Rome Energy Meeting 2008Rome Energy Meeting 2008Rome, 13-14 November 2008Rome, 13-14 November 2008

Investments Opportunities and Project Finance Investments Opportunities and Project Finance in the Energy Marketin the Energy Market

Luigi MarsulloLuigi Marsullo

President President Finpublic ltd – FinEnergie ltdFinpublic ltd – FinEnergie ltd

Italian Italian Founder, D.G. EVALUATION Ministry of Economy Founder, D.G. EVALUATION Ministry of Economy and Financeand Finance

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The Italian frameworkThe Italian framework Italy is dependent on external Italy is dependent on external

sourcessources Average energy prices in Italy are Average energy prices in Italy are

higher than in the rest of Europehigher than in the rest of Europe Energy policy is presently driven by Energy policy is presently driven by

market liberalisation, devolution to market liberalisation, devolution to the regions and diversificationthe regions and diversification

Complex administrative procedures Complex administrative procedures are required to conduct investmentsare required to conduct investments

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Recent issues in the Italian Recent issues in the Italian energy policyenergy policy

Diversification of energy sources and Diversification of energy sources and increase of efficiencyincrease of efficiency

Secure timely investment in energy-Secure timely investment in energy-related infrastructure related infrastructure

Clarify the responsibilities of the Clarify the responsibilities of the regions and the central Governmentregions and the central Government

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Energy market trendsEnergy market trends Improve integration of the Italian Improve integration of the Italian

energy market into the single energy market into the single European marketEuropean market

Promote the process of liberalisation Promote the process of liberalisation of the electricity and gas markets of the electricity and gas markets

Prepare the tools to promote and Prepare the tools to promote and facilitate investments facilitate investments

Increase transparency of markets Increase transparency of markets rules and streamline proceduresrules and streamline procedures

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The Italian infrastructures The Italian infrastructures financing backgroundfinancing background

The Public sector has traditionally played a The Public sector has traditionally played a major role in infrastructures projects in major role in infrastructures projects in ItalyItaly

The public expenditure reduction has The public expenditure reduction has given rise to a significant impact on given rise to a significant impact on investmentsinvestments

Social role of the infrastructures: this is the Social role of the infrastructures: this is the starting point for a new frameworkstarting point for a new framework

A new co-operation between public sector A new co-operation between public sector and private investors is needed and private investors is needed

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Key Issues to be addressedKey Issues to be addressed

Ex-ante evaluationEx-ante evaluation Ex-post evaluationEx-post evaluation Performance monitoring in the Performance monitoring in the

long termlong term

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Why PPP in Italy ?Why PPP in Italy ?

Key features of successful partnerships Key features of successful partnerships Major gaps identificationMajor gaps identification Role of a strategic planning processRole of a strategic planning process New roles and responsabilities of Regions in New roles and responsabilities of Regions in

two crucial sectors: energy and transporttwo crucial sectors: energy and transport Conflict of Interests between Central Conflict of Interests between Central

Government and Local GovernmentGovernment and Local Government What are the solutions and prospects for the What are the solutions and prospects for the

near future?near future?

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PPP Preliminary Criteria in ItalyPPP Preliminary Criteria in Italy

Stakeholders involvementStakeholders involvement Risk assessment (political, financial, Risk assessment (political, financial,

operating, environmental)operating, environmental) Legal and regulatory framework Legal and regulatory framework Identifying constraints and how to Identifying constraints and how to

overcome themovercome them Defining objectivesDefining objectives

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Key issues faced by Central and Key issues faced by Central and Local Governments in ItalyLocal Governments in Italy

Performance requirementsPerformance requirements Definition of key performance Definition of key performance

indicatorsindicators Quality improvementQuality improvement Definition of inputs and outputsDefinition of inputs and outputs Need for overall control and Need for overall control and

monitoring in Italymonitoring in Italy

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Impact AssessmentImpact Assessment

Identifying stackholders and related Identifying stackholders and related interestsinterests

Assessing the impact of the projectAssessing the impact of the project Identifying assumptions and risks Identifying assumptions and risks

about stakeholders about stakeholders Main problems: too many authorities Main problems: too many authorities

and burocracyand burocracy

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PPP investment financingPPP investment financing

Business evaluation Business evaluation Feasibility evaluationFeasibility evaluation PPP must be financially viablePPP must be financially viable Cost-benefit analysis: a significant Cost-benefit analysis: a significant

tool for identifying the best options tool for identifying the best options that conform to the economic goal of that conform to the economic goal of the country to satisfy the demand of the country to satisfy the demand of the final usersthe final users

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Performance monitoring (1)Performance monitoring (1)

Monitoring is an effective tool to Monitoring is an effective tool to manage the Public-Private dialogue manage the Public-Private dialogue process and to demonstrate its purpose process and to demonstrate its purpose and performance of the investments in and performance of the investments in infrastructuresinfrastructures

Monitoring through cost-benefit analysis Monitoring through cost-benefit analysis is an optimum instrument to ascertain is an optimum instrument to ascertain the financial feasibility of the project the financial feasibility of the project financingfinancing

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Performance monitoring (2)Performance monitoring (2)

Performance evaluation and Performance evaluation and reportingreporting

Definition and characterisation of Definition and characterisation of performance indicators performance indicators

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Performance indicatorsPerformance indicators

They should provide information for They should provide information for decision-makersdecision-makers

The information must be available in The information must be available in time to influence decisionstime to influence decisions

They should be truly representativeThey should be truly representative They should be adequately verifiableThey should be adequately verifiable

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The challenge: definition of The challenge: definition of public/private rolespublic/private roles

Sectors that are fully liberalised and Sectors that are fully liberalised and other sectors affected by rules of other sectors affected by rules of public governance public governance

Electricity and gas grids operated Electricity and gas grids operated under concessions by central or local under concessions by central or local government government

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The opportunitiesThe opportunities

The Italian energy market may present The Italian energy market may present significant opportunities to new investmentssignificant opportunities to new investments

Financial and business environment look Financial and business environment look friendly towards renewed and strengthened friendly towards renewed and strengthened enterprise collaboration and partnership enterprise collaboration and partnership

PPP should develop a baseline assessment to PPP should develop a baseline assessment to measure their effectiveness in order to enable measure their effectiveness in order to enable the partnership to better measure how it is the partnership to better measure how it is achieving its goals over time and delivering achieving its goals over time and delivering on its envisaged benefitson its envisaged benefits