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Mag. Martin Oder, LL.M.

OECD/SIGMA “ Concessions and Public Private Partnerships” Ankara, 10-11 March 2008 Case Studies from Technical I nfrastructure S ectors -Highways Sector. Mag. Martin Oder, LL.M. Case study – Highways. Austria: A5 Eastern region – concession model Preparatory stage

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Mag. Martin Oder, LL.M.

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  1. OECD/SIGMA“Concessions and Public Private Partnerships”Ankara, 10-11 March 2008Case Studies from Technical Infrastructure Sectors -Highways Sector Mag. Martin Oder, LL.M.

  2. Case study – Highways • Austria: A5 Eastern region – concession model • Preparatory stage • Decision-making process • Scope and shape of project • Time schedule • Main procedural and contractual issues

  3. Preparatory stage – shaping of first road PPP project on political level Working group on road infrastructure financing 2002 (Interest groups) Ministry of Transport, Innovation and Technology – Steering Committee PPP 2003 (with help of external experts) procurement law Scope of procurement financing Discussion on most suitable model: IPP vs. concession model debt acceleration risk transfer Ministry of Transport – Steering Committee PPP Oct. 2003 CONCESSION MODEL Resolution of the Council of Ministers Dec. 2003

  4. Scope of project 51 km motorway, 1 tunnel (2km) • First road PPP-project in Austria • Estimated construction costs € 800 m • Project size: too big in terms of seize and value? • 4 EIA procedures for different parts of road: different planning and approval status • Financing issues: ASFINAG financing vs private financing • Bankability

  5. Project setup Ministry of Transport –MoF Management board of ASFINAG ASFINAG Supervisory board Project leader Law working group Infrastructure working group Economics Financing working group Core technical planning team Ostregion Advisors & experts Advisors & experts Advisors & experts

  6. Task sharing within the project team Interdisciplinary Infrastructure Financial Law • Award procedure • Concession contract • Interface to BMVIT and authorities • Functional output specification for construction, operation, management and maintenance • Traffic forecasts as basis for revenue models • Concession model • Risk allocation • Risk valuation • Business plans • Revenue models • Econ. planning tools • Tender evaluation EXTERNAL CONSULTANTS Haslinger / Nagele & Partners Doralt – Seist - Csoklich Technical consultants DonauConsult, Zottl & Erber ZT GmbH KPMG

  7. Republic of Austria Direct Agreement concession contract Concessionaire (SPV) lenders (debt) sponsors (equity) Loan bond Art of Association subcontractors planning & construction maintainance & operation Project structure – Concession model • Financing through debt (90%, loans and bonds, EIB & Dt Bank) and equity (10%) • Remuneration upon completion and opening of road to traffic through cash-flows from project only • Non-recourse project (no contingent liabilities on sponsors) • Concession lifetime: ~33 years • ASFiNAG: no stake in SPV, only monitoring and control function • Fair risk allocation

  8. Time schedule Application period 3 months Selection of 5 candidates Award decision submission of requests to participate by candidates Time limit for submission of bids: 6 months Determination of „preferred bidder“: 8 months financing documents by preferred bidder: 2 mo Preparation period: 12 months • Planning, EIA procedures • Conception of model: definition of project scope, determination of financing model, ...... • - Preparation of prequalification documents (PQQ, project information brochure) • - Preparation of tender documents (esp technical output specifications, financial/business requirements, draft concession contract) Negotiations with all three bidders timeline (not according to scale) 01.01. 2004 2006 01.09.2005 01.12. 01.09. May 05

  9. Main issues during negotiations • Procedural issues • Alleged discriminatory effect of different financing solutions (bond vs loan) on comparability of LAFO • Submission of complete financial documentation by preferred bidder only and point of time of publication of award decision • Contractual issues • Changes in law and additional remuneration • Relief / force majeure events and their consequences • Payments in cases of early termination (bond vs loan) • State guarantees • Direct agreement financing with lenders, esp liabilities of lenders upon step-in

  10. Thank you for your attention! Martin Oder HASLINGER / NAGELE & PARTNERS Am Hof 13, A-1010 Vienna Phone +43/1/718 66 80-616 Fax +43/1/718 66 80-30 email: office.wien@haslinger-nagele.com

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