Public Private Partnerships for sustainable and smart cities. Milano, 4 July 2017

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1 Public Private Partnerships for sustainable and smart cities Milano, 4 July 2017

2 PPP FOR CITIES

3 PPP FOR CITIES International Centre of Excellence The United Nations Economic Commission for Europe (UNECE) is one of the United Nations five regional commissions. Its main goal is to promote pan-european economic integration among 56 countries in Europe, Asia and North America through dialogue and cooperation. The goal of the International PPP Centre of Excellence (ICoE) is to serve as an international benchmark and leader in the development of PPP good practices and standards. UNECE has a United Nations mandate to expand and develop the program and to work with other international organizations such as the World Bank, the EIB and the ADB, among others. The mission of the Specialist Centres (SCs) is to become global benchmarks in specific sectors. Their tasks include compiling practical case studies in PPP projects, drawing up standards and guides to good practices, and providing consulting and training to public administrations all over the world.

4 PPP FOR CITIES Goals According to the United Nations, some of the main objectives of the PPP for Cities are: Identifying and disseminating good practices internationally Creating spaces of debate among companies, administrations and experts from all over the world on specific topics Creating working standards for managing PPP projects Helping governments develop public-private partnership projects in the sphere of cities Conducting research Designing training strategies in the sector for state and regional governments, especially in countries with less experience, and fostering the exchange of knowledge with countries with more experience in PPPs Providing specialized training in PPPs Work should be done under the Sustainable Development Goals, mainly 11th Make cities and human settlements inclusive, safe, resilient and sustainable and 17th Revitalize the global partnership for sustainable development

5 OUR VISION OF A RESILIENT CITY. THE IMPORTANCE OF GOVERNANCE

6 CONDITIONS FOR CITY PROSPERITY OR FOR CITY RESILIENCE IESE CITIES IN MOTION Urban development model

7 OUR VISION OF A RESILIENT CITY. THE IMPORTANCE OF GOVERNANCEOUR VISION Cities need Smart GOVERNANCE: Strategic Planning Systemic view of the city Modern management practices Open and transparent Innovative business models and Public Private Partnership

8 PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES

9 PRIVATE SECTOR AND RESILIENCE Key Issues Private companies operate key infrastructures and services in cities Any plan should consider infrastructures operated by public sector as well as those operated directly by public sector Private sector can offer innovative solutions to help communities build or rebuild resilient infrastructure.

10 PUBLIC PRIVATE PARTNERSHIPS Public-Private Partnerships (PPPs) aim at financing, designing, implementing and operating public sector facilities and services. Their key characteristics include: a) Long-term (sometimes up to 30 years) service provisions; (b) The transfer of risk to the private sector; (c) Different forms of long-term contracts drawn up between legal entities and public authorities Guidebook on Promoting Good Governance in Public-Private Partnerships. UNECE

11 PUBLIC PRIVATE PARTNERSHIPS Private Management contract, Franchsing, O&M Affermage, Operating lease Concession Outsourcing Divestiture MANAGEMENT OF SERVICE PROVIDER Mixed Service Contracts Conversion into Public Enterprise Performance contract Brownfield projects Joint Venture Build-Operate-Transfer Build-Own-Operate Design-Build-Finance-Operate Design-Build-Manage-Finance etc Greenfield projects Public Public Authority Cooperation Public Mixed Private CONTROL OF ASSETS Source: Delmon, J. (2010), Understanding Options for Public Private Partnerships in Infrastructure, Policy Research Working Paper 5173, World Bank.

12 PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES Key Issues Governance Financing Lower dimension of projects (investment and revenues) Need of innovative models Use of value of land and taxes as a financing instrument Citizenship participation. Need of considering citizens as another agent in the equation Sustainability Need of efficient use of resources

13 DISTINCTIVE FEATURES OF EUROPEAN CITIES VISION Difficult governance results of highly participative social movements and groups of interest Existence of (old) infrastructure Urban design (high density, services & infrastructures) Cultural heritage & pool of research centers Issues affecting implementation of PPPs

14 KEY ISSUES: GOVERNANCEN METRO de SEVILLA First tramway in the city Greenfield project. 18km, 21 metro stations 4 Cities ( inhabitants) Delivery Mode: Build Design Finance Operate Transfer (BDFOT) Construction start: January 14th, 2004 Planned end construction period: June 2006 Actual construction end: April 2 nd, years overtime

15 KEY ISSUES: GOVERNANCE PROJECT FAILURES Draft project Underestimation of costs (Construction + rolling stock): 360MM. Awarded 428MM (Lowest bid). Actual 730MM (+70%) Delays in the construction (2,9 years late) Advisory Committee approving contract modifications not independent from the Ministry of Public Works Electoral timing Initial construction awarded cost: 382 MM. Final: 680 MM Who pays the bill? + 78% Additional cost for public administration including operation: + 75% 1.093MM Technical fee (total cost + return) Subvention regional government Ticket fare Bad governance implied higher cost for taxpayer

16 KEY ISSUES: BROWNFIELD - TECHNICAL EXPERTISEN BARCELONA GIX Integrated Management of Municipal IT Networks Brownfield project. Active & Passive Networks of Barcelona City Council (fiber optic and WiFi) Project Type: Operate networks, until then managed separately, under a single management contract Delivery Mode: BOT Project Developer: Tradia Telecom (100% owned by Cellnex)

17 KEY ISSUES: BROWNFIELD - TECHNICAL EXPERTISEN New business model Outdated infrastructure for new challenges: SMART CITIES Integration municipal fiber optic & WIFI Private management using PPP: - Higher efficiency in management - Commercialize spare capacity (incentives) Better service Lower cost Using PPP in brownfield projects allow for public savings and business expansion

18 KEY ISSUES: INNOVATION VELIB PARIS Project Type: Large-scale bicycle-sharing program bicycles & stations Delivery Mode: BFOM Location: Paris + 30 suburban municipalities New sustainable public transport. Reduction of CO 2 emissions BILLBOARDS FOR BICYCLES NEW BUSINESS MODEL From private transport to public service using private funds

19 BEST PRACTICES What have we seen? Governance: Strong governance with independent committees for a proper contract management and cost control Brownfield: Private firms may improve efficiency in existing infrastructure if they have the right incentives Innovation: New business models can help to provide public services without any cost for the administration

20 PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES ENVIRONMENT: VANCOUVER LANDFILL GAS COGENERATION PROJECT Procurement method: B-O-O Capital cost: $10.3 million Contract term: 20 years Reduce greenhouse emissions converting landfill gas in electrical power (56,000 megawats per year aprox.) Owner and operator of landfill: City of Vancouver Owner and operator of cogeneration system: Maxim Power Corporation (2003) Client of electricity: BC Hydro 20 Supply contract with landfill and 20 years purchase agreement with BC Hydro

21 PPPS IN DISASTER MANAGEMENT. RECONSTRUCTION

22 Thanks for your attention PPP for Cities, an International platform of collaboration between públic and private sector in cities arena Av. Pearson, 21 Phone: