PPP – the way of financing of infrastructure investments

1. Radosław Stępień Undersecretary of State Ministry of Infrastructure PPP – the way of financing of infrastructure investments Sopot, 6th September 2011

2. Why PPP? • Financing of infrastructure investments in transport: • new projects, raising standard of existing infrastructure • implementation of innovative technological solutions • Financial crisis and public finances • public debt and reduction of opportunities of taking new commitments to finance multiannual infrastructural projects • reduced opportunities of financing from budgets of the EU Member States • Not all EU Member States apply PPP in transport infrastructure projects

3. It’s estimated that over 21% of the value of investment in the period of its realisation returns to the budget as ZUS contribution, taxes: corporate income tax, income tax and VAT Direct results: Number of jobs Sale of construction materials Sale of services (transport, resources etc.) Profit of construction companies Indirect results: Enhancement of competiveness of companies involved directly and indirectly in the project (decrease of unit fixed costs) Investments of companies in tangible assets and human resources Budget revenues from infrastructure exploitation (jobs creation, construction materials, services, revenue of company) Improvement of accessibility of areas and increased economic circulation Budget profits from realisation of road investment by PPP contract

4. Sources of financing of Infrastructural investments in the EU in following sectors 2006-2009 EU Average, in GDP % 2006-2009 EU Average, participation in total Education Health Public services Transport Education Health Public services Transport Private Financing other than PPP PPP Corporation Government Źródło: Eurostat, Projectware, EIB/EPEC

5. Sources of financing of transport investmentsin the EU in some old and new EU Member States in the period 2006-2009 Old EU Member States New EU Member States Private financing other than PPP PPP Corporation Government Źródło: Eurostat, Projectware, EIB/EPEC

6. PPP in 2010 in the EU • value of PPP transactions in the EU, which achieved financial closureamounted to 18,3 bln euro (about 75,8 bln PLN*) • number of projects: 112 • Following countries were PPP leaders: by number of contracts: Great Britain (44), France (19), Germany (14), Spain (13); by value: Spain, Great Britain, Portugal (all above 3 bln euro) • value of transport projects amounted to nearly 50% of the value of all PPP projects Źródło: Market Update - Review of the European PPP Market in 2010, EPEC * According to avaerage rate of NBP (01.09.2011)

7. Number of PPP projects realised in the EU in following sectors Average 2001- 2006 2007 2008 2009 Transport Health Eduction Universal public services Defense Public order and security Recreation, culture, religion Environment Źródło: EIB, „Public –Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, Lipiec 2010

8. The PPP projects implemented in the EU in the period 1990-2010 number of projects withfinancial closure Source: Data comparison from : EIB, „Public–Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, July 2010; EPEC, Market UpdateReview of the European PPP Market in 2010

9. Value of the PPP projects implemented in the UE in the period 1990-2010 value of projects with financial closure MEuro Source: Data comparison from: EIB, „Public–Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, July 2010; EPEC, Market UpdateReview of the European PPP Market in 2010

10. Remuneration systems in the PPP projects Number of the PPP projects agreements by the remuneration mechanism used, implemented in the period 2007 – 2009 for roads, bridges and tunnels. Real toll Shadow toll Availability fee Mixed Source: EIB, „Public –Private Partnerships in Europe – before and during the recent financial crisis”, Andreas Kappeler, Mathieu Nemoz, July 2010

11. Polish proposals concerning PPP Concerning the Member States experiences and EUROSTAT decision 18/2004 from the 11 of February 2004 r. we propose: • European regulation on PPP • PPP definition • PPP in relation to the scope of standard public procurement • Conditions description for granting the guarantees • Description of model risk sharing for the sake of optimal renumeration mechanism • Possible renumeration mechanisms In times of crisis: • Availability payment • Real toll • Shadow toll • Mixed mechanism Effect: clarity for the public side on the budget cassification of the project

12. conclusions • PPP is a good way for financing and delivering infrastructure investments in transport, however, is not proper to each type of investment • It can be used mainly where higher rate of return is expected. • Public funds are vital in the development of infrastructure. • There is a large space for the implementation of infrastructure projects under PPP • The need for a common European framework for PPP specifying: • PPP definition • The range of implementation • Model solutions for the risks sharing, in order to apply optimal renumeration mechanism • The scope of guarantees • A need for hanbook of good practices

13. Thank you for your attention!