Title: PublicPrivate Partnerships PPP in Highways
1Public-Private Partnerships (PPP) in Highways
Seminar on Public-Private Partnerships in
Transport Sector in Russia
- Cesar Queiroz
- Lead Highway Engineer
- World Bank
- Moscow, 3-4 March 2005
2Presentation Outline
- PPP and public policy requirements
- The main risks of highway projects
- International experience with highway PPP
projects - Traffic forecasting risks
- Impacts on revenues
- The Toolkit for PPP in Highways
- Allocation of risks
- Discussions
3PPP Public Policy Requirements
- Proposed highway projects should be part of
Government program - Subject to full social cost-benefit assessment
- to ensure public as well as private benefits
- to establish need, and provide basis for public
participation in financing - Concession award and agreement should
- be well designed
- be transparent and competitively procured
- have clear rules for regulation of the concession
4Some Key PPP Issues
- Ensuring open market access and competition
- Protecting the publics interest
- Defining the right level of Government
contribution - Selection of the most suitable PPP type
- Appropriate performance indicators
5Traffic Risk in Start-Up Toll FacilitiesStandar
d Poors (SP)
- 67 toll case studies comparing forecast
performance with actual/observed - Toll roads, bridges and tunnels
- User-paid and shadow tolls
- Key findings
- Systematic errors (optimism bias) in forecasts
- Consistency of error-drivers
- Produced a traffic risk index
- Sensitivity testing is essential
6SP Research Results 2002
Mean 70 Spread 18 - 146 !
7Traffic Forecasting Risk Index
8Error Drivers
- Miscalculation of road user willingness-to-pay
- Recession or economic downturn
- Future land use scenarios that never transpired
- Time savings less than expected
- Improvements to competitive (toll-free) routes
- Underestimate of ramp-up period (traffic
stability), both severity and duration - Less usage by trucks than anticipated
9Future Challenges
- Point-of-use charging
- depends on ability to pay/willingness to pay
- New toll collection technologies
- Reliability, take-up, back-office processing
- Pricing sophistication
- discounts (frequent user programs, resident
discount schemes), peak/off-peak pricing,
day-of-week, season-of-year
10Main Lessons for Success
- A well defined legal framework
- Simple and transparent procurement
- Shared risk-reward concession structure
- Projects should have social benefits as well as
commercial viability - Particular attention to traffic forecasting and
hence revenues - Public sector comparator advisable
11World Bank Toolkit for Public-Private Partnership
in Highways
Provides policy makers from economies in
transition with guidance in the design and
implementation of a Public Private Partnership
(PPP) in the highway sector
12Public Private Partnerships
Build Operate Transfer Concessions
Management Maintenance Contracts
Works Services Contracts
Operation Maintenance Concessions
Full Privatization
Low
High
Extent of private sector participation
13- Build-Operate-Transfer (BOT) Type of Concession
- The responsibility of the concessionaire
comprises an initial construction, upgrading or
major asset rehabilitation, and operation and
maintenance of the facility (e.g., motorway,
tunnel, bridge)
14Availability of the Toolkit
- Free of charge
- A multimedia product available on a CD ROM
- Also available at the World Banks web site
www.worldbank.org/transport
15The Highway Toolkit Includes
- over 5000 pages of reference publications and web
links - five main modules, case studies and financial
simulation software
16Toolkit Modules
- 1. Overview and Diagnosis
- 2. Project Characteristics
- 3. Public Sector Functions
- 4. Laws, Rules and Contracts
- 5. Implementation
17The Toolkit also includes
- Financial simulation tool
- Graphic simulation tool
- Case study
- Documentation
- Glossary
18 19Some WB-related Sites
- Toll Roads and Concessions http//www.worldbank.or
g/transport/roads/toll_rds.htm - Toolkit for PPP in Highways http//rru.worldbank.o
rg/Toolkits/PartnershipsHighways/ - Port Reform Toolkit http//www.worldbank.org/html/
fpd/transport/ports/toolkit.htm - How to Hire Expert Advice on PPP
http//rru.worldbank.org/Toolkits/Documents/Adviso
rs/Full_Toolkit.pdf - Labor Issues in Infrastructure Reform
www.ppiaf.org/Reports/LaborToolkit/toolkit.html
20Allocation of Risks
100
MaintenanceContracts
ManagementContracts
Operation Maintenance Concessions
RISK TO PUBLIC SECTOR
BOT
BOO
Decreasing Public Risks, Increasing Private Risks
0
100
RISK TO PRIVATE SECTOR
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