PFI ・ＰＰＰ in JAPAN

1. PFI・ＰＰＰ in JAPAN June, 2010 Kazuo Ueda Non-Profit-Organization Japan PFI PPP Association

4. 1. PFI Law in JAPAN • PFI Law (The Law Regarding to Promote Provision of Public Facilities and Other Related Services by Use of Private Capital and other Resources) has become effective on 24th September 1999. • Basic Policy ( by Prime Minister : 13th March ,2000 ) (3) Notice by Ministry of Home Affairs ( by Vice Minister : 29th March, 2000 ) (4) Guidelines by CabinetOffice ① Guideline for Process ② Guideline for VFM ③ Guideline for Risk-sharing 　④ Guideline for contract 　　　⑤ Guideline for Monitoring

5. 2. PFI Project in PFI Law Public Facilities Road / Railway / Port / Airport / River / Park / Water / Government Building / Residence for civil servants / Education and Culture Center / Rehabilitation and Custody Facilities / Waste Management Facilities / Medical Facilities / Social Welfare Facilities / Car Park/ Underground Arcade / Heat Supply Facilities / Information Telecommunication Facilities / New Energy Facilities, Recycle Facilities/ Tourist Facilities/Study Facilities

6. 3. Impacts of PFI to the existing system In Japan • Transparency - Transparency of all the steps • Life Cycle Cost Management - Improvement of financial problems and efficiency of public works (3) Principle of Contract- Detailed contract to spell out clearly roles, risks and responsibilities allocation and procedures in case of project failure (4) Project Finance - Feasibility in Public Works - Risk analysis and allocation - Present Value

7. Public Users PFI Operator(SPC) Payment of Considerationfor Services Services Business Licenses, etc. Services Public PFI Operator(SPC) Users Payment Licenses Application, etc. Services Public PFI Operator(SPC) Users Definite Capital Investment Payment 4. Classified by the recovery method of project costs 1) Service-purchased type (in which a PFI operator recovers costs from the service charges paid by the public sector) 2) Self-supporting accounting type (in which a PFI operator recovers costs directly from users as a charge over a certain PFI operation period) 3) Joint-venture type (in which a PFI operator recovers costs from the charges collected directly from users, public subsidies, etc. over a certain PFI operation period)

8. 5. Utilization on Private Finance PFI Project Screening Committee (Selection of Preferred Bidder, etc.) Advice Advisor Public Sector 3rd Party Direct Agreement Repayment Loan Lender PFI Project Contract PFI Project Committee (Judgment, etc.) Payment for Public Services Loan Agreement PFI Project Company Special Purpose Company (SPC) Equity Investors (SPC Consortium) Residents Dividends Public Services Investment Contract Residents Design Construction Management Operation

9. 6-1. PFI Process before Contract Sealing _PFI Screening Committee Conceptual Planning F/S& VFM Test LOI Negotiation Announcement of PFI Implementation SPC Foundation Tendering Q&A Q&A Guideline Announcement of Projects Invitation to Tender Selection of Preferred Bidder Contract Sealing 1 1 3 4 3 3 - 4 months Min 12 months

10. 6-2. PFI Process after contract sealing (BTO) Asset transferred to Public Sector (BOT) Asset transferred to Public Sector Loan Agreement Sealing Direct Agreement Sealing _Monitoring & Payment _PFI Project Committee Contract Sealing End of Contract Start Operation Completion Design & Construction Maintenance & Operation

11. 7. Characteristics of Japanese PFI • Independency of contracting agency (local authority) (2) Lump – sum contract for PFI advisor • Competition among consortiums • Function of screening committee • Function of project committee after contract sealing • Screening criteria and monitoring system • Contractual mecheanism (8) Function of financial institution

13. 8. Wakkanai City Waste Final Disposal Site The result of the examination of comprehensive evaluation

14. The result of the examination of comprehensive evaluation

15. Ａｎｎｅｘ Table Risk Sharing

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