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THE RESOURCE BOOK Methodology and Case Studies

Explore detailed case studies of PPP projects in water, solid waste, and transport sectors, supported by EC grant financing. Discover sector comparisons, risk assessment, and key conclusions on effective PPP design.

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THE RESOURCE BOOK Methodology and Case Studies

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  1. THE RESOURCE BOOKMethodology and Case Studies Simon Murray Brussels 5th July 2004 ISPA – PPP Framework Contract

  2. Presentation • Background • Methodology • General conclusions • Sector analyses • Water and waste water • Solid waste • Transport infrastructure • Recent developments

  3. Background • “Guidelines for the Development of Successful PPPs” • Seminars in Brussels and the Candidate Countries • Request for examples of real projects to complement the Guidelines • Three key sectors chosen • Case studies identified and analysed • Report published

  4. Methodology • The Resource Book supports the Guidelines • It provides detailed case studies of actual projects in three key sectors • Three sectors in which the EC has provided grant financing to the Candidate Countries through ISPA and the Cohesion Fund • Case studies are not statistically representative • But they do demonstrate structures, issues and problems that are commonly found • Case studies have been analysed against six criteria

  5. Criteria for Analysis of Case Studies • Value of the investment • Contract duration • Transfer of responsibility • Demand risk • Availability risk • Contract type

  6. Values Assigned to Criteria

  7. Results of the Analysis • Investment value – largest investments in water and transport. Smallest in solid waste. • Contract duration – water and transport sectors have the longest contract durations, often over 20 years. • Responsibility transfer – solid waste projects have the highest transfer of responsibility to the private sector. Sector Comparison

  8. Results of the Analysis • Demand risk – solid waste projects have the highest transfer of demand risk to the private sector. • Availability risk – generally determined by the characteristics of the project. • Contract type …………. Sector Comparison

  9. Distribution of Contract Types

  10. General Conclusions • Risk transfer lies at the heart of effective PPP design. Every project is unique but risks should be borne by the parties best able to manage them. • Need for sustained political support and commitment, in particular for large projects of long duration. • Demonstrate value for money for the project. Important for assessing that the project design is most effective.

  11. General Conclusions • Need for well defined legislative and regulatory environment to support project implementation. • Importance of rigorous analysis of costs and revenues undertaken by both parties as the basis for a sustainable contract.

  12. Sector Analysis – Water and Waste Water • This is a mature sector. Water concessions have been common for 40 years in EU countries. • This is a growth sector. Member States will have to undertake substantial investments in water and waste water treatment facilities. • There is considerable experience of the full range of PPP structures in this sector.

  13. Sector Analysis – Water and Waste Water • EC co-financing can improve the operational efficiency and fairness of a PPP. • PPPs can capture private sector expertise and new technologies. • There is a big difference between privatisation and PPPs

  14. Sector Analysis – Solid Waste • Four interdependent elements – vehicles and equipment, sanitary landfills, MSWM strategies and collection and transport services. • Private enterprise has been leading modern waste management in the Candidate Countries. • Service contracts, concessions and JVs are prevalent reflecting long-term stable contracts in this sector.

  15. Sector Analysis – Solid Waste • Affordability in terms of acceptable tariffs is the key issue in this sector. • High cost of compliance with EU Directives has a significant impact on project design.

  16. Sector Analysis – Transport Infrastructure • This is a mature sector and is seen as a viable opportunity for PPPs across the EU. • There is a long history of optimistic forecasts of costs and revenues on transport projects. Errors of up to 40% are typical on railway projects. • Simple connections like bridges and tunnels are well-suited to financing through user charges.

  17. Sector Analysis – Transport Infrastructure • More complex projects cannot exist in isolation and must form part of a regional development plan. • Considerable potential for public outcry. Committed and sustained political support is critical to the success of projects.

  18. RecentDevelopments • The EC has taken steps to promote, define and regulate the use of PPPs. • Recent publication of the Green Paper on PPPs and Community Law on Public Contracts and Concessions. • The EU rules governing the choice of a private partner have been coordinated so that a wide variety of approaches are still possible at national level. • Eurostat has published a decision defining the treatment of PPP investments in public accounts.

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