KEY INCENTIVES FOR PPP IN POLAND PROGRESS AND QUESTIONS

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KEY INCENTIVES FOR PPP IN POLAND - PROGRESS AND
QUESTIONS
Technical University of Berlin, 4th European
Symposium, Berlin, 18th of September
2003 European and German competence centres for
Public Private Partnership

• Krzysztof Siwek
• Department for Infrastructure Financing
• Ministry of Infrastructure, Poland

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What is PPP ? A partnership between public and
private sectors where a private sector money and
expertise is used to deliver public sector
services
Do we have such a partnership in Poland ? Yes.
Some of the first projects have been water
supply and sewage disposal services in Gdansk,
1992 lighting of the city roads in Cracov,
1998 motorways A2 and A4 BOT concessions, 1997 /
2000
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PPP includes many different structures
Water supply and sewage disposal services in
Gdansk Privatisation of services joint venture
of Gdansk and French company SAUR based on the
privatisation of a community enterprise Lighting
of the city roads in Cracov Modernisation and
operation of the city roads lighting system by a
private company till 2004 Parts of motorways A2
and A4 Concessions / BOT (toll system)
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How does PPP develope in Poland ?
There are very few projects completed There is no
PPP Task Force There are no PPP competence centres
BUT THE SOLUTION OF PPP HAS BECOME RECENTLY VERY
POPULAR IN POLAND
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Setting up a Task Force - one year experience
Government PPP Working Group was initiated by the
Ministry of Infrastructure officials from key
ministries (Ministry of Finance, Ministry of
Economy, Committee for European Integration and
Public Procurement Office) are represented PPP
Division in the Infrastructure Financing
Department, Ministry of Infrastructure PPP
Advisory Group in the Ministry of
Infrastructure Steering Commity of the PPP Task
Force Support Project involving representatives
of the Ministry of Infrastructure, Ministry of
Economy, Committee for European Integration and
City of Warsaw
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Warsaw Metro Project Preparation and GoP PPP
Task Force Support Co-operation program between
the Capital City of Warsaw and the Ministry of
Infrastructure Consultancy services financed by
EBRD under the EU PHARE facility Letter of
Intent signed in September 2002 Project started
in January 2003 Expected completion of advisory
services in November 2003 The main idea of the
Project Support the development of PPP Task
Force and competence centre through experience in
a real case project, reflecting all existing
barriers for PPP in Poland

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• Learning from the international experience is of
  particular interest to the Polish PPP Task Force
• Conferences provide an important forum to
  exchange experiences and information
• International consultants have been involved in
  different advisory projects. Potential projects
  participants such as banks, consultants (legal,
  financial, technical), insurers, rating agencies,
  underwriters, etc. assist to implement PPP models
  in Poland
• Long experience in co-operation with IFIs is of
  great educational value
• Long experience in EU Programmes PHARE and ISPA
• Internationally applicable procedures (EU, IFI,
  FIDIC, etc.)
• Bilateral co-operation, i.e. very good
  relationship and vital contacts of Polish
  Ministry of Infrastructure and Spanish Ministry
  of Development (Ministerio de Fomento)
• Learning from individual experiences gained by
  other EU countries

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What is the top priority for PPP in Poland
? Create better value for money increased
efficiency of infrastructure investments better
use of public money Bridge a financial gap
through involving longterm private financial
resources Facilitate the national cofinancing of
EU Cohesion and Structural Funds
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PPP initiatives are seen as an attractive way of
stimulating infrastructure investments and a way
of supplementing public sector spending
(including EU funds co-financing) International
experience of PPP involving EU funds is very
limited in general it makes the projects more
complicated Is the attitude of EU Commission to
PPP / EU funds projects really positive ? EC
Guidelines for successful Public-Private
Partnerships, March 2003
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Existing models of transport infrastructure
financing
Traditional system State Budget financing only
With the assistance of IFIs loans
(EIB, WB, EBRD)
Traditional system State Budget financing with
the assistance of the EU funds (PHARE, ISPA ?
CF, ERDF)
PPP Concessions (BOT)
Private co-financing (tendering procedures)
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Concessions (BOT) current status
A2 Motorway

• Concessionaire - Autostrada Wielkopolska S.A.
  
  granted concession, signed
  concession agreement
• sections Wrzesnia Konin 48 km
  operating
• Nowy Tomysl Poznan 50 km under construction
• Poznan Wrzesnia 37 km under construction
• Toll system

A4 Motorway
A1 Motorway
Concessionaire - Stalexport S.A.
granted concession, signed concession agreement
section Katowice Kraków 61 km
operating Toll system
Concessionaire - GTC S.A. granted concession,
concession agreement - under negotiations

section
Gdansk Grudziadz 91 km Originally planned
shadow toll system
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Development of road network for the period of
2002 2010 according to the government
strategy Infrastructure a key to development
and Motorways and Other National Roads
Construction Program
Traditional financing - from budgetary funds
with the assistance of the EU funds (Phare,
ISPA, Cohesion Fund, ERDF), the IFIs
loans (EIB, WB, EBRD), the loans from commercial
banks
Pavement strengthening of roads and bridges to
115 kN/axle 1 500 km
Motorways A1 65 km A2 210
km A4/A18 374 km A6 7 km
Expressways 47 sections 1 530
km By-passes 105 by-passes - total length 656
km
Current maintenance and rehabilitation
Concessions / PPP
A1 208 km A2
242 km (concessionaire AW S.A.)
Project for Private Sector Preparation for
Upgrading, Maintenance and Management of Roads in
Poland Pilot DBFO projects sections of the
national roads No 19 and No 62
Allocation of projects to presented above
financing systems (traditional, PPP) can be
changed
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PPP as a supplement to traditional financing

• learning from the best practice and experience
• learning from own mistakes
• better to learn from mistakes made by others

PPP risk allocation
Concessionaire
State Treasury
designing, financing, organizing, constructing,
operating, maintenance
Investment, preparation, co-organizing,
co-financing
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PPP - Case 1 Build and operate 2 and 3 lines
of Warsaw Metro

• construction of 19 stations along the section of
  19 km, crossing the Vistula river in the period
  of 2005 2014
• estimated investment cost - 1.400 MEUR.
• Consulting services financed by EBRD under the EU
  PHARE facility
• completion of advisory services end of November
  2003
• Co-operation program between the Capital City of
  Warsaw and the Ministry of Infrastructure
• __________________________________________________
  __________
  
  
  
  
  
• What is the best solution in a relatively big PPP
  project covering building and operating the metro
  line, to satisfy so many different players
  public (governmental, communal and EU funds),
  private and international financial institutions
  ?
• What, if any, should be the Polish model of PPP
  Task Force ? - There are so many models applied
  and experienced in different EU countries.

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PPP - Case 2 Private Sector Preparation to
Upgrading, Maintenance and Management of Roads

• Pilot project for two sections of national roads
• Road No. 19 section Bialystok - Miedzyrzec
  Podlaski (150 km)
• Road No. 62 section Wyszków - Wyszogród (100
  km)
• estimated total investment cost - 220 MEUR
• analyses (feasibility study, tendering
  documentation) should be prepared untill
  September, 2003
• expected tendering and contracting date the
  beginning of 2004
• __________________________________________________
  ____
• Is there any such case that private partner is
  entrusted with upgrading, maintaining and
  managing of a national road, while at the same
  time the public co-financing is expected ?
• Is there any possibility to use the EU funds in
  such case ?

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PPP - Case 3 railways privatisation projects /
PPP optionally

• WKD Warsaw Commuter Rail
• 35,4 km 8,6 million passengers per year
• SKM Tri-City Suburban Rail (Gdansk Gdynia
  Sopot)
• 52 km 38,0 million passengers per year
• Rehabilitation, maintenance and management
• - feasibility study is being prepared optionally
  with privatisation analyses
• - EBRDs financing of consultants analyses
• - expected tendering and contracting date end
  of 2003 __________________________________________
  ____________________
• Operation of these lines is not possible on
  commercial conditions ie. without state
  subsidies. The vital interests of the local
  communities must be respected.
• May the PPP model be applied ?
• May the EU funds be involved ?

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PPP - Case 4 Upgrading and private rail service
concession for parts of the regional network

• Regional Railways in West Pomeranian
  
  
  
  
  Project initiated by NS Rail (Dutch National
  Railways and proposed setting up a joint venture
  with PKP- Przewozy Regionalne, which would be
  responsible for upgrading of the rolling stock
  and operations of the network
• Regional Railways in Lower Silesia
• Project initiated by local governments at the
  inception phase, consultancy services financed by
  EBRD under the EU PHARE facility
• __________________________________________________
  _____
• Which experience and internationally applied
  models are most relevant for Polish railways ?
• What should be the procedure - transparent,
  public, competitive, non-discriminatory - if the
  project is initially developed by the potential
  investor ?

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• May the presented projects be completed
  successfully as PPP ?
• Actually it is either not possible or very
  difficult due to
• Lack of understanding the PPP solution
• Need for a friendly environment legal,
  financial, organisational and institutional

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The Polish Government is interested in building
legal and institutional framework necessary to
carry out PPP projects No structures or
approaches have been ruled out to date New law
on PPP has been considered The assumptions of
the project of the PPP Act should be prepared at
the end of September Amendments to the existing
law have also been discussed. New act on public
procurement will allow more efficient PPP
tendering procedures. Also rules of public
finances will be favourably changed.
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Ministry of Infrastructure key areas of
responsibility
Transport and Maritime Economy
Maritime and Inland Waterways Transport
Civil Aviation
Roads
Railways
Tele - communication
Social Housing
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RELEVANT DEPARTMENTS

• Dept. for Infrastructure Financing
  Tel. [phone] Fax. 48 22
  630-13-63
• Dept. of European Integration
• and International Cooperation Tel.
  48 22 630-11-60 Fax. [phone]
• Civil Aviation Office Tel. 48 22
  629-63-78 Fax. [phone]
• General Directoriate
• for National Roads and Motorways
  Tel. [phone] Fax. 48 22
  621-95-57
• Polish State Railways (PKP S.A.)
  Tel. [phone] Fax 48 22
  524-90-20
• PKP Polish Railway Lines S.A
  Tel. [phone] Fax 48 22
  513-26-96
• Polish Airports S.O.E.
  Tel. [phone]
  Fax [phone]  
• Website www.mi.gov.pl
• Krzysztof Siwek ksiwek_at_mi.gov.pl