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Public Private Partnerships in the Infrastructure Sector

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CoursesealsPublic Private Partnerships in the Infrastructure Sector
  • Introduction to PPP in the infrastructure sector 6

    • Lecture1.1
      What is PPP and how is the concept defined? 30 min
    • Lecture1.2
      The growth of PPP from an historical perspective 30 min
    • Lecture1.3
      The concept of privatisation in the context of PPPs 30 min
    • Lecture1.4
      Conventional procurement and PPP procurement 30 min
    • Lecture1.5
      Examples of PPP reform 30 min
    • Lecture1.6
      Summary of key characteristics and criteria of PPPs 30 min
  • Chapter 2: Structuring a PPP project 5

    • Lecture2.1
      Structuring a PPP project 30 min
    • Lecture2.2
      Project structuring: feasibility study 30 min
    • Lecture2.3
      PPP economics 30 min
    • Lecture2.4
      PPP economics 30 min
    • Lecture2.5
      Alternative PPP structure: rail project case study 30 min
  • Chapter 3: Financing an infrastructure PPP project 6

    • Lecture3.1
      Sources of financing for an infrastructure PPP project 30 min
    • Lecture3.2
      What is Project Finance? 30 min
    • Lecture3.3
      Drawbacks of using project finance in infrastructure PPP transactions 30 min
    • Lecture3.4
      Structure 30 min
    • Lecture3.5
      Key parties 30 min
    • Lecture3.6
      Timeline for financing an infrastructure PPP project 30 min
  • Chapter 4 :Documenting the transaction: anatomy of a PPP concession agreement and key risk allocation issues 11

    • Lecture4.1
      Scope and term of a PPP Concession Agreement 30 min
    • Lecture4.2
      Construction period obligations 30 min
    • Lecture4.3
      Operation period obligations 30 min
    • Lecture4.4
      Payment regimes 30 min
    • Lecture4.5
      Supervening events 30 min
    • Lecture4.6
      Termination and compensation 30 min
    • Lecture4.7
      Liability and insurance 30 min
    • Lecture4.8
      Dispute resolution 30 min
    • Lecture4.9
      Government controls 30 min
    • Lecture4.10
      Government support obligations 30 min
    • Lecture4.11
      Additional terms and conditions 30 min
  • Chapter 5: Documenting the transaction: finance documents 8

    • Lecture5.1
      Core finance documents 30 min
    • Lecture5.2
      Equity arrangements 30 min
    • Lecture5.3
      Impact on the concession agreement 30 min
    • Lecture5.4
      Direct Agreements 30 min
    • Lecture5.5
      Security 30 min
    • Lecture5.6
      Enforcement and insolvency 30 min
    • Lecture5.7
      Involvement of multilateral development banks (MDBs), development finance institutions (DFIs) and export credit agencies (ECAs) 30 min
    • Lecture5.8
      Government shareholder arrangements 30 min
  • Chapter 6:Documenting the transaction: other project documents 2

    • Lecture6.1
      Construction contract, O&M contract and interface issues 30 min
    • Lecture6.2
      Sub-contract risk pass-down 30 min
  • Chapter 7:Procurement arrangements 2

    • Lecture7.1
      A typical PPP timetable 30 min
    • Lecture7.2
      Unsolicited proposals 30 min
  • Chapter 8:Introduction to key sector issues 7

    • Lecture8.1
      Road projects 30 min
    • Lecture8.2
      Urban rail projects 30 min
    • Lecture8.3
      Freight rail projects 30 min
    • Lecture8.4
      Airport projects 30 min
    • Lecture8.5
      Port projects 30 min
    • Lecture8.6
      Accommodation projects 30 min
    • Lecture8.7
      Glossary 30 min

    Government shareholder arrangements

    (a)        In certain projects, the government may take an ownership stake in the project company. There may be different reasons for this, for example, a requirement of the government to maintain some management control over the project company; as a means of injecting funding into the project (possibly to make the project more bankable); public perception (to show that the project is still, at least partially, publically held) or to extract value in the future from the project. Government ownership interests are common in many mining transactions, and the government’s rights in respect of such ownership interests are typically enshrined in law.

    (b)        The percentage of ownership interest will depend on whether the government wants to have management rights in respect of the project company or wants the interest to be “off balance sheet”. Even where the government does not have management control, the shareholders agreement may enable the government to have a veto right in respect of certain matters. The shareholders agreement will be the key document which governs the rights and obligations of a government shareholder, along with the constitutional documents of the project company or any holding company vehicle. Issues which will need to dealt with include:

    (i)         What voting rights will the government shareholder have? Will these be the same as the private investors?

    (ii)        Should the government pay for the equity interest in cash or will it be a “free carry interest” (i.e. free of charge)? Rather than pay cash for the interest it is more likely that the payment will be “in kind”, for example, through some other form of support or contribution or through issue of the concession itself.

    (iii)       Will the government shareholder be required to participate in any equity call e.g. for further development costs? If not, will their interest be diluted by any new issue or remain in the same proportion? The term “free carry interest” refers to the other shareholders “carrying” the government shareholder through the period when calls may be made, potentially for the duration of the concession.

    (iv)       Will the government shareholder have a right to have a nominee appointed to the board of directors? This may give rise to conflict of interest issues – is the appointee acting in the interests of all the project company shareholders or as a representative of the government?

    (v)        Will the government shareholder be entitled to a fixed return?

    (vi)       What provisions are there relating to transfers? For example, will pre-emption rights be included?

    SUMMARY OF KEY POINTS
    Government shareholder arrangements

    • The government may sometimes take an equitable stake in the project company so that it can retain some management control over the project, it addresses any perceived “privatisation” of the project or asset or scepticism by the public, it enables the project to receive additional funding and enables the government to take advantage of the upsides in the project.
    • The shareholders agreement documents the rights and obligations of the government as a shareholder of the project company; it outlines the extent of its involvement in the project, the interaction of its position as shareholder with other project investors and the levels of return it can expect to receive.

     

    Prev Involvement of multilateral development banks (MDBs), development finance institutions (DFIs) and export credit agencies (ECAs)
    Next Construction contract, O&M contract and interface issues

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