UN Training Program Keys to Successful PPP’s September 25, 2006

GV\ ppt 2 Agenda u Continuum of Risk Sharing u Typical European PPP Risk Allocation u PPP Lessons Learned - Government u Examples of Successful PPP’s –Netherlands High Speed Rail –London Connect Project –Pocahontas Parkway –I-495 Capital Beltway HOT Lanes

GV\ ppt 3 Traditional Procurement Privatization PPPs Full Public-Sector Ownership and Operation Design-Build with Public Ownership Design-Build with Some Development Design-Build-Operate Publicly Operated/Privately Developed Privately Financed Public Facility Privately Developed and Operated Public Project Privately Developed Sale of Public Facility to Private Sector Publicly Owned Private Development Concession Repurchased by Public Sector Private Transit Concession Toll Road Concession Regulated Private Concession Continuum of Risk Sharing More Private – Less Public Control

GV\ ppt 4 Metropolitan Transportation Authority Metropolitan Transportation Authority USA - Continuum of Risk Sharing Between Public and Private Sectors Full public-sector ownership and operation Design-build with some development Privately developed and operated public project Regulated private concession Concession repurchased by public sector Toll road concession Central Texas Turnpike System Central Texas Turnpike System Hudson Bergen Light Rail Hudson Bergen Light Rail JFK Int’l Air Terminal LLC JFK Int’l Air Terminal LLC Pocahontas Parkway Richmond Pocahontas Parkway Richmond I-70 Express Lanes I-70 Express Lanes Chicago Skyway Chicago Skyway Seattle Monorail Seattle Monorail Denver E-470 Florida High Speed Rail Florida High Speed Rail I-495 Capital Beltway HOT Lanes I-495 Capital Beltway HOT Lanes C-470 HOT Lanes C-470 HOT Lanes Dulles Rail 7 Train Enhanced Plan of Finance 7 Train Enhanced Plan of Finance SR 91 HOT Lanes Orange Co. SR 91 HOT Lanes Orange Co. Indiana Toll Road Indiana Toll Road Dulles Greenway Dulles Greenway SR 125 San Diego SR 125 San Diego Design-build with public ownership Privately financed public facility Privately developed Publicly owned private development Private transit concession Sale of public facility to private sector Publicly operated/privately developed Design- build- operate PublicPrivate

GV\ ppt 5 Typical European PPP Risk Allocation Private Sector Inflation Risks Force Majeure Change of Law (Volume) Planning/Permits Regulatory Risks Usage Risks Completion Risk Completion Risk ♦ Design ♦ Construction ♦ Commissioning Operating Performance Technology Obsolescence Public SectorShared Risks

GV\ ppt 6 PPP Lessons Learned u Know your priorities –Prioritize –Focus on “ready to go” projects –Proposed solution must accomplish project objectives u Select best financing approach –Reasonableness and risk of private-sector plan of finance clearly understood –Market risk understood –Public vs. private control (concession financing) u Remove or reduce non-financial barriers –Legal –Administrative

GV\ ppt 7 PPP Lessons Learned u Form true partnership with private sector –Quality partners Strength of balance sheet, ability to provide bonding or insurance required Proven PPP record Ability to handle projects of scale and complete the project –Cooperation vs. confrontation –Regular contact vs. formal contact only –Recognize mutual learning curve of both partners –Contract form that rewards quality and success in meeting project objectives

GV\ ppt 8 PPP Lessons Learned u Understand private-sector needs in a PPP –Defined implementation process for proposals –Projects of scale –Enabling legislation to permit unsolicited as well as solicited proposals –List of priority projects –Opportunity to help build public support for the project –Rewards that balance the intellectual and financial investment –Buy-in by all transportation agency participants –Single-point contact on the state side to the maximum extent possible –Performance specifications not prescriptive specs

GV\ ppt 9 Netherlands High Speed Rail u Infraspeed Consortium includes Fluor, Siemens, local constructors u Single largest public-private partnership (PPP) contract ever awarded by the Dutch state u 1.2 billion euro project to design, build, finance, maintain superstructure –Fluor led financing ($1.1 billion) –Fluor and partners provided $120 million of equity u 95 kilometers of rail infrastructure, 4 tunnels, an aqueduct, a bridge, and connections at 5 major interfaces u State will not begin making payments until the availability phase –3.0 billion euro “performance based” revenue covers investment cost, maintenance cost, cost of amortization, taxes, insurances, cost of capital, profit, and overhead u Payments tied to performance standards based on percent availability

GV\ ppt 10 London Connect Project u Part of the $1.7 billion project London Underground (LUL) awarded to CityLinkTelecommunications Limited, a special purpose company –Design, build, maintain, and operate London Underground’s communications system for 20 years –Contracted as a privately financed initiative (PFI) that is intended to transfer project risk to the private sector and provide London Underground with both a fixed price and contractual completion dates –Fluor has an 18 percent shareholding in CityLinkTelecommunications u Throughout 20-year operation and maintenance contract, clearly defined performance and safety measurements will cause CityLink to be penalized if service levels fall below the defined standards u Initial Phase ($650 million) – $76 million equity; $576 million debt –Debt: Arranged by Bank of America, Royal Bank of Scotland, Bayerische Landesbank and Toronto Dominion –Equity: Provided by Fluor, Thales, Motorola, Hyder, HSBC Project Equity

GV\ ppt 11 Pocahontas Parkway (Route 895) u $323 million new toll bridge and road in Richmond, Virginia u Public-private partnership with Virginia DOT u Develop, finance, design-build contract u 1 st PPP to be implemented under Virginia’s PPTA legislation

GV\ ppt 12 I-495 Capital Beltway HOT Lanes u $1.1 billion expansion of the I- 495 Capital Beltway and addition of High Occupancy Toll (HOT) Lanes u Public-private partnership with VDOT u Develop, finance, design-build, operate & maintain under long- term concession u Status: –In development phase –Record of decision received –Finalizing project definition –Finalizing financing plan

GV\ ppt 13 Questions