Responsible Agencies are required to budget for financial liability and budget impacts that arise over the life of the project, including financing costs. This includes budgeting for the capital, operational and financing elements of availability payments (also known as service payments) in accordance with relevant accounting standards, and NSW Treasury guidelines and policies.
In order to budget for financial liability and budget impacts associated with Availability PPP projects, Responsible Agencies are required to develop a budget model in consultation with NSW Treasury after the contract is awarded. The development of the budget model should be included in the scope of work for the financial adviser at the time they are engaged by the Responsible Agency on the PPP project.
The budget model is used for the Responsible Agency's budgeting purposes and should be derived from the Base Case Financial Model agreed at the time of Financial Close. The budget model should reflect the Responsible Agency's financial liability and budget impacts arising over the course of the Availability PPP project. In consultation with NSW Treasury, the Responsible Agency must update and maintain the budget model for any changes prior to the annual State budget process.
Treasury uses the budgeting for Availability PPPs data to assist with consideration of the:
• financial impact of Availability PPPs on the State budget over the PPP lifecycle (i.e. project procurement, development, construction and operations)
• impact of Availability PPPs on State Budget Aggregates (e.g. the impact to State Gross Debt, and State Net Debt)
• financial implications of Availability PPPs and ensure that they are appropriately captured for longer term fiscal planning purposes; and
• impact on the State's credit rating.