European PPP Expertise Centre EPEC Building Public Sector

European PPP Expertise Centre (EPEC) Building Public Sector Expertise and Organisational Capacity in the EU Jaime Barragan EIB – European Investment Bank IADB, 8 -9 December 2005

Europe’s PPP challenge • PPPs have a key role in modernising Europe’s infrastructure • Increasing evidence of PPPs track record on – effectiveness and – efficiency • But weakness of public sector organisational capacity still constraining further developments

Wide recognition of the need to increase public sector expertise • Van Miert High Level Group on TENs Transport (2004) • Dutch Ministry of Finance Report on Co-financing and Reform of TENs (2004) • Trans European Transport Network Report on Financing of TENs (2004) • DG Market Report on PPP Green Paper Consultation (2005) • European Economic & Social Committee Report on EIB’s Financing of PPPs (2005) • EBRD and UNECE proposals on financing concessions in Transition Countries and capacity building • Developing PPPs in New Europe (Price. Waterhouse. Coopers)

The analysis • Low level of public sector experience, knowledge and organisational resources are barriers to development and implementation of PPP programmes in various countries • Many common issues arise across different national programmes • PPP expertise is not shared effectively between authorities • ‘Reinventing the wheel’ can lead to poor value PPP transactions or failure of programmes • Some public authorities not realising the full, or expected, benefits of PPP programmes • Implications for the private sector of public sector weaknesses include excess bid costs and delay as well as dissatisfied public sector clients and negative image amongst the public

Recent High Level Recommendations • Importance of ‘initiatives to educate. . public authorities’ (Economic and Social Committee) • ‘Many contributors favour exchange of best practice and need to learn from bad experiences’ (DG Market) • ‘general consensus among national PPP Task Forces that infrastructure development could be further improved if the public sector had more effective means of sharing experiences in PPP policy, programme development and project implementation (European Commission) • ‘The Commission should set up a cross-EU group, whose role would include. . acting as a centre of knowledge in PPPs for the EU. . coordinating requests for information and assistance’ (Price. Waterhouse. Coopers)

The EU response • European Council October 2003 invited Commission & EIB to consider mobilisation in support of Growth Initiative and PPPs • March 2005 18 EU PPP Taskforces discuss need for EU PPP initiative • Distribution by EIB of Consultation Paper on establishment of a European PPP Expertise Centre (EPEC) to provide Knowledge Centre and, possibly, Advisory and Support Services • July to October 2005 extensive consultation with the public sector

PROPOSITION “The public sector should pool its expertise and experience to provide institutional support by establishing a European Centre of Expertise (ECo. E) for PPPs for Member States and Candidate Countries “ Objective – Assist EU public sector to speed-up and improve quality of project delivery

Why ? • Growing importance of using PPP structures in EU 25 Member States and Candidate Countries • Organisational framework, availability of necessary resources and experience of public sector are all critical factors in PPP success • Variable levels of experience across countries todate • Scope to share best practice and learn from previous pitfalls between public sectors • Substantial experience in EIB and Member State Taskforces that could be utilised more effectively.

MEMBERSHIP & RESOURCE MODEL Membership Member State EC EIB European Co. E National PPP Taskforce EIB PPP Co. E Services PPP Policy & Programmes PPP Projects 6

How would EPEC work? • Sharing of knowledge and expertise on policy development and programmes through review of key issues by EPEC Secretariat in response to member requests • Provision of information resources, network facilitation and communication channel • Preparation of review papers on EU experience; meeting / discussion facilitation. Mostly multilateral, also bilateral as required • Limited user fees reflecting ‘public good’ nature of service (information exchange) • Bilateral programme support could develop according to demand. Expected to be self financing given ‘private good’ nature of service • Creation of a pool of staff with EU wide experience

RESOURCESS • Full time staff from EIB. • Seconded PPP experts from Member States • As required, draw on expertise from : – EIB’s country, legal and technical departments – Member State Taskforce staff – National Experts and Resources/Advisors

SERVICES • Located at the EIB premises in Luxembourg. • Focused on strategic advice for delivery of PPP policy, programme and projects • Priority to TENs policy, programme frameworks and flagship projects • Possible levels of service : – Basic; Helpdesk/Advice through access to PPP experts and web-based best practice resources – Premium; Direct contribution/involvement in the development of a country's PPP policy, programme or project. Substantial input for pilot projects or those in distress. Will NOT replace existing advisors

EPEC would not: • Provide project level support • Seek to replicate other advisory services (financial, technical, legal) or compete for advisory mandates • Require a large, dedicated infrastructure

EPEC would: • Seek to develop the public sector as a better informed client for private partners and advisors • Be demand driven • Be a joint Member State / Commission / EIB initiative • Be established with a limited time mandate, subject to extension • Develop new services (for example, training) only the basis of clear need

Outstanding issues Conceptual: • Does the private sector support the concept behind EPEC? • Is the proposed focus of EPEC’s activities appropriate? • How should EPEC and the private sector collaborate, and on what? Operational: • How can EPEC access the required multidisciplinary skills? • How should EPEC be funded?

Next steps • Reflection on private sector perspectives on EPEC • Preparation, and web publication, of a Concept Paper on EPEC (end 2005 / early 2006) • Development of governance and funding arrangements (early 2006) • Finalisation of a proposal to stakeholders (Member States, Commission, EIB) (early 2006)