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A._Auboeck_3

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Nikos Kasimatis
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Support for City Projects

- Grants, PPPs, Finance -


Alexander Auboeck
Senior Finance Expert
JASPERS/EIB

Smart Sustainable Cities Financing Forum


Liechtenstein, 7-8 November 2016
What is JASPERS?
 A technical assistance partnership between three
partners (EU, EIB and EBRD), legally part of EIB
 Independent advice to beneficiary countries to help
prepare high quality major projects to be co-financed by
EU Structural and Cohesion Funds
 Focus on assignments related to major projects with total
eligible cost exceeding EUR 75 million (transport sector)
and EUR 50 million (other sectors)
 Flexibility for assignments of smaller cost
 Provides advice on project preparation, strategies,
horizontal issues (but JASPERS is not consultant)
 Sectors: Roads, Rail and Public Transport, Water,
Energy, Solid Waste, Smart Development
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Why is JASPERS relevant?
 Bottleneck is often not the availability of financing but the
sound preparation of projects which makes financing
possible
 It assists in the use of EU Structural and Cohesion
Funds by the Member Countries in underdeveloped
regions of Europe (more than EUR 351.8 billion for
7years)
 Specifically, under the European Regional Development
Fund (around EUR 100 billion) a portion will be used for
integrated projects in cities
 Support from Structural and Cohesion Funds helps
making projects more affordable
 Funds can be blended with commercial loans, EFSI
loans (European Fund for Strategic Investment) and 3
“Traditional” PPPs for City Projects

 Long term arrangement between public and private


sector to deliver public (infrastructure) projects
 Focus is on delivery of services rather than assets
 The private party bears significant risk and management
responsibility over the whole life of the asset
(construction and operation)
 Sectors: water, wastewater, district heating, airports,
street lighting, trams, metros, waste, parking, ring-roads
 Two basic options: user pays to concessionaire;
availability payments by city
 Experience has been mixed but if done well “Value for
Money” can be excellent

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“PPPs” in the Smart Cities context (1)

 Projects such as connectivity projects (broadband); open data


projects; smart energy grids; intelligent mobility projects
(congestion relief, electric vehicle infra); energy efficiency
(smart metering; building control systems); infrastructure for
entrepreneurs and startups (e.g. business parks), IT platforms
 Innovative schemes will have to be developed which go
beyond the classical structures where assets are built and
operated for a long period
 Private sector will have stronger upstream involvement
 Procurement of projects is issue where private companies
worked on pilots

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“PPPs” in the Smart Cities context (2)

 Because of technology focus much more flexibility


needed
 Private sector still perceives the risks to be too high
 Blending public and private funds will feature prominently
because positive externalities can often not be fully
captured through fees
 Operators may first build and operate core assets (e.g.
telecoms) and then branch out into new areas such as
health, education, safety, home automation…

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Why PPPs?

 Can improve management and maintenance (and better


quality of construction) through “Whole-of-life” approach
 May lead to better project selection
 Improved risk management creates efficiency benefits
 Are more likely to be completed on time and within budget
 Can access additional sources of financing
 Benefits of third party scrutiny
 Can spread payments over time
 Value for money

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Key policies to underpin a PPP programme

 Clear and visible political commitment


 Public sector awareness of resources required to prepare
and pay for projects
 Strong governance, quality control and approval processes
including clear rules for use of PPPs, market sounding
 Technical expertise available within or to the public
authority (e.g. PPP Units, appropriate advisory budgets)
 Good communication across government and to citizens
 Market sounding and longer term shaping strategy (e.g.
use of programmes, development of project pipelines)
 Realistic timeframes for preparation and procurement

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Financing Sources
 EU for various support schemes (grants, guarantees etc)
plus national, regional and municipal support – especially
for projects where part of project is an “enabler”
 EIB, potentially with support from European Fund for
Strategic Investment (EFSI) and with input from the
European Investment Advisory Hub (EIAH); the EIB has
provided EUR 56 billion for urban infrastructure in 5 years
 EBRD with focus on lending to final beneficiary and using
loan as vehicle to promote change and restructuring;
excellent track record in Central- and Eastern Europe
 National development banks
 Commercial banks
 Venture Capital and Equity Funds
 Cloud Funding
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For info or further questions, please contact:

Alexander Auboeck
JASPERS Senior Finance Expert
ph: +43 1 505 3676 78
mail: [email protected]
www.jaspersnetwork.org
[email protected]

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