 50 km 58.9% 50.4% Not informed 10.6% 0.8% Kind % Passenger Car 78% Trucks 22% Ownership Passenger Car Trucks Driver NA 21.8% Individual 65.3% 18.6% Rent 6.2% NA Corporate 20.7% 59.0% Not informed 7.8% 0.6% Activity Passenger cars Trucks Dualization of the road 41.60% 36.40% Pavement enhancement 30.10% 26.40% Third lanes construction 13.30% 15.90% Services to help the users 5.30% 3.70% Signaling enhancement 4.00% 9.60% Others 5.60% 7.90%
    11. 11. Number of people in the passenger cars of the BA 093 system Age of the Passenger Cars Frequency of Trips Reason of the Trips Highlights on the Users Profile Frequência Automóveis Caminhões Eventual 12,9% 8,7% 2x por sem. 9,7% 9,3% 3x por sem. 7,7% 8,0% 5x por sem. 5,5% 5,4% Diária 42,9% 34,0% Outros 21,3% 34,6% # of people/car Passenger Cars 1 50,8% 2 36,4% 3 12,8% 4 ou mais 0,0% Car Year of Production Passenger cars 2008 to 2005 57,3% 2004 to 2000 26,4% 1999 to 1990 14,8% Anterior a 89 1,5% Reason of Trip Passenger Cars Business 9,9% Fun/Visit 3,9% Home 22,1% Daily place of work 58,7% Other 5,2% No Information 0,2%
    12. 12. Main Enhancements <ul><li>Pavement condition </li></ul><ul><li>Security (construction of side lanes and third lanes) </li></ul><ul><li>Capacity (dualization works) </li></ul>
    13. 13. Pavement <ul><li>3 contract phases: </li></ul><ul><ul><li>Initial Works – Until the 6 th month of the concession </li></ul></ul><ul><ul><ul><li>Enhances the pavement, side lanes, and security items </li></ul></ul></ul><ul><ul><ul><li>After this phase, The tolling charge BEGINS </li></ul></ul></ul><ul><ul><li>Rehabilitation – Until the 5 th year of the concession </li></ul></ul><ul><ul><ul><li>Works to attain high performance standards, such as high quality IRI and IGG </li></ul></ul></ul><ul><ul><li>Maintenance – Until the end of the concession </li></ul></ul><ul><li>The performance standards should encompass the pavement, protection and security items, special works, drainage systems, contention structures, road side domain area, lightening, and operational standards </li></ul>PERFORMANCE STANDARDS FOR PAVEMENT
    14. 14. Security Enhancement: Side Lanes and Third Lanes Construction Third lanes – Required work Side lanes construction – Required work Road Segment Extension (km) Term to execute BA-093 4 1.60 Until the end of the first year after contract signing 1.40 Road Segment Extension (km) Term to execute BA-093 1 14.13 Until the end of the first year of contract signing BA-093 2 4.16 BA-093 3 5.43 BA-526 15 5.52 BA-526 14 8.62 BA-535 17 28.00 BA-512 6 5.50 BA-093 4 8.66 Until the end of the second year of contract signing BA-093 5 13.57 BA-521 9 7.00 BA-524 12 8.71
    15. 15. Third Lanes Maps Road Segment Extension (km) BA-093 4 1.60 1.40
    16. 16. Side Lanes Maps Road Segment Extension (km) Execution BA-093 1 14.13 1 Year BA-093 2 4.16 BA-093 3 5.43 BA-526 15 5.52 BA-526 14 8.62 BA-535 17 28.00 BA-512 6 5.50 BA-093 4 8.66 2 Year BA-093 5 13.57 BA-521 9 7.00 BA-524 12 8.71
    17. 17. Capacity Analisys using HCM 2000 Service Levels Level A Level B Level C Level D Level E Level F
    18. 18. Level of Service by road segment
    19. 19. Capacity Enhancement – Required Works Capacity Enhancement – conditioned to traffic volume Capacity Enhancement - Dualization Triggers for dualization (single lane segments) Road Segment Extension Execution deadline (from signing) BA-093 1 14.1 km 3 rd year BA-526 14 8.6 km 1 st semester of 3 rd year 15 5.5 km 1 st semester of 3 rd year BA-535 17 28.0 km 3 rd year Road Segment Extension ADV Time BA-521 9 7,00 km 7,850 NA BA-524 12 8,71 km 8,490 NA 13 16,0 km 7,320 2013 BA-093 3 5,4 km 7,900 2015 2 4,2 km 7,910 2017 4 8,7 km 7,580 2017 5 13,6 km 6,910 2017 BA-512 6 5,5 km 8,260 2020
    20. 20. Dualization Works Required Work Works conditioned to traffic triggers Road Segment Extension Year of Execution BA-093 1 14.1 km Third year BA-526 14 8.6 km First semester of the third year 15 5.5 km First semester of third year BA-535 17 28.0 km Third year Road Segment Extension DAV Estimation BA-521 9 7.00 km 7,850 NA BA-524 12 8.71 km 8,490 NA 13 16.0 km 7,320 2013 BA-093 3 5.4 km 7,900 2015 2 4.2 km 7,910 2017 4 8.7 km 7,580 2017 5 13.6 km 6,910 2017 BA-512 6 5.5 km 8,260 2020
    21. 21. Toll System Placement Plaza Road Segment Municipality 1 BA-093 5 Mata de São João 2 BA-093 1 Simões Filho 3 BA-524 13 Simões Filho 4 BA-535 17 Camaçari 5 BA-526 14 Salvador Road crossing with BA 535 Salvador
    22. 22. Structuring Results and Next Steps <ul><li>RESULTS </li></ul><ul><li>Concession term - 25 years </li></ul><ul><li>Investments – estimated present value R$ 805 million (approx. US$ 400 million) </li></ul><ul><li>Operational Costs – present value R$ 798 million (approx. US$ 400 million) </li></ul><ul><li>5 Toll Plazas </li></ul><ul><li>Basic toll (passenger car toll) for the auction - R$ 3.35 (approx. US$1.60) </li></ul><ul><li>NEXT STEPS </li></ul><ul><li>Public consultation and public hearings: Oct-Nov 2009 (has started www.derba.ba.gov.br) </li></ul><ul><li>Release of final version of biding terms of reference: Dec 2009 </li></ul><ul><li>Auction: Feb 2010 </li></ul><ul><li>Contract signing: March 2010 </li></ul>
    23. 23. Lessons Learned That could be interesting for Caribbean countries <ul><li>To have strong political decision to do the project and the involvement of the political champion of the project to face: </li></ul><ul><ul><li>the population affected by the project </li></ul></ul><ul><ul><li>Internal bureaucratic resistance </li></ul></ul><ul><ul><li>Users resistance specially in cases where the project involves starting to charge tolls </li></ul></ul><ul><li>Develop an adequate institutional and contractual framework </li></ul><ul><ul><li>Specially to mitigate political risks </li></ul></ul><ul><ul><li>In case there will be Government payment to the concessionaire, it may be important to enhance the Gov credit profile </li></ul></ul><ul><ul><li>Structure the biding procedure/competitive negotiation in a way that guarantee transparency, discourages collusion, and address existent entry barriers </li></ul></ul><ul><ul><li>Develop adequate performance indicators and their connection with the charging/payment mechanism </li></ul></ul><ul><ul><li>Have a clear risk matrix and financial equilibrium mechanism </li></ul></ul><ul><ul><li>Establish the social and environmental obligations of the concessionaire and of the Government </li></ul></ul>
    24. 24. Lessons Learned That could be interesting for Caribbean countries <ul><li>Develop high quality feasibility studies </li></ul><ul><ul><li>Spending with high profile consultants shows to be extremely cost efficient </li></ul></ul><ul><li>Have to target the right investors and listen to their concerns when reasonable </li></ul><ul><ul><li>Not all investors are keen to be involved in small projects, so you have to find the right ones and try to make sure that they will bid for the project </li></ul></ul><ul><li>Have a communication mechanisms and procedures that allow the users and the public to communicate about issues related to the project before it goes for biding </li></ul><ul><ul><li>In other countries public consultation and public hearings are held to allow the public to communicate the issues to the Government before it is too late </li></ul></ul>

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