This report presents the findings of an evaluation of "Public-Private Partnership" (PPP) Projects financed by the EIB. Fifteen projects which were either fully operational or close to full completion were selected for a desk review, based on data and information available within the Bank. Ten of these were then selected for in-depth evaluation, covering the scope and geographical range of the Bank's PPP portfolio. The evaluation assessed the performance of the projects against the Bank's standard evaluation criteria1 in line with normal EV practice, but also paid particular attention to the Bank's role in the process and the impact of the PPP structure on both the project and the Bank.
Concession-based transport and utilities projects have existed in EU Member Countries for many years, particularly in France, Italy and Spain, with revenues derived from payments by end-users, e.g. tolls. Expansion to a broader range of public infrastructure, combined with the introduction of payment by the public sector rather than end-users, started around 1992 with the introduction of the "Private Finance Initiative" (PFI) in the United Kingdom. While the use of PPPs has spread to most EU Member States, the UK is still the largest and most diverse PPP market.
There is no simple, single, agreed definition of the term PPP. So, for the purposes of this evaluation, a PPP was defined to be the private-sector construction and operation of infrastructure (including Concessions) which would otherwise have been provided by the public sector. While the evaluation was under way, Eurostat published guidelines on when a PPP could be taken off the national "balance sheet": there must be a transfer of risk to the private sector of both project completion and either project use or project availability. In practice, there was a high degree of commonality between projects meeting the definition used by EV and those conforming to the Eurostat guidelines.
Generally, but not exclusively, EIB PPP projects involve a project finance-style loan to a private-sector Special Purpose Vehicle (SPV) which has been set up to undertake the project. In all of the projects evaluated, the EIB loan was guaranteed during construction, usually by private-sector banks. In some cases, these guarantees were released once the project was proven to be operating satisfactorily.
There is clear EU support for the use of private funding for public infrastructure, including the use of the PPP mechanism, and for the EIB playing a major role in that process. By the end of 2003, the Bank had signed loans to the value of EUR 14.7 billion for PPP operations. However, eligibility for EIB funding is based on the underlying project, not the fact that it is a PPP. Further information on the Bank's PPP operations my be found in "The Role of the EIB in Public Private Partnerships (PPPs)" which may be found at www.eib.org/publications.
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1 Relevance/Efficacy, Efficiency and Sustainability. See Appendix II for definitions.