Download - Owen Hayford, Clayton UTZ - The reality of Public Private Partnerships in present market conditions
© Clayton Utz
INFORMA MAJOR ROADS PROJECTS CONFERENCE 2014
THE REALITY OF PRIVATE PUBLIC PARTNERSHIPS IN PRESENT MARKET CONDITIONS
Owen Hayford | Partner
11 March 2014
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OUTLINE
Opportunities for utilising private finance on major
road projects
Recent market developments and their impact on
PPPs in the Australian transport sector
Is there scope for innovation around the current
PPP model?
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TRAFFIC/DEMAND RISK
Traditional Toll Road PPPs
» Project Company retains tolls collected from motorists.
» Equity Investors and Debt Financiers bear traffic risk
Availability Payment PPPs
» Project Company receives Availability Payment from
Government, in return for making road available to
motorists
» Government retains any toll revenues collected from
motorists
» Government bears traffic risk
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AVAILABILITY PAYMENT PPP
Mornington Peninsula Link
East West Link
Toowoomba Second Range Crossing
Transmission Gully
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TRAFFIC/DEMAND RISK (CONT)
Government Builds, Tolls then Sells
» Government engages contractors to build and maintain
road, and install tolling equipment, under publicly funded
contracts
» Government retains tolls collected during ramp-up
» Once actual traffic history established, Government sells
right to collect future tolls to the private sector
» Government bears traffic risk during ramp up
» Private sector bears traffic risk after ramp up
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GOVERNMENT BUILDS, TOLLS THEN SELLS
Go Between Bridge
Legacy Way
WestConnex
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IMPLICATIONS OF DIFFERENT APPROACHES
Availability PPP
» Private finance for
construction
» Debt/equity exposed to
risk of contractor
default / insolvency
» Government retains
traffic risk
» But Government could
sell tolling rights/traffic
risk
Build, Toll then Sell
» Government finances
construction
» Government exposed
to risk of contractor
default / insolvency.
No equity/debt buffer
» Government takes
traffic risk prior to sale
» Private sector takes
traffic risk after sale
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SOME INVESTORS WILL STILL TAKE TRAFFIC RISK
M1- M2 Link
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SO IF THE TOLL ROAD PPP MODEL WAS 'DEAD', IT'S NOW RISING FROM THE GRAVE!
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UNSOLICITED PROPOSALS
M1 - M2 Link
Eastern section of East West Link
Dandenong Rail Corridor
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QUESTIONS?
Any questions?
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