1. www.dbj.at ERES 2011 INDUSTRY Seminar " Public Private Partnership – Magic bullet or danger" 21 October 2011 Bernhard Mueller Associate Professor University of Vienna, School of Law Partner and Head of the Public Law Desk of DORDA BRUGGER JORDIS Rechtsanwälte GmbH

2. DORDA BRUGGER JORDIS www.dbj.at Seite 1 Introduction Definition and Characteristics of PPP Basic forms of PPP Limited risk transfer to private sector full risk transfer to private sector Contracting out Leasing Public Private Joint Ventures PFI BOT, DBFO, BOOT, etc Concessions Divestiture and Privatisation PFI:Private Finance Initiative BOT:Build Operate Transfer DBFO:Design Build Finance and Operate BOOT:Build Own Operate Transfer

3. DORDA BRUGGER JORDIS www.dbj.at Seite 2 Overview ■ Introduction Definition and Characteristics of PPP Main Drivers of PPP Parties of PPP Projects Structures of PPP Projects ■ Practical Examples

4. DORDA BRUGGER JORDIS www.dbj.at Seite 3 Introduction Definition and Characteristics of PPP ■ The following elements characterize PPPs: Long duration of the relationship (up to 30 years; life cycle models); Relationship involving intensive cooperation between public partner and private partner on different aspects of a the project; Alternative methods of financing the project (project financing; forfeiting with waiver of defences); The important role of the economic operator (private partner), who participates at different stages in the project (design, construction, operation, financing); Public partner concentrates primarily on defining the objectives to be attained in terms of public interest, quality of services provided and pricing policy; Risk-sharing between public and private partner (i.e. transfer of certain risks from public sector to private partner);

5. DORDA BRUGGER JORDIS www.dbj.at Seite 4 Introduction Main Drivers and scope of PPP ■ “Value for money” and “risk transfer” as main Drivers of PPP ■ Scope of PPP projects Rail infrastructure Road infrastructure Prisons Hospitals Waste management Waste water treatment

6. DORDA BRUGGER JORDIS www.dbj.at Seite 5 Risks Technolgical risks Elementary risks Technical risksEconomical risks Force majeur Global risks Planning risks Completion risks Geological risks Operation and Managment risks Financial risks Market risks Political risks

7. DORDA BRUGGER JORDIS www.dbj.at Seite 6 Contractual aspects Allocation of risks Private Partner ■ Planning ■ Completion ■ Technological ■ Operation and management ■ Financial ■ Market ■ Force majeur Public Sector ■ Planning (permits, authorizations) ■ Geological ■ Inflation ■ Force majeur

8. DORDA BRUGGER JORDIS www.dbj.at Seite 7 Introduction parties of PPP projects ■ Public sector Statutory bodies under public law (e.g. State, Austrian provinces, communities and outsourced entities controlled by them); ■ Tasks of public sector Definition of scope of services Determination of priorities Determination of goals and results Regular quality acceptance Partial financing of the project (in particular by giving guaranties to reduce financing costs [interest rates])

9. DORDA BRUGGER JORDIS www.dbj.at Seite 8 Introduction parties of PPP projects ■ Private sector Constructor Operator Concessionaire Banks ■ Tasks of private sector Design, construction, operation etc. Financing function Supply of “value for money” to the public sector

10. DORDA BRUGGER JORDIS www.dbj.at Seite 9 How does PPP work? Public Sector

11. DORDA BRUGGER JORDIS www.dbj.at Seite 10 Contractual Model Contract with Project Company Public Sector Project company 100% ownership

12. DORDA BRUGGER JORDIS www.dbj.at Seite 11 Contractual Model Financing Contract Public Sector Project company 100% ownership Consortium of banks financing securities

13. DORDA BRUGGER JORDIS www.dbj.at Seite 12 Contractual Model Construction contract / Works Concession Public Sector Project company 100% ownership Consortium of banks financing securities Building company Public tender Sub contractor construction

14. DORDA BRUGGER JORDIS www.dbj.at Seite 13 Contractual Model Operation Contract / Services Concession Public Sector Project company 100% ownership Consortium of banks financing securities Building company Public tender Sub contractor construction Operating company Public tender Operation for 30 years

15. DORDA BRUGGER JORDIS www.dbj.at Seite 14 Institutional Model Public Sector Project company Consortium of banks financing securities Building company Public tender Sub contractor construction Operating company Operation for 30 years Public Sector Building company operating company shareholder

16. DORDA BRUGGER JORDIS www.dbj.at Seite 15 Success Factors for Life Cycle Management Models ■ Construction + operation = 1 team ■ Construction + operation = 1 price ■ The team wins the tender / the award Same interests Optimized total cost of ownership Sustainability is rewarded All partners are connected for a long period Construction: planning and realization Operation: operation, service, repairing, replacement capital investments, energy costs.

17. DORDA BRUGGER JORDIS www.dbj.at Seite 16 PPP-projects examples I ■ PPP-Ostregion (Austria) project volume: € 944.18 m Financing model: Project Finance: For planning, construction and operation financing by the Concessionaire through equity, subordinated debt (bank guarantee to safeguard capitalization of Concessionaire until start of operation) and mezzanine and senior facilities, senior bond Operational period 30 years Awarding authority ASFINAG Description of project  planning, construction, financing (Concessionaire); refinancing out of the revenues of the project (“shadow toll”)

18. DORDA BRUGGER JORDIS www.dbj.at Seite 17 PPP-projects examples II ■ Heavy Vehicles Toll System (Austria) project volume: € 1,200 m Financing model: Project Finance: For planning, construction and operation financing by the Concessionaire through equity, subordinated debt and mezzanine and senior facilities Operational period 10 years (call option of ASFINAG) Awarding authority ASFINAG Description of project  planning, construction, financing, operation; refinancing out of annual fees

19. DORDA BRUGGER JORDIS www.dbj.at Seite 18 PPP-projects examples III ■ Psychosomatic Rehabilitation Hospital Eggenburg (Austria) Project volume: € 15 m Financing model: Project Finance Operational period 30 years Awarding authority Province of Lower Austria Description of project  planning, construction and financing of special hospital;  Technical operation of prison (e.g. wastewater disposal, technical maintenance etc)

20. DORDA BRUGGER JORDIS www.dbj.at Seite 19 PPP-projects examples IV ■ Prison München-Stadelheim (Germany) Project volume: € 54 m Financing model: Forfaiting with waiver of defences Operational period 20 years Awarding authority The Free State of Bavaria Description of project  planning, construction and financing of new building of a women's and juvenile detention facility of prison München-Stadelheim;  Technical operation of prison (e.g. wastewater disposal, technical maintenance etc)

21. DORDA BRUGGER JORDIS www.dbj.at Seite 20 Financing Models Forfaiting with waiver of defences:

22. DORDA BRUGGER JORDIS www.dbj.at Seite 21 PPP-projects examples V ■ Schools in Eppelheim (Germany) Project volume: € 62.5m Financing model: Forfaiting with waiver of defences Operational period: 25 years Awarding authority The City of Eppelheim Description of project Renovation, construction and operation of five schools and two sports halls

23. DORDA BRUGGER JORDIS www.dbj.at Seite 22 Kontakt DORDA BRUGGER JORDIS Rechtsanwälte GmbH Dr-Karl-Lueger-Ring 10 1010 Wien www.dbj.at Austrian Law Firm of the Year 2010, Chambers Europe Awards for Excellence Diese Unterlage wurde sorgfältig ausgearbeitet, kann jedoch individuelle Beratung im Einzelfall nicht ersetzen. Priv Doz Dr Bernhard Müller T: +43 1 533 47 95-57 F: +43 1533 47 95-5057 E: bernhard.mueller@dbj.at