1. The Basic Policy Issues of Public Private Partnerships (PPPs) by Alexandros Lykourezos Lykourezos Law Offices World Bank Conference Athens, December 19 th, 2006

2. Public Private Partnerships (PPPs) Definition: “any joint venture between a public body and a private company, typically involving the joint ownership of a special purpose vehicle (SPV) established under company law, to work in collaboration on a variety of projects”

3. The basic features of PPPs: New Market for provision of Construction & Services New Market for provision of Construction & Services The financial aspect of PPPs The financial aspect of PPPs Public Works  Financial Instrument Public Works  Financial Instrument Off-Balance Sheet – EUROSTAT 11 Feb. 2004 Off-Balance Sheet – EUROSTAT 11 Feb. 2004 Allocation of Risks Allocation of Risks Construction – Demand – Availability Risk Bankability Bankability Secondary Market – Securitisation Insurance Insurance Value for Money – Public Sector Comparator Value for Money – Public Sector Comparator Incentive for Quality

4. Interested in PPP Source: IFSL International Interest in PPP 1999

5. Interested in PPP Source: IFSL International Interest in PPP 2006

6. The ongoing discussions on PPPs in Europe: European Commission “Green Paper” on PPPs European Commission “Green Paper” on PPPs PPP Alliance Programme - UNECE PPP Alliance Programme - UNECE

7. European Commission “Green Paper” on PPPs (2004) Wide debate by Governments and Stakeholders in the Private Sector Wide debate by Governments and Stakeholders in the Private Sector Apparent need for concise legal framework Apparent need for concise legal framework Emphasis on the procurement aspect Emphasis on the procurement aspect Next steps: Concessions legislation and shared better practice information Next steps: Concessions legislation and shared better practice information

8. PPP Alliance Programme United Nations Economic Commission for Europe UN Global Compact & Millennium Summit (2000): Declaration to use PPPs as a means to address critical challenges of poverty and social deprivation UN Global Compact & Millennium Summit (2000): Declaration to use PPPs as a means to address critical challenges of poverty and social deprivation Fourth Alliance Meeting (2005): Governance in PPPs for Infrastructure Development Fourth Alliance Meeting (2005): Governance in PPPs for Infrastructure Development Emphasis on Shared Better Practice Emphasis on Shared Better Practice Critical importance of carefully choosing a PPP approach Critical importance of carefully choosing a PPP approach

9. Policy Issues of PPPs: Proper Legal Framework Proper Legal Framework Appropriate Institutional Framework Appropriate Institutional Framework Transparent Procurement Framework Transparent Procurement Framework Attractive Market Framework Attractive Market Framework Globalization Globalization

10. Proper Legal Framework: Clarity and Stability Adherence to International Convention and European Union Law Safeguard a Level Playing Field “Commercialization” - “Soft Law” ATTENTION TO ALL STAKEHOLDERS: USE THE LAW WELL!!!

11. Appropriate Institutional Framework: The Government The “PPP Taskforce” Stakeholder Associations End-User Concerns Important: Choosing the proper approach

12. Attractive Market Framework: Primary Market Concerns Open Market / Good PPP Contract Secondary Market Concerns Bakability / Insurance Risk Allocation Real Risk / Financial Risk / Risk Management

13. Globalization – The next step? The “Mature Market Test” The “Lessons Learned Test” The “Uniform Practice Test” The “PPP Mutual Fund Challenge”

14. Greek Law 3389/2005 on PPPs: Abolishes requirement of Parliament ratification Abolishes requirement of Parliament ratification Adopts new EU Directives on Public Procurement Adopts new EU Directives on Public Procurement Regulates award and contractual scheme of PPPs Regulates award and contractual scheme of PPPs Provides flexibility and allows shared better practice Provides flexibility and allows shared better practice Enhances bankability (step-in clauses and securitisation) Enhances bankability (step-in clauses and securitisation) Complies with EUROSTAT regulations Complies with EUROSTAT regulations

15. Practical layout - Award of a PPP contract (Greek Law 3389/2005): Government (Ministers’ Committee) PPP Taskforce Public Body (Municipality) External Advisors Award Committee Private entity (consortium) SPV Private entity (consortium) SPV Private entity (consortium) SPV

16. Greek PPP projects in the pipeline: Multi-schools projects: 27 Schools in Attica and 31 Schools in Macedonia Multi-schools projects: 27 Schools in Attica and 31 Schools in Macedonia (€ 266 mil. + 20%) (€ 266 mil. + 20%) Prisons projects: 3 prisons facilities in Salonika, Volos and Corinthos Prisons projects: 3 prisons facilities in Salonika, Volos and Corinthos (€ 198 mil. + 20%) (€ 198 mil. + 20%) University of Peloponnisos University of Peloponnisos (€ 84 mil. + 20%) Courthouse projects: 2 courthouse facilities in Heraklion and Patras Courthouse projects: 2 courthouse facilities in Heraklion and Patras (€ 100 mil. + 20%) Police facilities project in Attica Police facilities project in Attica (€ 36 mil. + 20%) Fire department facilities projects: 7 facilities in Salonika, Alexandroupolis, Veria, Lefkada, Giannitsa, Mesolongi & Gargaliani Fire department facilities projects: 7 facilities in Salonika, Alexandroupolis, Veria, Lefkada, Giannitsa, Mesolongi & Gargaliani (€ 31,5 mil. + 20%) International Conference Center in Athens (Paleo Faliro) International Conference Center in Athens (Paleo Faliro) (€ 54 mil. + 20%) Municipalities (Article 224 of the New Municipalities Code) Municipalities (Article 224 of the New Municipalities Code)

17. A quick case study: “Athens International Airport”  A concession contract (with a PPP approach)  EU funding: Cohesion Fund 11%, EIB loan 47%  Greek State contribution 19%  Commercial debt 17%  Equity 6%  SPV: Athens International Airport S.A (55% Greek State, 45% Private Consortium)  Construction delays: 3 months in advance Source: Patrick Boeuf, EIB, 2004

18. “Athens International Airport” – Duration of Project Implementation Source: Patrick Boeuf, EIB, 2004 (Time in months elapsed in each phase) Total (10 years)

19. Why is the Government using PPPs: Expand of Public Works - Private finance, off balance sheet Expand of Public Works - Private finance, off balance sheet Value for money – Risk transfer – Performance-related reward Value for money – Risk transfer – Performance-related reward Commercial interest - Investments Commercial interest - Investments Innovation, Efficiency, Quality Innovation, Efficiency, Quality New approach to “Privatization” New approach to “Privatization”

20. The keys to a successful PPP: Political support (focus on the public service) Political support (focus on the public service) Proper and complete legislation harmonized with international practice and expertise Proper and complete legislation harmonized with international practice and expertise Full and complete legal, financial and technical advice to the public bodies Full and complete legal, financial and technical advice to the public bodies A good PPP contract A good PPP contract A level playing field A level playing field Collaboration Collaboration

21. Email: allykourezos@lykourezos.gr Website: www.lykourezoslawoffices.gr Thank you for your kind attention!