Presented By: Group 11

Submitted To: Prof. Abhijeeth S.

7/21/2014
Beginning
Our water our future campaign.
Deal worth of 5.2 billion for a period of 30 years and
1 month.
Reasons Drought and population growth.
Financing through PPP

Some aspects about PPP:
Constrained government budgets.
Encouraged efficiency in delivery of infrastructure
service.
Tighter monitoring to ensure quality.
There should be real competition in PPP auction.
Immovable infrastructure Bilateral monopoly.
Difficult to punish non compliance by firm.
Filter for White Elephants
Partnerships Victoria- Centralized authority for PPP with
intention of growing the market- Adopted PSC(Public sector
Comparator).
PSC:
1. Raw PSC = capital cost of construction + operating cost
2. Competitive Neutrality adjustment= Tax saving from public
ownership.
3. Transferable Risk = Expected cost of risk transferred to pvt
provider.
4. Retained Risk = Expected cost of risk transferred to
government
CAPM APPROACH
Systematic Risk Holder
Discount Rate = CAPM RATE
No systematic risk
Discount Rate = Risk free rate
*complication involved in different pattern of cash outlay.
Revenue for AQUASURE
1. Monthly water security payment- Cover fixed cost
2. Monthly water usage payments- As per amount
ordered.

AQUASURE was not entitiled to sell water to third party.!
Party involved Risk
Aquasure Throughput risk
The Sponsors Resource risk, Technical risk
The state of Victoria Socio political risk, Completion risk
D & C Contractor Completion risk
O & M Contractor O & M Failures
Transmission line operator Completion Risk
Electricity and REC provider (AGL Energy Ltd.) Throughput risk
Equity Providers Resource Risk
Debt Providers Completion risk, Interest rate risk
Risks Associated With The Project
Risk Mitigates
The key player's risks in the structuring of the project were
mitigated in the following manner:

The State of Victoria:

The state would provide support by procuring alternative
funding
Procuring state supported guarantee for the debt funding
Termination of the project and payment of the relevant
termination

Risk Mitigates
Pay out of the balance of any unrefined debt
Price reset mechanism in case AGL technologies became
insolvent or a defaulter after 10 years.

Design and Construction Contractor:

To avoid the risk of undersupply and risk abatement to
service payments, the plant would be built with redundancy
and additional capacity with parallel processing and modular
design.


Risk Mitigates
Operations and Maintenance Contractor:

The risks of failures were borne by O&M contractor but
were protected by joint and several guarantees by the parent
company.

Role of The State
The state was responsible for procuring the land for
desalination plant and related infrastructure.
The state provided support for financing the project through
guaranteeing the debt project.
a) Global financial crisis
b) Equity investors demanding higher returns & liquidity
premium.
c) The consortium could only secure A$1.925 billion
d) Remaining A$1.746 billion was to be syndicated to a wider
group of banks.
Role of The State
e) The state effectively acted as a lender-of-last-resort.
Thank You