This document provides an overview of public-private partnerships (PPPs) for toll road projects. It discusses key elements for evaluating BOT project economics, including country environment, concession environment, public-private risk sharing, sponsor ability, and financial market environment. It also covers different tolling models and concepts, as well as critical risks and success factors for tolled PPP projects. The document aims to outline effective collaboration between the public and private sectors for delivering tolled bridge and highway projects.

1. Successfully Delivering PPPTolled
Bridges and Highway Projects
Effective Collaboration Between
Public and Private Sectors
Loay Ghazaleh, MBA, BSc. Civil Eng.
Bridges / Highways Bahrain & Saudi Arabia – April 2016

2. Contents
 Introduction to PPP &Tolling
 Critical Elements for BOT Project Evaluation
 Tolled BOT Project Economics
 BasicTolling Models Comparisons
 Alternative Risk And Profit Sharing Models
 Concession Agreement for Highways
 Successes and Failures Examples of PPP Road Projects
 Finally, IJ Global Data inTolled Roads
2

3. Introduction to PPP & Tolling
3

4. PPP in Infrastructure
 Infrastructure whether financed through traditional
methods or PPPs relies on funding sources to repay
financing, whether debt, equity, or a combination.
 All infrastructure investments ultimately depend on
either user fees, government tax revenues, or a
combination of both.
 Therefore, community and political support for greater
investment of government tax revenues or the imposition
of user fees is critical to expanding investment in public
infrastructure.
 The challenge is for PPPs to demonstrate overall cost
savings and efficiencies that outweigh the lower-cost
financing advantage of traditional procurement.
4

5. Purpose of Public Private Partnerships
(“PPP’s”)
PUBLIC PRIVATE PARTNERSHIPS
…have many forms and seek to provide the public sector with a variety of
benefits
PROMOTE
Entrepreneurial
Development
CAPITALIZE
Additional Sources
of Private Equity
and Flexible
Corporate Debt
Structures
ACCELERATE
High Priority
Projects
TRANSFER
New Technologies
and Engineering
Techniques
BENEFIT
From Private
Expertise and
Specialized
Management
5

6. PPP’s : A Win-Win Solution For
Infrastructure Development
Government
Objectives
Private Sector
Goals
Alleviation/removal of
the Government’s role
Injection of private
capital in public
services
Increased budgetary
certainty
Introducing private
sector efficiencies
PPP
Maintaining oversight
to ensure quality
Attractive risk weighted
returns
Government guarantees
mitigate certain risks
Long-terms investment
opportunities
Upside from
operational
outperformance
To operate under a clear
regulatory framework
6

7. Un-Accounted Government Costs in
Traditional Procurement!!
Capital and operating costs are paid for by the
public sector, including costs related to cost
overruns and late delivery of the infrastructure.
Cost
Overruns
Construction
Phase
Operation & Maintenance
Phase
O&M Cost Overruns
Estimated
Investment
Costs
O&M Costs
100% Public Financing
Delays
Costs
Time
The public sector only pays over the long term once
the infrastructure has been delivered according to
contractual requirements.
Construction
Phase
Operation & Maintenance
Phase
Payment to private sector to
cover fixed and variable costs
(Incl. debt service and equity
return)
PPP
Costs
Time
7

8.  Infrastructure investments inherently involve huge sunk costs and create
assets that are long-lived and are location-specific.
 Creation of Infrastructure has economics both of scale and scope (i.e.,
minimum size of facilities, inelastic adjustment of capacity to demand, long
term project completion, etc..).
 Transport supply systems contain elements of natural monopoly.
 Demand is wide spread (difficult to target).
 Revenues are usually in local currency (mismatch if foreign debt financing).
 Services have an essentiality component that raise legitimate public policy
concerns of affordability.
However ………..
 Transport has a great impact on economic growth and poverty alleviation.
 Sound transport infrastructure allows countries to integrate to the global
economy and increases competitiveness
The Economics of Transport
Infrastructure
8

9. 9
PPP Options in Transport
Full Divestiture
Technical
Assistance
Service
Contract
Management
Contract
Lease
Contract
Concession Contract
3-5 yrs
5-15 yrs
1-3 yrs
25-30 yrs
Risktransferredcontractuallytoprivatesector
As the term increases, amount of risk allocated to the private sector is increased
Contract Duration
Limited risk transfer to private sector
Government control
Full risk transfer
No government
control
Substantial risk
transfer
Government
control
Most common
PPP model

10. BOT Contract Structure in Roads
 The build-operate transfer (BOT) model is the most common
approach used to assign responsibilities for toll road development
that include ; design, construction, maintenance, toll collection,
arranging financing, and legal ownership.
 BOT is a broadly defined term that encompasses build-own-operate-
transfer (BOOT), build-lease-transfer (BLT), rehabilitate-operate-
transfer (ROT), lease-rehabilitate-operate (LRO), etc.
 BOT structure involves the grant of a concession (sometimes called
an authorization or a license) by a properly empowered
governmental authority (the grantor) to a special purpose company
(the concessionaire).
 Under the concession, the concessionaire would agree to finance,
build, and operate a facility for a limited time, typically 20 to 35 years,
after which responsibility for the facility is transferred to the
government, usually free of charge.
10

11. Toll Road BOT Structure
11

12. Public vs. Private Toll Road Structures
Public Private (PPP)
Goals
 Improve transportation
 Respond to political environment
 Maximize present value cash flow
 Provide customers a quality product
Tolling/Revenue
Restrictions
 Toll increase typically limited to
covering O&M and debt repayment
 Political pressure
 Toll rate covenant / committment
 Set tolls at lesser of (1) market level and
(2) concession agreement limitation
 Political Pressure to Public Entity
 Typically no toll rate covenant
Financing
 Government Funding
 International Loans
Tax-Exempt Debt
 Equity (15-30% of financing)
Purpose of Debt
 Finance initial development and
subsequent improvements
 Maximize leverage to minimize cost of
capital/maximize bid price
Traffic/Revenue
Modeling
 Focus on cost recovery/downside  Focus on business approach and upside
for equity
Surplus Revenues
 Fund capital improvements for facility
and other eligible projects
 Fund capital improvements for facility
 Recurring equity dividend payments
12

13. Options for Existing Toll Facilities
Maximum Public Control Maximum Private Control
13
Management Agreement
Long Term Concession
Agreement
Privatization
Management contract up to
15 years
Long term lease (can be
up to 99 years). Public
maintains title ownership
Ownership of asset
/ title Acquisition
Management contract
subject to termination
similar to other vendor
contracts
Public can reclaim
revenue and operations
of asset in event of non-
performance or default
Private Entity has
ownership,
operating flexibility
and responsibility
Private Entity manage road
and receives fixed
compensation with limited
incentives tied to revenues
Private Entity has
operating
risk/management
responsibility
No limitation on
tolling
Public Entity retains overall
operating risk/management
responsibility
Various types of limits on
possible revenue
Bears full risk

14. Toll Charging Concepts
14
 Road tolls were levied traditionally for a specific access (e.g. city) or
for a specific infrastructure (e.g. roads, bridges). The evolution in
technology made it possible to implement road tolling policies based
on different concepts.
 The different charging concepts are designed to suit different
requirements regarding purpose of the charge, charging policy, the
network to the charge, tariff class differentiation etc.
Time Based Charges and Access Fees: a road user has to pay for a given
period of time in which he may use the associated infrastructure. For
practically identical access fees are charged, the user pays for the access
to a restricted zone for a period or several days.
Motorway / Passage Tolling: Tolling can be used for charging bridges,
tunnels, mountain passes, motorway concessions or for the whole
motorway network of a country.
Distance or Area Charging: In a distance or area charging system
concept, vehicles are charged per total distance driven in a defined
area. Some toll roads charge a toll in only one direction like city-bound

15. View on the Use of Tolls Generated
from Roads
15
 Tolls are Government fiscal revenue to be allocated to any sector
 Tolls are used to reduce congestion and negative environmental
effects, thus tolls should be used in these areas alone.
 THERFORE Allocation is;
 BEST; Explicit dedication to the facility (roads)
 Okay; General dedication to system (network)
 Poor; General dedication to transport
 BAD; General purpose revenue
 NOTES;
 Fuel tax and tolling are complimentary!
 Toll roads are supplementary in the roads system, not fulfilling the basic
needs of the system / network!

16. Success Factors & Criticism on Tolling
16
 Success Factors for Tolling
 Win public respect and support
 Demonstrate a real dedication to solving congestion
 Adopt measurable performance results
 Accept public consumer sovereignty
 Criticism!
 The traffic diversion resulting from the tolls can increase
congestion on the road system and reduces its usefulness.
 By tracking the vehicle locations on tolled roads, drivers are
subject to restriction of their freedom of movement (excessive
surveillance!).
 Tolling is for affluent time focused society!!!

17. Critical Elements for BOT Project
Evaluation
17

18. Critical Elements for BOT Project
Evaluation
In order to attract private capital, a toll road project must
have strong project economics , good Country & concession
Environment and balanced contract structure which result
from a combination of the following elements:
 Country Environment
 Concession Environment
 Public-Private Risk Sharing
 Sponsors’ Ability
 PROJECT Economics [PPP Model / Project Viability]
 Financial Market Environment
 Financing Structure
18

19. Country Environment
 A stable economic and political environment is
critical for attracting investment to a project and
limiting the need for government assumption of risk.
 The environment can be evaluated on the basis of
macroeconomic stability in terms of;
 Country Risk Rating (Institutional Investor Rating)
 Standard & Poor’s Rating (Long Term Sovereign Debt
Ratings)
 Annual Inflation Rate, Annual GDP Growth, Local
Interest Rate
19

20. Concession Environment
 The concession environment refers to the policy, laws, and
procedures a country has in place to support the implementation of a
concession program, including:
 Overall Road Concession Policy;
 Is the government committed to a concession program that is
coordinated with its broader transportation policy?
 Are there successful concessions made thus far?
 Concession Legislation;
 Has the government enacted legislation to encourage concessions
generally and to authorize toll road concessions specifically?
 Concession Process;
 Are the concession term and regulatory mechanism conducive to
attracting long-term private capital?
 Is the bidding process competitive, transparent, and based on
reasonable evaluation criteria?
20

21. Public-Private Risk Sharing
 In principle, in private toll road development risks should be assigned to the public or
private entity “best able to control or mitigate their effect”.
 Also it is to be noted, the transfer of risks and responsibilities to the private sector
would increase the scope of innovation leading to efficiencies in costs and services.
 The main risks facing private toll road projects include pre-construction, construction,
traffic and revenue, currency, force majeure, tort liability, political, and financial.
These risks must all be addressed in a manner satisfactory to debt and equity
investors before they will commit to project funding.
 The private sector is primarily responsible for construction, financing and toll
collection (operation), while the public sector retain legal ownership of the facilities.
 In order for a project to obtain financing, public participation may be required in
areas such as acquisition of right-of-way, all political risk, and, in some cases, traffic
and revenue risk.
 Finally, even though technical parameters is generally output oriented to allow room
for the Concessionaire to innovate and add value, HOWEVER, design responsibility is
shared, with the public sector taking the lead in the preliminary design (including
route alignment, number of lanes, interchanges, etc.).
21

22. Major Risks in an Infrastructure Project
22
Risk Category Example of Downside Risk
Design Design flaws
Construction Construction cost overruns
Delays to completion
O & M Higher operations costs
Higher maintenance costs
Performance Periods of service unavailability
Lower service quality
Policy New competing capacity
Demand (Revenue) Lower utilization than initially forecasted
Financial Higher interest rates
Less favorable exchange rates
Political Adverse Law Change , NewTaxes

23. Sponsor’s (Investors’s) Ability
 A project company is generally a consortium of parties with
focused specialty required for the development of toll road
project.
 The sponsor(s) of the project must have sufficient track records
in executing a number of similar projects in the area and must
be able to assign appropriate team of people at various stages
of project development to coordinate the complex process.
 The team at the early stage must have an expertise not only in
the technical aspect of the project but the financial and legal
aspects in order to construct financial model and to draft
essential contracts using outside experts in the areas.
 Also Sponsors’ ability to assume “necessary” project risk is
considered critical since it is very rare for a toll road project to
be financed on a purely nonrecourse basis.
23

24. GlobalPPPRoadsInvestors
24
Country Company
China China Railway Construction Corporation (CRCC)
China China State Construction Engineering Corporation (CSCEC)
Australia Colonial First State Global Asset Management - First State
Investments
Luxembourg Cube Infraestructure Managers
Switzerland Edmond de Rothschild Group
Italy F2i SGR
Germany Fraport
USA (United States of America) Global Infrastructure Partners (GIP)
UK (United Kingdom) iCON Infrastructure
China Industrial and Commercial Bank of China (ICBC)
Australia Industry Funds Management (IFM Investors)
Hungary Intertoll Europe
South Korea Korail
Kuwait Kuwait Investment Authority (KIA) -Wren House Infrastructure
Management
Malaysia Malaysia Airports Holding Berhard (MAHB)
Mexico Mexico Infrastructure Partners (MIP)
Russia Mostotrest
UK (United Kingdom) Resonance Asset Management LLP
USA (United States of America) Star America Infrastructure Partners
Canada Stonebridge Financial Corporation
USA (United States of America) Stonepeak Infrastructure Partners
Colombia SURA asset management
Australia Transurban
Turkey YDA Insaat

25. PROJECT Economics
[PPP Model / Project Viability]
PPPs have traditionally used
 THE BASIC USER FEE
The private partner collects and retains all fees from consumers of the
service. This model allocates all demand risk and (therefore revenue risk)
to the private partner.
 AVAILABILITY PAYMENTS
The government collects any revenue from users (or charges fuel tax)
and makes fixed, recurring (usually annuity) payments to the private
partner provided the asset meets contracted quality standards.
Because availability payments do not vary with assets use, the
government bears all the demand and revenue risk.
 New “incentive” models are emerging that apply principles from the
regulation of privately-owned energy (electric power, gas and oil
pipelines) and telecom infrastructure to PPP projects namely;
 These models include; THE RATE OF RETURN MODEL, PRICE CAP
MODEL, and “REVENUE SHARING” Model (s)
25

26. Example of A possible Bad Outcome
0
50
100
150
200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
$ million
Payment
Forecast revenue
Actual revenue
Guaranteed revenue
26

27. Financial Markets Environment
Financing structure of a project is generally composed of the equity of
sponsors and other investors with debt financing of various sources,
which sometimes includes that of the governments and involves
various financial markets;
 Foreign equity investments,
 Local equity investments,
 Foreign commercial bank loans,
 Domestic commercial bank loans,
 ECA (Export Credit Agencies) loans and guarantees,
 Multilateral Agencies loans and guarantees,
 Bilateral Official Development Assistance,
 Domestic and foreign bond markets,
 Infrastructure equity funds,
 Subordinated loans,
Financial structure and financial closing of private toll road project may
significantly be affected by the conditions of these markets at the time
of financial closing.
27

28. GlobalPPPFundSources
28
Manager Location Infrastucture Fund
United Arab Emirates Bunyah GCC Infrastructure Fund
Kenya African Renewable Energy Fund (AREF)
France Meridiam Infrastructure Africa Fund
Morocco Infrastructure Fund (MIF)
South Africa Emerging Africa Infrastructure Fund Limited (EAIF)
Africa50 Infrastructure Fund
MENA Infrastructure Fund II LP
Infrastructural, Developmental and Environmental Assets (IDEAS)
Managed Fund
Islamic Development Bank Infrastructure Fund II
MENA Infrastructure Fund LP
UK (United Kingdom) Pantheon Global Infrastructure Fund II
BTG Pactual África FIMM Fund
IFC Global Infrastructure Fund, LP
JCM Capital's Clean Power Infrastructure Fund VI
Argan Infrastructure Fund (ARIF)
InfraMed Infrastructure
South Africa Pan African Infrastructure Development Fund (PAIDF)
South Africa Pan-African Infrastructure Development Fund 2 (PAIDF 2)
African Infrastructure Investment Fund 2 (AIIF2)
UK (United Kingdom) Actis Energy 3
Convergence Partners Communications Infrastructure Fund (CPCIF)
UK (United Kingdom) GCP Sovereign Debt Infrastructure fund
Nigeria ARM Infrastructure Fund (ARMIF)
Nigeria ARM-Harith Infrastructure Fund (ARMHIF)

29. Financing Structure
 Most private toll roads are undertaken on a project finance basis, whereby
investors rely on the performance of the project for payment rather than the
credit of the sponsor. This is also known as “Limited Recourse Financing”, in
which lenders have limited recourse to the sponsors for payment.
 A primary benefit of project finance structure is that it allows sponsors to
keep the project debt off their balance sheet, leverage their resources and to
share project risks with lenders.
 For the construction of the toll road, the intention would be for the
concessionaire to receive sufficient revenues during the operational phase to;
 Service the debt that would be provided by the banks and financial
institutions (the project lenders);
 Cover the concessionaire’s working capital and maintenance costs;
 Repay the investment of the investor (s) who are initiating the project (the
sponsors),
 Provide a reasonable profit for the sponsors and other investors
 To provide enhanced security to the lenders and greater stability to the
project operations, all financial inflows and outflows of the project are to be
routed through an “Escrow Account”.
29

30.  Project Financial Internal Rate of Return: IRR ≥ 12%
 Equity Internal Rate of Return (or Return on Equity): ROE ≥ 16%
 Loan Life Cover Ratio: LLCR ≥ 1.2
 Annual Debt Service Cover Ratio: ADSCR ≥ 1.2
30
The Usual Financial Indicators Target
PPIAF Financial Model – Link

31. Tolled BOT Project Economics
31

32. PPP Project Economics
Project economics refers to the costs of developing,
constructing, and operating a project relative to the
revenue it generates. This is typically measured in terms of
Net Present Value or Internal Rate Of Return on investment
OR equity.
The project economics of a toll road are influenced by a
number of factors;
 Project Function: congestion relievers, inter-city arteries,
development roads, or bridges and tunnels
 Physical Characteristic: new facility or expansion, length
and capacity, geography, toll collection mechanism.
 Market Demand: actual or expected traffic levels,
predictability of expected traffic, willingness of user to
pay tolls.
32

33. Financial Viability of A Highway Tolled
Project
Detailed studies by engineering experts and financial advisers,
including traffic and revenue projections, construction cost
estimates, preliminary design documents for the project, and
financial feasibility studies are essential to ensure;.
 Proper mitigation and unbundling of risks;
 Symmetry of obligations between the principal parties;
 Precision and predictability of COSTS & REVENUES;
The critical elements that determine the financial viability of a
highway tolled project are;
 TRAFFIC VOLUME
 INTEREST & EXCHANGE RATES
 REVENUES
 CONCESSION PERIOD
 GOVERNMENT SUBSIDY / GRANTS (VIABILITY GAP FUNDING)
33

34. Traffic Volume
 A green field BOT toll road project, has a typical cost and revenue
profile of capital intensive business where the break-even point is
high and if such revenue threshold level is not attained, huge loss
would occur.
 Therefore, the project economics of toll road development is very
sensitive to the threshold level of traffic volume, thus proper risk
allocation becomes paramount
 It is generally recognized that economic growth will have a direct
influence on the growth of traffic and that the Concessionaire cannot
manage or control this element.
 Therefore, The rate of growth of traffic risk is allocated to the
Concessionaire ONLY in situations of near natural monopoly or when
existing traffic volumes can be measured with reasonable accuracy.
 Usually Authorities provides for extension of the concession period
in the event of a lower than expected growth in traffic. Conversely,
the concession period shall be reduced if the traffic growth exceeds
the expected level.
34

35. High Sensitivity to Interest & Exchange
Rates
 If the toll road is financed on highly leveraged and
floating interest rate basis, as most of toll road
projects are, the amount of debt service payment in
the beginning years may become considerable.
 Therefore, the project economics is very sensitive to
the level of interest rate as this rate will be
compounded over the life of the project!
 Financing transport facilities and services (local
currency based) in the foreign debt markets adds
substantial risk in the absence of a stable currency
exchange rate.
35

36. Revenues
 Where the project is viable without grants, bidders will be asked to make a financial offer to
the Government, in the form of;
 A Flat Concession Fee Per Annum for the concession period
 Availability Payment (Government pays for capacity)
 Sharing Percentage
 (Minimum) Rate of Return / Price CAP Threshold
 Generally, the revenue share quoted for the initial year is increased for each subsequent
year (ascending revenue share) by an agreed percentage (tied to inflation). The same
applies to Rate of Return / Price CAP models were adjustments are carried out periodically.
 The magnitude of the price adjustment depends in part on the price elasticity of demand,
i.e. the responsiveness of demand to a price change. In general demand responsiveness
tends to be low for infrastructure services because as there are few substitutes readily
available.
 While a variable tolling policy is essential for managing demand and reducing congestion
(like allowing frequent users discounted rates or having seasonal or off peak discounts) , yet
this variability in revenues which is undesirable!
 A toll road project in general has a long start up operating years in loss due to its long lump-
up period for the traffic level to stabilize. Therefore the sponsors of the project would have
to wait for many years before they start enjoying dividends form the project.
 Tolled highways also should be open to use without any payment of tolls until free service
lanes are provided to ensure local support for the project and avoid legal challenges or local
opposition arising out of easement rights.36

37. The Price Elasticity of
Demand Changes Along
the Demand Curve
37

38. Concession Period
 The concession period is determined depending on the
volume of present and projected traffic. Concession
should cease when full capacity of the road is reached as
toll paying users should not be subjected to congested
highways.
 The concession period can be extended “marginally” for
improving project viability as the growth of traffic
(reaching capacity) would not permit very long
concession periods.
 The present value of projected revenues, after say 20
years, is comparatively low from the Concessionaire’s
perspective, thus further extensions may not be desired!
38

39. Government Subsidy / Grants (Viability
Gap Funding)
 Generally, Bidders seek an appropriate capital grant/subsidy from the
Government to reduce the capital cost to arrive at an acceptable rate of
return.
 In the context of a PPP transaction based on pre-stated single financial
parameter competitive bidding, the public sponsor would select the bidder
most likely to deliver the project at the lowest lifecycle cost (least subsidy),
thus maximizing value for taxpayers.
 In this bidding type all project parameters such as the concession period, toll
rates, price indexation and technical parameters are clearly stated upfront,
and short-listed bidders will be required to specify only the amount of grant
sought by them.
 The project grant sometimes reach up 20% of the project cost, where such
assistance is inadequate for making a project commercially viable, an
additional grant can sometimes be used towards O&M.
 THE MORE Government subsidies, the lesser the program of highway
development will be, thus it is important to rely on cost-effective designs and
to combine them with a phased investment to enable a more efficient and
sustainable highway development.
39

40. Example of Basic Data Modeled
Financial Input Traffic Input
40
 Concession term: 30 years
 Construction Cost:----
 Road length: ---- km
 Construction Expenditure;
 Year 1: 15%
 Year 2: 30%
 Year 3: 30%
 Year 4: 25%
 1st Year Operating Cost: ----
 Increase in operating expenses: --%
 Capital structure:
 Equity,20%;
 Subsidies, 0%
 Nominal interest rate: 7% per year
 Loan grace period: 4 years
 Loan repayment period: 15 years
 Discount rate (real terms): 8%
 Inflation: 4% per year
 VAT: 21% , Corporate Tax: 0%
 Opening year Daily Traffic:
------ Vehicles/Day
 Traffic Composition:
 Cars, 70%
 Trucks, 25%
 Buses, 5%
 Average Toll Rates;
 Cars = X
 Trucks = 3X
 Buses = 2X
 Traffic Growth Rate : 3%

41. Questions Typically Answered by
Financial Modeling
41
 Estimate the minimum toll
rate per average vehicle for
the project to be able to
attract private sponsors.
[Note: This toll rate can be
obtained by trial and error by
varying the “Cash Flow” so the
financial indicators calculated
are just above the minimum
required threshold]
 Estimate the minimum
weighted average toll rate in
$/veh-km.
 If the initial average annual
daily traffic (AADT) increases
by 10%, what will be the effect
on the minimum toll rate?
 Estimate the minimum
required amount of
government contribution (i.e.,
subsidies) that would lead to
more acceptable (affordable)
toll rates.
 How does the project financial
internal rate of return (IRR)
vary with the amount of
subsidies? [Note; IRR is
independent from the financial
structure of subsidies, equity,
and credit].
 What would be the impact on
ROE of an increase in subsidies
from 0 to 10%?
 Assuming there will be no
capital grants ,estimate the
minimum annual required
payment by the government
(availability payment) during
the first year of operation.
 Determine the financial criteria
to use in the bidding
documents, so as to facilitate
the evaluation of financial
proposals in the case of
competitive selection of
concessionaires

42. Eurasia Tunnel
42
 Grantor: Republic of Turkey Ministry
of Transport, Maritime Affairs and
Communication General Directorate
of Infrastructure Investments (AYGM)
 Guarantor : Republic of Turkey
Undersecretariat of Treasury
 Concessionaire : Avrasya Tüneli
İşletme İnşaat ve Yatırım A.Ş. (ATAŞ)
 Equity investors :
 Yapı Merkezi İnşaat ve Sanayi A.Ş. and SK
Engineering & Construction Co. Ltd
 Yapı Merkezi İnşaat ve Sanayi A.Ş. and SK
Engineering & Construction Co. Ltd Joint
Venture (YMSKJV)
 Total Investment: $1.245 billion
 Equity: $285 Million
 Loan: $960 Million
 Concession period :29 years
 Construction Period : 55 month
 Operation Period:24 years, 5 months
 Traffic guarantee: 68,000
vehicles per day.
 Concessionaire returns: 30% of
revenue over guarantee to
Grantor.
 Toll: $4.00 (+18% VAT) for
cars.
 Debt financing
 $500m. Direct loans: EIB,
EBRD, Korea EximBank.
 $210m. Commercial bank
loans guaranteed by Korea
Export Insurance
Corporations: Sumitomo
Mitsui Banking Corporation,
Standard Chartered Bank,
Mizuho Bank.
 $200m. EIB loan guaranteed
by three Turkish commercial
banks.

43. BASIC TOLLING MODELS
COMPARISONS
43

44. Features Of the Basic Models
44
Real Tolls Shadow Tolls
Availability/ Performance
Base Mechanisms
Road users pay
for use of the
asset
No actual tolls are collected from
public. Total cost of project falls on
public purse.
Concessionaire is paid for making
road available for public use by the
Authority. Sometimes mixed with
real tolls
Often some form
of subsidy/ very
long concession
period are
needed.
Concessionaire is paid by Authority on
road use – the more the road is used
the more the concessionaire is paid!
The concessionaire pays a non-
availability payment to authority for
road or lane closures out of toll
revenue.
Accurate traffic
volumes
forecasts are
critical to meet
debt service and
equity return for
sponsors.
Usually a banding mechanism, which
applies different tolls to different levels
of traffic is adopted. Commonly;
Amount of deduction/ non-
availability payment usually
determined by reference to factors
including:
Base Case – designed to service
senior debt but not to provide
return on equity
Length of project road that is
unavailable
Higher Bands – provide a return
on equity
Number of lanes affected
Top Band – usually has a toll rate
of zero to cap amount payable to
concessionaire
Duration (& time of day) of
unavailability

45. Comparisons Of the Basic Models
45
Real Tolls Shadow Tolls
Availability/ Performance
Base Mechanisms
Zero cost to the
Government
Can introduce PPP structures
where environment is
perceived to be hostile to real
tolls.
Absence of traffic/ revenue risk
simplifies project
Government has
fiscal space to
fund other projects
Prepare way for real-tolled
roads by cultivating an
industry to take traffic risk
Lower level of due diligence
needed
Reluctance by
investors to
become involved!
Multiple sources of funding
can be drawn on by
concessionaire.
Reduces financing risk on
concessionaire – making
project cheaper
High traffic risk to
the concessionaire
Mechanism of traffic risk
transfer (bands) reduce
complexity of project and
reduce level of due diligence
required
Removes emphasis on
monitoring traffic flows during
operational period
Potential consumer
resistance to
paying for road use
Indirect charge to users like
fuel Tax! No consumer resistance

46. ALTERNATIVE RISK AND PROFIT
SHARING MODELS
46

47. Emerging PPP Toll Models
 New “INCENTIVE” models are being adopted from the utility industry
based on the merits that some investors are attracted to being able
to share the project’s upside with the government in return for some
protection from downside demand risk.;
 Also, this is driven in part by the slow growth of project bond
markets, Basel III Banking reforms, and conservatism among senior
debt lenders to structure PPPs to mitigate or retain risks that private
investors no longer find acceptable.
 Such models include; “The Rate Of Return Model”, “Price Cap Model”,
and “SHARING” models
 In a PPP contract, the initial rate of return, price cap or sharing would
be negotiated between the private partner and project sponsor as
part of the competitive bidding process used to award the PPP.
 Also in the PPP contract returns outside the sharing range would be
addressed with respect to payments mechanism (price adjustments,
or a combination) between the project sponsor and private partner.
47

48. 48
The Rate of Return (RoR) Model

49. The Concept of Rate of Return Model
 The rate of return model balances consumer and investor interests by
placing a limit directly on the allowed rate of return on investment, and
setting a regulated price on the service which can be adjusted at set
intervals
 The concept of a “fair” return in the context of public utility regulation
may include considerations such as whether the return;
1. Is sufficient to maintain the firm’s financial viability
2. Enables the utility to attract additional capital
3. Is comparable to the return earned by other companies with similar
risks.
 The rate of return model protects consumers from excessive rates by
setting a regulated price that approximates what the price would be if
the utility had to compete with similar firms instead of operating as a
monopoly franchise.
 In practice, the realized rate of return which depends on the regulated
firm baseline assumptions of cost and demand may differ from the rate
assumed in the regulatory process.
49

50. The Application of a “FAIR” Return
 The price is calculated to explicitly allow the private firm to recover its
costs and earn a (RoR) on its “RATE BASE,” or its “WEIGHTED AVERAGE
COST OF CAPITAL”
Allowable Price = [O&M + Depreciation + Taxes + (Rate Base* RoR)] /
Demand
 In this model, the regulated firm — or PPP —has to contend with demand
risk until the allowable price is adjusted, either at the next scheduled rate
hearing or by a short-term revenue stabilization measure implemented by
the regulator.
 The time between price adjustments carries implications for risk-sharing
and the incentive to operate efficiently and must balance the public
interest in avoiding sharp toll hikes with the private sector’s need for a
financially viable project. For instance;
 A long wait until the price can increase places more of the demand risk
on the private firm while providing a strong incentive to hold down
costs;
 A shorter wait until the price can increase places less of the demand
risk on the private firm and provides less incentive to lower costs.50

51. Actual Versus Expected RoR Example
For a given level of demand, operations and maintenance cost risk effect is illustrated by
the two lines (Blue & Green) that are parallel to the red line.
51

52. Price Adjustment Effect on O&M and Demand
OPERATION & MAINTENANCE RISK
 Regulated price adjusts slowly ; Provide strong incentive for cost efficiency and technical
innovation however;
 No protection from profit squeeze if costs are higher than expected – Firm Bears Risk
 Firm realizes long term benefits from improved operation efficiency
 Regulated price adjusts quickly; Has the effect of low incentive for cost efficiency and
technical innovation
 Firm protected from profit squeeze if costs higher than expected – Consumer Bears Risk
 No longer long term benefits from improvements in operating efficiency
DEMAND RISK
 Regulated price adjusts slowly; Private firm realized revenue gain on the upside but absorbs
lower revenue on the downside
 Higher than expected demand yields long term revenue gains and higher RoR
 Lower than expected demand causes long term revenue shortfall and lower RoR
 Regulated price adjusts quickly; Consumer realize lower price on the upside but absorb
higher prices on the downside
 Higher than expected demand leads to rapid fall in regulated price, no change in RoR
 Lower than expected demand leads to rapid fall in regulated price, no change in RoR
52

53. Wrap Up on the Rate of Return Model
 The RoR Model provides the firm with greater
protection against demand risk than does the basic
user fee model; it also affords better protection
against operations and maintenance cost risk than
the user fee and availability payments models.
 However, the RoR Model provides somewhat less
incentive for cost cutting than user fee and
availability payment contracts because price is
eventually reduced to reflect cost savings or
eventually raised to reflect cost increases.
53

54. 54
The Price “CAP” Model

55. The Concept of Price “CAP” Model
 The maximum allowable price, or “CAP”, would be allowed to increase
at a rate tied to, but below, inflation as measured by the Consumer
Price Index (CPI) for example, and expressed as a proportion:
Allowable price this year = Allowable price last year * (1+CPI – Rate of
Productivity Improvement)
 The rationale for deducting the Firm “Rate of Productivity
Improvement” is to allow consumers to benefit from such
improvements.
Productivity Improvement Examples; the rate of traffic flow per year on
say a bridge might be increased by using automated toll collection
facilities or by installing traffic congestion management technology on
approaches to the bridge.
 Regulators also may allow a firm to adjust prices in response to factors
beyond its control that have pronounced financial impact on the firm,
such as an industry-specific tax change, new legislation, or a force
majeure (e.g., floods, hurricanes and tornadoes). This factor can be a
positive or negative adjustment.
55

56. Incentives in the CAP Model
 In the price cap model, the firm has a built-in incentive to minimize costs because the focus of regulatory
control is price, not profit;
 There is an added incentive than the user fee model to improve efficiency and reduce costs beyond the
level required by the productivity factor to boost profit potential , however, a high preset productivity
factor may deter or exclude many potential bidders.56

57. Demand Risk in the CAP Model
 Similar to the basic user fee model, under a pure price cap model, demand risk is entirely
borne by the private partner.
 If demand falls short or exceeds expectations, the firm’s total revenue will rise or fall
proportionately (the dashed black line).57

58. Wrap Up on the “CAP” Model
 The Price CAP Model enables the project sponsor to transfer all
demand risk to the private partner because price cannot be
increased in response to a demand shortfall, as in the basic user fee
model.
 At the same time the Price CAP Model provides protection to
consumers against large and unanticipated price increases which may
make the project more attractive to project sponsors and local
stakeholders.
 The Price CAP Model encourages the private partner to be more cost
efficient than does the user fee model by motivating the firm to do
better than the productivity factor considering profits are not directly
constrained. (note; the private firm retains all gains from productivity
improvement in the basic user fee model).
 Where the project sponsor sets the productivity factor (and its
frequency to keep it aligned with changes in actual performance) will
determine both the extent of consumer price protection and the
attractiveness of the project to potential partners: a moderate
productivity factor increases private partner’s efficiency incentives,
but too high may deter or exclude many potential bidders.58

59. 59
The Sharing Models

60. The Concept of the “Sharing Models”
 Risk sharing contracts can directly align sponsor and investor interests and
expands the universe of acceptable deals compared to cases where the
parties’ risk preferences and return expectations are not well-served by
other models.
 In the Sharing Models, the Investor are required to share the project’s upside
potential with the government, in turn, provides some protection from
demand risk on the downside.
 A risk-sharing contract should be flexible enough to provide investors and
public sponsors with a set of acceptable risk-return tradeoffs over a range of
uncertain future demand. In particular, a sharing contract can balance
 The investor’s willingness to share a portion of the project’s upside potential in
return for getting some downside risk protection, with
 The sponsor’s willingness to provide a degree of downside protection in
exchange for a share of the project’s upside gain.
 In a contract negotiation, both sides take positions based on their own
forecasts of demand and project performance; an effective contract will
allocate risks and returns in a way that is acceptable to both parties.
 Return = [Revenue – (O&M + Depreciation + Taxes)] /Fixed assets.
60

61. Example 1: 50% Proportional Sharing Of
High And Low Returns
The private partner retains all profits in a central range, corresponding to the most likely
outcomes, while permitting profit-sharing outside that range. The solid blue lines represent the
private sector return above and below the negotiated return thresholds.61

62. Notes on the Proportional Sharing Graph
 In the “central” range, the contract operates like a pure price cap with
the private partner assuming all of the demand risk.
 Also In the “central” range, the incentives for cost efficiency and
exposure to operations and maintenance risk are the same as in the
price cap model.
 The private partner keeps all of the return between the negotiated
thresholds in the “Intermediate” demand range while shares 50% of
the returns in the low and high regions.
 The closer the blue line is to the dashed black line, the more, the more
incentives and risk exposures resemble the price cap model. (The
upward-sloping dashed black line represents the rate of return under a
pure price cap model).
 The closer the blue line is to the horizontal, the more incentives and
risk exposures resemble the RoR model with very frequent (i.e.
instantaneous) price adjustments.
 In the low range the public sector is still exposed to demand risk, but
the magnitude of the exposure is reduced compared to the RoR model.
62

63. Example 2: Minimum Profit Guarantees
and Maximum Profit Cap
Complete downside protection to the private partner is provided in exchange for a limit on
the upside (The Solid Red Lines).
63

64. Notes on the Profit Guarantees Graph
 The upward-sloping dashed black line represents a pure price CAP
model in which the private partner bears all of the demand risk.
 The private partner keeps all of the return between the negotiated
thresholds in the Intermediate demand range and assumes all of the
demand risk.
 In the no-sharing (central) range, the contract operates like a pure
price cap model without any sharing, and incentives for cost
efficiency and exposure to operations and maintenance risk are the
same as in the price CAP model.
 In both the Low and High demand ranges, demand risk, incentives for
cost efficiency, and exposure to operations and maintenance risk
match the RoR model.
 Compared to the Proportional Sharing Model, the magnitude of the
subsidy to the private partner or payments to the project sponsor is
larger.
64

65. Benefits of SHARING” Models
 Sharing models retain the private partner’s financial incentive to increase
profits while aligning the interests of government and investors.
 Arrangements that include sharing when returns fall below contracted RoR
thresholds partially insulates the private firm from the demand shortfall,
reduces the risk that the project company enters bankruptcy or seeking
contract renegotiation
 If demand is much higher than expected, the government will receive
revenue which it can deploy to make other investments, lower taxes, or
retire debt.
 The sharing of returns above an upper threshold will dampen the private
partner’s incentive to raise prices to a level that would drive returns above
the threshold.
 Relatively risk-averse investors or investors with low confidence in the
demand forecasts may be willing to accept a maximum return cap in
exchange for being fully protected if returns are much lower than expected.
 Investors who are willing to assume greater risk and are more optimistic
about demand may prefer the Proportional Sharing Model because it offers
higher return potential in exchange for less protection on the downside.
65

66. Demand Risk Country Examples!
Whether government should bear demand risk
in toll roads is therefore controversial
 Chile, Colombia, Korea, and Spain, for
example, have provided revenue guarantees
(often in return for upside risk sharing).
 Italy and Turkey gave revenue guarantees for
privately financed railways in the nineteenth
century.
 Australia, Canada, United States have not
given guarantees.
66

67. Concession Agreement for Highways
67

68.  The Public Entity (the “Owner”) typically maintains title to the asset and enters into a long-
term Concession and Lease Agreement with the Concessionaire (the “Operator”)
 The Concession Agreement must fully anticipate any issue that could possibly arise during the
term of the lease
Public Goals for Agreement Private Goals for Agreement
 Transfer operating risk to Private Entity
 Ongoing protection of public interest from the
concession granted to the winning bidder
 Ensure long-term viability of toll road asset
(operating and maintenance standards)
 Certain employment restrictions (non-
discrimination, fair wages, conflict of interest)
 Ensure that Private Entity expands system
in a manner consistent with economic
development and demographic needs
 Maintain flexibility regarding method of
performing repairs and replacements
 Maximize flexibility regarding employment
 Maintain public responsibility for law
enforcement and some environmental issues
 Maximize ability to benefit cost efficiencies
including modern tolling strategies and
technologies
 Minimize risk of future competing toll roads
and freeways
 Ability to assign Concession Agreement
and/or grant leasehold mortgage
68
Public Versus Private Party Goals

69. Concession Agreement for Highways
 The regulatory and policy framework is a pre-requisite for attracting private
investment with improved efficiencies and reduced costs, necessary for
accelerating growth.
 Negotiation of a concession agreement include a detailed allocation of risks
and responsibilities among the various project participants
 Typical issues in Concession Agreement that are important for the parties
involved;
 Monitoring and Supervision
 User Fee Setting Mechanism
 Financial Close
 Support and Guarantees by the Government
 Right of Substitution
 Force Majeure
 Termination Clauses
 Other issues include; dispute resolution, suspension of rights, change in law,
insurance, defects liability, indemnity, compensation / public grievances, user
protection and disclosure of project documents.
69

70. Monitoring and Supervision
 Day-to-day interaction between the Government and the Concessionaire
need to be kept to the minimum, “hands-off” approach, but checks and
balances need to be in place to ensuring full accountability of the
Concessionaire. The Government shall be entitled to intervene only in the
event of a material default.
 Before commencing the collection of user fee, the Concessionaire will be
required to subject the Project Highway to specified tests for ensuring
compliance with the specifications relating to safety and quality of service
for the users.
 Operational performance combined with an elaborate and dynamic
mechanism to evaluate and upgrade safety and quality of service on a
continuing basis is a must as PPP incentivizes cost-cutting.
 Quality must be “contractible” meaning translated into contractual terms
that can be readily verified by the government that include measures on
traffic management, police assistance, emergency medical services and
rescue operations.
 Maintenance standards and workforce wages need to be enforced strictly to
avoid tendencies to reduce costs.
70

71. Typical Questions in Tolled Roads
Performance Metrics
Operations
• Is traffic speeds
satisfactory?
• TrafficVolumes &
Occupancy /
congestion
requirements
• Is pricing
dynamic? –
reflects discounts ,
time of day, etc.
• Is there violation
enforcement (toll
evasion)
• Maintenance
Targets
Political/
Stakeholder
• What to Do with
Excess Revenue?
• Social equity and
environmental
justice
• Relationship to
transit
• Business rules and
operating policies
Customer
• Does it take me
where I want to
go?
• Do I feel safe?
• Is it reliable?
• Is it easy to
understand and
use?
• Does it solve my
problem?
• Value =What else
could I spend my
money on?
Financial
• Will tolls cover
capital and
operating costs?
• Financing
mechanism
• Lender
requirements
• Pricing for
throughput vs.
revenue
71

72. User Fee Setting Mechanism
 A balanced and precise mechanism for determination of
user fee need to be specified for the entire concession
period including any inflation indexation since this would
be of fundamental importance in estimating the revenue
streams of the project and, therefore, its viability.
 Full or at bar indexation is not favored in tolled projects,
as that would require the users to pay more for a
declining (more congested) level of service when they
should be receiving the benefit of a depreciated fee.
 Also a high inflation indexation percentage would also
add to uncertainties in the financial projections (revenues)
of the project.
72

73. Financial Close
 The scope of the project needs to be defined with precision and
predictability in order to enable the Concessionaire to determine its
costs and obligations and therefore is able to make the financial close.
 NOTE; Additional works can be undertaken within a specified limit,
only if the entire cost thereof is borne by the Government at usually
no additional profit to the concessionaire.
 Generally a time limit of 180 days for achieving financial close, failing
which the bid security is forfeited (the time limit can sometimes be
extendable up to another 120 days on payment of a penalty) .
 By prevalent financial conditions, this is a tight schedule, which is
achievable only if all the project parameters are well defined and the
requisite preparatory work has been undertaken.
 Handing over possession of the required land ( or substantial
portions thereof) and obtaining of environmental clearances are
among the conditions precedent to a financial close.
73

74. Support and Guarantees by the
Government
 By way of comfort to the lenders, loan assistance from the
Government can sometimes be stipulated for supporting debt
service obligations in the event of a revenue shortfall resulting
from political force majeure or default by the Government.
 Also Guarantees have been used to protect the Concessionaire
from construction of competing roads, which can upset the
revenue streams of the project.
 NOTES;
1. Additional toll ways generally are allowed, after a specified
period and / or upon compensation to the Concessionaire by
way of an extended concession period for example.
2. If persistent congestion develops on the privately operated
facility, the Government should have the opportunity to add
capacity serving similar origins and destinations;
74

75. Right of Substitution
 It is project revenue streams that constitute the bulk of
securities. Lenders require assignment and substitution rights
so that the concession can be transferred to another company
in the event of failure of the Concessionaire to operate the
project successfully.
 Assignments and Security Documentation in Concession
Contract to Project Lenders
 Assignment of Concession Contract
 Assignment of Construction Contract
 Assignment of Operation & Maintenance Contract
 Charges over Bank Accounts
 Liens & Pledges over Movable Property
 Mortgages Over Land
 Assignment of Insurances
 Assignment of Performance Bonds
75

76. Force Majeure
 Provisions for dealing with force majeure events, in
particular, protection to the Concessionaire against
political actions that may have a material adverse
effect on the project.
76

77. Termination
 In the event of termination, usually a compulsory buy-out is
executed by the Government, as neither the Concessionaire nor the
lenders can use the highway in any other manner.
 Political force majeure and defaults by the Government can qualify
for adequate compensatory payments to the Concessionaire to guard
against discriminatory or arbitrary action by the Government.
 Termination payments need to be quantified and pre-determined to
provide predictability. The project debt is usually “fully” protected
by the Government in the event of termination, except for two
situations,
 When termination occurs as a result of default by the Concessionaire,
usually a percentage of the debt will be protected (can reach 90%).
 In the event of non-political force majeure such as Act of God
(normally covered by insurance), then generally 90 per cent of the
debt not covered by insurance can be protected.
 If the Concessionaire fails to “COMMISSION” the project owing to its
own default, no termination payment would be due.
77

78. Successes and Failures Examples of
PPP Road Projects
78

79. Success
 Procurement process
was transparent
 Focus on creating
public awareness
(tolling culture)
 Government learned as
program developed and
made adjustments
 Attracting international
firms brought finance,
credibility, know-how
etc.…
Failure
 Combination of small
contract duration and low
traffic resulted in high tolls.
 Existence of free roads
contributed to financial
distress of concessionaires
 Public resistance
(willingness to pay not
assessed)
 Overly optimistic traffic
forecasts studies
 Undefined public
contribution of funds.
Lessons learned Worldwide in Toll Roads
79

80. CASE: Hungary M1/M15
Toll Motorway Project
 Hungary M1/M15 was the first toll
motorway tendered and implemented
in Central and Eastern Europe.
 Construction of motorway was
finished in 1995 on schedule and
within budget.
 Traffic volumes were about 40% lower
than anticipated, despite the forecasts
being prepared by independent
experts.
 High toll rate did not cover for the low
volume. Instead, it led to a court case
by dissatisfied road users.
 As a result, the concessionaire was
unable to service its debt and
ultimately the government had to take
over the concession at a high cost.
 Strong emphasis should be
put on forecasting revenues
and costs as part of the
feasibility study.
 Overestimation of revenues
can bankrupt the
concession
Lesson: Solid Revenue and Cost
Estimations
80

81. COUNTRY CASE: Portugal weak
management of its PPP program
 Portugal pursued its first PPPs in the
mid-1990s to more efficiently build
new infrastructure
 The government PPP unit suffered
from lack of experience with PPP
projects and inexperienced staff
 As a result, Portugal’s early PPPs were
subject o constant delays and cost
overruns– by 2003, the country’s PPP-
related liabilities amounted to 10% of
GDP
 Weak public sector capacity was
evident in insufficient risk transfer to
the private sector and delays in giving
government approvals on essential
land and environmental aspects
 Institutional Arrangement should
ensure coordination, technical
support and that checks and
balances are appropriately
applied
Lesson: Strong Institutional
Arrangements
81

82. Strong international competition requires to use international best
practices in preparing, procuring and monitoring PPP projects
KEY SUCCESS FACTORS INCLUDE:
 Careful planning of PPP project
 Solid revenue and cost estimate
 User willingness to pay and communication plan
 Extensive feasibility study with use of PPP experts
 Compliance with contractual agreement
 Appropriate Legal and Regulatory Framework
 Strong Institutions with appropriate resources
 Competitive and transparent procurement
 Mitigation and flexibility in managing macro-risks
Summary of Lessons from Successes
and Failures
82

83. 83
 PPPs are complex and time demanding structures that required full time
dedicated resources from the public sector entities responsible
transport infrastructure development.
 Consideration should be given to a Coordinating Transport PPP Unit that
should ensure;
 Well planned projects with realistic parameters to promote competitive
bidding.
 Highly structured bids; RFP, pre-qualification, bidding, detailed face-to-face
negotiations.
 Performance-based Operation , Maintenance and Management Contracts
 Smart tools for public subsidy
 Projects structure to withstand dips in traffic
 Limitations on Capital Leverage : EBITDA/debt and EBITDA/finance charges
 Built in scheduled renegotiations every 5 years for contract maintenance
 Smart and effective risk mitigation products supporting PPPs if it goes wrong!
The Best Tool To Successes is Project
Planning & Structure!

84. 2015 - IJ Global MENA Data in Tolled
Roads
84

85. 85
 About half of active transport deals are in Asia Pacific.
 Worldwide, transport comprises nearly a third of global pipeline and
procurement deal value. That is second only to oil and gas. .
 By deal count, the United States is the busiest country for transport
deals, with 22 transactions progressing towards completion in the past
nine months.
 IJ Global recorded more infrastructure finance for the transport sector
in 2015 than in any previous year since 2008.
2015 - IJ Global Data in Tolled Roads

86. 2015 Sponsors League – MENA Region
86
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1 Saudi Aramco 3,247 2 16
2 Sumitomo Corp 3,047 1 15
3 ACWA Power 2,643 9 13
4 ACWA Holding 1,617 2 8
5 Mubadala Development Company 1,274 2 6
6 Shikun & Binui 535 1 3
7 Abengoa 535 1 3
8 Air Products and Chemicals 530 1 3
9 Moroccan Agency for Solar Energy 500 2 2
10 Sahara Petrochemical 467 1 2

87. 2015 Mandated Lead Arrangers (MLA’s)
League – MENA Region
87
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1 Sumitomo Mitsui Financial Group 1,661 8 13
2 Mitsubishi UFJ Financial Group 1,658 7 13
3 Mizuho Financial Group 1,350 7 10
4 HSBC 1,045 5 8
5 Banque Saudi Fransi 584 4 5
6 Samba Financial 480 5 4
7 BNP Paribas 416 3 3
8 National Bank of Abu Dhabi 402 3 3
9 Bank Muscat 402 3 3
10 First Gulf Bank 369 3 3

88. 2015 Development Finance Institutions
(DFI’s) League – MENA Region
88
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1
Japan Bank for International
Cooperation
2,767 3 49
2 World Bank 400 2 7
3 European Investment Bank 371 3 7
4 KfW 307 4 5
5 National Commercial Bank 304 2 5
6
Overseas Private Investment
Corporation
275 2 5
7 European Union 216 2 4
8 African Development Bank 216 2 4
9 Agence Francaise de Development 216 2 4
10 Clean Technology Fund 130 3 2

89. 2015 Legal Advisors League – MENA
Region
89
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1 White & Case 12,179 5 20
2 Dentons 8,292 2 14
3 Milbank, Tweed, Hadley & McCloy 8,125 1 14
4 Chadbourne & Parke 3,720 7 6
5 Allen & Overy 3,592 11 6
6 Norton Rose Fulbright 3,036 5 5
7 Ashurst 2,427 4 4
8 King & Spalding 2,395 2 4
9 Shearman & Sterling 2,206 5 4
10 Hajji & Associes 2,000 2 3

90. 2015 Financial Advisors League –
MENA Region
90
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1 HSBC 10,868 3 27
2 Sumitomo Mitsui Financial Group 8,125 1 20
3 Greengate 8,125 1 20
4 Synergy Consulting 3,201 4 8
5 Ernst & Young 2,000 2 5
6 Alderbrook 2,000 2 5
7 Deutsche Bank 1,070 1 3
8 Goren Capital 1,070 1 3
9 TASC 1,070 1 3
10 Mitsubishi UFJ Financial Group 863 1 2

91. 2015 Technical Advisors League –
MENA Region
91
Rank Company
Total
(US$ m)
Deals
Market
Share (%)
1 Lummus Consultants International 8,125 1 41
2 Nexant 8,125 1 41
3 Parsons Corporation 1,070 1 5
4 Mott MacDonald 990 3 5
5 Fichtner 590 1 3
6 Lahmeyer International 355 2 2
7 Poyry 305 1 2
8 A. Epstein & Sons International 135 1 1
9 DNV GL 30 1 less than 1

92. 92
By aligning investor and Government interests considering their
different risk preferences and return expectations, the potential
to increase the number of PPP deals and increase the odds of
the projects’ long-term success becomes bigger.

93. 93
Loay Ghazaleh, MBA, BSc. Civil Eng.
Advisor, Undersecretary Office
Ministry ofWorks, Bahrain
loay.ghz@gmail.com , +973-36711547