TEN-T GI / 1 Second International Workshop Building a valuable approach to PPPs Community Guarantee Instrument for TEN-T projects A brief presentation J.M. Magnette Directorate General Economic and Financial Affairs European Commission

TEN-T GI / 2 Background European Initiative for Growth Trans-European Network and knowledge projects Mobilise financial support through public sources and leveraged private funding European Council of 12 December 2003 Invited Commission to study the feasibility of a possible guarantee instrument for post-construction risks in TEN-T projects

TEN-T GI / 3 Principal aims of the Instrument Facilitate the completion of TEN-T projects Encourage private participation and new approaches to financing Achieve high levels of leverage of EU budget resources

TEN-T GI / 4 Risks in PPP projects Risk up to completionPost-construction risk Short-term Long-term DesignTraffic (ramp-up)Traffic (longer term) ConstructionAvailability Regulatory/Contractual Latent Defect Political Varying risk characteristics between projects Road Rail Tunnel

TEN-T GI / 5 Guarantees - principles Many forms of guarantees Generally rely on three characteristics: Clear definition of risks and their allocation Quantitative knowledge of behaviour of risks Portfolio of projects

TEN-T GI / 6 Possible instrument design - I Projects in EU25 TEN-T at or near investment grade suitable private sector involvement financial support from Member State public bodies Cover risk for limited period (ramp-up period) Charge made for the guarantee

TEN-T GI / 7 Possible instrument design - II If guarantee called, EU payment takes the form of mezzanine financing Relationship to senior debt and equity Claim is repayable over project-specific period

TEN-T GI / 8 Next steps Market testing completed Commission Communication on feasibility If appropriate, legislative proposal for the Instrument New financial perspective