Transcription
Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedWPS5173Policy Research Working Paper5173Understanding Options for Public-PrivatePartnerships in InfrastructureSorting out the forest from the trees:BOT, DBFO, DCMF, concession, lease Jeffrey DelmonThe World BankFinance Economics & Urban DepartmentFinance and Guarantees UnitJanuary 2010
Policy Research Working Paper 5173AbstractThis paper provides a methodology for categorizingpublic-private partnerships in infrastructure, based on thefollowing key characteristics: whether the project involvesnew or existing business, the nature of the private sector’sconstruction obligations, the need for the private sectorto mobilize significant private funding ab initio, thenature of the private sector’s service delivery obligations,and the source of the project revenue stream. The purposeof this methodology is to facilitate mapping, referencing,cross-comparison, analytical studies, and descriptionsof public-private partnerships in infrastructure projectswith similar key characteristics across sector, commercial,regional, and geopolitical lines. The methodology istested against 15 case studies representing differentinfrastructure sectors, regional applications, andcommercial approaches to public-private partnerships.This paper—a product of the Finance and Guarantees Unit, Finance Economics & Urban Department—is part of a largereffort in the department to develop best practice and latest technology in public private partnerships for infrastructure.Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contactedat jdelmon@worldbank.org.The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about developmentissues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry thenames of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely thoseof the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank andits affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.Produced by the Research Support Team
Understanding Options for Public-Private Partnershipsin Infrastructure:Sorting out the forest from the trees: BOT, DBFO,DCMF, concession, lease . . .Jeffrey Delmon1“When I use a word” Humpty Dumpty said in a rather scornful tone,“it means just what I choose it to mean – neither more nor less.”212The findings, interpretations, and conclusions expressed herein are those of the authorand should not be attributed in any manner to the World Bank or to PPIAF, theiraffiliated organizations, or to the members of their Board of Executive Directors or thecountries they represent. The author would like to thank Andres Londono for hisassistance in writing this paper, and in particular developing the case studies. Hewould also like to thank Mark Moseley, Katharina Gassner, Clemencia Torres, ArtSmith, Rob Lalka, Victoria Delmon, Clive Harris, Jose Luis Guasch, Alex Jett andGovindan Nair for their review and comments on different drafts of this paper. Anyerrors or mistakes remain those of the author.Carroll, Lewis, Through the Looking Glass, at chapter 6.
2
Table of ContentsExecutive Summary . 51.Introduction . 81.11.21.31.41.52.Business .232.12.23.Bulk. 40User . 42Source of revenue.446.16.27.Sources of Financing . 34Lending . 36Equity Investors . 38Service delivery.395.15.26.Construction risk . 29Build . 31Refurbish . 32Private funding .334.14.24.35.New . 24Existing . 25Construction obligation .283.13.23.34.Constraints of current models . 11Purpose of the classification model . 15Nature of classification model . 16Using the classification model . 19Issues excluded from the model . 20Fee . 45Tariff . 46Application of the Model to the Case Studies .497.17.27.37.47.57.67.77.87.97.10Dhabol Power Corporation, India . 51East Manila Water Concession, Philippines . 52Thames Water, UK . 54Santiago - Valparaíso – Viña del Mar Toll Road (Rutas delPacifico), Chile . 55The Pulkovo Airport Expansion Project, Russia . 57Athens International Airport, Greece . 58The Royal Victoria Infirmary and Freeman Hospital, UK . 60TANESCO- NETGroup Solutions . 61Aguas de Cartagena Public -Private Partnership, Colombia . 62The Southern Africa Regional Gas Project. 643
7.117.127.137.147.15Sao Paulo Metro Line 4, Brazil . 66Skikda Seawater Desalination Plant, Algeria . 68Zagreb-Macelj Toll Road, Croatia . 70Panagarh to Palsit Tollroad, India . 71Orlovski Tunnel Concession, Russia . 724
Executive SummaryThe following provides a categorization methodology for public-privatepartnerships3 in infrastructure (PPP), classifying the different design options forPPP based on their most salient elements, those characteristics fundamental to thenature of PPP and therefore the character of the project in question. Lack of anagreed categorization methodology has created confusion and limited the ability tocross-fertilize, learning lessons from different regions and sectors who usedifferent terminology, making it difficult to know, without in-depth analysis, if thestructures being used are similar or not.There is no universal norm as to the most appropriate approach to PPP. Thatanalysis needs to be made on a country-by-country, sector-by-sector and projectby-project basis. The model is therefore not meant to be normative, i.e. it does notidentify which PPP option would be the most appropriate, most efficient or mosteffective nor does it try to be comprehensive (nor uncontrovercial). Instead, itserves three key purposes. It: facilitates the task of practitioners when seeking to identify relevantlessons learned from other projects, sectors, countries, legal systems andcultures; helps mapping, referencing and analytical studies by providing a practical,descriptive nomenclature; and assists in the description of a given PPP structure, e.g. for policy ordecision makers without the confusion of political, nationalistic or culturallabels often associated with other terminology.For example, when technical experts need to discuss PPP options withpolicymakers, using this classification model will facilitate the process by avoidingmisunderstandings associated with tired or misused vocabulary. Equally, whendesigning PPP structures to fit the needs of a given country, sector or project, thedesign team will want to take advantage of the lessons learned from similarexercises. The model will help the application of lessons learned from other similarstructures across the globe by identifying commonalities amongst those structures3This paper uses a broad definition of PPP to be relevant across the largest sample ofprojects.5
and enabling the design team to utilize good practice associated with the relevantelements of those structures.The classification model addresses five key parameters that may or may not berelevant to any given PPP project. These parameters identify the most fundamentalcharacteristics of a PPP project.41.New or existing business – taking over existing revenues, customers,assets or employees represents a different risk profile than a newbusiness.2.The nature of project company construction obligations –implementing a significant construction program carries with it a hostof construction and performance related risks that will be essential tounderstanding the role of the project company.4 This obligation differsfundamentally if it is a new build, or the refurbishment of existingassets.3.The need for the project company to mobilize significant privatefunding ab initio - where the project company is required to mobilizeprivate finance for any significant up-front costs (including fees,acquisition of assets and construction costs), the risk profile for theproject company and the influence of the financiers will alterfundamentally the nature of the project.4.The nature of the project company’s service delivery obligations –refers to the extent to which the project company is delivering servicesdirectly to consumers “User” or only to a single user, such as the utility“Bulk”. Delivery of services to a large number of consumers representsa more complex context for the project company, and its financiers.5.The source of the project revenue stream – the source of the revenuestream influences the certainty, size and nature of that revenue stream,e.g. the collection risk associated with the revenue stream and thelikelihood that the obligor will be available to pay on its obligations.“Fee” refers to a single or small number of purchasers of the offtake orFor ease of reference, this paper refers to the “grantor” as the public initiator of theproject and the “project company” being the private company undertaking the project.6
service, while “Tariffs” refers to collection of revenues from a largenumber of consumers or users.The Classification eFundingServiceDeliverySource shFor example, a project where the project company builds a new power plant,operates it and sells the power to the local utilities, would be a New-Build-FinanceBulk-Fee. The refurbishment of an existing hospital, financed by the projectcompany, where the project company does not provide clinical services, butinstead makes the refurbished hospital available to the local health authority for afee and the grantor delivers clinical services out of the hospital. This project wouldbe a New-Refurbish-Finance-Bulk-Fee. The management of an existing watercompany and refurbishment of assets, financed by the grantor, with revenuescollected from the consumers, would be an Existing-Refurbish-User-Tariffs. Themanagement of an existing waste management plant for the local utility with nocapital expenditure, but an up-front concession fee, with revenues from anyonewanting to deposit waste at the facility, would be an Existing-Finance-Bulk-Tariffs.7
1.IntroductionThe public sector provides financing for the vast majority of infrastructureservices. The government analyzes, chooses, and implements policies intended toimprove infrastructure delivery, increase access to financing, reduce waste andcorruption, and develop the information and data to manage infrastructureeffectively and efficiently. Public-private partnerships in infrastructure (PPP) areone of the tools in a policymaker’s arsenal.5 PPP, in this paper, means anycontractual or legal relationship between public and private entities aimed atimproving and/or expanding infrastructure services.The decision to adopt PPP must be political, first. The government must considerthe political and social implications of PPP and whether there is sufficient politicalwill to implement PPP. Next, consideration needs to be given to the institutional,legal and regulatory context - the extent to which government institutions have theneeded skills and resources, the financial and commercial markets have neededcapacity and appetite, and laws and regulations encourage or enable PPP - andwhether changes need to be made to the institutional, legal
11.01.2010 · Understanding Options for Public-Private Partnerships in Infrastructure: Sorting out the forest from the trees: BOT, DBFO, . understanding the role of the project company.4 This obligation differs fundamentally if it is a new build, or the refurbishment of existing assets. 3. The need for the project company to mobilize significant private funding ab initio - where the project company is .
