Public-Private Partnership (PPP)

Alstom Transport’s experience

Philippe Pegorier, Martin Vaujour

03/06/2011

Agenda

ALSTOM TRANSPORT

PPP – AT’s EXPERIENCE

CONCLUSION

ALSTOM GROUP

TURNKEY SYSTEMS

Alstom

Three main activities

96 000 employees in 70 countries

Power sectorEquipment & services for power generation

Transport sectorEquipment & services for rail transport

Grid sectorEquipment & services for power transmission

Three main activities

Transport5.8 €bn

Total sales 2009/10 : €23 bn*

Power13.9 €bn

30%

51%

19%

* Proforma figures

Grid3.5 €bn(2009)

Alstom Transport

A worldwide presence

Latin America2 5009,5%Asia Pacific

1 3005%

North Europe5 800 22,1%

North America1 1004,2%

South Europe670025,5%

26 000 employees in more than 60 countries

France8800 33,6% CEI

200,1%

Alstom Transport, the only railway multi-specialist

The only manufacturer in the world to master all businesses of rail sector The most complete range of systems, equipements and services: • -

Rolling stock

• - Infrastructures

• - Signalling

• - Services

• - Turnkey systems

N°1 in high and very high speed N°2 in urban transport (tramways, metros) N°2 in signaling N°2 in maintenance

Metro

Regional

Locomotives Very high speedDISTANCE

SPEED

Tram-Train

Tram

High speed

A wide range of products and services

Suburban

Rolling stock : from trams to very high speed…

A wide range of products and services

Infrastructure, signalling, services and maintenance

SIGNALLING

INFRASTRUCTURE

Track laying

Electrification

Electric power supply

Electromechanical equipment

SERVICES AND MAINTENANCE

Full Maintenance Management

Spare parts management

Renovation

Traintracer

AtlasRevolution in interoperable drive systems

UrbalisOptimal and efficient monitoringof complex urban transport systems

Turnkey systems

Optimised turnkey engineering phase

Alstom has a large system engineering team which guarantees • Co-ordinated turnkey design team integrating each subsystem • Selection of products and solutions to optimize the Life Cycle Costs• Sophisticated RAMS (Reliability Availability Maintainability Safety) simulation team and

tools• Planning optimisation reducing construction time

Our large experience allows costs optimisation • Better logistics management• Mutualisation of resources• Optimization of site organisation

Public-Private Partnership

AT’s experience in railway projects

PPP & Concession : General Definition

A PPP & Concession’s Project is a project which includes through a single contract :

− the construction of all or part of a railway transport system

− the financing of all or part of the construction by the private sector

− the operation and/or maintenance of the railway transport system

− the revenue, taking into account (part of) the traffic risk and/or performance risk (availability, reliability , …)

A  PPP or Concession’s Project  (BOT, BOO, DBFOM, DBFM…) is a project where Alstom :

− has its usual role of contractor / supplier / maintainer

+

− acts as shareholder of a Special Purpose Company (SPC)

+

− mobilizes private fundings (equity, limited recourse financing) to implement the Project and secure its scope of works

PPP & Concession: Alstom Definition

Consortium Construction

Lenders

Conceding Authority

Special Purpose Company

Consortium(Exploitation) & Maintenance

PPP contract

O&M contract

Engineering, Procurement and

Construction (EPC) contract (turnkey)

Loan contract

Debt service

Users

Capital subsidy

Operating subsidies

PPP contractual scheme :

Shareholders

PPP typical structure & benefits

Risk transfer

Budget control

On-time delivery

Substitute Capex by Opex

Main benefits for the customer :

Investment scope

Operational scope

Civ

il work

s

Ele

ctro

-m

ecan

ic

Rollin

g S

tock

Con

stru

ctio

n

Op

era

tion

Main

ten

an

ce

Benefits Drawbacks Examples

1/ Global project setting up

X X X X X XNo interface to deal with

Private sector totally responsible

Well-adapted to tramway projects

Financial flow too important for high speed projects

TAV Brazil

2/ PPP for infrastructure only

X X - X - X

Facilitating multiple operation

Private sector totally responsible of the line

Possible segmentation into portions

Lead to hold a precise preliminary referential for operation by third operators

Not much adapted to tramway or metro

RFF France

California

Spain

3/ PPP for superstructure only (or for selected portions)

- X - X - X

Multiple operation facilitated

Direct control on civil works by the customer

Private sector committment to the system

Possible segmentation into portions or trades

Reducing risk transfer (interfaces)

Not much adapated to tramway or metro

HSL Zuid Nthlds

Example: Three possible schemes for a High Speed PPP project:

Why is Alstom involved in a PPP ?

• Life cycle cost: long-term performance maintening from the conception phase to the operational phase

• Industrial Alstom share in a PPP, up to:- 20% for high speed, - 30% for metros,- 80% for tramways

• Being minority shareholder in the SPC, Alstom fulfils its global committment towards the Customer and the shareholders

• Mid-term & long-term balance between customers’ and Alstom’s interests

Unique expertise as a railway system integrator:

PPP projects:

Laws context

Grounds

Rights

Subsidies

Design & construction

Operation & maintenance

Capital

Financing Banks

PPPproject

Private sector

Passengers

Public sector

What each one bringsWhat each one gets

Risk sharing

Turnkey solution

On-time delivery commitment

Betterbudget control

Service Quality

Design & construction Contract

Financing Contracts

Dividends

Operation &Maintenance

Contract

Farebox Income

RISK SHARING MATRIX Alstom views – Subject to negotiation

Land acquisitionDesign & Construction

Modification of standards and normsOperation and maintenance

Exchange rateTicket price

InflationChange orders

Level of serviceTraffic

Interest rateTechnology

New competition modesPolitical risks

Conceding Concessionaire

PPP: Major Success Factors

Sustained political support to the project

Adequacy of legal concession frame with international standards

Realistic assessment of the investment cost and/or of the revenues of the passenger traffic at the ‘feasibility’ stage

Past experience of the country for such projects

The conceding authority must have the financial capacity to support the project

Well-balanced risk sharing between the conceding authority and the concessionaire

Strong committed , experienced, international and local partners for construction, operation, and financing

Limited number of partners at Concession and EPC levels

Alstom’s References

Arlanda Airport Link - Sweden 1994 45-year concession; 40 km line/7 EMU trains

Barcelona LRT Ph 1- Spain 200028-year concession; 16km/19 Citadis LRV’s

Barcelona LRT Ph 2 - Spain 200325-year concession; 14km/18 Citadis LRV’s

Jerusalem LRT Line 1- Israel 200430-year concession; 14km/46 Citadis LRV’s

Florence LRT Lines 2&3 – Italy 2005 25-year concession; infrastructure

Milan metro Line 5 – Italy 200632-year concession; infrastructure

Milan metro Line 5 extension – Italy 201032-year concession; infrastructure

Reims LRT Line 1 – France 200630-year concession; 11km/18 Citadis LRV’s

Nottingham Tramway Phase 2 - UK 201123 years concession, turnkey/22 Citadis LRVs

Barcelona

Reims

Arlanda

Conclusion

General Key Messages

The State have to create upstream adequate political and legal frame

A too complex environment does not attract investors

A direct investment from public authority is a must

Allow use of Export Credit from Supplier to leverage additional support

Part of the payment (including revenues) to be considered in strong currency (or to

provide Forex guarantees)

The risk matrix should be discuss locally and take into consideration the local

environment as well

www.alstom.com