1. Public Transport Investment financing
Karolis Dekeris
Urban Transport Consultant to EBRD
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2. Content About EBRD Has the moment come for private operators?
Can private contribute to a better service quality?
Things important to banks financing public transport
Conclusions
Introduction of EBRD
Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important.
Introduce each of the major topics.
To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

3. European Bank for Reconstruction and Development (EBRD)
Owned by 64 shareholder countries and organisations
Active in 36 countries of operation
Annual business volume EUR 9 billion
Estonia
Latvia
Lithuania
Number of projects 79 71 76
Investment to date, in EUR million
595
585
629
Value of current portfolio, in EUR million
104
249
120
Private sector share
86%
64%
62%

4. Municipal & Environmental Infrastructure
Department finances:
District heating
Solid waste
Water and waste water
With an average project size between EUR 15 and 18 million, the Bank’s MEI is financing about 12
About half of portfolio is urban transport projects

5. Kaunas Public Transport Project (2004)
Bank’s first loan to a municipal bus operator in Kaunas without a municipal guarantee
Based performance-based gross cost Public Service Contract
Corporate Development Programe of UAB Kauno autobusai (Lithuania) with impressive performance improvements
Increase in service quality, reliability, pax fare revenue, financial results.

6. Content About EBRD Has the moment came for private operators?
Can private contribute to a better service quality?
Things important to banks financing public transport
Conclusions
Introduction of EBRD
Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important.
Introduce each of the major topics.
To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

7. UT Challenges at a City Level
Lack of borrowing capacity for investment needs
High agenda toward sustainability goals in the context growing car ownership
Call for liberalization of services
Growing diversification in technology

8. Public Operators Dominate the Market
Stagnating quality of service
Strong trade unions and ever growing cost
Weak lobby when it come to tariff adjustment
Delayed investments
Often focus on technology rather than on passenger and service quality
At the same time…
Minibus era left bad association about private operators

9. Context Delaying Private Operators Involvement
Regulatory framework
Know-how and experience in contract management
Lack of equipment to sustain system’s integration (AFC and AVL)
Inefficient network
Weak private operators
Currently many cities has these issues behind

10. Private operators could
Provide good benchmark of PT service cost and quality for public operators
Reduce bargaining power of trade unions
Facilitate timely adjustments in tariffs
Bring more investment into public transport
Attract more passengers and revenue to the system
In London very competitive market private operators profits circle between per cent.

11. Content About EBRD Has the moment came for private operators?
Can private contribute to a better service quality?
Things important to banks financing public transport
Conclusions
Introduction of EBRD
Give a brief overview of the presentation. Describe the major focus of the presentation and why it is important.
Introduce each of the major topics.
To provide a road map for the audience, you can repeat this Overview slide throughout the presentation, highlighting the particular topic you will discuss next.

12. What is important for banks?

13. Commencement of service provision
CONTRACT AWARD
TENDER
SERVICE PROVISION
Commencement of service provision
This is another option for an overview using transitions to advance through several slides.

14. CONTRACT AWARD
TENDER
SERVICE PROVISION
Tender for buses
Delivery of buses
Advance payment for buses
Remaining payment

15. Financial analysis
TENDER
SERVICE PROVISION
CONTRACT AWARD
Delivery of buses
FINANCIAL CLOSURE
Tender for buses
Tender for financing

16. Project Assessment by the Bank
Market
Tender
Contract
Operator
City

17. Project Assessment by the Bank
Controlled,
Competitive
Market
Tender
Contract
Operator
City

18. Project Assessment by the Bank
Controlled,
Competitive
Prepared by experienced consultant,
Open, transparent and competitive
Market
Tender
Contract
Operator
City

19. Project Assessment by the Bank
Controlled,
Competitive
Prepared by experienced consultant,
Open, transparent and competitive
Market
Tender
Contract
Operator
City
Well structured,
Balanced

20. Project Assessment by the Bank
Controlled,
Competitive
Prepared by experienced consultant,
Open, transparent and competitive
Market
Tender
Contract
Operator
City
Well structured,
Balanced
Experienced,
Creditworthy

21. Project Assessment by the Bank
Capable
Has sector strategy
Controlled,
Competitive
Prepared by experienced consultant,
Open, transparent and competitive
Market
Tender
Contract
Operator
City
Well structured,
Balanced
Experienced,
Creditworthy

22. Financing Application Process Overview
Request for financing 1
CONCEPT approval 2
Signing Mandate Latter 3
Project Assessment 4
Term Sheet Signing 5
FINAL approval 6
Loan Signing 7
Therefore it is important to engage early with banks to ensure funds are available at the time of the need.

23. Importance of Public Service Contract
Use a section header for each of the topics, so there is a clear transition to the audience.

24. Things to consider in the contract
Ensure strict payment mechanism, including penalties for delayed payments
Clearly defined scope of service with flexibility to amend it
Indexation formula
Strong and balanced contract termination clauses
Dispute resolution mechanism

25. Things that also help… The longer the contract – the better
Part of operator’s payment comes from fare revenue
Penalties not too excessive
Clear reporting and information exchange requirements

26. EBRD’s Technical Cooperation Funds
Microsoft Engineering Excellence
EBRD’s Technical Cooperation Funds
Available for project preparation and implementation
Project development stage:
Preparation of PSC and tender document package
Feasibility studies for larger projects (PPP)
Investment and Business plans
Implementation stage:
Corporate development programmes
SUMPs
Market liberalisation strategies
Gender inclusion and environmental for companies strategies
ITS projects, etc.
Microsoft Confidential

27. Summary
Private operators can contribute to overall public transport service improvement
Engagement with financiers early increases chances of success
Time constrains needs to be properly assessed
EBRD can still be source of financing in Baltics in particular for private operators

28. Microsoft Engineering Excellence
Questions?
Microsoft Confidential

29. Microsoft Engineering Excellence
Contact details
Matthew Jordan-Tank
Head of Infrastructure Policy
European Bank for Reconstruction and Development
One Exchange Square, EC2A 2JN London,
United Kingdom
Tel:
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Presentation by:
Karolis Dekeris
Urban Transport Consultant to EBRD
LT-48334, Kaunas, Lithuania
Tel:
Microsoft Confidential