1. 1 Veolia Transport Growing with Public Private Partnerships (PPP) An alternative financing solution

2. Document commercial non contractuel –Veolia Environnement 2 PPPs are more and more a solution for our customers Veolia Transport PPP policy Main feedbacks from experience

3. Document commercial non contractuel –Veolia Environnement 3 Background Elements The request for infrastructure is increasing due to major elements such as :  Long term worldwide economic growth  Climate change  Ageing infrastructure  Growing cities and traffic congestion But how to finance them quickly ?

4. Document commercial non contractuel –Veolia Environnement 4 PPPs are an attractive alternative solution to governments for the following reasons Reform the public sector  Focus on core mission of PTAs  Improve efficiency  In some cases, lack of technical skills A paradox to common ideas : improve delivery and reduce costs (~10 to 20% savings) :  Total lifecycle cost optimization  Private model efficiency : cost and delivery See next slide Create additional financing capacity  Decrease opex and capex expenditures  Reduce public debt  Finance off-balance sheet

5. Document commercial non contractuel –Veolia Environnement 5 PPPs should be less expensive Total optimization  System optimization based on functionnal requests and performances  Total lifecycle cost optimization including long term reliability, overhauls, maintenance …  Avoid piling margins and unnecessary redundancies Main pitfalls to avoid extra costs and contingencies  Governance of the project for decision making  Lack of clarification of functionnal requests  Poor risk allocation involving contingencies on private side

6. Document commercial non contractuel –Veolia Environnement 6 PPPs are more and more a solution for our customers Veolia Transport PPP policy Main feedbacks from experience

7. Document commercial non contractuel –Veolia Environnement 7 Veolia Transport PPP policy : governance issues Strong focus on governance and decision process with the PTA and within SPC To be a long term partner in the private special purpose company (the SPC) with all the risks attached to Operator influence at very early stage General management of the SPC not later than commercial start Single turnkey construction contract with the builders

8. Document commercial non contractuel –Veolia Environnement 8 Role of the operator in the early stages and during construction The operator is part of the optimization of the total lifecycle cost and of commissioning Optimization of basic design during bid preparation After start of detailed design : the success of the project lays in the details Commissioning and testing  A very critical phase, not to be shortened if we want to avoid problems with passengers on board  To assist SPC, and to operate during empty trial running System acceptance Main pitfall in the design : “it’s too late, too expensive, too complicated”

9. Document commercial non contractuel –Veolia Environnement 9 Veolia Transport PPP policy : finance issues Importance of a good balance between upfront investment subsidy and yearly operational subsidies Tarif and subsidy escalation reflecting cost structure of the SPC Exchange risks if any to be covered (construction and spare parts)

10. Document commercial non contractuel –Veolia Environnement 10 Veolia Transport in BOT projects – some examples BOT contracts in operation : Rouen (France) A 30-year BOT contract to finance, build and operate the LRT system Veolia responsible for operating and maintaining the system LRT operations began in 1994 Barcelona (Spain) 2 successive 25-year BOT contracts related to the 2 LRT systems “TramBaix” and “TramBesos”: the first two LRT lines to be run by a private operator in Spain BOT contracts under construction : LESLYS (France) : the first express city-to-airport rail link in France Consortium: “RhônExpress” Brought into service in September 2009 for 28 years 22 km of lines, 6 Stadler “Tango” express tram-trains Mumbai underground system (India) A 35-year BOT contract awarded by the consortium “Mumbai Metro One” in July 2006 1st line in operation in 2010 11km of lines, Implementation of the complete system in 2021 (9 lines)

11. Document commercial non contractuel –Veolia Environnement 11 Why PPPs are more and more an issue for our customers Veolia Transport PPP policy Main feedbacks from experience

12. Document commercial non contractuel –Veolia Environnement 12 Cooperation operators / builders !!

13. Document commercial non contractuel –Veolia Environnement 13 Main lessons for a win/win partnership: A process aimed at eliminating uncertainties 1.To have a detailed Pre-Project, precise and politically stabilized. 2.To pre-qualify some consortium presenting all the skills in terms of integration of the system, vehicles, and operation. 3.To organize the risk sharing on a fair balance, as : Commitment of the Local Authority to : the networks integration the schemes and priorities of circulation security and vandalism the fare policy clauses of revisions or of buy back in case of changes of structure in the transport environment To ask functional commitments and performance guaranties of the SPC 4. To organize governance of the project on both side : PTA and SPC