[PPT] - Norwegian Experience with Highway Concessions 2nd Workshop on PowerPoint Presentation

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Norwegian Experience with Highway Concessions

2nd Workshop on Applied Infrastructure Research

Dr. Ansgar Bendiek, Head of Infrastructure and Maritime

HSH Nordbank, Hamburg, Germany

Case Study

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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

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Decision Making Process

The Norwegian Road 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.

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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 Norwegian Road Program

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E 39 Klett- Bårdshaug: Map

Project 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

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Contractual Structure

Selmer Skanska AS Based on Statens Vegvesen Vegdirektoratet

Project Desciption

Vegdirektoratet Orkdalsvegen

PPP Contract

Skanska BOT AB Laing Roads Debt Lenders

Loan Repayment Equity Return

Users Toll Company

AP, MMP, TP, SP, and ERC Toll Toll

The Storting

Ministry of Transport

Right to collect toll Additional Funds Fixed Price Turn Key Contract O&M Contract

Construction Company D&C Contractor O&M Contractor

Three Party Agreement

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Project Parties

Tendering Authority: Statens Vegvesen

Vegdirektoratet

Sponsors SPC Lead Arrangers

Project Desciption

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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

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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

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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

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Payment Mechanism

Concept

– Monthly/annual unitary payments being available for the SPC, but with 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

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E 39 PPP Road - Scope of Work

Availability Payment

Toll Collection

Operation
Construction
Design

Candidate (SPV) Toll Collector Storting Legal Framework

Project

Description

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General Terms

Borrower Orkdalsvegen AS Sponsors Skanska BOT and Laing Roads Facility NOK 1,414 million Bank Syndicate HSH Nordbank Nordea Svenska Handelsbanken Dexia IKB ING SEK

Financing

Lead Arranger 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

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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

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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

Shared SPV State

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

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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

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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

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Structured Corporate Finance

The Infrastructure & Maritime Team

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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

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Dr. Ansgar Bendiek

Tel. +49 (0)40 / 3333 13484 Team head Fax +49 (0)40 / 3333 6 13484 e-Mail ansgar.bendiek@hsh-nordbank.com Maik Tschentschel Tel. +49 (0)40 / 3333 12584 Fax +49 (0)40 / 3333 6 12584 e-Mail maik.tschentschel@hsh-nordbank.com Thorsten Lundius Tel. +49 (0)40 / 3333 10062 Senior Manager Fax +49 (0)40 / 3333 6 10062 e-Mail thorsten.lundius@hsh-nordbank.com Matthias Meyer Tel. +49 (0)40 / 3333 12662 Senior Manager Fax +49 (0)40 / 3333 6 12662 e-Mail matthias.meyer@hsh-nordbank.com

Team Infrastructure & Maritime.

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Carl Augustin Tel. +49 (0)40 / 3333 14611 Senior Manager Fax +49 (0)40 / 3333 6 14611 e-Mail carl.augustin@hsh-nordbank.com Petra Hoefle Tel. +49 (0)40 / 3333 12789 Manager Fax +49 (0)40 / 3333 6 12789 e-Mail petra.hoefle@hsh-nordbank.com Karen Raguse Tel. +49 (0)40 / 3333 13530 Junior Manager Fax +49 (0)40 / 3333 6 13530 e-Mail karen.raguse@hsh-nordbank.com Phillip Staake Tel. +49 (0)40 / 3333 13250 Assistance Fax +49 (0)40 / 3333 6 13250 e-Mail phillip.staake@hsh-nordbank.com