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Effective project financing through Public-Private Partnerships

Effective project financing through Public-Private Partnerships. David Harley, Partner, Abu Dhabi Urban Transportation 2009 27 April 2009. Effective project financing through PPPs. Overview Exploring the benefits Keys to successful project delivery Risk allocation. Overview.

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Effective project financing through Public-Private Partnerships

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  1. Effective project financing through Public-Private Partnerships David Harley, Partner, Abu Dhabi Urban Transportation 2009 27 April 2009

  2. Effective project financing through PPPs • Overview • Exploring the benefits • Keys to successful project delivery • Risk allocation

  3. Overview • PPPs take a variety of forms • O&M • DBO • DBFM • BOT / BOOT • Concession • Government a purchaser of services rather than assets

  4. Typical project structure Project Deed Construction Contract O&M/FM Contract Facility Agreement and Security Documents Tripartite/ Direct Agreements Government Support and others State Banks Project Co. Insurer Equity Insurance D&C O+M Insurance Subcontractor Consultants Subcontractor Insurance Insurance

  5. Exploring the benefits of a PPP • Private sector know-how, experience and resources • Pass substantial risk to private sector • Integration of responsibilities – “one-stop shop” • Limit government debt • Avoid significant short-term government expenditure

  6. Keys to successful project delivery • Political/Government backing and commitment • Regulatory framework • Adequate scoping • Managing the bid • Allocation of risk

  7. Risk allocation • Identify, quantify and allocate potential risks • Party that is best able to deal with risk at lowest cost • Prepare a risk matrix • Lowest risk not always optimal outcome – value for money is key

  8. Takeaway points • PPPs an effective way to deliver transport projects • Need government commitment, good scoping and realistic allocation of risk • Challenges at present with funding • Opportunity now to build a pipeline and lay the groundwork for the future

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