1. Sustainable infrastructure in water sector
Philippe THIEL
Projects Director - BOT/PPP
Danube Water Conference, 18 May 2017

2. Annual volume by country
More than 3,500 plants operated in 20+ countries …
1,261 drinking water plants
2,342 wastewater treatment plants
7,144 Mm3 produced in 2015
5,240 Mm3 treated in 2015
Annual volume by country
73 million people
63 million
Population Equivalent
2017 Danube Water Conference, 18 May 2017

3. … through long-term sustainable partnerships
More than 20 years of track record, +25 years commitment
extension
Prospect (Australia)
1993
2021
Ciudad Juaruez (Mexico)
1998
2026
Medan (Indonesia)
2001
2026
extension
Samra (Jordan)
2003
2037
Melbourne (Australia)
2012
2039
Cornwall (UK)
2013
2036
Poznan (Poland)
2014
2041
2016
2038
Barka (Oman)
2017
3 I
2017 Danube Water Conference, 18 May 2017

4. Maintenance Subcontracting Preventive Maintenance
Most whole-life-cycle costs are Opex…
CAPEX
Global
OPEX
Equipment Price
Tools
Spare Parts
Training
Repair Work
Maintenance Subcontracting
Documentation
Preventive Maintenance
Technical Assistance
Overhauls
Renewal
Upgrading
Consumables
2017 Danube Water Conference, 18 May 2017

5. Who does what ? Type of contract Scope of Work Public authority
Private partner
Construct only
Produces a design (or engages a private sector design Consultant to do so)
Calls for tenders from private constructors
Responsible for the maintenance of the facility
Funds the project
Builds the facility to government’s design for a fixed price
Design & Build (DB)
Produces a performance specification describing the outcomes that the facility must achieve and the requirements it must meet.
- Calls for tenders from private sector contractors
Responsible for maintenance
Designs and constructs a facility that meets the performance specification for a fixed price
DBO 2 years
(Design, Build &Operate)
Calls for tenders from private sector contractors
Designs and constructs a facility that meets the performance
Maintains the facility for a specified period – usually corresponding to the Guarantee Period
2017 Danube Water Conference, 18 May 2017

6. Who does what ? (Cont’d) Type of contract Scope of Work
Public authority
Private partner
DBO
10-30 years
Long Term Performance-based contract
Produces a performance specification describing the outcomes that the facility must achieve and the requirements it must meet.
- Calls for tenders from private sector contractors
Funds the project
Designs and constructs a facility that meets the performance
Maintains the facility for a specified period – usually between 10 and 30 years
BOT
(Build Own Transfer)
Calls for tenders from private sector
Pays the SPV a monthly or quarterly service payment commencing when construction is complete
Designs and constructs a facility that meets the performance specification for a fixed price
Maintains the facility for a specified period – usually between 20 and 30 years
Finances the design and construction of the facility by raising equity and/or debt finance.
Returns the facility in good operating condition at the end of the contract period.
2017 Danube Water Conference, 18 May 2017

7. Pros & Cons from the Public Authority view point + / -
Type of contract
+ / -
Construct only
- Technical options unchallenged
- No feedback from operational experience considered
- no incentive to optimise the operational efficiency
- no incentive to optimize the whole-of life cost
+ Cheap financing solution
Design & Build (DB)
+ Fast and cost effective selection process
+ Reduces design time and construction calendar (as design and building elements run concurrently)
+ financial risk transferred (labour and materials)
- Final costs can be reasonably higher than original estimates.
- Eliminates the possibility of using an integrated design (i.e. no incentive to optimize the operational efficiency, nor the whole-of life cost)
DBO 2 years
(Design, Build &Operate)
+ performance certainty, but limited to the Guarantee Period
- No incentive to optimize the whole-of life cost
2017 Danube Water Conference, 18 May 2017

8. Pros & Cons from the Public Authority view point + / -
Type of contract
+ / -
DBO
10-30 years
+ strategic control over service delivery
+ improved project scoping and risk assessment (i.e. thorough preparation)
- preparation usually long and costly
+ Transfer of expertise to the local community
+ Superior whole-of-life cost outcomes : minimize the combined design, construction and maintenance costs
BOT
(Build Own Transfer)
As for DBO years :
plus :
+ greater budgetary certainty (stable price for the contract whole-life)
+ Freedom to pursue other essential projects
- higher transaction costs
- higher financing cost
2017 Danube Water Conference, 18 May 2017

9. BOT versus traditional DB – Risk transfer
Tradition DB
BOT
Authority
Private
CONSTRUCTION
Risk of failure to design to specifications 
Planning risk
Construction contractor insolvency
Handover/commissioning
Defects post construction
OPERATIONS
Operational cost risk
Maintenance cost risk
Availability payment na
Archaeological event risk
Increase in insurance premia
Utility consumption / price risk
2017 Danube Water Conference, 18 May 2017

10. 1/ Increase the utility of infrastructure (WEF Recommendations)
 Johor Potable Water Treatment Plant, Malaysia
 Assets transferred back in 2012 at the term of a 20y BOT, now under operation by public authority
Two conventional water treatment plants
One m3/d water treatment plant extension (water source–dam)
One m3/d built in two stages (water source –river water)
One interbasin raw water transfer, capable of m3/d
Ground reservoirs and main feeders (100 km)
636,000 m3/d of water produced accounting for 40% of total State production
4 million of people served
A 20 years BOT contract transferred back in 2012
JOHOR
1992
2017 Danube Water Conference, 18 May 2017

11. Millennium Challenge Corporation (MCC) Arab Bank-led consortium
2/ Decrease the total cost of infrastructure (WEF Recommendations)
As Samra WWTP, Jordan
 Hybrid PPP, with US grants, delivering a cheap, stable whole-life tariff
BOT 25 years
Phase 1 with USAID
Phase 2 with MCC
90% energy self-sufficient
Cheapest water tariff in Jordan for MWI
Millennium Challenge Corporation (MCC)
Arab Bank-led consortium
Sponsor Consortium
Grant
B Loan
Equity
SPV + Operator
2017 Danube Water Conference, 18 May 2017

12. 3/ Increase infrastructure’s value over its lifetime (WEF Recommendations)
Maribor WWTP, Slovenia
Nature
: WWTP
Size (m3/d) :
Contract value
: 43 M.EUR
Start date
: 07/1998
Termination date
: 10/06/2024
Partnership
Suez/Suez International
: 40%
PETROL (Slo)
: 26%
AQUA.NET (A)
: 21%
PORR SOLUTIONS (A)
: 10%
Styrcon (A)
: 3%
Current stage
: Operation
Project description :
primary, secondary, tertiary
WW treatment, sludge
dehydration
PE, (50% communal
WW, 25% meteoric WW, 25 %
industriual WW)
development:
construction:
operation: 2004 – 2024
Client
: Municipality of Maribor
Lender (refi 2008)
Initial amount
Outstanding amount
(Dec 2016)
Maturity date
DEXIA CREDIT LOCAL
(refi 2008)
24 M.EUR
9,7 M.EUR
23/08/2023
EPC
: DGT (Leader) / PORR, Austria (civil works)
O&M
: Directly by SPC
2017 Danube Water Conference, 18 May 2017

13. Maribor WWTP - Project timeline
July 29th, 1998: Contract Signing
November 16th, 1999: Construction
contract signed
Plant Construction
April 28th, 2000: Signing of the Loan Agreement
June 9th, 2000 : Start of the construction
June 10th, 2002:
Start of
operation Phase I
December 15th, 2005:
Final
operating permit
2002
1999
2000
1998
2005
2004
February 10th, 2004:
operation Phase II
2024
June 10th, 2024:
End of operations
2008
August 25th, 2008:
Refinancing of the debt by Dexia (24 m€ loan)
2013
Starting in 2013:
Sludge project negotiations with MoM
2017 Danube Water Conference, 18 May 2017

14. A very reliable plant and a laboratory for small scale innovation
Risk-sharing scheme
Maribor Municipality
Suez & partners
Land acquisition for the WWTP construction
Project management risks
Regulation of the inflow
Construction risks
Service payment
Operation risks
Operation activities:
Operation, Maintenance, Repair, Renewal, Monitoring, Laboratory, Quality control
Innovation promoted through :
Sludge treatment - Innovative solutions tested ( )
Environmental management (ISO 14000) in 2011, renewed in 2016
Asset management (IS ) – Audit planned in May 2017
Energy efficiency – Actions taken
2017 Danube Water Conference, 18 May 2017

15. Benefits that WWTP brings to Maribor community
Aquasystems contributes to sustainable development of the Maribor economy and well-being of its population:
Full compliance with most demanding slovenian and EU environmental protection standards
Local subcontractors have executed more than 70% of the costruction value
R&D cooperation with technological local actors
Good cooperation with schools and local organisations aiming to increase the environmental protection awareness of Maribor population(open door events, excursions, presentations)
Sponsoring and donations to Maribor’s educational institutions, local community
2017 Danube Water Conference, 18 May 2017

16. Maribor – Key success factors
Successful delegated management in the region, combining Private Sector, EBRD private loan, commercial banking sector and E.U. funds
Necessity of political support and commitment for a long-lasting partnering (20 to 30 years)
Balanced contract customized to the capability of the Client
PPP is a way of financing infrastructure in a context of increasing technical, financial and performance requirements
2017 Danube Water Conference, 18 May 2017

17. Sustainability / Affordability / Bankability :
how can DBO/BOT model be improved?
SELECTION Only use DBO/BOT models for suitable projects PREPARATION Improve pipeline Design robust financing structures Adequate risk sharing Minimise financing costs and risks EXECUTION Reduce transaction and bid costs Disclose weightings for evaluation criteria Encourage “owner-led” bids
2017 Danube Water Conference, 18 May 2017

18. Thank You Sustainable infrastructure in water sector
Danube Water Conference – 18 May 2017
Thank You