Public – Private Partnership Biryukov E. S. Mishra S.
Definition Public Private Partnership PPP – describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies PPP - association of financial, technological, organizational-administrative, personnel and other resources of the state and business for creation and operation of objects of the state or municipal property, and also rendering of socially significant services traditionally fixed to the competence of the state.
Speed highway Moscow - Saint. Petersburg
Financing the highway Vneshekonombank + Sberbank 29 billion RUR Vinci (France) 12 billion RUR Contractor: Vinci (France) Финансовые параметры проекта Общая стоимость реализации головного участка автомобильной дороги составляет более 60 миллиардов рублей (в том числе, стоимость строительства без НДС в размере
The state should promote and in some cases take part in innovative processes, and to create conditions for entrepreneurship The state should separate primary risks of working out and creation of new kinds of products and technics How to organize most effectively innovative activity, if: - the state doesn't have enough resources and forces; - private business doesn't have desire to risk with the resources at early stages of innovative activity Is there a decision? ? ?
Examples in Moscow region The volume of contracts concluded by Moscow under public-private partnership in recent years amounted to about $ 10 billion. the northern relief road for Kutuzovskiy Prospect, City Clinical Hospital No. 63, creation of about 250 transfer hubs, the construction of the Moscow Ring Railway Road, life cycle contracts for supply of subway cars, long-term contracts for removal and disposal of waste” - See more at: http: //russiaic. com/news/show/18504#. VOn. YKMj. Wj. IU
roads, housing, community amenities, medicine and education
Large-scale projects the 2014 Olympic Games in Sochi, the Student Games in Kazan in 2013, the development of special economic zones Moscow Ring Railway Road
Three parties of the PPP agreement Government Business Society
2 approaches to PPP In wide understanding: All variants of partnership of business and the state. In narrow sense: PPP includes partnership of the state and business in the decision of the problems concerning public sector, under certain conditions: indemnifications of expenses, divisions of risks, obligations, competences.
The benefits of government
The benefits of government it shifts the burden of investment and maintenance of property on business as in this way it can improve the efficiency of their operation, through the PPP government refuses from inefficient forms of economic activity (construction, operation, repair and other) that private companies perform better, the government partially alleviates the socioeconomic problems.
The benefits of business
The benefits of business minimization of the risk of entrepreneurship. a private company receives state assets in the longterm ownership - often on favorable terms. a guaranteed opportunity for sales of its services (products) because of a long-term contract with the state. high assurance of investments return , as the state , shares risks to ensure a minimum level of profitability. private companies , having economic freedom can increase the profitability of their business through experience, knowledge, know-how and investment
The benefits of society Society can expect improvement of services quality and lower prices. Often with the help of such a partnership it is possible to partially solve some social problems. The economic impact on the society is also in shortening the duration of the design and construction of infrastructure, the higher efficiency of construction.
Features of PPP 1) 2) 3) 4) 5) The subject of PPP is state and municipal property, as well as the services provided by the state, municipal governments and state-financed organizations. The partnership is legalized by special agreement (treaty, contract) between the government and participants from the private sector. Co-investment by the state and private companies. In some cases, the project may be funded solely by private sector. There is a risk sharing between all project participants. PPP project operates within a limited term, fixed in the contract. Upon its end the object is either transferred to the state or partnership can be continued on the basis of a new contract.
Organizing PPP mechanism
Legal institutes and mechanisms of the publicprivate partnership In essence, transition to PP partnership in the sphere of state ownership means (it is the basic moment!) partial and for a certain date transfer to private sector of some – resolved by the legislation and by issued agreement (contract) – state functions. Establishment of mutual organizations Investment agreements Concessions Production Sharing Agreements Combination of different types
Legal institutes and mechanisms of the publicprivate partnership BOT BOOT BTO BOMT DBOOT
History In total in the world during 1980 – 2000 th some thousands of large-scale PPP projects have been realized, without speaking about a large quantity of regional and municipal projects. Ø The first construction of the channel by a concession principle in France is dated 1552. Ø PPP in the concession form used by many countries, including Russia, on a boundary XIX - the XX-th centuries, especially for building of the railways. Ø The analysis of foreign experience of use PPP has shown that in each of the countries «The Group of Seven» there is a most priority sphere of PPP. So, in the USA such branch are highways (32 of 36 projects), in Great Britain – public health services (123 of 352 projects) and construction (113 of 352 projects), in Germany – construction (24 of 56 projects), in Italy, Canada and France – public health services. Ø
History The analysis of experience of PPP application in the countries with different levels of the social and economic development, realized by means of concession form PPP, has shown that such partnership are successfully applied Ø In transport (highways, the railways, the airports, pipeline transport) Ø And a social infrastructure (public health services, formation, entertainment, tourism), Ø Housing and communal services (water supply, an electrical supply, water treating, gas supply, etc. ), Ø In other spheres (prisons, defense, objects of military sphere). Thus the transport infrastructure is in the lead, it with a small separation is followed by a social infrastructure.
Case-study. After a fire destroyed the public market in Mandaluyong, the Mandaluyong City Government (MCG) lacking the resources to build a new one, decided on a public private partnership to help finance and build a new market place. The private sponsor, under a Build-Transfer-Operate scheme and a 40 -year concession contract, agreed to develop, finance and construct a new public market with a shopping mall above it. At a construction cost of Php 500 million the revenues from the shopping mall would service the debt that was borrowed to finance both projects. The financing structure was based on fifty percent debt and fifty percent equity. Short-term project financing was provided by local commercial banks while longer term financing was provided by the Asian Financing and Investment Corporation, a subsidiary of the Asian Development Bank. Twenty-Five percent of the equity was provided by the private sponsors, while the other twenty-five percent was made up of advances by shop keepers and stall holders. Upon completion the ownership of both the shopping mall and public market was transferred back to the MCG. Though management of the public market became the responsibility of the MCG, management of the shopping mall was left to the private sponsor, as per the concession agreement. The building of a new public market and shopping mall has benefited the community as a whole by providing long-term employment opportunities to locals, as well as improved living standards in this and neighbouring communities due to new sewage facilities. Question. What were the results to the community? Did it benefit?
Box. The increase of the role of Public Sector under Margaret Thatcher (1925 – 2013) was the Prime Minister of the United Kingdom from 1979 to 1990. She was the only woman to have held the office and also the longest-serving British Prime Minister of the 20 th century. For her uncompromising politics and leadership style she was called the "Iron Lady". As Prime Minister, she implemented policies that have come to be known as Thatcherism. Speaking about PPP - Thatcherism influenced the increase of PPP over the World greatly.
Box. The increase of the role of Public Sector under Margaret Thatcher M. Thatcher was associated with radical programmes to reform public services At the time, the state seemed to dominate and controlled public services while was not able to efficiently and effectively deliver quality services to its citizens. She viewed the Civil Service as - Inefficient - Badly managed - Unresponsive Margaret Thatcher introduced radical shift from traditional to New Public Management (NPM). There were at least five prime features of NPM as follows: 1) deregulation of management structures, decentralizing budgetary and financial management; 2) conversion of government departments into autonomous executive agencies and privatization units; 3) evaluation of performance based on outputs rather than inputs; use of contracts; 4) introduction of competition and internal markets; greater use of market resource allocation; 5) extending public-private partnership and privatization.
Box. The increase of the role of Public Sector under Margaret Thatcher Combined with lack of efficiency the Civil Service was overstaffed. By 1997, the number of Civil Servants had fallen from 732, 000 in 1979 to 500, 000 in 1997, the year the Conservatives left office. Such a decrease represented nearly 33% of the Civil Service as it stood in 1979. The most important time for change in the Civil Service occurred after 1988 with the so-called “Next Steps” reforms, which were as follows: The dual roles of providing advice and implementing government policies were split.
Box. The increase of the role of Public Sector under Margaret Thatcher The Civil Service continued with its role of giving the government advice but the delivery of policy was transferred to newly created executive agencies – which became known as ‘Next Step’ agencies. Each agency is given a specific brief so there should be no overlap between different agencies. The criteria for a chief executive keeping his/her position is based on whether that agency is deemed to be doing its job. Some agencies have been privatised. The general trend was that privatised agencies were more efficient than non-privatised ones. Probably the best example has been seen at the DVLA where waiting times for driving licences has fallen. However, where problems have occurred they have been very public and the media has been keen to ensure that the public is aware of their failings. When this has occurred, there have been political repercussions. When agencies have failed, ministerial control over them is usually extended –
ТИПОЛОГИЯ ГОСУДАРСТВЕННО-ЧАСТНОГО ПАРТНЕРСТВА В ИННОВАЦИОННОЙ СФЕРЕ Цикл инновационной деятельности Государство, в лице органов исполнительной власти В форме программ (технологические кластеры, СТАРТ, ТЕМП) Вклад государства: Собственность (в т. ч. ИС); Финансирование + услуга Обременения частного сектора Гарантии ГЧП На основе договоров/соглашений (в принципе важнейшие инновационные проекты) Гражданскоправовой договор о партнерстве Частный бизнес Смешанного типа (закупка НИОКР, ФЦНТП, Центры трансфера технологий и т. п. ) Вклад частного сектора: • Финансы • Имущество • Менеджмент
EBIT = Earnings Before Interest and Tax EBT = Earnings Before Tax EAT = Earnings After Tax ROE = Return on Equity
Class-task. Two Indian businessmen Aftab and Nayak are willing to build a factory producing sport-clothes. The start of the project would cost 50 mil USD, the project will give 60 mil USD as revenues. Nayak has got 25 mil USD, Aftab 15 mil. But Nayak is not sure he would like to invest all the sum of 25. Consider different variants for them: a) 70% debt/30% equity investment, b) 20% debt / 80% equity investment. A cost of capital: 8%. Tax: 25%. 1. Could they finance the project without debt financing? 2. Count EBIT, EBT, EAT, ROE. 3. What variant is preferable? 4. What were the arguments of each of them during the stage of negotiations. * Consider tax holidays for both variants
Project A Project B 60 50 10 (60 -50) 2, 8 (50 x 30%(eq. ) x 8%) 7, 2 (10 -2, 8) 1, 8 (7, 2 x 25%) 5, 4 (7, 2 -1, 8) 5, 4/eq. =5, 4/(50 x 30%) = 5, 4/15 = 0, 36 = 36% 60 50 10 (60 -50) 0, 8 (50 x 80% (eq. )x 8%) 9, 2 (10 -0, 8) 2, 3 (9, 2 x 25%) 6, 9 (9, 2 -2, 3) 6, 9/eq. = 6. 9/(50 x 80%) = 6, 9/40 = 0, 17 = 17% 70% debt / 30% equity 20% debt / 80% equity Revenue Expenses EBIT - Interest EBT - Tax Net Income (EAT) ROE A cost of capital: 8%. Tax: 25%. EBIT = Earnings Before Interest and Tax EBT = Earnings Before Tax EAT = Earnings After Tax ROE = Return on Equity
Ключевые проблемы, которые препятствуют развитию ГЧП в России • Отсутствие опытных кадров, которые могли бы двигать ГЧП – как со стороны бизнеса, так и государства. • Неготовность госсектора. Отсутствие единой системы управления (недостаточная эффективность госинститутов). Бюрократия и коррупция. Неготовность органов власти к партнерским отношениям и реализации проектов ГЧП. • Пробелы и ограничения законодательства (в частности, концессионного) и недостаток правоприменительной практики
Ключевые проблемы, которые препятствуют развитию ГЧП в России • Неготовность частного сектора: малое число частных операторов в крайне небольшом количестве секторов. Восприятие в среде российского бизнеса ГЧП и концессий как проектов с крайне высокими рисками и низкой доходностью, неопределенностью относительно будущих условий. • Отсутствие проектов, привлекательных и соответствующих требованиям банков (bankable projects). • Текущий кризис и его следствия (отсутствие «длинных денег в стране» , неготовность инвестировать в долгосрочные проекты и др. ).
Development Institutions • Bank of Development and External Economic Activity (Vnesheconombank) • Investment Fund of Russia • Russian Venture Company • Russian Fund of Fundamental Research • Rosnano (state-corporation) • Federal Specific-Purposes Programmes
Investment Fund Project Cost, Source of Financing, % bil. Investment Regional Private RUR. Fund Budget Invest ments 99, 95 32 17 51 Highway building "the Western high-speed diameter" in St. -Petersburg Building of the Orel tunnel under Neva within 31, 67 the Volga-Baltic waterway Building of a new exit on MKAD from federal 17, 26 highway М 1 Moscow - Minsk 54, 93 Building of high-speed road Moscow - St. Petersburg on a site 15 - 58 km Complex development of the Bottom Angara 213, 92 Region 130, 30 Building of a complex of oil refining and petrochemical factories in Nizhnekamsk 167, 77 Creation of a transport infrastructure for development of a mineralno-source of raw materials of the Chita region 33 32 35 58 - 42 47 - 53 16 - 84 29 - 71 13 - 87
Legal Acts of the Russian Federation providing PPP activity Federal laws: N 115 -FZ «On Concession Agreements“ dated 7/21/2005; N 116 -FZ «On Special Economic Zones in the Russian Federation” dated 8/27/2005; N 94 -FZ «On placing of orders for deliveries of the goods, performance of works, rendering of services for the state and municipal needs» dated 7/21/2005 The governmental Decrees of the Russian Federation: N 284 “On the state account of results of research, developmental and technological works of civil appointment» from 5/4/2005; N 685 “On the order of the order the rights to results Scientifically - technical activity” dated 11/17/2005
Legislation on PPPs UNCITRAL Guidance on PPP/ Concession Laws. UNCITRAL has produced a Legislative Guide on Privately Funded Infrastructure Projects in 2000 where it discusses the different issues and how to deal with them. It sets out suggested legislative language in its Model Legislative Provisions on Privately Financed Infrastructure Projects in 2003. The European Bank for Reconstruction and Development (EBRD) defined a set of core principles for a modern concession law as legislative guidelines. The full text is also available in Russian and French from the EBRD here. OECD Basic Elements of a Law on Concession Agreements. A set of basic elements for Concession Agreements for corporate law and foreign direct investment legislation joint produced by the Istanbul Stock Exchange (ISE), the OECD and a group of experts from NIS, Black Sea and South-East European Countries.
Пробелы и барьеры развития ГЧП 1. Нет прямого договора (впервые упоминания о нем появляются в документах на ОЭЗ, инвестиционном фонде, концессионные соглашения) 2. Права на результаты ИС (Постановление № 685 от 17 ноября 2005 года не реализует эти вопросы для ГЧП) 3. Государство, в большинстве проектов, предоставляет средства в виде заказа на НИОКР 4. Закон № 94 ФЗ от 21 июля 2005 года отводит на экспертизу только 20 дней 5. Министерство финансов РФ имеет собственный взгляд (генеральное разрешение - верни деньги государству)
Проблемы обеспечения частных и публичных интересов в ЧГП • Кому принадлежат созданные объекты? Как заинтересовать бизнес вкладываться? • Как государству организовать планирование проекта и обосновать необходимость привлечения частного партнера? • Нужно ли унифицировать процедуру ЧГП, создавать специальный орган в этой сфере? • Как бороться с издержками, связанными с многолетними проектами? • Вопросы ответственности государства и партнеров: наделять ли статусом гос. служащих сотрудников организации частного партнера, изменение условий договоров, отказ от реализации ЧГП и т. д.
Case-study. The Pamir Private Power project, Tajikistan was created in 1991 after the break-down of the Soviet Union. However, with a per capita income of $160, Tajikistan is the poorest country in the former Soviet Union. Due to its economic situation and a civil war, Tajikistan has been unable to meet the demand for power and has suffered from significant power shortages. Pamir Energy, a special purpose vehicle formed to undertake the project, has a 25 -year concession agreement and is responsible for all existing electricity generation, transmission, and distribution facilities. As the physical assets are to remain with the government, Pamir Energy’s only asset is the concession agreement. The agreement set out the legal, regulatory, technical, operational, environmental and financial framework for the project. The total cost of the project was $26 million, with 45% equity financing provided by the International Finance Corporation ($3. 5 million) and the Aga Khan Fund for Economic Development ($8. 2 million), the private sector sponsor. The remaining 55% was financed using debt provided by the International Finance Corporation (IFC) and the International Development Association (IDA). With the assistance, guarantees, and funding by the IDA and IFC, the project was able to secure the private sector sponsor and improve the risk profile which in turn helped lower the cost of capital. Question. What scheme was used in the project? What would be without PPP?
Вода – стратегический ресурс и национальное достояние России Обеспеченность регионов пресной водой n Вода уже является причиной конфликтов с применением оружия в том числе и в развитых странах (с 1999 по 2007 – 49 конфликтов). n Износ сетей ВКХ в России достигает 70%* n В год заменяется менее 1. 5% водопроводных и 0. 5% канализационных сетей n До 2020 г. на модернизацию сектора ВКХ потребуется около 15 трлн. руб. * n Ежегодно государством выделяется менее 15 млрд. рублей Наиболее перспективный способ развития отрасли – ГОСУДАРСТВЕННО-ЧАСТНОЕ ПАРТНЕРСТВО И ПРИВЛЕЧЕНИЕ ВНЕБЮДЖЕТНЫХ ИНВЕСТИЦИЙ *по данным Минрегионразвития, РАВВ ** по данным «Города без границ»
Последствия финансового кризиса для предприятий ВКХ Практически полное прекращение финансирования со стороны банков Требование возврата ранее выданных кредитов Сокращение инвестиционных программ Сокращение финансирования водоканалов Значительное увеличение ставок по действующим кредитам Уменьшение сбора платежей, в частности, платы за подключение Снижение объемов потребления воды предприятиями Сокращение штатов (инженерные и сервисные подразделения) Институциональные риски: реставрация неэффективных МУПов ДЕСТАБИЛИЗАЦИЯ ТЕКУЩЕЙ ОПЕРАЦИОННОЙ ДЕЯТЕЛЬНОСТИ ВОДОКАНАЛОВ
ВКХ России является сектором жилищно-коммунального хозяйства с наименьшим уровнем частных инвестиций Количество людей, обслуживаемых частными операторами в мире, (млн. людей)* Среднее количество контрактов с частными операторами в год в мире* * Global Water Intelligence Доля частных компании в различных сегментах ЖКХ России, % Передача водоканалов под управление частным компаниям
Причины, препятствующие развитию ГЧП в коммунальной отрасли 1. ОТСУТСТВИЕ СТИМУЛОВ, мотивирующих операторов повышать эффективность 2. ОТСУТСТВИЕ эффективных операторов Затратное тарифообразование и отсутствие долгосрочных тарифных программ Неспособность большинства операторов разработать эффективные инвестпрограммы и обеспечивать возврат заемных средств Выставление счетов по нормам (отсутствие у потребителей приборов учета) Отсутствие стимулов и «политической воли» проведения конкурсов по проектам ГЧП в ЖКХ Расчет новых тарифов производится на основе индексации тарифов прошлого года Нет законодательного порядка проведения конкурсов на право аренды коммунального имущества
Привлечение частных инвесторов в отрасль требует доработки законодательства Обоснованное и долгосрочное тарифообразование Гарантии возврата инвестиций Преобразование концессионного законодательства: • определение четких гарантий по возврату инвестиций концессионеру • синхронизация концессионного законодательства с тарифным • пересмотр процедуры проведения конкурсов, так как в ряде случае она излишне усложнена Совершенствование антимонопольного законодательства Преобразование регулятивного законодательства отрасли (принятие технических регламентов по водоснабжению и водоотведении)
Further materials Peculiarities of PPP schemes in Russia Financial institutions to finance PPP in Russia Product sharing agreements in Russia
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