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Overview and Outlook for PPP Projects in Vilnius

Mrs. Ruta Vainiene Adviser to the Mayor of theCity of Vilnius

November 22nd , 2006 Vilnius

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Contents:

• Region overview……………………………………...p. 3-5• Reasons for the PPP……….............................p. 6• Present and future projects………………..…….p. 7-13• Conclusions.…….…………………………………....p. 15-16

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- According to “Financial Times”:

Vilnius and Kaunas Region –European Region of the Future 2006/07

Vilnius – Future City of the Baltic Region 2006/07

(European Cities & Regions of the Future, “Financial Times fDi” competition)

- Standard &Poors:

credit rating BBB+ / Stable (July 2006)

- European Capital of Culture 2009

- Host of European Men’s Basketball Championship 2011

fDi editor Courtney Fingar, Mayor of Vilnius Arturas Zuokas and Saulius Lukosius, head of strategic planning for Kaunas municipality at the award ceremony

We are:

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Reasons for PPP in Vilnius:

• Modern way to solve old problems• Estimation of the project’s viability• A viable alternative where

privatization is impossible• Out-of-budget liabilities

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Long term lease of Vilnius’ heating networks

An urgent need to renovate City’s heating system in order to make the heat consumption more efficient

- About 163 mln. EUR to be invested to the heat system of Vilnius during 15 years;- More than 195 000 flats administrated in Vilnius region;- More than 2880 heating stations renovated since 1 of February 2002, 76 mln. EUR invested.- The city receives 10 mln. EUR rent payment; - The lowest heat price in Republic is 0,03 EUR/kWh without VAT. Residents of Vilnius city save upto 1,7 mln. EUR annually

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Vilnius Entertainment Park – the newest entertainment center

Construction of Siemens Arena allowed Vilnius to host European Men’s Basketball championship in 2011

Investments in to the Park:

I Stage - SIEMENS Arena (capacity upto 12 000 seats): upto 19,5 mln EURII Stage - Water entertainment park: up to 13 mln. EURIII Stage “Ozas” family entertainment and shopping centre – upto 40 mln. EUR

Municipality has invested into infrastructure - 2 mln. EURPlanned investments for 2006-2007 period – upto 8,7 mln. EUR

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Project was initiated in order to reform one of the most complicated social spheres

- Concession period – 25 years- Private investment –4 mln. EUR- Tenders started in August and September 2006- Health care services remain free of charge (at current level)

Concession of the health care services in two Vilnius’ clinics

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80 % of schools’ and 99 % of kindergartens’ buildings are in poor condition

- 15 educational institutions in the pilot project- Expected private investment – over 30 mln. EUR- PPP scheme on public procurement basis for 25 years period

Renovation and long-term maintenance of Vilnius’ educational institutions

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Modern Tram line

Solving traffic jams and ecological problems in the city centre; part of the modern European city image

up to 100 mln. EUR investments, one line - 12 km length

Concession period – 25 years

Contribution of the City – 30-50 percent of CAPEX

Availability of EU support - questionable

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HALĖ market-place

Newly renovated old market place with a new modern equipment and an expanded parking-plot

Market place leased for 20 year periodOpened on 10th May, 2006Investor:Invests over 6 mln EURReconstructed and installed parking-lotOperates the marketPays annual fee to Municipality – 320 thous EUR

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PPP in waste treatment:Site for construction waste and

Site for medical wasteUntil 2003 there was no such modern construction waste treatment site, thus causing huge environmental problems for the cityLand leased for 14 year periodInvestor:Invested over 1 mln EUROperates the sitePays annual fee to Municipality – 5 percent from income (52 thous. EUR in 2005)

An urgent need to solve the medical waste treatment in the region and the countryLand leased for 25 year periodOpening in Summer 2006Investor:Invested over 3 mln EUROperates the sitePays fixed annual fee to Municipality 43,5 thous. EUR

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Conclusions:

• More than the possibility to have funds out of the balances, increase them and fit in to the debt limit

• Better management – better services• Real responsibility• Risk transferred• Information asymmetries avoided• Expanding private initiative• Educational role

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PPP is:

Best or second best solution (?)

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www.vilnius.eu

Thank you for your attention!