Public Private Partnership - Japan

8/10/2019 Public Private Partnership - Japan

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Japan PFI Association 1

Kazuo UedaPresident, Japan PFI Association

Purpose and Process of PFI


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Contents

1. Purposes of PFI

2. Process of the Selection of a Preferred Bidder

3. Risk Allocation and Contractual Issues

4. Monitoring Methodology

5. Project Finance


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1. Purposes of PFI


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1.1 Minimization of LCC

(1) PFI is a scheme to challenge the minimization of Life Cycle

Cost (LCC) of public servicessuch as schools, hospitals,waste management, government office, etc.


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Japan PFI Association5

PFI Project CompanySpecial Purpose Company

(SPC)

Direct Agreement

Design

Residents

PFI Project Screening Committee

(Selection of Preferred Bidder, etc.)

Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty

Management Operation

Public Sector

PublicServices

ContractInvestment

LoanAgreement

Payment for

Public

Services

PFI ProjectContract

Loan

Repayment

PFI Project

Committee

(Judgment, etc.)

Advisor

Dividends

Advice

Residents

1.1 Minimization of LCC


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(2) PFI is a scheme to utilize private finance (project finance)

for the construction of public facilities for the provision ofpublic services.

1.2 Utilization of Private Finance


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7


(SPC)

Direct Agreement

Design

Residents



Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty

Management Operation

Public Sector

PublicServices

ContractInvestment

LoanAgreement

Payment for

Public

Services

PFI ProjectContract

Loan

Repayment

PFI Project

Committee

(Judgment, etc.)

Advisor

Dividends

Advice

Residents

1.2 Utilization of Private Finance


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2. Process of the Selection of

a Preferred Bidder



9

Contract

Sealing

1

2.1 PFI Process before Contract Sealing

SPC Foundation

F/S & VFM

Test

Min 12 months

Selection of

Preferred Bidder

3 - 4 months

Tendering

_PFI Screening

CommitteeConceptual

Planning

Guideline Announcement

of Projects

31

3 4

Invitation to

Tender

Q&A Q&A

NegotiationAnnouncement of

PFI Implementation

LOI



10

Contract

Sealing

2.2 PFI Process after contract sealing

(BTO) Asset

transferred to

Public Sector

End of

Contract

_Monitoring & Payment

_PFI Project Committee

Design &

Construction

Completion

Maintenance

& Operation

Start

Operation

(BOT) Asset

transferred to

Public Sector

Loan

Agreement

SealingDirect

Agreement

Sealing



11

Group CGroup B



3rdParty

Group A

DesignFirm ConstructionCompany

Maintenance

Company

Operation

Company

Public Sector

2.3 Selection Process of a Preferred Bidder

Open Q&A & Negotiation

Advisor Advice

Local Council

Financier


Maintenance

Company

Operation

Company

Financier


Maintenance

Company

Operation

Company

Financier



12


(SPC)

Direct Agreement

Design

Residents

Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty

Maintenance Operation

Public Sector

ContractInvestment

LoanAgreement

PFI ProjectContract

Loan PFI Project

Committee

(Judgment, etc.)

2.4 Start of PFI Project

Residents


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(SPC)

Design

Residents

Construction

3rdParty

Public Sector

Contract

Monitoring &

Reporting

PFI ProjectContract

PFI Project

Committee

(Judgment, etc.)

2.5 Design & Construction Period

Monitoring

LenderLoan

Agreement

Monitoring

Direct Agreement

Reporting


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(SPC) Residents

3rdParty

Public Sector

Contract

Monitoring

& Reporting

PFI ProjectContract

PFI Project

Committee

(Judgment, etc.)

2.6 Management & Operation Period

Monitoring

LenderLoan

Agreement

Monitoring

Direct Agreement

Reporting


PublicServices

Paymentfor Public

Services

Equity Investors

(SPC Consortium)

Repayment

Dividends

Residents


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(SPC) Residents

Public Sector

2.7 Termination / End of Contract

Lender

Direct Agreement

PublicServices

Assets

Residents

3rdParty

PFI Project

Committee

(Judgment, etc.)


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3. Risk Allocation and Contractual

Issues


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3.1 Risk Allocation


(SPC)

Design Construction Maintenance Operation

Public Sector

Contract

PFI Project

Contract

RISK RISK RISK

RISK

RISK

Equity

Investors

(SPC Consortium)

Lender

RISK

RISK

RISKRISK

RISK

Insurance

companyRISK


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3.2 Direct Agreement


(SPC)

Direct Agreement

Design

Residents



Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty


Public Sector

PublicServices

ContractInvestment

LoanAgreement

Payment forPublic

Services

PFI ProjectContract

Loan

Repayment

PFI Project

Committee

(Judgment, etc.)

Advisor

Dividends

Advice

Residents


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3.2 Direct Agreement

(1) Establishment of security by Lender

(2) Statement of the political importance & the priority

project

(3) Confirmation of the fulfillment of PFI project contract

(4) Mutual reporting & meeting for the continuity of theproject

Public Sector agrees with Lender the following:


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3.3 PFI Project Committee


(SPC)

Direct Agreement

Design

Residents



Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty


Public Sector

PublicServices

ContractInvestment

LoanAgreement

Payment forPublic

Services

PFI ProjectContract

Loan

Repayment

PFI Project

Committee

(Judgment, etc.)

Advisor

Dividends

Advice

Residents


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3.3 PFI Project Committee

_To deal fairly and smoothly with possible argumentsbetween Public Sector and PFI Project Company (SPC)

during the execution of the project

_Judgments of service monitoring outcome and contract

termination_Assessment of the quality of the asset transferred to

Public Sector at the end of the contract, etc.

2 from residents

2 from the Public Sector

2 from the PFI Project company

2 from the 3rdparty

*people of experience or

academic standing

*specialists (lawyer, etc)


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4. Monitoring Methodology


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4.1 Monitoring Methodology


(SPC)

Direct Agreement

Design

Residents



Equity Investors

(SPC Consortium)

Lender

Construction

3rdParty


Public Sector

PublicServices

ContractInvestment

LoanAgreement

Payment forPublic

Services

PFI ProjectContract

Loan

Repayment

PFI Project

Committee

(Judgment, etc.)

Advisor

Dividends

Advice

Residents


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_Project to be sustainable

_Agreed leveled services to be maintained

purpose

4.1 Monitoring Methodology


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Monitoring by PFI

Project company

Payment

Monitoring by Public Sector

Questionnaire survey

against users

Inspection

by Public Sector

Monitor how much the performancesatisfies the agreed leveled services

Determine the deduction of payment

monitoring procedure

4.2 Monitoring System &Payment Mechanism


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Payment

Availability

Performance

For Design & Build

ForMaintenance

& Operation

_Public Sector to PFI company

_Periodically

_During M&O

_Building & Facility Mgt.

_Garden Mgt.

_Cleaning Mgt.

_Safety Mgt.

_Environment Mgt., etc.

monitoring

payment structure


4 2


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1 2 3 4 period

PaymentDeduction

Stop of payment

For performance

For availability

For D&B

Full payment

Recovery

Termination

Change contractors

_PFI project committee

_Discussion with Lenders

payment type



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5. Project Finance


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5. Project Finance

1. Objectives2. Philosophy among stakeholders

Partnerships

Who is a lawyer for the Project?

3. Contract and Culture

Civil Law and Common Law

How about ours

4. Regulator

Excess Profit

5. Sponsors


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J PFI A i ti 30

PPP Project CompanySpecial Purpose Company

(SPC)

Direct Agreement

Design

ResidentsEquity Investors

(SPC Consortium)

Lender

Construction Management Operation

Public SectorWest Java Province

(Contracting Agency)

PublicServices

ContractInvestment

LoanAgreement

Payment for

Public

Services

PFI ProjectContract

Loan

Repayment

Dividends

Residents

Documents

Public Private Partnership - Japan