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

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. Agenda
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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!
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

3. The Standard Model Agreement
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 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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

4. 4
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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. 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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

6. The Standard Model Agreement
a composite structure
ANNEXES
CONTRACTUAL DOCUMENTS
DEFINITIONS
RISK MATRIX
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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
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Service’s requirements
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

12. Authorizations Controls Payments
PECUNIARY OBLIGATIONS OF THE GRANTOR
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Certainty in the availability of resources
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

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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.
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

16. Financial close
Analisys of risks
Feasibility study
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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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016
THE DATA SET ON PPPS

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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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

18. Risks
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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
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

19. EXPECTED RESULTS
Standard
PPP
contract
Monitor
PPPs
Evaluate &
Decide
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016

20. Thank you very much!
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Annual Meeting of Senior Infrastructure and PPP Officials – Paris, 1 March 2016