Public Private Partnership

PwC
 Introduction to PPP

PricewaterhouseCoopers Slide 2
Partnerships between the public and private sector for delivering
public sector services

PPPs come in a variety of different forms

A generally accepted principle is that better value for money may be achieved through
the exploitation of private sector competencies and the allocation of risk to the party
best able to manage it.

PPPs are becoming well established worldwide

PPPs are becoming an accepted means of delivering a wide variety of services and
associated infrastructure which have previously been provided by the public sector.
They are now an important tool for the public sector to secure much needed capital
investment in an efficient manner.

PwC is a pioneer in PPP advising

We have been at the forefront in providing advice to the public sector on the
development of PPP programmes since the early 1990s on a global basis. We have
been advisors to many governments, helping them shape a policy framework to
support the overall rollout of PPP programmes.
PricewaterhouseCoopers Slide 3
Why use PPP?

• Accelerate the delivery of

infrastructure services

• Transfer appropriate risk to the

private sector

• Obtain innovation and

economic efficiency

• Fund additional necessary

infrastructure investment

PricewaterhouseCoopers Slide 4
 PwC and the PPP sector

PricewaterhouseCoopers Slide 5
Thought leadership

Delivering the PPP-Promise

PwC Publication, 2005

Partnering in Practice: New approaches to PPP delivery

PwC Publication, 2004

Developing Public Private Partnerships in New Europe

PwC Publication, 2004

Japan’s PPP experience – lessons for Europe?

Published in European Public Finance May 2003

The PPP and Infrastructure Market in Canada

Published in Project Finance International 2004/05

Germany – going ahead with PPP

Published in the PPP Global Directory 2002 by the
International Project Finance Association

PricewaterhouseCoopers Slide 6
Our PPP advisory network

Ireland United Kingdom Nordic Countries

2 Professionals 160 Professionals 10 Professionals
The Netherlands Germany
9 Professionals 25 Professionals

Canada Central Europe

36 Professionals 33 Professionals

USA Japan
19 Professionals 10 Professionals

South & Central South East Asia

America 34 Professionals
20 Professionals

France Australia
9 Professionals 28 Professionals
Spain Africa India
8 Professionals 26 Professionals 8 Professionals

PricewaterhouseCoopers Slide 7
A market leader in PPP
Closed deals 2005

Number Value USD million

1. PwC 35 5,423
2. Ernst & Young 26 4,380
3. Macquarie 24 6,717
4. Project Financing Solutions 11 1,702
5. HSBC 9 10,725
5. SG 9 8,058
7. Citigroup 8 4,520
8. Grant Thornton 7 377
9. Standard Chartered 6 9,575
10. BNP Paribas 4 2,441
Source: Project Finance International, January 2006

PricewaterhouseCoopers Slide 8
 Germany – a market for PPP

PricewaterhouseCoopers Slide 9
Milestones of PPP development in Germany

04/2001 Implementation Chancellor working group

04/2001 Implementation PPP-Working Group SPD-Party, PwC Adviser

Start PPP-Initiative North-Rhine Westphalia, PwC Adviser, Implementation

10/2001
PPP-Task Force

Chancellor G. Schröder announces initiation to promote PPP development

06/2002
in Germany

Award of Advisory mandate PPP in the public building sector

02/2003
PwC lead Adviser Consortium

09/2003 Submission of the report “PPP in the public building construction sector”

Final decision about tasks and structure of federal PPP centre of

12/2003
competence

04/2004 Start of business by federal PPP centre of competence

07/2005 Adoption of a PPP enhancing law (“ÖPP-Beschleunigungsgesetz”)

PricewaterhouseCoopers Slide 10
PwC advisory projects in Germany in the Public Sector
Strategy
Ministry of Finance NRW
Advise of Ministry of Finance North-
Rhine Westphalia on developing and
implementing a PPP-Initiative and a
PPP Task Force,Schulen
2001
Elaboration of PPP financing guidelines
on behalf of the PPP centre of
competence of North Rhine-Westphalia,
2004
Düsseldorf
Prisons
Ministry of Finance NRW Frankfurt/Main
Advise of Ministry of Finance North-
Rhine Westphalia on planning and
constructing PPP-prison, 2002
IT
City of Wiesbaden
Outsourcing of IT services, foundation of
a PPP-based service company, 2004
PricewaterhouseCoopers
Strategy
Ministry of Transport, Building and
Housing
Expert’s report on PPP in the public
Hamburg building construction sector for the
Ministry of Transport, Building and
Berlin Housing, 2003
Roads
Leipzig
Ministry of Transport, Building and
Housing
Introduction of route based toll for heavy
goods vehicles, since 1999
Stuttgart Tunnels
Ministry of Transport, Building and
Munich
Housing
Evaluation of toll amount proposed by
the operator for future tolls at
Warnowquerung (Rostock), 2004
Evaluation of toll amount proposed by
the operator for future tolls at
Herrentunnel (Lübeck), 2005
Slide 11
PwC advisory projects in Germany in the Public Sector

Multi-purpose hall Street lighting

City of Coburg City of Braunschweig
Market survey on the implementation of Outsourcing of the street lighting, the
a PPP-project for the construction and light signal system and road signs and
operation of a multi-purpose hall, 2006 Hamburg transfer to a private operator, 2004-2005
Berlin
Schools /Day-care centre Schools
Leipzig
City of Münster City of Salzgitter
Düsseldorf Analysis regarding the applicability of
Economic feasibility study to determine
the most favourable model for the PPP and economic feasibility study on
construction of a school and a day-care Frankfurt/Main the rehabilitation of 41 school sites
centre, 2003; 2005 comprising more than 170 buildings,
2006
Schools
Stuttgart
City hall
City of Velbert Munich
City of Moers
Economic feasibility study to determine
the most favourable model for the Analysis regarding the applicability of
rehabilitation and operation of schools, PPP and economic feasibility study on
2004 the rehabilitation and/or construction of
a new building and the operation of the
the city hall and further municipal
buildings, 2006.

PricewaterhouseCoopers Slide 12
PwC advisory projects in Germany in the Private Sector
Schools/Sports hall Centre of logistics
German construction company Bilfinger Berger BOT GmbH
Financial adviser of a private bidder in a Elaboration of the Financial Model in a
PPP-project on the planning, construction PPP-project on a centre of logistics in
financing and operation of a school Dortmund, 2004
including a sports hall in Schwarzenbek,
2006 Schools
Schools German construction company
Bilfinger Berger BOT GmbH Hamburg
Financial Adviser in a PPP-project on the
Elaboration of a business plan for a PPP- Berlin rehabilitation, financing and operation of
project on schools in Monheim (Rhine schools in Frankfurt a. M., 2006
River), 2003 Leipzig Prisons
Schools German construction company
Düsseldorf
Bilfinger Berger BOT GmbH Financial Adviser in a PPP-project on a
prison in Burg, 2006
Financial Adviser in a PPP-project on Frankfurt/Main
schools in Frechen, 2003
Administration buildings
Schools
Stuttgart Bilfinger Berger BOT GmbH
HOCHTIEF AG Financial Adviser in a PPP-project on a
Munich
Elaboration of the Financial Model in a public administration building in Unna,
PPP-project on schools in Cologne, 2004 2004
Schools Administration buildings
HOCHTIEF AG Bilfinger Berger BOT GmbH
Elaboration of the Financial Model in a Financial Adviser in a PPP-project on a
PPP-project on the rehabilitation, financing public administration building in
and operation of 92 schools (570 building) Gladbeck, 2004
schools in Offenbach, 2002-2004
PricewaterhouseCoopers Slide 13
Expert’s report “PPP in the public building construction sector”

• Development of a process based PPP guideline

book covering the whole project lifecycle
• Comprehensive analysis of the existing legal
framework figuring out any constraints and
suggesting solutions
• Development of a structured procedure for
efficiency evaluation taking into account
international standards and national legal
requirements (e.g. budget law)
• Detailed analysis of national and international
PPP projects and experiences
• Development of the structure and tasks of a
federal PPP competence centre

PricewaterhouseCoopers Slide 14
Expert’s report “PPP in the public building construction sector”

“Public building projects can be realised in a more efficient way

by using long-term cooperation with the private sector. The report
presents the way for successful projects and how to solve
possible difficulties. I believe that this report will become the
PPP-Bible in Germany.”

Dr. Manfred Stolpe, former Federal Minister of Transport, Building and Housing, October 2003

PricewaterhouseCoopers Slide 15
Guidelines for financing PPP projects

• Elaborated on behalf of the PPP centre of

competence of North Rhine-Westphalia
• Explanation of the fundamentals and
characteristics of PPP projects
• Illustration of financing aspects in the planning and
realisation of PPP projects
• Information on how to avoid problems

PricewaterhouseCoopers Slide 16
 Services benefiting you

PricewaterhouseCoopers Slide 17
Serving the Public Sector

Feasibility Marketing Tender Evaluation Implementation

• Establish • Develop an • Design process • Risk analysis • Negotiations
objectives attractive with bidders and
• Prepare • Value for money
package financiers
• Identify suitable documents
• Contractual
projects • Prepare • Input to
• Develop qualifications
information documentation
• Market evaluation criteria
• Deliverability of
assessment • Identify potential • Supervision of
• Interviews with financing
bidders syndication /
• Design legal bidders
• Recommendation underwriting
and regulatory
of preferred bid process
framework
• Cost benefit
analysis
• Affordability

Achieve best value for money – optimise risk allocation – ensure deliverability

PricewaterhouseCoopers Slide 18
Serving the Private Sector

Feasibility Financial Structuring Arranging finance Closing the deal

• Risk analysis • Risk allocation • Manage competition • Deliver the
• Funding strategy for funding documentation
• Financial modelling
- Bank debt • Practical support in • Manage the due
• Commercial issues
negotiation diligence process
• Contract structures - Leasing
• Bring in underwriters - Legal
- Bonds
• Funding options - Banks - Technical
- Export credits
- Institutions - Insurance
- Ratings and
- Bond - Modelling
credit
underwriters
- Enhancement
• Tax structuring
• Security structure

Optimise funding Package to achieve a winning bid and maximise equity returns

PricewaterhouseCoopers Slide 19
How to contact us

www.pwc.com/de/ppp

Prof. Dr. Martin Weber

PricewaterhouseCoopers
Corporate Finance Beratung GmbH
Marie-Curie-Str. 24-28
60439 Frankfurt
Tel.: +49 (69) 95 85-59 21
E-Mail: martin.weber@de.pwc.com

PwC