Illinois, Indiana divvy up ‘Illiana’ responsibilities
Illinois and Indiana, which together are procuring the bi-state toll road project, entered into an agreement that outlines each state’s responsibilities, project management duties, as well as project delivery requirements and schedule.
“Formalizing the details and expectations of the project into a binding agreement will help to ensure that both states receive the best financing deal possible on the Illiana Corridor and, as a result, the best deal for taxpayers,” the Illinois Department of Transportation (IDOT) and the Indiana Department of Transportation (INDOT) said in a joint statement.
The Illiana Corridor project is a proposed 47-mile highway that extends from Interstate 55 (I-55) in Illinois to the west to Interstate 65 (I-65) in Indiana to the east.
The two states are working together on Illiana but are separately procuring their own public-private partnership (PPP; P3) to deliver their respective parts of the project.
A total of 11 consortia – five for the larger Illinois portion and six for the Indiana portion – were shortlisted in February.
The project is expected to create 13,000 construction jobs, resulting in an estimated $1.3 billion in wages over a 35-year period and $1 million in daily travel savings, according to the procuring agencies.
Canada PPP guidelines target accurate cost estimates
PPP Canada, the government’s public-private partnership (PPP; P3) authority also known as the Corporation, has compiled a guide to help provincial governments more accurately estimate costs when procuring P3 projects.
Because minimal design is undertaken by public authorities ahead of procurement, cost estimates at that stage can vary greatly from actual costs, PPP Canada said.
The guide includes industry best practices, addresses design requirements, approaches to the application of contingencies, sector-specific considerations, and the treatment of outputs.
“This guide is the latest in a series of studies and guides the Corporation has developed to make P3s, and the value and accountability they provide, more accessible to Canadians,” PPP Canada’s chief executive John McBride said.
Methods presented in the guide also promote a consistent approach to the preparation of cost estimates, allowing for improved cost comparisons over time, according to the agency.
PPP Canada, which became operational in February 2009, is charged with improving delivery of public infrastructure projects by providing expertise and promoting P3 best practices. Its independent board of directors reports to Parliament through the Minister of Finance.
Florida considers its first water sector P3
Miami Dade County is exploring the possibility of procuring and delivering the South Miami Heights water treatment plant as a public-private partnership (PPP; P3), the first such project in the water sector since the state enacted the Partnership for Public Facilities and Infrastructure Act last July, significantly expanding the type of projects that can be financed by private companies.
The Miami Dade Water and Sewer Department (MDWASD), the agency procuring the project, issued a Request for Expressions of Interest (REOI) in November seeking input from the private sector for a number of water and wastewater projects in southern Florida.
Of the 32 responses Miami Dade received to its REOI, 12 respondents expressed strong interest in the South Miami Heights water treatment plant, MDWASD's Juan Carlos Arteaga – deputy director, capital improvements and regulatory compliance – wrote in a letter to respondents recently.
The project, which at this stage is estimated to cost $135 million, involves building a new plant in order to decommission satellite plants that have been in service for more than 40 years.
MDWASD is the largest water and sewer utility in the south-eastern US, serving nearly 2.3 million residents. The department provides water and wastewater services to the unincorporated areas of Miami Dade County, wholesale water services to 14 municipalities, and wholesale wastewater services to 11 municipalities.
Moscow team of four in legal switch
Alexander Dolgov has joined the Moscow office of Anglo-US law firm Hogan Lovells as a partner in its global infrastructure, energy, resources and projects group.
Dolgov joins from the Moscow office of French law firm Gide Loyrette Nouel. Three colleagues – associates Konstantin Makarevich and Fedor Kovatev, plus trainee Grigory Fedorov – are following Dolgov in making the same move.
Alexander had spent four years at Gide Loyrette Nouel having joined the firm in 2010 from Allen & Overy as a partner to develop and lead its public-private partnerships (PPP) and projects practice. He has been described by Legal 500 as “a rainmaker” and “one of only a few leading PPP experts in Russia”.
Dolgov has worked with clients including Sberbank, the European Bank for Reconstruction and Development (EBRD), BNP Paribas, the Moscow Region and other public authorities, as well as a “range of international sponsors and financiers”.
According to EBRD estimates, Russia will require infrastructure investment of $753 billion over the next 10 years. The country has 80 projects in its medium- to long-term deal pipeline.
CEO departs Balfour Beatty
Balfour Beatty, a major player in infrastructure both in its domestic UK market and overseas, has announced the departure of chief executive Andrew McNaughton after just over a year in the job.
The announcement was made at the same time as the release of an interim management statement for the period 1 January 2014 to 5 May 2014 in which pre-tax profits for 2014 were expected to be “significantly lower” than previous expectations in the range of £145 million (€176 million; $256 million) to £160 million.
It said that while most parts of the group were trading in line with expectations, a £30 million shortfall was expected in the firm’s UK construction business. The statement said: “Actions taken in 2013 to improve the operational issues in the UK construction business are taking effect, but at a slower pace than expected.”
Steve Marshall has been handed the task of running the business as executive chairman while a successor for the chief executive role is sought. “Today’s trading update is once again disappointing,” he said in the statement. “The Board is committed to rapidly addressing the root causes.”
On a positive note, the firm said it was now targeting total public-private partnership disposal gains of £50 million in 2014 – £10 million higher than previously anticipated. It noted a “significant milestone” in early 2014, as it was announced preferred bidder on a project for the first time in Canada – the £196 million BC Children’s and BC Women’s hospital redevelopment project in Vancouver.
Aberdeen swoops for SWIP unit
Aberdeen Asset Management (Aberdeen) has completed the acquisition of Scottish Widows Investment Partnership’s infrastructure fund management business from Lloyds Banking Group.
The news marks the last step in the overall purchase of Scottish Widows Investment Partnership (SWIP) by the asset manager, which was first announced in November. It will see Lloyds acquire a 9.9 percent share in Aberdeen and receive a top-up payment of £38 million (€46 million; $64 million), valuing SWIP at £550 million.
SWIP’s infrastructure business, headed by Gershon Cohen, has around £1.3 billion in funds under management. The unit’s latest deals include its 30 percent participation in Scots Road Partnership, the consortium behind a £415 million motorway upgrade in Central Scotland. The project was first announced in August 2013.
SWIP’s new owner will strive to keep its management team and investment strategy intact while allowing it to benefit from Aberdeen’s international presence, a spokesperson told Infrastructure Investor.
ASIA & ROW
Indonesia to tender 10 airports
Indonesia is about to kick off an ambitious plan to build up its regional aviation infrastructure, according to the country’s Ministry of Transport.
Government officials have announced the first phase of a public-private partnership (PPP) to develop regional airports by opening management bids for Bandar Lampung Radin Inten II, Komodo and Palu Mutiara Airports. This is the first batch of ten airports lined up for the privatisation drive and the bid processes will commence in the coming months.
The three platforms are seen as the most likely to attract a significant number of competitive bids, with at least one airline – Indonesia’s national flag carrier Garuda – having already expressed interest in running Komodo Airport.
The other seven airports considered in the scheme are Bengkulu, Jayapura Sentani, Matahora, Palangkaraya Tjilik Riwut,Tanjung, Tarakan Juwata and Ternate Babullah.
The move comes amid calls for a boost in Indonesian airport PPPs to accommodate increased air traffic across the archipelago. Jakarta’s Soekarno-Hatta International Airport, which recorded 62.1 million passengers at the end of last year, is the eighth-busiest airport in the world.
The policy also comes prior to the implementation of the 2009 ASEAN Open Skies agreement in Indonesia next year, which aims to create a free market environment for the airline industry across the 10 members of the south-east Asian grouping.
Estimates by Indonesia’s National Development Planning Agency suggest that the country needs to spend more than $15 billion on airports between 2015 and 2019 to improve standards and raise capacity.
The agency has singled out the expansion of the Soekarno-Hatta and Medan airports as well as the development of an airport in Karawang, West Java, as priorities for the government. It also calls for the construction of 45 new airports in more remote parts of Indonesia.
Law firm in key Saudi hire
Baker & McKenzie, the global law firm with US origins, has hired banking and finance lawyer Basel Barakat as a partner.
Barakat, who joins from Saudi Arabian law firm Hassan Mahassni, will divide his time between Baker & McKenzie’s Riyadh and Bahrain offices.
In his previous role, Barakat focused on project finance, Islamic finance and syndicated lending and – according to a Baker & McKenzie statement – advised on “the majority” of project financing arrangements for Saudi Arabia’s Integrated Water & Power Plant (IWPP) and Independent Power Producer (IPP) programmes to date as well as other “prestigious” infrastructure projects.
Hassan Mahassni’s website says Barakat – who was educated in the US – advised on deals such as the $2.5 billion project financing of the Shuaibah III IWPP (Saudi Arabia’s first IWPP project) and the $450 million financing of the Red Sea Gateway Terminal Company’s third container terminal at Jeddah Islamic Port (the country’s first private greenfield build-operate-transfer container terminal project).
Ian Siddell, co-managing partner of Baker & McKenzie’s Bahrain, Doha and Riyadh offices, said in the statement that Barakat’s “experience advising on many of the most complex and largest financings in Saudi Arabia over the past decade will add significant value to our client offering”.
Baker & McKenzie claims to have been the first global law firm to have opened an associated office in Riyadh in 1980. It opened offices in Bahrain in 1999, Abu Dhabi in 2009, Doha in 2011 and Dubai in 2013. In all, it has 75 offices globally in 47 countries.