siemens ppp experiences for growth in asean

© Siemens AG 2011

Mr. Markus Zachmeier Division Cluster Lead Infrastructure & Cities Sector Rail Systems / Mobility and Logistics Division Siemens ASEAN Email: [email protected]

Siemens PPP experiences for Growth in ASEAN

Competitive Advantage

Why is PPP interesting to Siemens?

In comparison to low investment cost bidders, a more quality and whole life approach resulting in better value for money is taken. Financially strong entities may have an advantage due to the complexity, degree of project risks and long term partnership character of these schemes.

Cross Selling of Products and Services

Knowledge Transfer

Concessions schemes are an ideal playing field for entities with a broad spectrum of rail infrastructure related products and services. Cross selling includes a) project management, b) products (rolling stock, E&M systems) and c) services (provision of maintenance and potentially operations support).

Due to the intense interaction with specialized parties, e.g. in operations, Siemens can gain further understanding of operational concepts and client needs and therefore can enhance its knowledge base for future product and project development.

Siemens has experience in PPPs in various industry sectors, such as healthcare, energy, airports and rail However, proper risk sharing is essential for successful PPP in railway environment!

Long Term Steady Income

Concession models permit longer term stable income streams from maintenance and investment and thus add a certain degree of counterbalance to more cyclical income resulting from investment phases.

There are various reasons why Siemens is interested in PPP projects

The sheer size of the civil portion requires a split in multiple lots and separation from E&M for Mainline

Mainline project (e.g. HSL Zuid) Siemens experience with this set-up

Design Build Operate Maintain Finance

Bridges and Viaducts Tunnels and Cuttings Concrete Slab

Buildings

Track work

Other Civil Infrastructure

Rolling Stock

Power Supply

Overhead Catenary

Signaling / Telecom

Other E&M Infrastructure

Benefits One responsible partner for system integration of

E&M Good structure / portion of private financing Issues Delays by Civil Companies caused additional

cost to client Many parties involved in approval process Lessons Learnt Good basis for a project approach Order of trains from another supplier caused

problems

Advantages / Disadvantages for the customer By PPP financing the State‘s budget is supported

in the short run Reliability of system availability by 25 years E&M

maintenance contract with availability guarantees Very political, different opinions within the

stakeholder groupd

Civil contractors (multiple lots)

n/a

Infraspeed Holding

RS supplier

Infraspeed Holding

Cus

tom

er

Infr

aspe

ed

Hol

ding

Infr

aspe

ed

Hol

ding

ci

vil p

ortio

n no

t par

t of f

inan

cing

mod

el

Civil and E&M lots of Mass Transit projects are typically realized in one PPP and by one turnkey consortium

Mass transit project (e.g. BTS Bangkok) Siemens experience with this set-up



Buildings

Track work Other Civil Infrastructure Rolling Stock

Power Supply

Overhead Catenary

Signaling / Telecom Other E&M Infrastructure

BTS

Con

sort

ium

Si

emen

s Ita

lian

Thai

Dev

elop

men

t B

ank

Con

sort

ium

Benefits Private customer, success triggered not too bureaucratic, good Consortium team, only

few responsible entities Issues Project came into the Asian crisis in 1997 and

suffered financial loss in the end Passenger run up slower than projections Lessons Learnt Full private financing of Mass Transit not possible Risk evaluation and allocation has changed

Advantages / Disadvantages for the customer One responsible partner for project execution Financial success depending on passenger

numbers

Cus

tom

er

Mass Transit projects realized as a turnkey

Mass transit project (e.g. DLF Gurgaon Metro) Siemens experience with this set-up



Buildings


Power Supply

Third Rail

Signaling / Telecom Other E&M Infrastructure

Benefits Private customer, with most of the land already in

possession of one of the consortium member Financially strong and knowledgeable customer facilitated co-operation among diff. parties

Issues Delays by the civil contractor (company owned by

customer) Language and documentation issues with key

subcontractor

Lessons Learnt Excellent basis for project approach Innovative way of balancing and sharing of risks

Advantages / Disadvantages for the customer Key E&M systems and integration from

responsible partner to act as a lever for smooth opening of line

Commercial success depends on ridership numbers and extension of the line is mandatory for ridership numbers.

Cus

tom

er

Customer

n/a

Other Contractor C

usto

mer

Siemens

Other Contractor

Mass Transit projects realized in single lots

Mass transit project (e.g. Delhi Aiport Link) Siemens experience with this set-up



Buildings


Power Supply

Overhead Catenary

Signaling Other E&M Infrastructure

Benefits Civil uncertainties and risks taken over by the

customer. Financially strong customer Issues Delays by civil and track works contractors No single entity responsible for integration Opening of the line before commonwealth games

put additional pressure. Lessons Learnt Although this model of PPP where civil risk is

taken by customer is beneficial, execution of project remains utmost important for success

In-experienced customer needs to award integration responsibility to single party

Advantages / Disadvantages for the customer Commercial success clearly depends on

ridership numbers and real estate revenues. Civil risk taken over by the customer

Cus

tom

er

Cus

tom

er

Delhi Metro

Concession Rail Infra

Siemens

Customer

Other contractor

Issues to consider

Duration: Length of tender process between prequalification and financial close could easily be 3 years

Resources: For managing bid development, bid publicizing, ongoing management as well as evaluation on the side of the authority (interaction with number of bidders)

Bidders' Bid Costs: An increasingly important issue as costs can easily go into the double digit millions per bid group, thus very careful selection of tender participation

Legal / Regulatory Issues: Should ideally be clear prior to release of tender, otherwise potential risk of reconfigurations and delays in process (e.g. EIS, Planning Authorizations, Funding Authorizations)

Time, resources and costs as well as legal issues are main critical aspects to consider in Tender Process

siemens ppp experiences for growth in asean

Documents