Private Financing Initiatives for Project Finance are a form of Public-Private Partnership regulated by paragraph 15 of article 183 of the Public Contracts Code (Legislative Decree no. 50/2016) allowing private operators to make and implement investment proposals for public sector projects, by paying the up-front costs of the project instead of the Administration and then leasing the resulting asset back to the administration for a time period that will guarantee its economic-financial sustainability.
The collaboration is a genuine partnership created through the following simple and transparent steps:
1. Energy audit: Enel X carries out, at its own expense and with no obligation to the PA, an energy audit of the assets covered by the proposal. There is nothing to hinder this initial stage and no obligation to publish invitations to tender as each private operator is free to request access to the relevant information.
2. Once the starting point, both in terms of infrastructure and current expenditure, has been identified, a feasibility study is carried out to establish the best technological solutions to achieve the PA’s service or expenditure goals. Collaboration is essential in this phase to ensure that the correct investment choices are made to balance the administration’s requirements and the technical feasibility of the project. Enel X pays for all of the design costs up-front.
3. Once the design phase is completed, a formal proposal is submitted which will contain:
- The feasibility study
- Specifics of the service and management characteristics
- Draft agreement
- A bank-certified Business Plan
- Risk Matrix used by the Administration to verify the advantage of the Public-Private Partnership over a conventional procurement contract
4. The Administration will have 90 days to evaluate the proposal in relation to the requests made. Clearly, it may request further details or certain modifications.
5. The evaluation will conclude with a positive outcome when the Administration declares the initiative to be feasible.
6. The approved project is then put out to tender, opening up the opportunity to receive tenders from any other operators that fulfil the requirements, in a fully transparent and public manner.
Why Project Finance?
- It is a simple and transparent process that allows the PA to avoid bearing the cost of the analysis and design phases
- It allows the project to be structured on the basis of the Administration’s specific requirements while also taking full advantage of an expert private partner
- Private investment is greater and of higher quality than investment obtained through the normal tendering process. It also produces even greater value in terms of infrastructure and services.
- It can be customised to the extent that the use of public resources can be significantly reduced and an immediate reduction in current public spending achieved
- The private partner assumes the risk instead of the PA
- The process, proposal and service are all implemented in full compliance with the Public Contracts Code and to the level of the main market benchmarks (e.g. Consip) at a very minimum, as well as complying with the guidelines issued by the National Anti-Corruption Authority (ANAC)
