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Public Private Partnerships (PPPs) Definition:

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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Public Private Partnerships (PPPs) Definition:

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

  2. 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”

  3. 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

  4. International Interest in PPP 1999 Interested in PPP Source: IFSL

  5. International Interest in PPP 2006 Interested in PPP Source: IFSL

  6. The ongoing discussions on PPPs in Europe: • European Commission “Green Paper” on PPPs • PPP Alliance Programme - UNECE

  7. 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

  8. 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

  9. Policy Issues of PPPs: • Proper Legal Framework • Appropriate Institutional Framework • Transparent Procurement Framework • Attractive Market Framework • Globalization

  10. 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!!!

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

  12. Attractive Market Framework: • Primary Market Concerns Open Market / Good PPP Contract • Secondary Market Concerns Bakability / Insurance • Risk Allocation Real Risk / Financial Risk / Risk Management

  13. Globalization – The next step? • The “Mature Market Test” • The “Lessons Learned Test” • The “Uniform Practice Test” • The “PPP Mutual Fund Challenge”

  14. 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

  15. Practical layout - Award of a PPP contract (Greek Law 3389/2005):

  16. 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)

  17. 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

  18. “Athens International Airport” – Duration of Project Implementation Source: Patrick Boeuf, EIB, 2004 (Time in months elapsed in each phase) Total (10 years)

  19. 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”

  20. 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

  21. Email: allykourezos@lykourezos.grWebsite: www.lykourezoslawoffices.gr Thank you for your kind attention!

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