SPUNIC Regional Conference 3 rd Working Group Meeting Financing Public Transport Projects by EBRD Guido Bruggeman Urban Transport Specialist former Employee European Bank for Reconstruction and Development (EBRD) Leipzig 18 April 2008
Contents EBRD Project Examples Project Structure Public Service Contract Loan conditions Final remarks
What is the EBRD? 32 28 24 20 16 12 8 4 0 '98 '99 '00 '01 '02 '03 '04 '05 '06 Cumulative commitments 30.5 billion International financial institution, promotes transition to market economies in 29 countries from central Europe to central Asia Owned by 60 countries and two inter-governmental institutions Capital base of 20 billion June 2006
29 countries of operations Croatia Czech Republic Estonia Hungary Latvia Lithuania Poland Slovak Republic Slovenia Albania Bosnia & Her. Bulgaria Macedonia Moldova Romania Serbia Montenegro Russia Ukraine Belarus Caucasus (3) Central Asia (5) Mongolia
EBRD public transport investments (1) rolling stock (and spare parts) workshop equipment workshop refurbishment administration and accounting ticketing systems traffic management
EBRD public transport investments (2) infrastructure rehabilitation prior to rolling stock renewal great benefits lower operation costs reducing maintenance more passengers
Belgrade Urban Transport Project (2001) financing of 110 new buses refurbishment workshops workshop equipment tram track renewal power supply assistance with procurement new regulatory framework for public transport
Krakow public transport project tram infrastructure upgrading new tramline (fast tram) new rolling stock introduction of PSC urban transport strategy
Croatia: Dubrovnik and Pula bus projects bus fleet renewal sustainable transport strategy for historic cities environmental standards for buses and maintenance procurement assistance twinning programme with Graz (Austria)
Romania: tram infrastructure and bus fleet renewal Tram Infrastructure: - Arad - Iasi Bus fleet renewal: - Brasov - Sibiu
Veolia Transport Central Europe Veolia Transport is one of the leading international transport operators first EBRD involvement in private sector equity stake (35 percent) support expansion of Veolia in Central and Eastern Europe now also active in Serbia and Croatia
Lithuania: Kaunas Bus Project Financing of 50 new buses, spare parts and workshop equipment Direct loan to (municipal) bus company EUR 10 million No municipal (or sovereign) guarantee Company Business Plan and restructuring PT sector Introduction of a Public Service Contract between the Company and the City
Lithuania: Kaunas Trolleybus Project First trolleybus project EBRD (2006) Financing of up to 50 new trolleybuses EUR 15 million Direct loan to trolleybus company (without guarantee) Restructuring public transport network
Milestone EBRD financing public transport Kaunas Public Transport First loan directly to public transport company without municipal guarantee First loan based on Public Service Contract (PSC)
Key ingredients for successful projects Financing of investments in combination with Reform and restructuring
EBRD transition objectives PT Successful ingredients Corporatisation with sound Business Plan and acting as corporate entity Commercialisation (not necessarily privatisation) Sound regulatory framework, with Public Service Contracts that enable companies to plan, invest and operate professionally
Financing PT: starting points for EBRD EBRD prefers loans to transport companies (instead of municipalities) Project structure applicable to public and private companies (level playing field) Infrastructure financed through loans to municipalities Supporting restructuring to enhance creditworthiness of borrower Promoting transparency
Traditional financing structure Revenue from fares Transport Company EBRD Investment Grant + subsidy payments Passengers Loan City
Financing under Public Service Contract Loan Transport Company Revenue from fares EBRD Passengers Municipality
Financing under Public Service Contract Loan Transport Company EBRD Payments linked to Public Service Contract Passengers Municipality Revenue from fares
Financing under Public Service Contract Loan Transport Company EBRD Public Service Contract and Payments Passengers Direct Support Agreement Municipality Revenue from fares
Public Service Contract (1) Signed between transport operator and City PSC defines: rights and obligations of both parties (who is responsible for what?) quantity and quality of services delivered under the contract service payments to the operator for delivering of services under the contract
Public Service Contract (2) Regular contractual payments Most common: payments on the basis of vehicle kilometres and performance Fixed km price with indexation Quality incentives (bonus/penalties) Yearly customer surveys with defined targets Complaints reporting City sets tariffs and defines network Duration 5-10 years Discourages interference by client authority
Loan Conditions and Technical Co-operation City and Company Signing Public Service Contract EBRD Procurement Policies and Rules Company Adoption of a Business Plan Transformation into a joint-stock company Corporate Development Programme City Signing Municipal Support Agreement with EBRD Sound model for financing public transport Review of tariff system Restructuring public transport network Review regulatory and institutional framework
Lessons learnt Money often the least problem More commitment to reform and change needed Less focus on technical issues and more on Clients Less interference of politics/politicians More implementation capacity needed PPP is a promising option provided strong commitment of Transport Authority
Final remarks: priorities for Central and Eastern Europe Central government - revision of National Legislation on urban/regional transport - stay out of fares policy (as long as you don t pay the bill) - support a framework for urban transport Local government - good transport doesn t come for free - introduce a fair, transparent and sustainable model for service payments - don t interfere with daily business management - long term vision and strategy on PT needed Transport Companies - change from product-oriented to client-oriented - think as a Company, act as a Company - project management cost money - learn from your colleagues
Contacts EBRD Karolis Dekeris Urban Transport Specialist +44 20 7338 7292 E-mail: dekerisk@ebrd.com Matthew Jordan Tank Senior Banker +44 20 7338 7171 E-mail: jordantm@ebrd.com www.ebrd.com
Contacts Guido Bruggeman Urban Transport Specialist Prinsengracht 464hs 1017 KG Amsterdam The Netherlands T +31 20 624 64 82 M +31 6 51 82 90 54 guido.bruggeman@planet.nl