Financing AirRail Projects Jean-Pierre Labuschagne 7 October 2016

Transcription

1 Financing AirRail Projects Jean-Pierre Labuschagne 7 October 2016

2 Contents 1. Challenges of passenger rail financing 2. Different models 3. South African ideas 4. Conclusion For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 2

3 Challenges of passenger rail financing The project structure has a significant influence on the ability to finance a rail project Key considerations Capex vs Opex split Price inelasticity of Airport services Ridership or demand risk Threats or new technology For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 3

4 Contents 1. Challenges of passenger rail financing 2. Different models 3. South African ideas 4. Conclusion For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 4

5 Different models Docklands Light Rail Docklands Light Railway DBFM Extensions Central Government Docklands Light Railway Greater London Authority Three extensions to original network Transport for London No rolling stock or operations for extensions Docklands Light Railway Limited Farebox Rolling stock provided by DLR Operator (has changed) runs full network Availability payments on DBFM Train operations contract Train Operating Contractor Ownership Original DLR lines SPV for Woolwich Arsenal Extn DBFM contracts (3) SPV for City Airport Extn Capital cost of extensions million each Two extensions debt funded in bank market with European Investment Bank participation in the largest one Bond debt used for one extension Approx. 25 year contracts Lenders to DBFM Cos SPV for Lewisham Extn Equity investors in DBFM Cos For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 5

6 Different models Docklands Light Railway DBFM extensions Key considerations Where a rail network already exists, it is both practical and possible to extend or expand an existing rail network by separating the infrastructure contracts (DBFM) from both the provision of the rolling stock contracts and the train operation contracts. A phased approach to the extension/ expansion of an existing rail network can improve the deliverability of the project on a PPP procurement basis as the procuring agent has the opportunity to gain experience and refine the PSC/PPP model with each successive extension For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 6

7 Different models Crossrail Crossrail Crossrail Business Rates Supplement and the Mayoral Community Infrastructure Levy Crossrail also successfully negotiated certain property owner contributions as a source of a portion of its funding these income streams will be supplemented by proceeds from the sale of land and property purchased to facilitate this development For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 7

8 Different models Crossrail Crossrail Crossrail shows that under certain conditions, financing can be raised by the public sector, by making use of various contributions from the private sector and alternative taxing of the private sector For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 8

9 Different models Northern Line extension Northern Line extension High capacity link to existing underground Public sector capital financing Borough councils and Greater London Authority to borrow with Treasury repayment guarantee The loan will be repaid through a levy on the area s development sites and through future growth in business rates revenue For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 9

10 Different models London underground Northern Line Extension Key insights The financing of railway projects is not limited to project finance, however, the project needs to be appropriately structured and the procurement documents need to allow for alternative financing sources For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 10

11 Contents 1. Challenges of passenger rail financing 2. Different models 3. South African ideas 4. Conclusion For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 11

12 South African ideas Gautrain Gautrain Full single PPP Concession 80km track, 10 stations Fare income covers O&M costs after 5 years General passenger Service and Airport Passenger Service For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 12

13 South African ideas Sources of funding Potential Funding Financing: matches timing of receipt of funding to cashflows Underwriting of sufficient total funding to complete required elements of the scheme to produce the necessary revenues Contributions from Fare box Contributions from other sources Ongoing subsidy/ commitments from the three spheres of Government Contributions from commercial developers Capital contributions from the three spheres of Government Total required capital financing Senior debt, bonds, ECA Mezzanine debt Equity/ Subordinated debt Financing by project not required where timing of grant receipts matches capital spend For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 13

14 South African ideas Another possibility Another possiblity Challenge how to add to existing network and how to finance the extensions 148km of new track and 19 stations Demand modeling shows the need to phase roll out over a number of years For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 14

15 Contents 1. Challenges of passenger rail financing 2. Different models 3. South African ideas 4. Conclusion For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 15

16 Financing rail is dependent upon the project structure and network status (greenfield vs brownfield extension) and can accommodate more than just a traditional senior debt approach For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 16

17 For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 17

18 For information, contact Deloitte Touche Tohmatsu Limited AirRail Financing 18

19 Jean-Pierre Labuschagne Africa Lead: Infrastructure & Capital