Public Private Partnership

 

PPP Features and Facts

PPP spectrum

– Privatisation
– BOO
– BOT
– Leasing / affermage
– Management contracts
– Service and supply contracts
– Cooperatives

 PPP sectors and project types

– Transport infrastructure
– Social infrastructure
– Public infrastructure

 PPP processes and stages / timing

– Policy formulation:
– International comparisons
– Competition policy
– Role of the regulator
– Unsolicited projects

 PPP interfaces

– Grantor / government
– Construction contractor
– Operator / facility manager
– Government / regulator
– Purchaser / user
– Inputs provider

 PPP tender / bidding

– Output specifications:
– Standard concession terms and conditions
– Consortium bidding dynamics
– Invitation to qualify
– Bid evaluation procedures
– Concession finalisation

Quantitative analysis for PPP projects

– The key debt ratios
– Value-for-money / public sector comparator
– The investor’s measures
– Cashflow forecasting
– Choosing sensitivities
– Calculating liquidated damages / overrun / retention requirements

 Risks and structuring

– The 6 risk systems
– The 16 risk categories
– The 59 means of risk identification
– Risk matrices
– The 174 risk structures
– Risk trade-offs / trade-ons

 Funding PPP projects

– Debt and equity
– Government
– Leasing / leveraged leasing
– Monoline insurers / credit wraps

Ratings for PPP project financings

– How to get one from Moody’s / Standard & Poors / Fitch
– The 6 key ratings factors
– Why risk isn’t priced in a project financing
– Impact on PPP refinancing
– Credit derivatives

Owner-controlled insurance program (OCIP)

– Delay-in-start up
– Hybrid force majeure

Contractual architecture

– Concession agreements
– Special purpose vehicles (the 6 types)
– Operations / management (O&M) contracts
– Turnkey construction contract
– Indirect / tripartite and support agreements
– Government guarantees / puts

 Funding documentation

– Loan agreements
– Joint venture / shareholder agreement
– Assignment of contracts / insurances
– Offshore proceeds account
– Swaps, securitization

Independent reviews

– How to scope the review
– Fit to credit approval
– The “bankable” feasibility study
 
Role of the advisor(s)

– The five standard reviews
– Construction cost audit
– Value management

International Projects – political risk

– Export Credit Agencies (ECA) / bilateral agencies
– Tactics for approaching the ECAs

Multilateral agencies

– How to approach the Multilaterals

Other political risk cover structures

– Captive insurers and political risk insurances
– Offshore proceeds accounts

Development finance agency PPP

– Social / environmental mandates
– Sector / legislative reform
– Regulations and competition

New horizons for PPP projects and funding sources

– Specialist PPP funds
– “Green” funds
– Emerging-market funds
– Tax structures
– Infrastructure funds
– Capital markets and credit derivatives

 

Project Risk Assessment 

Projects under the PPP method, the public  client provides a risk allocation scheme before the contract goes for tender. Ideally, a risk matrix saves both the public client and the private contractor.  It is therefore important to know which risk factors are best assigned to the public sector and which to the private sector.

Recently, it is argued that the majority of the PPP risks should be allocated to the private sector. Out of forty-six risk factors, thirty-two are preferably assigned to the private sector. Eleven risk factors are preferably allocated primarily to the private sector, but with many opportunities for this to be shared with the public sector. These risks are, tax regulation change, late design changes, residual risk, inflation, the tradition of private sector provision of public services, staff crisis, third party tort liability, influential economic events, the financial attraction of the project, the level of demand for the project, and different working methods. Tax regulation change, inflation, the lack of a tradition of private provision of public services, and influential economic events are four risk factors within the macro risk group.

Tax regulation risk is a business issue, and should certainly be assigned to the private contractor. Since this risk has an impact on project revenue or the payment mechanism that is why this risk might be shared between the public client and the private contractor. The reason behind this that government can influence macro economic conditions through public expenditure and hence the government should share at least some of the inflation risk.

Our experts follow, a meta-level approach Consists of :
The macro level of PPP risk comprises risks sourced exogenously, i.e. external to the project itself, or beyond the system boundaries of the project. This level focuses on the risks at a national or industry level status, and upon natural risks. The risks at this level are often

associated with political and legal conditions, economic conditions, social conditions and weather.

The meso level of PPP risk includes risks sourced endogenously, i.e. internally at the project level by the project itself. These represent the PPP implementation problem, involving issues such as project demand/usage, location, design and construction and technology.

The micro level of PPP risks represents the risks found in the stakeholder relationships

formed in the procurement process, due to the inherent differences between the public and private sectors in contract management. The most significant reason for proposing this risk category rests on the fact that the public sector has social responsibility, while the private

sector is mostly profit driven.

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