Innovative Financing of Public-Private Partnerships in the European Union

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Explore the best practices and strategies for innovative financing of Public-Private Partnerships (PPPs) in the European Union, featuring insights from Jan van Schoonhoven, a Senior Advisor on Innovative Finance and PPPs. Learn about key aspects such as project finance, capacity building, and incorporating the private sector for better services. Discover how PPPs can drive infrastructure development and economic growth.

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ALIANZAS PBLICO-PRIVADAS, BUENAS PR CTICAS DE LA UNI N EUROPEA International Best Practice From Project to Strategy

Jan van Schoonhoven Senior Advisor on Innovative Finance and PPP of the Netherland Government Project Manager/Director / MSc Guided Missiles and Electronics / Project Finance Advise governments in strategic policy on developing and implementing PPP Strategic Finance strategy and provide Capacity Building NL Diplomat in Geneva at United Nations, Staff member UN , executive director PPP Centre NL Rep at OECD and World Economic Forum on Infra and PPP Independent director PPP Centre Kazakhstan, Consultant for the World Bank, Senior Fellow at IISD, Think Tank Infrastructure Strategy Institute and IP3 Director PPP Unit, 20 PPP projects, around 20 billion Euro s Naval officer

Financiamiento Innovador de APP Financiamiento Innovador de APP ( (Innovative Financing of PPPs Innovative Financing of PPPs) ) Session 2

Innovative Financing of PPPs 1. 2. 3. IF=PPPs or PPP=IF PPP: Basics of Financing How does it work? 4. 5. 6. IF when does it work? How to process? Suggestion onwards 2030; accelerate 7. Questions

IF=PPPs or PPP=IF IF=PPPs or PPP=IF Strategic Choice - Is financing the main driver, and is PPP the (only) way forward? - Do you would incorporate the private sector for better services?

IF=PPPs or IF=PPPs or PPP=IF (2) PPP=IF (2) IF=PPP PPP=IF No Road to Toll Road Hospital 300 bed to 750 beds Financing versus Management User Payment Availability Payment Different Financial Model Each car pays $$$ Budget 200.000 US$ is and was Tax increase versus reduce Tax RoI in 30 years RoI in 15 years Different Model for Private Sector Financing Budgeting Finance versus Budget Tool Output From Input to Output PS versus Change of Gov t

How does it Work? How does it Work? Invite PS pre-finance and management of the asset PPPs Invite PS for financing and operation of the asset Asset dependent Private Inv Availability Payment User Payment Blending VfM Fully Financed and operated by Private Sector Pre- Financed and Managed by PS Combination/ ambition BUDGET BUDGET BUDGET Pay by the users (private) Sometimes with Private capital Out of taxes (public) Shadow toll / Campus Schools, social housing Toll Road

How does it Work? (2) User payment Design Build Finance Maintain Operate User Payment User Payment User Payment Guarantees Guarantees Design Build Finance Maintain Operate Availability payment Availability Payment Availability Payment Non Non Non

When does it work ? 1 User Payment - If there is a sound business case - The users are willing to pay (profit exceeds costs) - The calculations are fool prove (optimistic bias) - Economic and political factors are (made) stable - Government implications: - Methodology is fairly straight forward - Guarantees will reflect on your budget, be clever and on the ball - Private sector a fair RoI, but not excessive (political risk!)

When does it work ? 1 Availability Payment - If there is a budget available - The government is searching for reducing costs - The calculations are fool prove (optimistic bias) - Economic and political factors are (made) stable - Government implications: - Methodology is far more complicated - Availability will reflect on your budget, be clever and on the ball - Private sector more partner , but internal discussion ( privatisation )

How to process How to process? (1) ? (1) Traditional - Budget Budget - Costs Finance Road 500.000 700.000 (incl RoI 12%) Cars per day 300 Total / Annual 100.000) Contract 20 YEARS Annual 35000 Fee per trip (single) 0,35 per car Reduce time From 5 hours to 3 hours

How to process How to process? (2) ? (2) Traditional - Budget Budget - Costs Finance Doctor (2) 2400 1 / hour Nurses & Staff (10) 10 beds 6000 0,5 / hour Medicine and equipment 3000 10 per person Surgeon performance 300 1 / day Total costs 11.400 Knee 2 days hospital 12 12 Doctor 4 hours Nurses and staff 20 hours 4 10 4 10 Total costs 438 Surgical performances or 7.800 total Costs for 300 26

Suggestion onwards 2030 User Payment - Realise that guarantees are necessary and will reflect on the budget - Do not only calculate costs, but also make clear the profit for the users - Demand high quality and availability of the road, the building part is only 5% of the total contract time! Availability payment - Transform form budget thinking in to financing - If you know the budget but not the cost, this topic his hard to understand - It will change the way to run your budget and you will pay for services - You will encounter much resistance and misunderstanding at the public sector

Few questions Are you aware of the the real costs of your projects Housing Schooling Health Do you have ideas on a good communication process within the government Who are your stakeholders, and what's in it for them? PPP is NEVER privatisation, keep the two items completely separated!