Principles of Policy and FinanceBy
- E. R. Yescombe
- E. R. Yescombe
Over the last decade or so, private-sector financing through public-private partnerships (PPPs) has become increasingly popular around the world as a way of procuring and maintaining public-sector infrastructure, in sectors such as transportation (roads, bridges, tunnels, railways, ports, airports), social infrastructure (hospitals, schools, prisons, social housing) public utilities (water supply, waste water treatment, waste disposal), government offices and other accommodation, and other specialised services (communications networks or defence equipment). This book, based on the author's practical experience on the public- and private-sector sides of the table, reviews the key policy issues which arise for the public sector in considering whether to adopt the PPP procurement route, and the specific application of this policy approach in PPP contracts, comparing international practices in this respect. It offers a systematic and integrated approach to financing PPPs within this public-policy framework, and explains the project-finance techniques used for this purpose. The book deals with both the Concession and PFI models of PPP, and provides a structured introduction for those who are new to the subject, whether in the academic, public-sector, investment, finance or contracting fields, as well as an aide memoire for those developing PPP policies or negotiating PPPs. The author focuses on practical concepts, issues and techniques, and does not assume any prior knowledge of PPP policy issues or financing techniques. The book describes and explains:* The different types of PPPs and how these have developed* Why PPPs are attractive to governments* General policy issues for the public sector in developing a PPP programme* PPP procurement procedures and bid evaluation* The use of project-finance techniques for PPPs* Sources of funding* Typical PPP contracts and sub-contracts, and their relationship with the projectâs financial structure * Risk assessment from the points of view of the public sector, investors, lenders and other project parties* Structuring the investment and debt financing* The key issues in negotiating a project-finance debt facility. In addition the book includes an extensive glossary, as well as cross-referencing.
PPP and project financing specialists and consultants, public sector officials developing PPPs, private sector investors in PPP projects, MBA students studying project finance, other professionals involved in PPPs: construction and maintenance contractors, lawyers, accountants, engineers, transport economists.
Hardbound, 368 Pages
Published: March 2007
Imprint: Butterworth Heinemann
"This extremely useful book offers a systematic presentation of the recent trend where governments look increasingly to private sector for building and managing infrastructure facilities as well as for providing specialized services. The text covers a wide range of issues, from very general policy ones faced by authorities in considering whether to adopt the PPP route to much more technical ones, including financial analysis, procurement, financial and legal structuring. Written by an experienced practitioner, Mr. Yescombeâs work represents an invaluable and authoritative guide to all parties involved in PPPs- from investors, bankers, companies providing infrastructure and services to public sector authorities and the public at large as the main user of PPP facilities and/or services. The book is expected to be an excellent introduction for newcomers into the PPP business as well as a valuable reference source for all those that already have experience in the subject." - Mojmir Mrak, Professor of International Finance, Ljubljana Faculty of Economics, University of Ljubljana, Slovenia
- IntroductionChapter 1 What are Public-Private Partnerships? IntroductionPublic Infrastructure and the Private SectorPublic-Private Partnerships Development and StructuresPPPs and Public Infrastructure Types of PPPChapter 2 PPPsâFor and Against IntroductionNew Public Management Privatisation and PPPsBudgetary BenefitAdditionality Financing Cost and Risk Transfer Risk Transfer and Value for MoneyEconomies of ScaleWhole-Life Costing and MaintenancePrivate-Sector SkillsPublic-Sector Reform ComplexityFlexibilityPPPs and Politics Chapter 3 PPPs Worldwide IntroductionDeveloping PPP ProgrammesLegal FrameworkUnited Kingdom United StatesAustraliaFranceKoreaSpainSouth AfricaChapter 4 Cash Flow and Investment AnalysisIntroductionNet Present Value / Discounted Cash FlowInternal Rate of ReturnProblems with DCF and IRR CalculationsUses in PPPsChapter 5 The Public-Sector Investment Decision IntroductionEconomic JustificationValue for Money and the Public-Sector Comparator AffordabilityBalance-Sheet TreatmentChapter 6 Public-Sector Procurement and Contract ManagementIntroductionProject ManagementProcurement ProceduresOther Procurement IssuesDue DiligenceContract ManagementExternal AdvisersChapter 7 The Private-Sector Investorâs PerspectiveIntroductionThe Investment PoolThe Investment DecisionBidding and Project DevelopmentJoint-Venture IssuesThe Project CompanyExternal AdvisersChapter 8 Project Finance and PPPsIntroductionDevelopment of Project FinanceFeatures of Project FinanceThe Project-Finance MarketWhy Use Project Finance for PPPs?Chapter 9 Private-Sector FinancingâSources and ProceduresIntroductionThe RÃ´le of the Financial AdviserCommercial BanksBond IssuesLoans versus BondsMezzanine DebtChapter 10 Financial StructuringIntroductionThe Financial ModelModel Inputs and OutputsFinancing CostsDebt ProfileCover RatiosRelationship between Cover Ratio, Leverage and Equity ReturnAccounting and Taxation IssuesRecourse to the SponsorsChapter 11 Financial HedgingIntroductionInterest-Rate RiskInflation IssuesChapter 12 Lendersâ Cash-flow Controls, Security and EnforcementIntroductionControl of Cash FlowSecurityThe RÃ´le of InsuranceEvents of DefaultIntercreditor issuesChapter 13 Service-Fee MechanismIntroductionContract ScopePayment StructureUsage-based PaymentsAvailability-based PaymentsMixed Usage and Availability PaymentsThird-Party and Secondary RevenuesChapter 14 Risk Evaluation & TransferIntroductionPrinciples of Risk TransferThe Risk MatrixPolitical RisksSite RisksConstruction RisksCompletion RisksOperation-phase RisksChapter 15 Changes in Circumstances and TerminationIntroductionCompensation EventsRelief EventsStep-In and SubstitutionEarly Termination: Default by the Project Company Optional Termination or Default by the Public AuthorityEarly Termination: Force MajeureEarly Termination: CorruptionTermination and SubcontractorsTax Implications of a Termination-Sum Payment Final Maturity, Residual-Value Risk and Hand-BackChapter 16 Funding Competition, Debt Refinancing and Equity SaleIntroductionFunding CompetitionEquity CompetitionDebt RefinancingEquity SaleChapter 17 Alternative ModelsIntroductionPublic-Sector ProcurementPost-Construction Take-OutPublic-Sector Debt FundingJoint-Venture PPPsNot-for-Profit StructuresBibliographyGlossary and Abbreviations