1. GAVIN MUNRO, MANAGING DIRECTOR
Public-Private Partnerships & the Project Finance Market November 11, 2014 | 10:00 AM EST
Shyamala Shukla
Senior Consultant, WBG
with
GAVIN MUNRO, MANAGING DIRECTOR
SOCIETE GENERALE
Public-Private Partnerships

2. Global Infrastructure Project Finance
Source: Infrastructure Journal, Global Project Finance Infrastructure Review 2013
Public-Private Partnerships

3. Global PPP Infrastructure Investment
Source: Infrastructure Journal, Global PPP Market Review 2013
Public-Private Partnerships

4. PPI in Key Countries Developing markets…. Brazil, India, Russia
Decline in closed projects
Decline in total investment
Turkey, Mexico, China
Substantial increases in total investment
Developed markets…..
Australia: High profile deals
United States: Increasing interest in PPP
United Kingdom: Largest PPP market with large investments in transport and social sectors
Public-Private Partnerships

5. Project Structuring Risk allocation may be changing Less demand risk?
Availability payments
PPAs
Other forms of demand guarantees
Less construction risk?
Government debt support instruments
Senior debt
Subordinate debt
Innovative structuring
Mini perms
Multiple financing instruments
Guarantees by government
Letters of comfort
Debt guarantees
PRGs
Public-Private Partnerships

6. Sharing of demand risk with availability payments
United Kingdom
Major changes through PF2
UK Guarantee Scheme for senior debt
Support for availability payments in case of revenue shortfall
Example: Mersey Gateway Bridge
Government Guarantee for 50% of Senior Debt
Availability payments
DfT support for availability payments to authority
DfT grant to HBC for land assembly and other associated costs
Creates CL for government
Sharing of demand risk with availability payments
Source: PWC, Funding Infrastructure, Time for a New Approach, June 2011
Public-Private Partnerships

7. United States TIFIA PROGRAM Use of subordinate debt with longer terms
With mini perm like commercial loans
Extensive use of availability payments
Port of Miami Tunnel
Fixed payments during construction
Construction completion payment
TIFIA subordinate loan
Annual availability payments
Source: FDOT
Public-Private Partnerships

8. India Africa Economic downturn Most transactions in the energy sector
Financing issues
Sector exposure limits
Single and group borrower limits
constraints in external borrowing
currency depreciation
Lack of affordable hedging instruments
statutory requirements for banks
Governance issues:
Elections
Inefficient procurement
Land acquisition delays
Rethink in standard risk structure
Power sector tariff issues
Coal block allocation issues
Most transactions in the energy sector
Less traction in other sectors
Heavily wrapped transactions in many countries
Demand/ Offtake guarantees
Tariffs indexed to USD
Letters of comfort
PRGs
Public-Private Partnerships

9. Questions of focus
Do you see a difference in the project finance market prior to and after the financial crisis?
Do you think that the resurgence of PPPs in the UK does have something to do with the government coming up with programs like the UK guarantee scheme and other protections we have discussed?
Can you talk a little bit about the Indian PPP market and why there is no real project finance? What would it take for say Gavin Munro MD of SG to feel comfortable in financing projects in India?
How do you see the PPP project finance market in some of the African countries emerging over the next 5-6 years? Do you think the current project finance model with substantial indexing, PPAs and letters of comfort can be sustainable?
Which are the markets of most promise among the developing countries?
Public-Private Partnerships