Download Financial instruments under the Connecting Europe Facility

Financial instruments under the
Connecting Europe Facility
State-of-play
Matthieu Bertrand
Policy Officer, Connecting Europe – Infrastructure
Investment strategies, DG Mobility and Transport
Information Session on Project Bonds
Brussels, 19 February 2013
Transport
Financial instruments under the CEF
– Why?
• Huge investment needs identified for EU transport
system
• €1500bn for EU transport system by 2030
•
€500bn on the TEN-T alone by 2020
•
€250bn on the TEN-T Core Network by 2020
• Financial constraints
• Reduction of national infrastructure investments
programme
• Restriction of bank lending for long-term/risky
projects
• Need to attract new sources of funding for
infrastructure
Transport
Financial instruments under the CEF –
Why?
• Transport investment = investment in future growth
• Immediate job creation. Jobs that cannot be
offshored
• Improving territorial cohesion
• More efficient transport system for passengers &
goods
• Enhancing competitiveness of the industry
• Greening of the EU transport system
• Need to use the untapped potential of private
investments to finance infrastructure needs
Transport
Financial instruments under the CEF –
Why?
• Added Value of EU Financial instruments: Leveraging
• 3 types of leverage
Financial – multiplication of scarce budgetary resources by attracting additional
finance
Policy – financial intermediaries pursue EU policies
Institutional – EU can capitalise on the resources and expertise of financial
intermediaries
• Addressing suboptimal investment situations
FIs address projects with low financial profitability (but positive) and high risks =>
investors would not go there alone
Allows keeping grants for projects that have no financial profitability but
• Multiplier effect for EU policy goals
Attracting private investment greater than EU contribution
• Guiding private investments towards EU policy goals
Transport
Financial instruments under the CEF –
How (much)?
• €31.7 billion for transport => now €23.174bn :
• Innovative financial instruments
estimate of market take-up: €1 to 2bn
with an estimate leverage of up to 15 or 20 could generate total investments of €30bn
to €40bn.
• Grant component estimate: €19.7bn => now €11 or
12bn
Need to estimate the impact, need re-prioritisation.
• + €10bn earmarked in the Cohesion fund (grants) =>
stays!
with an estimated average co-funding rate of 85% could generate €11.5bn
• Total amount of investments that could be generated:
€140bn to €150bn on the basis of COM proposal
Transport
Financial instruments under the CEF –
How?
• Eligibility under CEF
• The whole TEN-T network, Core & Comprehensive
• All modes of transport
• Horizontal priorities (e.g. SESAR, ERTMS…)
• Type of Financial instruments
• Equity intruments
Risk-capital, e.g. Marguerite Fund
Investing in equity reduces the need for debt and reduces its riskyness
• Debt instruments
Guarantees and risk-sharing instruments, e.g. LGTT, RSFF and Project Bonds
LGTT and RSFF made to support bank lending
Project Bonds made to support investment from Capital Market investors (Pension
funds, insurance companies)
Transport
Example of an LGTT project: Tours –
Bordeaux High Speed Line
• High speed line between Paris and Tours
exists, after Tours only traditional tracks
• Construction and operation of a 300km high
speed rail link between Tours and Bordeaux
• €200 million LGTT supporting €3 billion
senior debt and €7.8 billion total investment
• LGTT proved decisive to attract senior
lenders; state guarantee more protected
• Break-through: First time a rail transaction
has been structured this way.
• Benefit: journey time between Paris and
Bordeaux will be reduced from 3 hours to 2
hours; substantial stimulus for the French
economy
Transport
Financial instruments under the CEF –
How?
• Management of FIs under the CEF
• Implementation by financial partners (EIB) in accordance with Financial
Regulation
• Possible combination of innovative financial instruments and grants to
optimise the impact of financing
• Possibility for MS (directly or through Structural Funds), other EU funds
and/or investors to top up the CEF financial instruments
• Role of EU and EIB
• EU determines general eligibility criteria (TEN-T Guidelines + CEF article 7)
• EU helps develop project pipeline where appropriate
• EIB selects specific projects using standard eligibility criteria and credit
risk policies, select type of support
• EU and EIB share risk, but EU risk capped at budgetary contribution,
no contingent liabilities.
• Building institutional capacity for PPPs in MS through EPEC
Transport
Financial instruments under the CEF – How?
• Role of the TEN-T Programme and the TEN-T Executive Agency
• TEN-T EA is responsible for grant management
Acts as a facilitator for TEN-T programme financial instruments offered through EIB
• TEN-T Programme offers support for PPP project preparation
Grant funding for project preparation targeting PPP screening and PPP tender preparation
(€ 47m offered through Annual Calls 2010, 2011, 2012)
Build solid EU level project pipeline to exploit Project Bond Initiative and other financial instruments
Send clear signal to private sector of commitment to PPPs
Consolidate experience to achieve consistency and standardisation where feasible and to share
best practice
• First results: added value of the TEN-T EA
Better preparation of technical, financial and legal aspects of projects through calls and expert
advisors
Improved project discipline and communication through milestones
Upstream advice on EU financial instruments , more informed decision-making for all partners
Better preparation of procurement authorities & procurement documentation and procedures
bond-friendly
Advice on opportunities for combining TEN-T investment grants with financial instruments
Transport
Annual Call 2012: Support for PPP project
preparation - feasibility to maturity
• Feasibility
studies necessary
for
value
for
money
assessment and preparation of business case:
 Market scan, Risk analysis
 Affordability & 'Bankability' – development of funding and financing
models
 Identification of output requirements
 Development of public sector comparator and ‘shadow bid’
• Mature project preparation phase, studies necessary to
bring project to tender:
 Defining output requirements and service quality standards
 Financial studies to explore sources of financing, including capital
markets solutions
 Preparation of draft PPP contract
 Support during procurement phase to make tender bond-friendly
Steady growth of EU level PPP project pipeline
•
Annual Call 2010 €7 million offered, 3 projects selected
 2010-NL-93302-S – Implementation study to prepare PPP to
improve maritime access to TEN-T at Amsterdam – Sea Lock
•
Annual Call 2011 €15
 2011-CZ-94064-S
 2011-ES-94123-S
 2011-FR-94036-S
 2011-IT-94006-S
 2011-IT-94030-S
 2011-NL-94111-S
•
Annual Call 2012 € 25 million offered
 Evolution towards stronger linkage with financial instruments
million offered, 6 projects selected
PPP for D3 motorway
PPP for intermodal logistics platform
PPP for CNM train stations
PPP for Port of Venice
PPP for rail link at Malpensa Terminal 2
PPP for Beatrix locks and Lekkanaal
Financial instruments under the CEF –
on-going negotiations
• Budgetary allocation to CEF
• European Council Agreement of 8th February
• Waiting for the position of the European Parliament – consent
needed
• Negotiations on the text (Objectives, Mechanisms,
%...)
• Vote in the Parliament TRAN/ITRE committee in Dec
2012
Support to the use of financial instruments under CEF
• Partial General Approach in Council in June 2012
Points left out:
– Continuation of the Project bonds from 2014?
– Annex & delegated acts on the main terms, conditions & procedures
for Financial instruments
Transport
Questions?
Thank you for
your attention!
matthieu.bertrand
@ec.europa.eu
Transport