Presentation on theme: "Second International Workshop on PPPs EIB financing of PPPs: the way forward Patrick Bœuf Projects Directorate European Investment Bank Brussels, 5 July."— Presentation transcript:
Second International Workshop on PPPs EIB financing of PPPs: the way forward Patrick Bœuf Projects Directorate European Investment Bank Brussels, 5 July 2004
EIBs approach to PPPs n Policy driven approach to PPPs based on the evaluation of the benefits achievable n PPPs are an additional policy option. No bias in favour of any particular procurement method n Expand expertise and financial resources available for infrastructure investment n Facilitating greater private sector investment (cf. Presidency conclusions on the Growth Initiative, Brussels European Council, 12 December 2003) n Focus on strategic public services with clear value added
Key PPP sectors for EIB n TENs and modernising transport infrastructure n Environmental improvements n Primary and acute healthcare services n Primary, secondary and tertiary education Supporting PPPs in areas of critical EU policy significance:
EIB loans for PPP/Concession projects - Approvals TOTALTRANSPORTWATERHEALTH/EDUCATION MEUR TOTAL AUSTRIA170 BELGIUM805 DENMARK3592 FRANCE1838 GERMANY1048 GREECE2503 IRELAND NETHERLANDS POLAND275 PORTUGAL SPAIN SWEDEN749 UNITED KINGDOM
Flagship deals to date - transport DBFO roads and river crossings in the UK. Channel Tunnel Rail Link and London Underground. Spanish & Portuguese transport projects (inc. Vasco de Gama Bridge). Spata airport, Athens ring road and Rion Antirion bridge. Dutch high speed train link. French and Irish motorway concessions
PPPs and EU grants Spata airport EU funding: Cohesion Fund 11%, EIB loan 47% Greek State contribution 19% Commercial debt 17% Equity 6% SPV: Athens International Airport S.A (55% Greek State, 45% Private Consortium) Construction costs overruns +1.8% Construction delays: 3 months in advance
6 Total (10 years) DURATION OF PROJECT IMPLEMENTATION (Time in months elapsed in each phase) SPATA AIRPORT
PPPs and EU grants Upfront subsidies Vs. operating subsidies/payments Coordination between ERDF, Cohesion Fund, TENs budget Coordination with other public grants (national, regional, local) Coordination with EIB financing Need for streamlined procedures – avoid multiplication of approval procedures
The TENs Investment Facility Strengthen and, where possible, accelerate the investment in TENs. Increase the EIB resources available for the development of TENs transport to Improve the range of financial instruments available from the Bank. … in collaboration with the Commission, Member State Authorities and the Private Sector.
The TENs Investment Facility 5 Building Blocks 1. Long term loans – Senior Debt for PPPs, Corporates and Public bodies. 2. Guarantee system – for Investment Grade Projects. 3. Structured Finance Facility – SFF. 4. Securitisation. 5. EIB institutional role.
(1)Increased EIB senior lending Proposal 50 billion over period Extra long maturities (35 years). Longer grace periods. Special arrangements for exceptional cases (e.g. up to 75%).
(2) EIB and EU guarantees EIB to provide guarantees for private finance projects with investment grade rating. Combine EIB guarantees with public sector guarantees so as to optimise the value for money and affordability of priority investment. The EU financial regulators should examine the Basle II regulatory framework to ensure that TENs financing can be effectively achieved through EU financial markets.
(3) Increased Structured Finance Facility SFF is an existing EIB senior debt product to finance higher risk projects (e.g risk during construction). Tripled from Euro 500 m to Euro 1500 m.
(4) Securitisation Financing institutions / SPVs, promoted by public authorities, to issue AAA bonds securitised by revenues from portfolio of existing infrastructure assets held by Member States / public authorities. Purchase of securitisation bonds by financial institutions co-financed by EIB, the capital and banking markets. Proceeds of securitisation bonds to be dedicated by public authorities to priority infrastructure financing. Release new resources to be invested in TENs
(5) Strengthen EIB Institutional Role Strategic Advisor to the Commission, to Member States and Public Authorities on TENS. Financial Engineering of TENs projects through PPPs, Structured Finance, Securitisation and Capital Markets. Proposed operator of Commission Guarantee Facility for TENs. Combined use of budgetary resources and EIB loans for TENs. Collaboration with national PPP Task Forces on TENs. Co-financing with specialist national financial institutions of SPVs and securitisation trusts for TENs. Collaboration with TENs Project Co-ordinators.