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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 project’s 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.
Reviews the PPP policy framework and development from an international perspective
Covers public- and private-sector financial analysis, structuring and investment in PPPs
*No prior knowledge of project financing required
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.
Chapter 1 What are Public-Private Partnerships? Introduction
Public Infrastructure and the Private Sector
Development and Structures
PPPs and Public Infrastructure
Types of PPP
Chapter 2 PPPs—For and Against
New Public Management
Privatisation and PPPs
Financing Cost and Risk Transfer
Risk Transfer and Value for Money
Economies of Scale
Whole-Life Costing and Maintenance
Public-Sector Reform Complexity
PPPs and Politics
Chapter 3 PPPs Worldwide
Developing PPP Programmes
Chapter 4 Cash Flow and Investment Analysis
Net Present Value / Discounted Cash Flow
Internal Rate of Return
Problems with DCF and IRR Calculations
Uses in PPPs
Chapter 5 The Public-Sector Investment Decision Introduction
Value for Money and the Public-Sector Comparator Affordability
Chapter 6 Public-Sector Procurement and Contract Management
Other Procurement Issues
Chapter 7 The Private-Sector Investor’s Perspective
The Investment Pool
The Investment Decision
Bidding and Project Development
The Project Company
Chapter 8 Project Finance and PPPs
Development of Project Finance
Features of Project Finance
The Project-Finance Market
Why Use Project Finance for PPPs?
Chapter 9 Private-Sector Financing—Sources and Procedures
The Rôle of the Financial Adviser
Loans versus Bonds
Chapter 10 Financial Structuring
The Financial Model
Model Inputs and Outputs
Relationship between Cover Ratio, Leverage and Equity Return
Accounting and Taxation Issues
Recourse to the Sponsors
Chapter 11 Financial Hedging
Chapter 12 Lenders’ Cash-flow Controls, Security and Enforcement
Control of Cash Flow
The Rôle of Insurance
Events of Default
Chapter 13 Service-Fee Mechanism
Mixed Usage and Availability Payments
Third-Party and Secondary Revenues
Chapter 14 Risk Evaluation & Transfer
Principles of Risk Transfer
The Risk Matrix
Chapter 15 Changes in Circumstances and Termination
Step-In and Substitution
Early Termination: Default by the Project Company Optional Termination or Default by the Public Authority
Early Termination: Force Majeure
Early Termination: Corruption
Termination and Subcontractors
Tax Implications of a Termination-Sum Payment
Final Maturity, Residual-Value Risk and Hand-Back
Chapter 16 Funding Competition, Debt Refinancing and Equity Sale
Chapter 17 Alternative Models
Public-Sector Debt Funding
Glossary and Abbreviations
- No. of pages:
- © Butterworth-Heinemann 2007
- 20th March 2007
- eBook ISBN:
- Paperback ISBN:
- Hardcover ISBN:
E.R. Yescombe is an independent consultant on project finance and public-private partnerships (PPPs), advising investors on financing for power, infrastructure and PPP projects, as well as public-sector entities on PPP policy issues, project procurement and contracting.
YCL Consulting, London UK
"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. Yescombe’s 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
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