Hulya PASAOGULLARI
Head of Department, PPP Undersecretariat of Turkish Treasury
March 24th, 2015 Paris
OECD 8th Annual Meeting of Senior PPP & Infrastructure Officers
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MINISTRY OF
HEALTH
MINISTRY OF CUSTOMS
AND TRADE
MINISTRY OF TRANSPORT
IMPLEMENTING INSTITUTIONS
TRANSPORT EDUCATION ENERGY CUSTOMS HEALTH
MINISTRY OF ENERGY
MINISTRY OF EDUCATION
TREASURY MINISTRY OF DEVELOPMENT
MINISTRY OF FINANCE
AUTHORISING BODY
RELATED INSTITUTIONS
HIGH PLANNING COUNCIL (HPC)
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Commercial risks
Supply risk Construction risk Operational risk
Financial risk Demand risk
Legal framework Regulatory framework
Dispute resolution Government policy, taxation
Expropriation & nationalisation
Legal & Political risks
Authority default
SPV default
Force majeure
PPP Contracts
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Compensation payment methodology Book value compensation Market value approach Financing-based compensation Debt approach Net present value approach
Main principals fairness incentive for the SPV and its lenders bankability
◦ Revieving PPP prefeasibility studies by Turkish Treasury Ministry of Finance Ministry of Development ◦ Providing debt assumption commitments and
investment sovereign guarantees
◦ Monitoring PPP related contingent liabilities
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Treasury’s role in PPP
Revenue Guarantees by procuring institutions Traffic guarantee Lease payment Conditional specific compensations
Treasury Investment Guarantees Guarantee for payment obligations of input purchasing
commitments and non-performance of its supply commitments
Guarantee for repayment obligations of the public institutions or the appointed company assuming the foreign debt or bridge loans in case of contract termination
Debt Assumption Commitment
Exemption from VAT, Stamp taxes and duties
Debt Assumption Investment Guarantee Applicable for the projects undertaken by general budget institutions and special budget institutions
In case of termination of IC and transfer of the Facility to the Implementing Public Authority, Treasury assumes foreign debt Treasury will be the primary obligor of foreign debt
Used to enhance the loan quality
Applicable for sub-sovereign institutions (i.e. SOEs, municipalities and special budget institutions) In case of non-payment/ default of the guaranteed public institution, Treasury will pay the defaulted amount on behalf of that institution. Public institution will be the primary obligor of foreign debt
Used to enhance the creditworthiness of non-central government institutions
Parallel to international applications: debt approach in case of early termination of the contract
Debt assumption commitments in case of an early termination
provided that the project assets are taken over by the public administration By authority default & force majeure: % 100 of outstanding
debt is assumed with the financing costs By company default: % 85 of outstanding debt is assumed
with the financing costs
Recent Legistlation: Regulation Regarding Debt Assumption to be Realized by the Undersecretariat of Treasury (April 2014)*
*:Press Release: http://www.treasury.gov.tr/default.aspx?nsw=iqmgQocZByo=-
SgKWD+pQItw=&id=5&nm=731#
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• Only for foreign financing • Partial debt assumption option • Only for PPPs implemented with
• BOT model by general budget and special budget administrations (transportation, highway, customs)
• BLT model for health and education • A threshold for the investment amount
• for BOT projects > 1 billion TL • for BLT projects > 500 million TL
• Subject to a budgetary limit – annual 3 billion $ (@ 2015) • Hedging cost limit of debt assumption: up to 10% of senior loan
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Before the tender stage • Public Administrations are liable to send their draft IC to
Treasury with a written request for debt assumption before publishing the procurement notice
• Treasury assesses the draft IC clauses which are directly related with debt assumption and gives its affirmative opinion if it deems appropriate
• Issuance of Council of Minister’s decision determining Treasury as the authorized institution to negotiate scope, elements and payment conditions of debt assumption
• Public Administration calls for tender after the Council of Ministers’ decision
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After the tender is finalized • Treasury assesses the draft IC clauses which are directly related
with debt assumption and gives its affirmative opinion if it deems appropriate
• Treasury, SPV and lenders negotiate the project documents including debt assumption agreement (DAA)
• Treasury submits the agreed terms of debt assumption to Council of Ministers
• After the issuance of Council of Minister’s decision, DAA is executed along with the other agreements of the financial package (IC Direct Agreement, Facility Agreement, etc.)
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(*) For the 1st and 2nd phase of project
Project Name Total Project Cost
Loan Amount
Eurasia Tunnel USD 1,2 Billion USD 960 Million
Gebze-İzmir Motorway* USD 6,3 Billion USD 2 Billion
3rd Bosphorus Bridge USD 2,9 Billion USD 2,3 Billion
• A long standing experience in PPP Model
• Sector and model specific laws for PPP models implemented
Build-Own-Operate • (Law No. 3096 dated 1984; energy sector) • (Law No. 3465 dated 1988; highways and roadside fac. ) • (Law No 3996 and Council of Ministers Decree dated
26.04.2011; various sectors)
Transfer of Operating Rights • (Law No. 4046 dated 1994; various sectors)
Build-Own • (Law No. 4283 dated 1997; energy sector)
Build- Lease- Transfer • (Law No. 6428 dated 09.03.2013; health sector) • (Decree Law No. 652 dated 25.08.2011; education sector) • (By-Law dated 08.09.2012; education sector)
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Thank you
Hulya PASAOGULLARI Head of Department, PPP
Turkish Treasury [email protected]
+90 312 204 73 63
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