norwegian experience with highway concessions - … experience with highway concessions ... case...

08.10.03

Norwegian Experience with Highway Concessions

2nd Workshop on Applied Infrastructure Research

Dr. Ansgar Bendiek, Head of Infrastructure and MaritimeHSH Nordbank, Hamburg, Germany

Case Study

08.10.03

Content.The Norwegian Road Program

– Decision Making Process

– PPP - Road Projects

E39 Klett-Bårdshaug: Project Description

– Map

– Scope of work

– Main Elements

– Project Contracts

– Scope of Work

E 39 Klett-Bardshaug: Financing

– General terms

– Structure

– Tenor & Repayment

– Security & Guarantees

– Risk Allocation

Timetable

Outlook

08.10.03

Decision Making ProcessThe NorwegianRoad Program

Decision in the Storting to test the PPP concept

– Autumn 1998: The Storting asks the Government to propose road projects to test the PPP concept

National Transport Program

– February 2001: The Storting approves three road projects. Aims to test efficiency and effectiveness in achieving political objectives through the PPP model.

E39 Klett – Bårdshaug

– June 2001: The Storting approves the financing of new E39 Øysand – Thamshamn, partly financed by tolling, and asks the Vegdirektoratet to procure E39 Klett – Bårdshaug as a PPP- project.

08.10.03

PPP - Road Projects

E39 Klett – Bårdshaug, Sør-Trøndelag

– Financial Close and Construction start-up 04/2003. Completion 09/2005. Construction cost NOK 1.3 billion

E39 Lyngdal – Flekkefjord, Vest-Agder

– Indicative Bid 09/2003. Scheduled Financial Close and Construction Startup 04/2004. Construction cost NOK 0.8 – 1.1 billion.

E18 Kristiansand – Grimstad, Aust-Agder

– Pre-qualification 2003. Construction cost not defined.

The NorwegianRoad Program

08.10.03

E 39 Klett- Bårdshaug: MapProject Desciption

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Scope of work

Engineering, Procurement and Construction: Øysand-Thamshamn 21.9 km. Approx. 2,5 year construction period. Cost NOK 1.3 billion.

Operation and Maintenance: Klett-Bårdshaug 26.9 km. Concession period 25 years.

Financing of construction and operating period.

Project Desciption

08.10.03

Contractual Structure

Selmer Skanska AS Based on Statens Vegvesen Vegdirektoratet

Project Desciption

Vegdirektoratet

Orkdalsvegen

PPP Contract

Skanska BOT AB

Laing Roads

Debt LendersLoan

Repayment

Equity

Return

UsersToll Company

AP, MMP,TP, SP, and ERC

TollToll

The StortingMinistry of Transport Right to

collect tollAdditionalFunds

Fixed Price TurnKey Contract O&M Contract

ConstructionCompany

D&CContractor

O&MContractor

Three Party Agreement

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Project Parties

Tendering Authority: Statens Vegvesen

Vegdirektoratet

Sponsors

SPC

Lead Arrangers

Project Desciption

08.10.03

Main Elements

Two lane highway.

7 tunnels, totalling

10.2 km.

4 main intersections.

Daily traffic:

– 7,900 AADT at

Øysand

– 5,600 at Thamshamn

Project Desciption

08.10.03

Project Contracts

Concession Contract

– 25 years operation, plus 2.5 years construction

– Risks placed with party that can influence them

– No traffic risk

– Payment subject to completion

– Payment mechanism during operation linked to performance

– Handover to Vegdirektoratet at end of concession

Evaluation criteria: Net Present Value of future payments

Project Desciption

08.10.03

Project Contracts

EPC Contract

– Fixed-price date-certain turn-key contract

– Back-to-back w/ concession (quality, dates, penalties, etc)

– Penalties for non-performance (delays etc)

O&M Contract

– Defined service level for 25 years

– Back-to-back w/ concession (services, penalties, reporting, etc.)

– Penalties for non-performance

Project Desciption

08.10.03

Payment Mechanism

Concept

– Monthly/annual unitary payments being available for the SPC, butwith the actual level of payment being varied according to performance against a number of pre-defined criteria.

Five Elements– Availability Payments– Maintenance Monitoring Payments– Safety Payments– Traffic Payments– Early Repayment of Construction Cost

Project Desciption

08.10.03

E 39 PPP Road - Scope of Work

Availability Payment

Toll Collection

Operation

Construction

DesignCandidate (SPV)Toll CollectorStorting

Legal Framework

Project Description

08.10.03

General Terms

Borrower Orkdalsvegen AS

Sponsors Skanska BOT and Laing Roads

Facility NOK 1,414 million

Bank Syndicate HSH NordbankNordeaSvenska HandelsbankenDexiaIKBINGSEK

Financing

LeadArranger

Co-Arranger

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Structure

Combined construction and long-term facility:

Tranche A NOK 1,150 million

Tranche B - NIB tranche NOK 300 million

Total NOK 1,450 million

Financing

08.10.03

Security & Guarantees

Security - Assignment of contracts and other rights - Pledge on SPC shares - Pledge on assets

Guarantees - D&C and O&M contract backed by Skanska AB

Reserve Accounts- 6 months DSRA- MMRA built up over 2 years in advance

Hedging - Interest fixing (swap) required

Financing

08.10.03

E 39 PPP Road - Risk Allocation and Means of Mitigation

Force Majeure

Political Risks

Payment Risk

Financial Risks• Inflation• Interest / Currency Risks• Insolvency

Operational Risks

Construction Risks

Planning Risks

Geotechnical Risks

SharedSPVState

Financing

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Timetable E39 - I

15 January 2003 Appointment of preferred bidder

final negotiations, due diligence,documentation

7 April 2003 Financial Close

26 June 2003 Syndication Closed

April 2003 Construction start-up

September 2005 Road completion

Timetable

08.10.03

Conclusion

Norway‘s first PPP project E39 I has successfully proven

– Interest from bidders ➭ availability of contractors

– strong support from banks ➭ availability of funds

– favorable terms and conditions ➭ competitive bidding

– sound risk allocation and sharing ➭ Public Private Partnership

groundbreaking reference for projects to follow!

Conclusion

08.10.03

Outlook

Potential Scandinavian follow up projects

– Norway: • E18 Grimstad-Kristianssand (Motorway)• Sandnes-Stavanger, new double track railway

– Denmark:• Parking facility Ørestad, Copenhagen• Link across Roskilde Bay

– Finland:• E18 Tusken -Helsinki Motorway

Outlook

08.10.03

Structured Corporate FinanceThe Infrastructure & Maritime Team

08.10.03

Infrastructure & Maritime - The team and the market.

The Infrastructure and Maritime Team as part of the Structured Corporate Finance Division offers advisory and arranging services.

Our Market:

Infrastructure (Roads, Tunnels, Bridges et al)

Maritime infrastructure (Substructures, Container, Öl & Gas terminals)

PPP-projects (Schools, Hospitals, Prisons et al)

Utilities

Broadband cable market

08.10.03

Dr. Ansgar Bendiek Tel. +49 (0)40 / 3333 13484Team head Fax +49 (0)40 / 3333 6 13484

e-Mail [email protected]

Maik Tschentschel Tel. +49 (0)40 / 3333 12584Fax +49 (0)40 / 3333 6 12584e-Mail [email protected]

Thorsten Lundius Tel. +49 (0)40 / 3333 10062 Senior Manager Fax +49 (0)40 / 3333 6 10062


Matthias Meyer Tel. +49 (0)40 / 3333 12662Senior Manager Fax +49 (0)40 / 3333 6 12662


Team Infrastructure & Maritime.

08.10.03

Carl Augustin Tel. +49 (0)40 / 3333 14611Senior Manager Fax +49 (0)40 / 3333 6 14611


Petra Hoefle Tel. +49 (0)40 / 3333 12789Manager Fax +49 (0)40 / 3333 6 12789


Karen Raguse Tel. +49 (0)40 / 3333 13530 Junior Manager Fax +49 (0)40 / 3333 6 13530


Phillip Staake Tel. +49 (0)40 / 3333 13250Assistance Fax +49 (0)40 / 3333 6 13250


Team Infrastructure & Maritime.

norwegian experience with highway concessions - … experience with highway concessions ... case...

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