PPP – an Introduction NRW.BANK. 2 October 5th, 2010 PPP – an Introduction NRW.BANK: Development Bank for North-Rhine Westphalia NRW.BANK is the development

PPP – an IntroductionNRW.BANK

2 PPP – an IntroductionOctober 5th, 2010

NRW.BANK: Development Bank for North-Rhine Westphalia

• NRW.BANK is the development bank for the State of North-Rhine Westphalia

• Owners of NRW.BANK are the State of North-Rhine Westphalia (98,62 %) and the Regional Associations of the Rhineland and of Westphalia-Lippe (0,69 % each)

• NRW.BANK offers it’s services through 5 “portals”: Education Financing, Municipal & Infrastructure, Mid-Capital and Business Start-up, Housing

• NRW.BANK’s business is carried out to a large extent in co-operation with banks and savings banks, or with public authorities

• NRW.BANK cooperates closely with the PPP-Task-Force, the Public Private Partnership initiative of the state of North Rhine-Westphalia


Public Private Partnership is

• a set of legally-binding contracts……

• between public sector and private business entities for the…...

• procurement of infrastructure and the delivery of services (the project).…..

• that allocates responsibilities and business risks among the partners…...

• throughout the lifecycle of the project.

Key-features: Life cycle Risk allocation between the parties

PPP – in a nutshell



Private Business

Corporate or

Special Purpose Company

PPP Contract (eg 22 years)

Design Build Operate (DBO) ….or…..

Design Build Operate and Finance (DBOF)…or…

Concession, Design Build and Finance (DBF)…or…

Operate only

Including…

…Remuneration for construction and operation

Public Sector(e.g. municipality)

Administrative building/

Roads

Design Build Finance

= Construction Phase, (eg2 y)

Operate

= Operational Phase (eg20 y)

Bank

Financing Agreement


PPP stands for:

• Cost efficiency and cost transparency throughout the life cycle

• Higher value with output-based specification

• Integration of private capital and private expertise


PPP does not stand for

• “borrow money”

• „build without money“

• „Save without money“



Financing options

• Corporate loan to construction company to cover construction work; followed by non-recourse forfeiting of installments payable by the public authority for construction work

• Project Finance


PPP closed in Germany

App. 190 PPP closed:

Source of data: PPP Plattform der Deutschen Bauindustrie and BWI-Letter

PPP in Germany by sector (#)

Schools39%

Administration19%

Bath11%

Sport/Leasure9%

Roads6%

Health4%

Others12%


• Strong bias towards non-recourse forfeiting (app. 60% by #) due to

• Higher transaction costs and the difficulty to communicate these to the public

• Reluctance of medium-sized private bidders to get involved into the negotiations of a project finance documentation

• Difficulty in equity-rising (esp. medium-sized bidders)

• Risk allocation that is seen as not appropriate by bidders and banks

• Size of several projects is not attracting banks experienced in project financing

PPP closed in Germany


• Benchmark for the public administration as part of it’s modernisation

• Economically motivated feed-back

• Transparency for efficiencies and inefficiencies within the procurement process

• In-depth analysis of the project before start:

•PPP screening test

•Economic feasibility study

• Evaluation of different options in respect to the investment backlog

• Integration of political objectives within the procurement process

•Ecological Lifecycle assessment

• Stimulation of creativity given by output-specification

• Integration of private capital and private expertise broadens scope of solutions

•Bidders are incentivised to offer the most efficient solution

• ….Evolution ongoing

PPP - a driving force for innovation


NRW.BANK - at home in Düsseldorf and Münster

• NRW.BANK

• DüsseldorfKavalleriestraße 22 40213 Düsseldorfphone: +49 211 91741-0fax: +49 211 91741-1800

• MünsterJohanniterstraße 348145 Münster phone: +49 251 91741-0 fax: +49 251 91741-2921

• E-Mail and web:[email protected]

• Liaison Office BrusselsRue Montoyer 471000 BRUSSELSphone: +32 2 504 79 71fax: +32 2 504 79 74

• Contact:

• Dr. Jörg HopfeHead of Municipal Customers: [email protected] : +49 251 91741-4184

• Elisabeth LeidingerSenior-Project Manager: [email protected]: +49 211 91741-6559

Documents

PPP – an Introduction NRW.BANK. 2 October 5th, 2010 PPP – an Introduction NRW.BANK: Development Bank for North-Rhine Westphalia NRW.BANK is the development