Public Private Partnerships for sustainable

and smart cities

Milano, 4 July 2017

PPP FOR CITIES
PPP FOR CITIES
The United Nations Economic
Commission for Europe (UNECE) is
one of the United Nations five
regional commissions. Its main
goal is to promote pan-European
economic integration among 56
countries in Europe, Asia and
North America through dialogue
and cooperation.
International Centre of Excellence
The goal of the International PPP
Centre of Excellence (ICoE) is to
serve as an international
benchmark and leader in the
development of PPP good
practices and standards. UNECE
has a United Nations mandate to
expand and develop the program
and to work with other
international organizations such as
the World Bank, the EIB and the
ADB, among others.
The mission of the Specialist
Centres (SCs) is to become global
benchmarks in specific sectors.
Their tasks include compiling
practical case studies in PPP
projects, drawing up standards
and guides to good practices, and
providing consulting and training
to public administrations all over
the world.
www.pppcities.org
PPP FOR CITIES

Goals

According to the United Nations, some of the main objectives of the PPP for
Cities are:

Identifying and disseminating good practices internationally

Creating spaces of debate among companies, administrations and experts
from all over the world on specific topics
Creating working standards for managing PPP projects
Helping governments develop public-private partnership projects in the
sphere of cities
Conducting research
Designing training strategies in the sector for state and regional
governments, especially in countries with less experience, and fostering
the exchange of knowledge with countries with more experience in PPPs
Providing specialized training in PPPs

Work should be done under the Sustainable Development Goals, mainly

11th Make cities and human settlements inclusive, safe, resilient and
sustainable and 17th Revitalize the global partnership for sustainable
development

www.pppcities.org
OUR VISION OF A RESILIENT CITY. THE
IMPORTANCE OF GOVERNANCE
CONDITIONS FOR CITY PROSPERITY OR FOR CITY RESILIENCE

IESE CITIES IN MOTION

Urban development model

www.pppcities.org
OUR VISION OF A RESILIENT CITY. THE IMPORTANCE OF GOVERNANCEOUR
VISION

Cities need Smart GOVERNANCE:

Strategic Planning
Systemic view of the city
Modern management practices
Open and transparent
Innovative business models
and
Public Private Partnership

www.pppcities.org
PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES
PRIVATE SECTOR AND RESILIENCE

Key Issues

Private companies operate key infrastructures and services in cities

Any plan should consider infrastructures operated by public sector as well as those
operated directly by public sector

Private sector can offer innovative solutions to help communities build or rebuild resilient
infrastructure.

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PUBLIC PRIVATE PARTNERSHIPS

Public-Private Partnerships (PPPs) aim at financing, designing, implementing and operating

public sector facilities and services.

Their key characteristics include:

a) Long-term (sometimes up to 30 years) service provisions;

(b) The transfer of risk to the private sector;
(c) Different forms of long-term contracts drawn up between legal entities and public
authorities

Guidebook on Promoting Good Governance in Public-Private Partnerships. UNECE

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PUBLIC PRIVATE PARTNERSHIPS

Management
Private

Affermage,
contract, Concession Outsourcing Divestiture
Operating lease
Franchsing, O&M
MANAGEMENT OF SERVICE PROVIDER

Build-Operate-Transfer
Mixed

Build-Own-Operate
Service Contracts
Design-Build-Finance-Operate
Design-Build-Manage-Finance etc
Brownfield projects Greenfield projects

Conversion into
Public Enterprise
Joint Venture
Performance
contract
Public

Public Authority Cooperation

Public Mixed Private

CONTROL OF ASSETS
Source: Delmon, J. (2010), Understanding Options for Public Private Partnerships in Infrastructure,
Policy Research Working Paper 5173, World Bank.
www.pppcities.org
PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES

Key Issues
Governance
Financing
Lower dimension of projects (investment and revenues)
Need of innovative models
Use of value of land and taxes as a financing instrument
Citizenship participation.
Need of considering citizens as another agent in the equation
Sustainability
Need of efficient use of resources

www.pppcities.org
 DISTINCTIVE FEATURES OF EUROPEAN CITIES
VISION

Difficult governance results of highly participative social

movements and groups of interest

Existence of (old) infrastructure

Urban design (high density, services & infrastructures)

Cultural heritage & pool of research centers

Issues affecting implementation of PPPs

www.pppcities.org
KEY ISSUES: GOVERNANCEN

METRO de SEVILLA
First tramway in the city
Greenfield project. 18km, 21 metro stations

4 Cities (230.000 inhabitants)

Delivery Mode: BuildDesignFinance
OperateTransfer (BDFOT)
Construction start: January 14th, 2004
Planned end construction period: June 2006
Actual construction end: April 2nd, 2009

+ 2.9 years
overtime

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KEY ISSUES: GOVERNANCE

PROJECT FAILURES
Draft project
Underestimation of costs (Construction + rolling stock): 360MM. Awarded 428MM (Lowest
bid). Actual 730MM (+70%)
Delays in the construction (2,9 years late)
Advisory Committee approving contract modifications not independent from the Ministry of
Public Works
Electoral timing
Who pays the bill?
Initial construction awarded cost: 382 MM. Final: 680 MM

Subvention
+ 78% regional
Technical fee government
(total cost +
Additional cost for public administration including operation:
return)
+ 75% Ticket fare

1.093MM

Bad governance implied higher cost for taxpayer
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KEY ISSUES: BROWNFIELD - TECHNICAL EXPERTISEN

BARCELONA GIX Integrated Management of Municipal IT Networks

Brownfield project. Active & Passive Networks of Barcelona City

Council (fiber optic and WiFi)
Project Type: Operate networks, until then managed separately,
under a single management contract

Delivery Mode: BOT

Project Developer: Tradia Telecom

(100% owned by Cellnex)

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KEY ISSUES: BROWNFIELD - TECHNICAL EXPERTISEN

New business model

Outdated infrastructure for new challenges: SMART CITIES

Integration municipal fiber optic & WIFI

Private management using PPP:

- Higher efficiency in management
- Commercialize spare capacity (incentives)

Lower
Better
cost
service

Using PPP in brownfield projects allow for public

savings and business expansion
www.pppcities.org
KEY ISSUES: INNOVATION

VELIB PARIS
Project Type: Large-scale bicycle-sharing program
20.600 bicycles & 1.450 stations
Delivery Mode: BFOM

Location: Paris + 30 suburban municipalities

New sustainable public transport. Reduction of CO 2 emissions

BILLBOARDS FOR BICYCLES NEW BUSINESS MODEL

From private transport to public service using private funds

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BEST PRACTICES

What have we seen?

Governance: Strong governance with independent committees

for a proper contract management and cost control
Brownfield: Private firms may improve efficiency in existing
infrastructure if they have the right incentives
Innovation: New business models can help to provide public
services without any cost for the administration

www.pppcities.org
PPPS IN SMART, SUSTAINABLE AND RESILIENT CITIES

ENVIRONMENT: VANCOUVER LANDFILL GAS

COGENERATION PROJECT

Procurement method: B-O-O

Capital cost: $10.3 million
Contract term: 20 years
Reduce greenhouse emissions converting
landfill gas in electrical power (56,000
megawats per year aprox.)
Owner and operator of landfill: City of
Vancouver
Owner and operator of cogeneration system:
Maxim Power Corporation (2003)
Client of electricity: BC Hydro
20 Supply contract with landfill and 20 years
purchase agreement with BC Hydro

www.pppcities.org
PPPS IN DISASTER MANAGEMENT. RECONSTRUCTION

www.pppcities.org
Thanks for your attention
PPP for Cities, an International platform of collaboration between
pblic and private sector in cities arena

Av. Pearson, 21
Phone: +34 932 534 200
Email: info@pppcities.org
www.pppcities.org