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The Basic Policy Issues of Public Private Partnerships (PPPs) by Alexandros Lykourezos Lykourezos Law Offices World Bank Conference Athens, December 19 th , 2006. Public Private Partnerships (PPPs) Definition:

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The Basic Policy Issues ofPublic Private Partnerships (PPPs)by Alexandros LykourezosLykourezos Law OfficesWorld Bank ConferenceAthens, December 19th, 2006

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Public Private Partnerships (PPPs)

Definition:

“any joint venture between a public body and a private company, typically involving the joint ownership of a special purpose vehicle (SPV) established under company law, to work in collaboration on a variety of projects”

slide3
The basic features of PPPs:
  • New Market for provision of Construction & Services
  • The financial aspect of PPPs

Public Works  Financial Instrument

  • Off-Balance Sheet – EUROSTAT 11 Feb. 2004
  • Allocation of Risks

Construction – Demand – Availability Risk

  • Bankability

Secondary Market – Securitisation

  • Insurance
  • Value for Money – Public Sector Comparator

Incentive for Quality

slide4

International Interest in PPP 1999

Interested in PPP

Source: IFSL

slide5

International Interest in PPP 2006

Interested in PPP

Source: IFSL

slide6
The ongoing discussions on PPPs in Europe:
  • European Commission “Green Paper” on PPPs
  • PPP Alliance Programme - UNECE
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European Commission “Green Paper” on PPPs (2004)
  • Wide debate by Governments and Stakeholders in the Private Sector
  • Apparent need for concise legal framework
  • Emphasis on the procurement aspect
  • Next steps: Concessions legislation and shared better practice information
slide8
PPP Alliance Programme

United Nations Economic Commission for Europe

  • UN Global Compact & Millennium Summit (2000): Declaration to use PPPs as a means to address critical challenges of poverty and social deprivation
  • Fourth Alliance Meeting (2005): Governance in PPPs for Infrastructure Development
  • Emphasis on Shared Better Practice
  • Critical importance of carefully choosing a PPP approach
slide9
Policy Issues of PPPs:
  • Proper Legal Framework
  • Appropriate Institutional Framework
  • Transparent Procurement Framework
  • Attractive Market Framework
  • Globalization
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Proper Legal Framework:
  • Clarity and Stability
  • Adherence to International Convention and European Union Law
  • Safeguard a Level Playing Field
  • “Commercialization” - “Soft Law”

ATTENTION TO ALL STAKEHOLDERS:

USE THE LAW WELL!!!

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Appropriate Institutional Framework:
  • The Government
  • The “PPP Taskforce”
  • Stakeholder Associations
  • End-User Concerns
  • Important: Choosing the proper approach
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Attractive Market Framework:
  • Primary Market Concerns

Open Market / Good PPP Contract

  • Secondary Market Concerns

Bakability / Insurance

  • Risk Allocation

Real Risk / Financial Risk / Risk Management

slide13
Globalization – The next step?
  • The “Mature Market Test”
  • The “Lessons Learned Test”
  • The “Uniform Practice Test”
  • The “PPP Mutual Fund Challenge”
slide14
Greek Law 3389/2005 on PPPs:
  • Abolishes requirement of Parliament ratification
  • Adopts new EU Directives on Public Procurement
  • Regulates award and contractual scheme of PPPs
  • Provides flexibility and allows shared better practice
  • Enhances bankability (step-in clauses and securitisation)
  • Complies with EUROSTAT regulations
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Greek PPP projects in the pipeline:
  • Multi-schools projects: 27 Schools in Attica and 31 Schools in Macedonia

(€ 266 mil. + 20%)

  • Prisons projects: 3 prisons facilities in Salonika, Volos and Corinthos

(€ 198 mil. + 20%)

  • University of Peloponnisos

(€ 84 mil. + 20%)

  • Courthouse projects: 2 courthouse facilities in Heraklion and Patras

(€ 100 mil. + 20%)

  • Police facilities project in Attica

(€ 36 mil. + 20%)

  • Fire department facilities projects: 7 facilities in Salonika, Alexandroupolis, Veria, Lefkada, Giannitsa, Mesolongi & Gargaliani

(€ 31,5 mil. + 20%)

  • International Conference Center in Athens (Paleo Faliro)

(€ 54 mil. + 20%)

  • Municipalities (Article 224 of the New Municipalities Code)
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A quick case study:

“Athens International Airport”

  • A concession contract (with a PPP approach)
  • EU funding: Cohesion Fund 11%, EIB loan 47%
  • Greek State contribution 19%
  • Commercial debt 17%
  • Equity 6%
  • SPV: Athens International Airport S.A (55% Greek State, 45% Private Consortium)
  • Construction delays: 3 months in advance

Source: Patrick Boeuf, EIB, 2004

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“Athens International Airport” – Duration of Project Implementation

Source: Patrick Boeuf, EIB, 2004

(Time in months elapsed in each phase)

Total (10 years)

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Why is the Government using PPPs:
  • Expand of Public Works - Private finance, off balance sheet
  • Value for money – Risk transfer – Performance-related reward
  • Commercial interest - Investments
  • Innovation, Efficiency, Quality
  • New approach to “Privatization”
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The keys to a successful PPP:
  • Political support (focus on the public service)
  • Proper and complete legislation harmonized with international practice and expertise
  • Full and complete legal, financial and technical advice to the public bodies
  • A good PPP contract
  • A level playing field
  • Collaboration
email allykourezos@lykourezos gr website www lykourezoslawoffices gr

Email: [email protected]: www.lykourezoslawoffices.gr

Thank you for your kind attention!

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