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    PF Group 11 Aquasure

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    siby13172
    The document discusses a public-private partnership (PPP) for a $5.2 billion, 30-year water desalination project in Victoria, Australia. It outlines some key aspects of PPPs, including how they can help with constrained government budgets but also present challenges like bilateral monopolies. The document then details how project risks were allocated and mitigated between the main parties - the state, private operator Aquasure, construction and maintenance contractors, and providers of financing. It explains the state played a key role by providing land, debt guarantees, and acting as a lender of last resort when only $1.925 billion of the required $3.671 billion in financing could be secured from banks due to the

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    PF Group 11 Aquasure

    Uploaded by

    siby13172
    225 views13 pages
    The document discusses a public-private partnership (PPP) for a $5.2 billion, 30-year water desalination project in Victoria, Australia. It outlines some key aspects of PPPs, including how they can help with constrained government budgets but also present challenges like bilateral monopolies. The document then details how project risks were allocated and mitigated between the main parties - the state, private operator Aquasure, construction and maintenance contractors, and providers of financing. It explains the state played a key role by providing land, debt guarantees, and acting as a lender of last resort when only $1.925 billion of the required $3.671 billion in financing could be secured from banks due to the

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    The document discusses a public-private partnership (PPP) for a $5.2 billion, 30-year water desalination project in Victoria, Australia. It outlines some key aspects of PPPs, including how they can help with constrained government budgets but also present challenges like bilateral monopolies. The document then details how project risks were allocated and mitigated between the main parties - the state, private operator Aquasure, construction and maintenance contractors, and providers of financing. It explains the state played a key role by providing land, debt guarantees, and acting as a lender of last resort when only $1.925 billion of the required $3.671 billion in financing could be secured from banks due to the

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    225 views13 pages

    PF Group 11 Aquasure

    Uploaded by

    siby13172
    The document discusses a public-private partnership (PPP) for a $5.2 billion, 30-year water desalination project in Victoria, Australia. It outlines some key aspects of PPPs, including how they can help with constrained government budgets but also present challenges like bilateral monopolies. The document then details how project risks were allocated and mitigated between the main parties - the state, private operator Aquasure, construction and maintenance contractors, and providers of financing. It explains the state played a key role by providing land, debt guarantees, and acting as a lender of last resort when only $1.925 billion of the required $3.671 billion in financing could be secured from banks due to the

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    Presented By: Group 11

    Submitted To: Prof. Abhijeeth S.


    7/21/2014
    Beginning
    Our water our future campaign.
    Deal worth of 5.2 billion for a period of 30 years and
    1 month.
    Reasons Drought and population growth.
    Financing through PPP

    Some aspects about PPP:
    Constrained government budgets.
    Encouraged efficiency in delivery of infrastructure
    service.
    Tighter monitoring to ensure quality.
    There should be real competition in PPP auction.
    Immovable infrastructure Bilateral monopoly.
    Difficult to punish non compliance by firm.
    Filter for White Elephants
    Partnerships Victoria- Centralized authority for PPP with
    intention of growing the market- Adopted PSC(Public sector
    Comparator).
    PSC:
    1. Raw PSC = capital cost of construction + operating cost
    2. Competitive Neutrality adjustment= Tax saving from public
    ownership.
    3. Transferable Risk = Expected cost of risk transferred to pvt
    provider.
    4. Retained Risk = Expected cost of risk transferred to
    government
    CAPM APPROACH
    Systematic Risk Holder
    Discount Rate = CAPM RATE
    No systematic risk
    Discount Rate = Risk free rate
    *complication involved in different pattern of cash outlay.
    Revenue for AQUASURE
    1. Monthly water security payment- Cover fixed cost
    2. Monthly water usage payments- As per amount
    ordered.

    AQUASURE was not entitiled to sell water to third party.!
    Party involved Risk
    Aquasure Throughput risk
    The Sponsors Resource risk, Technical risk
    The state of Victoria Socio political risk, Completion risk
    D & C Contractor Completion risk
    O & M Contractor O & M Failures
    Transmission line operator Completion Risk
    Electricity and REC provider (AGL Energy Ltd.) Throughput risk
    Equity Providers Resource Risk
    Debt Providers Completion risk, Interest rate risk
    Risks Associated With The Project
    Risk Mitigates
    The key player's risks in the structuring of the project were
    mitigated in the following manner:

    The State of Victoria:

    The state would provide support by procuring alternative
    funding
    Procuring state supported guarantee for the debt funding
    Termination of the project and payment of the relevant
    termination

    Risk Mitigates
    Pay out of the balance of any unrefined debt
    Price reset mechanism in case AGL technologies became
    insolvent or a defaulter after 10 years.

    Design and Construction Contractor:

    To avoid the risk of undersupply and risk abatement to
    service payments, the plant would be built with redundancy
    and additional capacity with parallel processing and modular
    design.


    Risk Mitigates
    Operations and Maintenance Contractor:

    The risks of failures were borne by O&M contractor but
    were protected by joint and several guarantees by the parent
    company.

    Role of The State
    The state was responsible for procuring the land for
    desalination plant and related infrastructure.
    The state provided support for financing the project through
    guaranteeing the debt project.
    a) Global financial crisis
    b) Equity investors demanding higher returns & liquidity
    premium.
    c) The consortium could only secure A$1.925 billion
    d) Remaining A$1.746 billion was to be syndicated to a wider
    group of banks.
    Role of The State
    e) The state effectively acted as a lender-of-last-resort.
    Thank You

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