Industry Day Watty Vos Boulevard Aruba

Watty Vos Boulevard

INDUSTRY DAY

23 JANUARY 2014

ARUBASolely for Information Purposes

Welcome

Mr. Ruben Goedhoop, Chairman Industry Day

Program – Industry Day

Welcome Aruba and PPP Infrastructure Investment Networking Coffee Break Technical Scope Project Spatial Development DBFM Agreement Lunch Financial Aspects Tender Procedure Q & A Session Closing

Prime MinisterMinister Sevinger

Marlon Croes & Paul KempBruce KaschykMarcelle van Valkenburg

Paul van den BergSwinda Dijkhoff

Aruba and PPP

Prime Minister of Aruba, Mr. Eman

• October 14, 2011Aruba Pursues Sustainability

Aruba, January 23Investment Opportunities in Sustainable Aruba

Infrastructure Investments

Minister of Integration, Infrastructure and SpatialDevelopment, Mr. Sevinger

Technical Scope of the ProjectMr. ing. Marlon Croes, deputy Director of the department ofPublic Works (DOW)

Mr. ing. Paul Kemp, Technical Advisor of the department ofPublic Works (DOW)

a. Background

b. Project objectives

c. Technical challenges

d. Detailed scope

Technical Scope of the project

Solely for Information Purposes

Agenda

Background

1. No suitable transport option between new Barcadera port andthe Hotel zone

10Solely for Information Purposes

New PortArea

Hotelarea

Oranjestad

Background

1. No suitable transport option between new Barcadera port andthe Hotel zone

2. There is a need for more social - economic developmentacross the island

3. Traffic congestion in Oranjestad

4. Congestion between residential areas and the rest of Aruba

Background

GreenCorridor

RingRoad 3

SpiralRoundaboutAirport

L.G. SmithBlvd.

Project Objectives

1. Improve traffic flows

2. Improve travel time

3. Improve road safety

4. Enable and facilitate the relocation of the port to Barcadera

5. Enable more social - economic development

6. Improve appearance low-rise hotel zone

Scope Watty Vos Boulevard

• Greenfield infrastructure 7 km

• Renewal of 14.5 km

• Bike path of 17 km

• Construction of 13 civil structures (roundabouts)

• Construction of 2 overpasses

• Including all designs

• Maintenance (regular, renewals, repairs)

• And financing

DesignMaintainFinance

• Integral Design- Build- Finance- Maintain (DBFM) Agreement forlife-cycle management and optimum availability

• Contract period approx. 22 years (construction + maintenance)• Estimated construction period 2 - 2.5 years

Technical challenges

1. Integral planning

2. Live traffic during construction at the cross-sections

3. Construction of overpasses without disruption of traffic flows

4. Utilities

5. Water management

Scope – Step by Step

Junction Cumana

• Delays

• Black spot intersection

Meiveld

• Overpass

Meiveld

• Overpass

Example:

Sero Patrishi

• Construction of a newconnection

Tanki Leendert

• Construction ofnew connection

• Black spot

Ponton

• Overpass

Example:

Bushiri (after Madiki Kavel)

Caya di Pos (Ling & Sons /Caribbean Oversees)

• Black spots

Punta Brabo (L.G. SmithBlvd. / J.E. Irausquin Blvd.)

• Intersection with bypass

Punta Brabo (L.G. SmithBlvd. / J.E. Irausquin Blvd.)

• Intersection with bypass

Example:

L.G. Smith Blvd.

Example:

Junction Hospital(Caya Punta Brabo)

• Black spot

Roundabout at Pos Abao

Example:

Scope – Step by StepJunction Bubali (Superfood)

• Reconstruction ofexisting intersection

• Delays

Scope – Step by StepAlhambra

• Many car accidents

• Delay

• Black spot

Junction J.E.Irausquin Blvd. /Bubali (Amsterdam Manor)

• Black spot

Roundabout Santa Helena

New situation:

Roundabout Montaña(Frans Figaroa Stadion)

Junction at Noord (Churchin Noord)

• Delays

Linear Park Phase 4

Example:

Example: Eagle Beach and surroundings

* Beach area is not included in the scope of the project

Example: Beach areanext to Costa Linda

Example:

Bike path Ponton / Noord

Technical Scope of the projectTechnical Scope of the project

Bike path Ponton / Noord

Example:

Bike path Ring Road 3

Example:

Bike path by Phoenix Hotel

Example:

DBFM Agreement

Mrs. Marcelle van Valkenburg, Legal Advisor of the DutchMinistry of Infrastructure and Environment

Agenda

1. Legal Framework

2. DBFM Agreement

DBFM Agreement

Landsverordening2013

No. 82

DBFM Agreement

Landsbesluithoudendealgemene

maatregelen2013 No. 92

• Enabling long term commitment.• Facilitating the use of the

competitive dialogue asprocurement procedure.

• Separate detailed decree for thelegal guidelines of the competitivedialogue procurement procedure.

State Ordinance (Landsverordening)

Legal Framework

• Watty Vos Boulevard DBFM Agreement:

– Aruban legislation is applicable

– Aruban jurisdiction is applicable

– Based on latest DBFM best practices

– Based on lessons learned of the Green Corridor project

DBFM Agreement

DBFM Agreementmoving from products to services

Contractor to deliver

DBFM Agreement

FinanceMaintain

BuildDesign

Long term2015 – 2037

DBFM Agreement

• Road management.

• Communication with thepublic.

• Incident management

• Facilitating single point ofcontact for permits (ARINA).

• Site availability.

• Design, Build, Maintain andFinancing.

• Coordinate therearrangement of utilityinfrastructures.

• Obtaining necessarypermits.

• Maintenance of publicplants and trees.

• Contract Management– Standard ISO 9001

– Proof of delivery of services

DBFM Agreement

Responsibilities of theGovernment remains:

Responsibilities of theDBFM contractor:

DBFM Agreement

1. Definitions2. Key obligations and

duration3. Financing4. Infrastructure6. Third Party Cables

and Pipelines7. Transfer8. Quality assurance9. Supervening Events10. Early termination11. Default12. Liability and

indemnity13. Changes14. Insurance15. Shareholders16. Subcontractors17. Intellectual property

Schedule 1:Definitions

Schedule 2:Payment mechanism

Schedule 3:Compensation forSupervening Events

Schedule 4:Compensation for earlytermination

Schedule 5:Changes

Schedule 6:Direct Agreement

Schedule 7:Models

Schedule 8:Basic Management Plan

Schedule 11:Insurance

Schedule 12:Project Data

Schedule 13:Rights of third partiesto access theInfrastructure duringthe Development Period

Schedule 10:Financial ModelAdjustment Guideline

Schedule 9:Programme ofRequirements1 System definitions2 System specificationsAnnex 1 Traffic lane definitionsAnnex 2 Availability Req’s

3 ManagementSpecifications

18. Miscellaneousprovisions:

- Regulations- Working conditions

and occupationalhealth and safety

- Permits- (Traffic) safety- Traffic accidents and

non-standard transport- Cost of main services- Weighted Average Cost

of Capital- Ownership of released

materials- Market conformitiy

19. Indexation20. Surplus profit21. Dispute resolution22. Communication23. Confidentiality24. Final stipulations

DBFM Agreement covers amongst others:

1. Full compensation Contractor in case of CompensationEvents

2. Continued payment in case of Force Majeure

3. Step in rights lenders via Direct Agreement

4. Compensation in the event of Early Terminations, due to:a. Contractor defaults

b. Contracting Authority defaults or discretionary termination

c. Force majeure

5. Protection against extraordinary insurance premiumincrease and uninsurable risks.

DBFM Agreement

Financial Aspects

Mr. Paul van den Berg, Transaction Advisor (PwC)

Agenda

a. Introduction

b. Financial characteristics

c. Performance mechanism

d. Financing requirements

Financial Aspects

Introduction

• Aruban community and businesses expect improvement ofthe infrastructure.

• Procurement shifts from ‘product’ to ‘service’.

Financial Aspects

Financial Characteristics

• Total project costs estimated over USD$ 100 million

• Project finance:

– CONTRACTOR is required to deliver an integral service asset out in the DBFM Agreement

– CONTRACTING AUTHORITY pays for the actualperformance

Financial Aspects

Contractual framework

ContractingAuthority

Builder Banks

EquityProviders

MaintenanceServices

Services Payment

Dividends

Interest& Payment

Services

Payment Payment

DBFM Agreement

Special Purpose Vehicle:• Limited Liability Company

Financial Aspects

Payment Profile

Traditional Government Procurement PPP Procurement

Financial Aspects

EstimatedCapitalCost

Costoverruns

Estimated running costs

Running cost overruns

ConstructionPhase

Operation andMaintenance Phase

No paymentsuntil

infrastructureis ready

Payment based onavailability and service

2 22Construction

PhaseOperation and

Maintenance Phase

Performance mechanism principles

• Mechanism aligns payments to performance delivered.

• Mechanism enables predictable future cash flows.

• Mechanism includes incentives.

Financial Aspects

Net performance fee

• Gross Availability Payment based on:

– Full availability of lanes during rush hours.

• Performance penalty

– to prevent lane closures caused by SPV during rush hours.

– to prevent loss of Watty Vos Boulevard scope items.

– to prevent non compliance with other requirements(process and condition criteria).

– credit applicable to penalties during construction.

Financial Aspects

Financing requirements

• Funding plan

– Authority Term Sheet based

– Shareholder support letters

– Financial advisor support letters

• Financial model and a statement from an independentmodel auditor.

• Tender bond Afl. 1.000.000

– Commitment period sufficient to reach financial close

Financial Aspects

Financing requirements

• Price evaluation

– the Gross Availability Payment submitted will be used tocreate a payment profile;

– the profile will be indexed by the bidder’s indexationformula;

– the Present Value of the bid will be determined;

– A Neutralized Present Value will be calculated to neutralizefor earlier availability dates

• Present value of bids should remain below the Ceiling Price

Financial Aspects

Procurement Procedure

Mrs. ing. Swinda Dijkhoff, Project Leader Watty VosBoulevard of the Public Works (DOW)

a. Outline tender procedure

b. Tender procedure

c. Our commitment

Tender Procedure

Agenda

Outline of the Tender Procedure

• Procedure used will be Competitive Dialogue• Aimed at finding the best solution for the project.

• Open dialogue.

• Candidates present their best solutions.

• Candidates and Contracting Authority discuss and negotiate, indialogue, optimisation of a solution

• Tender procedure according to international standards,meaning: Transparency / Objectivity / Equal treatment

• Standardized tender process adapted based on lessonslearned from the Green Corridor project

Tender Procedure

Tender Documents

• The tender procedure is further elaborated in the TenderingInstructions.

• After the announcement of the “Call to Tender”, interestedparties are invited to register via our email wvb@p3aruba.com

• Legal registration fee is USD$ 2,000

• The registered parties will receive all the tender documents(including drawings, Tendering Instructions and the draftDBFM Agreement).

Tender Procedure

Indicative Timeline

Selection Phase (n Candidates) Date

Announcement – “Call to Tender” 14 February 2014

Information Sessions March – April 2014

Receipt of letter of interest April 2014

Dialogue Phase (maximum 3 Candidates)

Invitation to participate in Dialogue Phase May 2014

Dialogue Phase / meetings June – October 2014

Final Submission Phase

Receipt of Final Submission November 2014

Contract and Financial Close Phase (1 Bidder)

Announcement of Preferred Bidder December 2014

Contract Close / Financial Close Mid 2015

Tender Procedure

DialoguePhase

SelectionPhase

FinalSubmission

3FinancialClosePhase

Tender Procedure – Selection Phase

• Minimum requirements:1. Project finance experience2. Project management experience3. Construction experience4. Capability of providing sufficient equity5. Standard exclusion grounds

• Shortlist of maximum 3 tenderers – to be invited for next phase• Based on reference projects regarding specific experience

Tender Procedure

DialoguePhase

SelectionPhase

FinalSubmission

FinancialClosePhase

Tender Procedure

DialoguePhase

SelectionPhase

FinalSubmission

FinancialClosePhase

Tender Procedure – Dialogue Phase• Optimising DBFM Agreement• General and confidential clarifications• Leads to identical DBFM Agreement for all tenderers• Discuss and evaluate draft parts of the submission• Discuss bidder specific solutions• Tenderers prepare their bids• Time frame approx. 5 months

DialoguePhase

SelectionPhase

FinalSubmission

FinancialClosePhase

Tender Procedure

Tender Procedure – Final Submission Phase• Candidates submit their final offer based on the tender

documents by November 2014

• Announcement of preferred bidder by December 2014

Tender Procedure

DialoguePhase

SelectionPhase

FinalSubmission

FinancialClosePhase

Tender Procedure – Award criteria1. PRICE: Present value of the bid 75%

2. QUALITY of Design 15%

3. Business Plan 10%

Added value to economy of Aruba

DialoguePhase

SelectionPhase

FinalSubmission

FinancialClosePhase

Tender Procedure

Tender Procedure – Financial Close Phase• Contract Close and Financial Close: Mid 2015 latest

• Financial compensation:For tenderers ranking 2nd and 3rd place – Afl. 1.000.000 (for acompliant bid)

Communications during tender procedure

• Two-way constructive and open dialogue:

• General clarifications made available to all tenderers• Confidential clarifications only available to tenderer involved• DBFM Agreement and dialogue language is English• Pre-set meeting schedule for the dialogue phase

Tender Procedure

Our commitment

• Political commitment• Well organized and capable team:

• Government departments• External advisors

Tender Procedure

Pioneer Projects Place

Partnership

Parcels

Procurement

Procedure Planning

Payment

Pioneer Projects Place

Partnership

Parcels Private

Procurement

Procedure Planning

Payment

Q & A Session

Closing

Announcement / Call to Tender: February 14, 2014

Looking forward for your Letter of Interest in April 2014

Please visit our website:

http:// www.p3aruba.com

Email: wvb@p3aruba.com

Closing

Industry Day Watty Vos Boulevard Aruba

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