Public Transport Investment financing Karolis Dekeris Urban Transport Consultant to EBRD This template can be used as a starter file for presenting training materials in a group setting. Sections Sections can help to organize your slides or facilitate collaboration between multiple authors. On the Home tab under Slides, click Section, and then click Add Section. Notes Use the Notes pane for delivery notes or to provide additional details for the audience. You can see these notes in Presenter View during your presentation. Keep in mind the font size (important for accessibility, visibility, videotaping, and online production) Coordinated colors Pay particular attention to the graphs, charts, and text boxes. Consider that attendees will print in black and white or grayscale. Run a test print to make sure your colors work when printed in pure black and white and grayscale. Graphics, tables, and graphs Keep it simple: If possible, use consistent, non-distracting styles and colors. Label all graphs and tables.

Content About EBRD Has the moment come for private operators? Can private contribute to a better service quality? Things important to banks financing public transport Conclusions Introduction of EBRD Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important. Introduce each of the major topics. To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

European Bank for Reconstruction and Development (EBRD) Owned by 64 shareholder countries and organisations Active in 36 countries of operation Annual business volume EUR 9 billion   Estonia Latvia Lithuania Number of projects 79 71 76 Investment to date, in EUR million 595 585 629 Value of current portfolio, in EUR million 104 249 120 Private sector share 86% 64% 62%

Municipal & Environmental Infrastructure Department finances: District heating Solid waste Water and waste water With an average project size between EUR 15 and 18 million, the Bank’s MEI is financing about 12 About half of portfolio is urban transport projects

Kaunas Public Transport Project (2004) Bank’s first loan to a municipal bus operator in Kaunas without a municipal guarantee Based performance-based gross cost Public Service Contract Corporate Development Programe of UAB Kauno autobusai (Lithuania) with impressive performance improvements Increase in service quality, reliability, pax fare revenue, financial results.

Content About EBRD Has the moment came for private operators? Can private contribute to a better service quality? Things important to banks financing public transport Conclusions Introduction of EBRD Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important. Introduce each of the major topics. To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

UT Challenges at a City Level Lack of borrowing capacity for investment needs High agenda toward sustainability goals in the context growing car ownership Call for liberalization of services Growing diversification in technology

Public Operators Dominate the Market Stagnating quality of service Strong trade unions and ever growing cost Weak lobby when it come to tariff adjustment Delayed investments Often focus on technology rather than on passenger and service quality At the same time… Minibus era left bad association about private operators

Context Delaying Private Operators Involvement Regulatory framework Know-how and experience in contract management Lack of equipment to sustain system’s integration (AFC and AVL) Inefficient network Weak private operators Currently many cities has these issues behind

Private operators could Provide good benchmark of PT service cost and quality for public operators Reduce bargaining power of trade unions Facilitate timely adjustments in tariffs Bring more investment into public transport Attract more passengers and revenue to the system In London very competitive market private operators profits circle between 2 - 4 per cent.

Content About EBRD Has the moment came for private operators? Can private contribute to a better service quality? Things important to banks financing public transport Conclusions Introduction of EBRD Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important. Introduce each of the major topics. To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

What is important for banks?

Commencement of service provision CONTRACT AWARD TENDER SERVICE PROVISION Commencement of service provision This is another option for an overview using transitions to advance through several slides.

CONTRACT AWARD TENDER SERVICE PROVISION Tender for buses Delivery of buses Advance payment for buses Remaining payment

Financial analysis TENDER SERVICE PROVISION CONTRACT AWARD Delivery of buses FINANCIAL CLOSURE Tender for buses Tender for financing

Project Assessment by the Bank Market Tender Contract Operator City

Project Assessment by the Bank Controlled, Competitive Market Tender Contract Operator City

Project Assessment by the Bank Controlled, Competitive Prepared by experienced consultant, Open, transparent and competitive Market Tender Contract Operator City

Project Assessment by the Bank Controlled, Competitive Prepared by experienced consultant, Open, transparent and competitive Market Tender Contract Operator City Well structured, Balanced

Project Assessment by the Bank Controlled, Competitive Prepared by experienced consultant, Open, transparent and competitive Market Tender Contract Operator City Well structured, Balanced Experienced, Creditworthy

Project Assessment by the Bank Capable Has sector strategy Controlled, Competitive Prepared by experienced consultant, Open, transparent and competitive Market Tender Contract Operator City Well structured, Balanced Experienced, Creditworthy

Financing Application Process Overview Request for financing 1 CONCEPT approval 2 Signing Mandate Latter 3 Project Assessment 4 Term Sheet Signing 5 FINAL approval 6 Loan Signing 7 Therefore it is important to engage early with banks to ensure funds are available at the time of the need.

Importance of Public Service Contract Use a section header for each of the topics, so there is a clear transition to the audience.

Things to consider in the contract Ensure strict payment mechanism, including penalties for delayed payments Clearly defined scope of service with flexibility to amend it Indexation formula Strong and balanced contract termination clauses Dispute resolution mechanism

Things that also help… The longer the contract – the better Part of operator’s payment comes from fare revenue Penalties not too excessive Clear reporting and information exchange requirements

EBRD’s Technical Cooperation Funds Microsoft Engineering Excellence EBRD’s Technical Cooperation Funds Available for project preparation and implementation Project development stage: Preparation of PSC and tender document package Feasibility studies for larger projects (PPP) Investment and Business plans Implementation stage: Corporate development programmes SUMPs Market liberalisation strategies Gender inclusion and environmental for companies strategies ITS projects, etc. Microsoft Confidential

Summary Private operators can contribute to overall public transport service improvement Engagement with financiers early increases chances of success Time constrains needs to be properly assessed EBRD can still be source of financing in Baltics in particular for private operators

Microsoft Engineering Excellence Questions? Microsoft Confidential

Microsoft Engineering Excellence Contact details Matthew Jordan-Tank Head of Infrastructure Policy European Bank for Reconstruction and Development One Exchange Square, EC2A 2JN London, United Kingdom Tel: +442073386000 Email: jordantm@ebrd.com Is your presentation as crisp as possible? Consider moving extra content to the appendix. Use appendix slides to store content that you might want to refer to during the Question slide or that may be useful for attendees to investigate deeper in the future. Presentation by: Karolis Dekeris Urban Transport Consultant to EBRD LT-48334, Kaunas, Lithuania Tel: +370 640 15 406 Email: karolisdek@icould.com Microsoft Confidential