Case Studies: Brabo 1, Flanders

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Project Overview
Brabo1.jpg
Figure 1: Impression of the Bardo 1 Project
Brabo 1, Antwerp, Belgium
Project Type: Brownfield
Contract duration: 35 Years
Budget: EUR 461M (The amount includes EUR 125M for design and build and EUR 9,6M/year in availability payments)
Project Time Line
Conception: 2000;
Establishment of Project Brabo 1 nv (PPP project company): August 2009;
Tender: July 2007;
Contract Approved: August 2009;
Financial Close: August 2009;
Beginning of Works: October 2009;
Tramways in service: February 2012 (Deurne-Wijnegem) and August 2012 (Mortsel-Boechout)(Beheersmaatschappij Antwerpen Mobiel, 2009a, 2009b)

Introduction

Brabo 1 was the first PPP for public transport in Flanders. The Project involved the design, financing, construction and maintenance of the civil, mechanical and electrical infrastructure associated with two separate tramway extensions in the eastern part of the city of Antwerp:

  • The Antwerp-Deurne section was extended to Wijnegem.
  • The Antwerp-Mortsel section was extended to Boechout.

Additionally, the project provided for a comprehensive renewal of all associated street infrastructure (including pavements and street furniture) for motor traffic, cyclists and pedestrians. A substantial tram stabling and maintenance depot, located on one of the lines (with office accommodation), was also included.

Both trajectories were extended in favor of inhabitants of the Antwerp suburbs. People living in this first “belt” of municipalities around Antwerp were looking for rapid, punctual tramway connections, since heavy traffic congestion affected their day-to-day commuting to and from the city (Beheersmaatschappij Antwerpen Mobiel, 2013).

Whilst the private partner takes up the responsibilities noted above, the operation, maintenance and ownership of trams and buses rests with the existing transport operator, De Lijn nv.

The Contracting Authority (Public Party)

Two contracting authorities are present in this project. The first one is De Lijn nv: an autonomous public company affiliated to the Flemish Region, providing public transport services. The second one is the Antwerp Agency for Roads and Traffic [Agentschap voor Wegen en Verkeer, AWV]. This authority has responsibility for the renovation of roads, which was part of the Brabo 1 project as well. These authorities jointly signed a DBFM contract with the SPV.

More specifically, the project was part of the plans that were announced in a Master Plan for mobility in the city of Antwerp [Masterplan Mobliteit Antwerpen], back in 2000. This Plan consisted of 16 infrastructure projects that would be constructed as a means of increasing the accessibility of the city and its port, to allow for a safer transport network and improve the area’s overall quality of life. In this Plan, Project Brabo 1 was explicitly mentioned, and it became one of the first projects to be constructed (Vlaamse Regering, 2012).

Although the Master Plan indicated the desire to finance the public transport projects with toll revenues from other projects included in the same Plan, the Flemish Government decided to separate the financing of public transport projects from the other projects. This decision was taken because it would allow for a faster implementation of the public transport plans (Van Gestel et al., 2011).

The tender was conducted by Lijninvest nv, which is a public investment vehicle 100 per cent owned by De Lijn nv except for one share. That very final share is owned by the Flemish Region. Lijninvest nv was established to provide a vehicle for the public sector to get a share in SPVs.

The Concessionaire (Private Party)

Project sponsors are Lijninvest nv (equity) and DG Infra+ (equity). The latter is a Belgian investment fund, established by GIMV and Dexia. Four banks provided senior debt: KBC, Dexia Credit Local, Dexia Bank Belgium, and the Bank of Dutch Municipalities [Bank Nederlandse Gemeenten].

The SPV is Project Brabo 1 nv [Lijninvest nv (24%), Beheersmaatschappij Antwerpen Mobiel (24%) and THV Silvius (51%)]. THV Silvius was also the consortium of subcontractors:

  • DG Infra+ (investment fund)
  • Heijmans Infra nv (construction company)
  • Frateur-De Pourcq nv (construction company)
  • Franki Construct nv (construction company)

Users

The Brabo 1 Project is available to private (passenger) traffic.

Key Purpose for PPP Model Selection

The primary reason for selecting a PPP model for project delivery was its promise to allow for quicker project realization. Antwerp’s accessibility problems were urgent and needed solutions immediately. In addition, a PPP procurement model offered “off-balance sheet financing”, in accordance with ESA95 requirements with respect to public debt. Risk transfer was also an important motivation (Vlaamse Regering, 2011).

Project Timing

According to government documents, the traffic situation between the center of Antwerp and its suburbs was a serious bottleneck. That, and the expected future traffic increase in the area, encouraged the government to set the tramway upgrade high on the agenda. An ex-post evaluation has not been conducted yet. It would enable a better assessment of the project need.

Project Locality and Market Geography

The project is located in the Antwerp suburbs and is specifically aimed at potential users living in these suburbs.

Procurement & Contractual Structure

Tendering

An open call for the expression of interest was announced in July of 2007. Three (3) consortia were selected for negotiations for the DBFM tender, and in April 2009 submitted their best and final offers: DANK, THV Silvius, and Travant. Subsequently, THV Silvius was chosen as the contractor for the Brabo 1 Project. The procurement process was concluded within 26 months.

The global financial-economic crisis between 2008 and 2012 delayed the procurement process. As bidders had failed to find the necessary external funding for their best and final offers, contractual close and financial close were postponed. A new round for best and final offers had to be arranged by the contracting authorities. The delay ultimately proved to be approximately six months as the tendering procedure stood still between November 2008 and Spring 2009.

Another postponement-inducing event has been a lawsuit that was filed by one of the bidders (TRAVANT), which found that it was unfairly excluded from the tendering procedure.

Contract Structure

The contractual regime was based on a fairly standard form of the DBFM agreement based on English PFI standards and the Dutch standard DBFM contract of the Dutch Directorate-General for Public Works and Water Management (for an updated version of this contract, see Rijkswaterstaat (2012).

The contract for the Brabo 1 project was signed by De Lijn nv, AWV, and the SPV. In this contract, a distinction has been made between tramway availability fees and non-tramway availability fees. The former fees are being paid by De Lijn nv, whereas the latter are paid by AWV. This construction can also be noticed in the organizational scheme under (see figure 2).

Brabo2.png

Figure 2: Organizational Schema of the Brabo 1 PPP

Risk Allocation

Although the public authority has transferred quite a number of responsibilities, it has retained some of its financial activities; it has invested equity in the SPV, and therefore, the public sector shares significant financial risk. Risk is allocated as depicted in figure 3.

Performance

Critical performance requirements have been included in the contract, but they remain confidential. However, there are financial penalties deducted from the availability fees for insufficient performance.

With respect to Construction Management performance, the project was delivered on time.

Brabo3.png

Figure 3: Risk allocation

References

  • Beheersmaatschappij Antwerpen Mobiel. (2009a). Persbericht: Brabo 1 in uitvoering na ondertekening contracten Retrieved January 28, 2013, from http://www2.vlaanderen.be/pps/documenten/contractsluiting_brabo_1.pdf
  • Beheersmaatschappij Antwerpen Mobiel. (2009b). Persbericht: drie offtertes voor Brabo 1 Retrieved January 28, 2013, from http://www2.vlaanderen.be/pps/documenten/offertes_brabo_1.pdf
  • Beheersmaatschappij Antwerpen Mobiel. (2013). Public transport: redevelopment of city boulevards and extension of tram lines (BRABO 1) Retrieved January 28, 2013, from http://www.bamnv.be/Public_transport/2624/bam
  • Dutch Department of Waterways and Public Works. (2012). Rijksbrede Modelovereenkomst DBFM Huisvesting. The Hague: Dutch Ministry of Infrastructure and the Environment.
  • Van Gestel, K., Voets, J., & Verhoest, K. (2011). Pijlers voor een performante samenwerking. Handreikingen voor de PPS-praktijk op basis van vijf Vlaamse PPS-projecten. Leuven: SBOV.
  • Vlaamse Regering. (2011). Alternatieve financiering van Vlaamse overheidsinvesteringen. Brussels: Flemish Parliament.
  • Vlaamse Regering. (2012). Plechtige opening tramlijn Deurne-Wijnegem en stelplaats: tram rijdt opnieuw naar Wijnegem Retrieved January 28, 2013, from http://www2.vlaanderen.be/pps/documenten/pb_br1.pdf