Public Private Partnerships for Infrastructure Financing

1
Public Private Partnerships for Infrastructure
Financing

• OECD Middle East and North Africa Initiative on
  Governance and Investment for Development
• Istanbul - 8 November 2006
• Mary Bonar
• Stephenson Harwood
• mary.bonar_at_shlegal.com

2
Benefits of a PPP Concessions Law
Benefit Public Sector Private Sector
Benefit Public Sector Bidders Funders
Transparency of policy ? ? ?
Certainty ? ? ?
Government Commitment ? ? ?
Clarity and cost control ? ? ?
Ring-fenced from general legal framework ? ? ?
3
Pitfalls of a PPP Concessions Law

• Inflexibility
• PPPs vary from sector to sector eg water,
  transport, energy
• Incompatibility with the general framework
• PPP has to function in local environment eg
  workforce, supplies, sales
• Public acceptance not guaranteed
• Political issue to be managed eg monopoly
  rights, non-payment culture
• Enforcement
• Needs to work for government, private sector
  and general public

4
Key points about the legal documents

• Complex structures require many documents
• Start before the competition not afterwards
• Documents need to reflect the required or agreed
  risk allocation
• Drafting and negotiation should not distort that
  risk allocation

5
Outline Structure parties and legal documents
GOVERNMENT SPONSOR
EXPORT CREDIT AGENCIES/BANKS
Direct Agreement
PPP Concession Contract

• INTERNATIONAL
• FUNDERS

CONCESSION VEHICLE
SHAREHOLDERS/ PARTICIPANTS
Funding Terms
Equity
LOCAL FUNDERS
Security Documents
Documentation
Insurance Contracts
Subcontracts
INSURERS
CONSTRUCTION CONTRACTOR
OPERATOR
MAINTAINER
Direct Agreements/ Step-in arrangements
6
Match the documentation to the process
Pre Competition Develop competition and evaluation rules, PPP specification, concession principles, government comparator, risk matrix, government policy statements consultation
Competition Phase Procurement notice Prequalification pack Announcement of prequalified bidders Invitation to tender - risk matrix - concession terms/contract - financial model requirements - required bid and variants
7
Match the documentation to the process - 2
Negotiation Phase Public Sector Private Sector Concession Agreement Sub-contracts Funder Direct Agreement Funding Documents Security Documents
Implementation Phase Approvals Commencement notification/sign-off
8
Offices

• Athens Associated
• Bucharest Associated
• Guangzhou
• Hong Kong
• Johannesburg Associated
• Kuwait Associated
• London
• Paris Associated
• Piraeus
• Shanghai
• Singapore
• Mary Bonar
• Direct Line 44 (0)20 7809 2061
• Direct Fax [phone]
• Email mary.bonar_at_shlegal.com
• Web www.shlegal.com