George Mucibabici Deloitte

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Information about George Mucibabici Deloitte
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Published on March 7, 2008

Author: Donato

Source: authorstream.com

Catching up with the Eurozone Need for a new approach on infrastructure financing:  Catching up with the Eurozone Need for a new approach on infrastructure financing The Future of the Infrastructure in Central and Eastern Europe 9th of November George Mucibabici Chairman, Deloitte Romania Key points of this presentation:  Our region needs huge infrastructure investments to ensure long-term economic and social development; There is a large gap between the needs and the available public budgets. Large-scale private sector financing of new transport infrastructure is essential; The countries in our region need to develop a long term financing strategy for infrastructure development, in cooperation with the private sector. Key points of this presentation Our region is catching up thanks to fast growth:  Our region is catching up thanks to fast growth Source: Eurostat statistics on GDP per capita in 2004, 2005 and 2006; extrapolation of 2006 rates for following years Our infrastructure is still under-developed: example motorways:  Our infrastructure is still under-developed: example motorways Motorway Density (m/km2) in EU Countries Source: The World Fact Book, Central Intelligence Agency, data available for 2005 and 2006 Our infrastructure is still under-developed: example motorways (2):  Our infrastructure is still under-developed: example motorways (2) Motorway Density (km/million inhabitants) in EU Countries Source: The World Fact Book, Central Intelligence Agency, data available for 2005 and 2006 Business case: How to finance the new highways in Romania:  Business case: How to finance the new highways in Romania How many km highways does Romania need to construct to have a network similar to the Eurozone? How much could that cost, how long could it take? Are public budgets enough or do we need to develop a new strategy on financing our infrastructure needs? Comparing ‘apples with apples’:  Comparing ‘apples with apples’ There is a relation between the density of a country and the size of its highway network. Spain, Portugal, Denmark and France together have an average density similar to Romania. We will compare Romania with these four countries. Source: The World Fact Book, Central Intelligence Agency, data available for 2005 and 2006 To catch up Romania needs 4,427 km new highways:  To catch up Romania needs 4,427 km new highways Spain, France, Portugal, Denmark have an average of 19.6 km highways per 1,000 km². Romania currently has 1.0 km highways per 1,000 km². To catch up to the Eurozone level Romania has to construct 18.6 km per 1,000 km². The surface of Romania is 238,000 km². To reach a network with a similar size as countries in the Eurozone currently have, Romania would have to construct: 18.6 x 238 = 4,427 km of new highways This may cost around € 15 billion:  This may cost around € 15 billion The most recent highway constructed in Romania (Bucharest – Constanta) cost EURO 3,4*) million per km. *) Romanian newspaper information This highway is on flat surface with few viaducts. It is a relatively cheap road! If each new constructed km of highway in Romania would cost € 3,4 million, the total required investment would be: € 3,4 mio x 4,427 km = € 15 billion. EU funds and National Budget are insufficient:  EU funds and National Budget are insufficient Available EU Funding: - TEN-T highways = 85% of € 1.85 billion - National roads = 85% of € 500 mio - Total: € 2 billion The total investment budget of the Ministry of Transport in the last five years was on average around € 250 *) million per year, *) according to Ministry of Transport budgets, the average capital expenditure for 2002- 2006 was around € 250 million If the investment budget would remain flat and it would only be spent on new highways, it would take 52 years to construct a network comparable to the current networks in the Eurozone. If Romania wants to have a comparable network by 2030, the funding gap for highways is € 7.25 billion. And highways are just a part of the country’s infrastructure needs!:  And highways are just a part of the country’s infrastructure needs! Private financing can help to close the infrastructure gap:  Private financing can help to close the infrastructure gap Large-scale private financing in transport infrastructure is necessary to maintain high economic growth rates in our region. Since recently initiatives have started: - Slovakia: D1 (EURO 3bn) - Hungary: M5, M6 and other sections - Bulgaria: Black Sea and Hemus highways - Czech Republic: D3 - Romania: preparing the two first private financed highways: Bucharest Belt and Ploiesti-Brasov All available funding sources need to be utilised:  All available funding sources need to be utilised National Budget Private financing EU Funds (co-financing) Funding sources Infrastructure needs (projects) Recommendations:  Recommendations Develop a long term national strategy - Which highways will be when realised and how will they be funded? - Budgetary consequences and affordability? Get the international financial community interested - Clear targets for private financing: how much when? - Successful pilot projects, transparency, standardisation Consult with the local construction market - Availability of labour - Competition and Capabilities Selection of our PPP experience in the world:  Selection of our PPP experience in the world Mexico: Privatization of Four Toll Roads (USD$2.5 billion) Canada: Sale/Privatization of Highway 407 ($3.1 billion) UK: Military satellite communications services Skynet 5 (£2.5 billion) UK: Upgrading inner city roads of Birmingham (£450 million) Belgium: Ring Road Antwerp (€2.5 billion) Ireland: Dublin Light Rail (€ 750 million) UK: London Underground PPP - Value for Money Assessment (€ 19.5 billion) Ireland: Belfast Port PPP (€ 135 million) Portugal: Vasco da Gama Bridge Netherlands: Financial District Redevelopment Amsterdam (€ 3 billion) Selection of our PPP experience in the region:  Selection of our PPP experience in the region D1 highway program in Slovakia Bacau Airport in Romania Nuclear Power Plant in Romania Prison Pilot PPP in Czech Republic Military Hospital Pilot PPP in Czech Republic E77 Highway in Latvia Government Quarter in Hungary eTolling PPP in Hungary Tirana Airport in Albania Nuclear Power Plant in Bulgaria

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