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What is PPP?

Planning

+ Building

+ Financing

+ Operation

(+ Post-contract life)

= PPP

PPP-Sectors: PPP – construction, PPP – infrastructure

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Types of PPP contracts- in German law -

Differences and core content

Acquisition model Hire-purchase of facility/asset

Owner model Planning, construction, financing, operation under ownership

of the principal

Leasing model Rent with option to buy

Rent model Contract for rent extending beyond 10 years

Contracting model Contract to operate the facility/asset

Licence model Operation of facility/asset with user fees collected privately

Company model Operation by way of project group

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PPP project structure- example -

Advisor AdvisorLicenser

Fed / Land / Municipality

Loan providerLicensee

Project company

General contractor

Construction planning

Banks/capital market

Shareholder

Investors

Maintenance

Maintenance

Public sector or private sector use

Operator

Operation

Ren

t or

fee

Pro

visi

on o

f se

rvic

e

Con

cess

ion

Gra

nt

Interest/re-payment

Maintenance

Return

Equity capital Loan

Remuneration Remuneration

Operation

Ser

vice

Con

stru

ctio

n

Con

stru

ctio

n at

agr

eed

pric

e an

d tim

efra

me

Rem

uner

atio

n

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History of PPP at EU level

07 May 2003 Commission publishes “Internal market strategy – priorities 2003 – 2006”, which highlights the need to clarify legal issues relating to PPP. The publication of a green paper on PPP is announced.

21 May 2003 Commission publishes Green Paper on services of general interest. This paper entails a substantial review of the Commission's service policy and asks whether a general legal framework should be created at Community level for services of general interest. The Commission plans top publish a green paper on public procurements and on PPP in the second half of the year.

30 Apr 2004 Commission adopts Green Paper

30 Apr 2004 Forwarded to the Council

30 Apr 2004 Forwarded to the European Parliament (EP)

27 Oct 2004 Opinion by the European Economic and Social Committee

17 Nov 2004 Opinion by the Committee of the Regions

End 2005 Commission announces resolution on further PPP legislation for the end of 2006

26 Oct 2006 Resolution by EP

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History of PPP at federal level

Apr 2001 Federal Chancellor sets up “Kanzler-AG”

Jun 2002 Federal Chancellor announces PPP competence centre

Jul 2002 Steering committee (SC): “PPP in public construction works”

Feb 2003 PPP federal study commissioned

Jul 2003 Bundestag adopts motion for PPP resolution

Dec 2003 Agreement by federal states ministers responsible for building

Dec 2003 SC: Recommendations for framework conditions

Nov 2004 Members’ initiative “PPPs Acceleration Act”

Dec 2004 Agreement by federal state ministers responsible for finance (FMK)

Jul 2004 PPP Task Force set up

May 2005 Creation of federal PPP competence network

Sep 2005 PPPs Acceleration Act comes into force

Sep 2006 FMK decision: Standard guidelines on examining profitability

Source: PPP Task Force, Federal Ministry for Transport, Building and Urban Affairs

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Market structure of PPP in Germany

More PPP

Framework More/bigger projects

Laws RegulationsAdmin. building

Defence

Education Research

TransportModels

Provision amendments:

Competition law

Tax law

Accounting law

Statistics law

Change in rules on awarding contracts

modify:

ContractsPC

PSCBudget issuesSystem of NADouble entry bookkeeping

More private capital for public tasks

More co.’s in the provision of public services

Health

PB = Profitability calculations

PSC = Public Sector Comparator

NA = National accounting

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PPP organisation of the govt in Germany

Ministry of Finance

Construction Transport Civil Defence

Project working

group PPP

Roads Rail,

Sea,

Air Federal states East West

Task Force

VIFGDeges

Ministry of DefenceMinistry of Transport Ministry of Economics

Project development co.

= Project management co.’s

Deutsche EinheitFernstraßenplanungs- und -bau GmbH

Verkehrsinfrastruktur-entwicklungsgesellschaft mbH

g.e.b.b., Dept. M / Group M I

Gesellschaft für Entwicklung, Beschaffung und Betrieb mbH

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The PPP procurement process in GermanyAgreed procedure between central and regional government

Phase I Determining needs, financeability and profitability of measures

Final profitability analysis

Provisional examination of profitability

Determining the maximum amount to be appropriated in the budget (budget readiness)

Drawing up conventional comparative values (Public Sector Comparator – PSC)

PPP test for suitability

Steps in examining PPP profitability

Phase II

Appropriation in budget and call for tender

Preliminary decision for or against continuing to pursue varies PPP options

Final decision on awarding and signing of contract

Project controlling

Phase III

Phase IV

The phases in the PPP procurement process

Preliminary decision for or against publishing call for tender

● Financial risk in changes of

laws or in the contracts

● Management risks

● Income risks

● Risk of differences in local

currency and currency of

the financial debt

● Financial risks ● Geological risks

Private Sector Public Sector

Requirements for collaboration- Example -

Adequately shared risks between public and private sectors

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ABC modules of tender I

Module A: Construction

Mostly invitation to tender as a general contractor subject to the provisionsof the guidelines on awarding contracts; to be built, for example, on a piece of land owned by the party issuing the invitation to tender

Module B: Financing part A

B1: conventional lease financing via the budget

B2: pure finance leasing (no equity capital of private investors, thus no tax effects), sometimes with forfeiting.

B3: tax-optimised fund leasing models with equity capital of private investors.

Module C: Investor model

Same-source construction and financing on the basis of the conditions of modules A and B with a fixed-price model without disclosing the details of

the calculation.

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ABC modules of tender II

In addition to parts A, B und C, additional tenders can be invited in suitable cases:

Module D: Similar to Module C, but using functional description of construction and with the bidder’s own planning, possibly also on a piece of land owned by the party inviting tender.

Module E: Offers to buy, hire-purchase of simply rent suitable objects which have already been built or which are in the process of being built.

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Overview of the current status of the PPP Simplification ActProject working group consisting of the majority parties in the German Bundestag and including representatives of German industry

As of May 2007

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Competence working groupsAdvisor proposals Consultation Agreement by Decision Decision by 1st reading 2nd reading 3rd reading

of for in the CWGs on by parliamentary in

the project working group outline paper CWGs key issues PWG party parliament Committees

Finances

Law on government support

X 4

1 X

Social infrastructureNo need

recognised

X

Awarding of contract 2

Transport X 3

DefenceNo need

recognised

Note: The original timeframe for the legislation, which provided for a first reading of the PPP Simplification Act in the Bundestag in May 2007, no longer applies . No new timeframe has yet been submitted

(1) The members of the CWGs consistently regarded the proposals by the advisors was not viable. Key issues where appropriate once proposals of the

"Hesse study" has been looked at by the Ministry of Health and the Länder working group "Hospital finances"

(2) Advisors recognised no absolute need for regulation

(3) Advisor proposals concentrate on further development of the Transport Infrastructure Financine Company (VIFG) and on its becoming authorised to borrow

(4) Advisors see no specific need for action. Proposed amendments to the Federal Budget Ordinance were sent to the CWG "Law on government support"/"Budget"

Need for legislation is covered by the amendments to the Investment Act and the Law on Public Procurements

Budget

Health

Taxes

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Overview of standardisation work of central and regional government in Germany

Field of competence Draft Agreement Publishing

1Guidelines on examining profitability of PPP projects O

2 Guidelines on awarding public contracts O

3 “PPP and government support legislation”

study

O

4PPP and budget appropriation

O

5 Guidelines on PPP and SME’s* O

6 PPP School study O

7 A-model awarding of contracts O

* SME = Small and Medium sized Enterprises

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Table of PPP Projects I

No Project sponsor / locationFederal state

Contract model ProjectContract concluded

Administrative unit

1 Bestensee BB Company model Mulit-function hall Aug 06 Municipality 2 Cottbus BB Operator model Public baths Dec 05 Municipality 3 Berlin BE Heinrich Böll Foundation building Dec 06 Land4 Bodenseekreis BW Owner model County Hall Friedrichshafen Aug 05 Municipality 5 Leimen BW Heritable building right Swimming pool Apr 05 Municipality 6 Offenburg BW Owner model Detention centre Nov 06 Land7 Fürth BY Operator model Thermal bath Jun 05 Municipality 8 Markt Kirchseeon BY Owner model School and sportshall (from the 20s) May07 Municipality 9 München-Stadlheirr BY Owner model Detention centre May 06 Land

10 Frankfurt am Main HE Rent model Training centre Ostend July 03 Municipality 11 Kassel HE Rent model Financial centre Kassel Altmarkt Nov 06 Land12 Kreis Offenbach (Los Ost) HE Company model Schools Nov 04 Municipality 13 Kreis Offenbach (Los West) HE Company model Schools Mar 04 Municipality 14 Wetzlar HE Schools and sportshall Jan 07 Municipality 15 Wiesbaden HE Building and maintenance Thermal bath Feb 02 Municipality 16 Wiesbaden HE Rent model Judicial and administrative centre Mar 07 Land17 Wiesbaden HE Licence model Parking centre Jan 05 Municipality 18 Hamburg HH Owner model 32 schools Feb 07 Land19 Hamburg HH Owner model HafenCity primary school May 07 Land20 Hamburg HH Owner model Elbphilharmony Feb 07, local Land21 Schwerin MV Congress hall and sport academy Feb 07 Municipality 22 Achim NDS Owner model Schools Aug 05 Municipality 23 Buchholz i.d.N. NDS Owner model + School centre Buchholz I Nov 06 Municipality 24 Bückeburg, Faßberg, NDS Licence model Helicopter simulation centre Nov 05 Federation25 Hannover NDS n.a. Public baths Sep 05 Municipality 26 Langenhangen NDS Playschool and family centre May 06 Municipality 27 Twistringen NDS Owner model New grammar school May 06 Municipality 28 Winsen NDS Owner model Extension to voational schools Mar 0729 Bedburg NW Owner model Schools Mar 05 Municipality 30 Dortmund NW Owner model Logistics centre clinic May 05 Municipality 31 Düsseldorf NW PPP licence model (acquisition model) Parking lot at the University of Düsseldorf Apr 06 Municipality 32 Essen NW Owner model Proton therapy centre Jun 06 Land33 Freundenberg NW Town hall Feb 07 Municipality 34 Gladbeck NW Owner model Town hall Sep 04 Municipality 35 Gütersloh NW Owner model Schools Jun 04 Municipality

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Table of PPP Projects II

No Project sponsor / locationFederal state

Contract model ProjectContract concluded

Administrative unit

36 Cologne NW Owner model Schools Apr 05 Municipality 37 Cologne NW Owner model Schools Aug 06 Municipality 38 Kreis Düren NW Schools Apr 07 Municipality 39 Kreis Lippe NW Owner model Lipperland Hall Jun 04 Municipality 40 Leverkusen NW Owner model Vocational schools Jun 05 Municipality 41 Lüdinghausen NW Owner model Swimming pool Jun 04 Municipality 42 Monheim NW Owner model Schools Jan 04 Municipality 43 Münster NW Rent model Münster-Roxel playschool Dec 05 Municipality 44 Münster NW Owner model Sportshalls Jun 04 Municipality 45 Neuss NW Owner model School Oct 06 Municipality 46 Rhein-Erft-Kreis NW Owner model Schools Feb 04 Municipality 47 Senden NW Operator model Indoor and outdoor pool Nov 05 Municipality 48 Unna NW Owner model District house Sep 04 Municipality 49 Witten NW Owner model Schools Aug 04 Municipality 50 Schwarzenbek SH Owner model Grammar school May 06 Municipality 51 Sylt-Ost SH Company model Keitum thermal baths Sep 06 Municipality 52 Chemnitz SN Owner model Chemnitz Sep 06 Land53 Leipzig SN Licence model Parking lot at the Federal Consititional Court Apr 04 Municipality 54 Barleben ST Owner model Schools Feb 06 Municipality 55 Burg bei Magdeburg ST Owner model Detention centre Dec 06 Land56 Halle ST Owner model Playschools Dec 06 Municipality 57 Halle ST Owner model Town schools Dec 06 Municipality

57

1.85

approx. 33

15.10%

280.00

Overall no of projects

Total investment in €billion

Average investment in €million

Average efficiency gain

Cost-savings in €million

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PPP projects in Germany since 2003No of

projectsInvestment

amountPlanning Contract

FederationLänder

Municipalities

I n f r a s t r u c t u re 8 6 2 1,012 m

Autobahn A-models 5 4

A 8 Augsburg - Munich 1 230 m

Autobahn F-models (here: tunnel) 2

Warnow crossing, Rostock 1 202 m

Trave crossing, Lübeck 1 90 m

HFTS Helicopter simulator centre 1 1 490 m

Construction 52 1,500 m

of which, schools:

Hesse 2 2 200 m

Lower Saxony 1 1 8.4 m

North Rhine-Westphalia 6 6 107 m

Saxony-Anhalt 2 2 61 m

further projects:

Fürst-Wrede-Barracks Munich 1 1

Training centre Frankf./M. 1 1 42 m

Judicial centre Free State of Saxony 1 1 74 m

County Hall, Lake Constance County 1 1 11.5 m

Swimming pool in Leimen 1 1 10.8 m

average efficiency gain of PPP project realised: 15.4 %

PPP communal distribution in Germany*- € 2.5bn invested -

Other5.6 %Culture

2.6 %

Administration 14.8 %

Transport 19.2 %

Sport, tourism 28.3 %

Schools 29.5 %

* Communal PPP survey 2005

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PPPs in France : a few figures

Sector % private

Water 71 %

Urban waste 73 %

District heating 93 %

Urban transport 16 %

Toll motorways ~100 %

Car parking 59 %

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