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Case Studies of Handback Experience with Public-Private Partnerships

January 25, 2018
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Jordan Wainer: On behalf of Federal Highway Administration Center for Innovative Finance Support I'd to welcome everyone to today's webinar on a review of handback experience with public/private partnerships. My name is Jordan Wainer. I'm with the U.S. DOT's Volpe Center in Cambridge, Massachusetts. And today I'll be providing technical assistance during the webinar. Before we begin I'd like to point out a few key features of the webinar room. On the top left side of your screen you will find the audio call-in information and a link to the white paper. Below the audio information is a list of attendees. Below the list of attendees is a box titled materials for download where you may access a copy of today's presentation and a copy of the white paper as well. Simply select the file, click download files and follow the prompts on your screen. In the lower left corner is a chat box where you can submit questions to the presenters throughout the webinar. You will take questions in the chat pod at several points throughout the presentation. And we'll open up the phone lines at the end of the presentation. And we'll provide instructions for that at that time. If you experience any technical difficulties, please use the chat box to send a private message to me, Jordan Wainer. Our webinar is scheduled to run until 3:00 P.M. Eastern today. And we are recording today's webinar so that anyone unable to join us may review the material at a later time. Before we begin, I'd like to open a couple of poll questions. The first is what is your affiliation? And the second is how many people are participating along with you today? Thank you for your responses. We'll give everyone one more second. Okay. And with that I will turn it over to Patrick DeCorla-Souza.

Patrick DeCorla-Souza: Thanks, Jordan. And welcome everybody. And good afternoon to everyone. And, of course, those on the west coast good morning to you. My name is Patrick DeCorla-Souza. I'm the P3 program manager at the U.S. DOT's Build America Bureau as well as Federal Highway Administration Center for Innovative Finance Support. So I'm pleased to welcome you to this webinar which has resulted from a question or several questions we got from state and local governments about the experience of handbacks in the United States and internationally. And, of course, there were no P3 projects that had been completed in the U.S. So we looked internationally to find out if any projects had been completed and how did those handback processes go? Were they successful or were they not successful? And we asked a couple of researchers, QC or Qingbin Cui from the University of Maryland. And Marcel Ham from IMG Rebel to help research this question. So they have been able to find three examples and that's what we're going to talk about today. And then a little bit on sort of guidance and key takeaways from what they learned. So here is Qingbin Cui and Marcel Ham and we will lead off with Qingbin Cui who will talk about the analytical framework and the case studies. And then Marcel will then follow with key takeaways and recommendations for good practice. So with that I turn it over to QC.

Qingbin Cui: Thank you, Patrick. Yes, so I'm going to talk about how do we really conduct this survey, international scan on a P3 handback. Jordan, can you move to the next slide? Okay. Before we conducted an international scan, in fact, we take a look at what our existing knowledge of documents available with respect to P3 handback. And it's as Patrick just mentioned there's no transportation P3 projects that have already reached handback in the U.S. On the other hand, there are a few, very few transportation projects in other countries that already achieve the contract term. And that hand over back to the public agency. And we take a look at also what are those guidelines, references available focusing on P3, whether they include a handback or not. We revealed a couple of guidelines especially from World Bank P3, especially the P3 reference guide, and also the U.K. PF2 standard contracts. And then the national P3 guidelines in Australia. And also the guidebook infrastructure P3 guidebook from the United Nations, and the concession, toll concession contract guide from U.S. DOT. And we basically found out that those documents, those guides has generally include the P3 or the handback requirement. On the other hand, the language in the section on the handback is very brief just to lay out the key issues or elements with respect to the handback. For example, that most of the guidelines state that the handback should be included and the requirement should be defined. But most references lack of detail implementation guideline there. And no specific recommendation has been included. Some references also state the specification and also the inspection procedure regarding the handback. However, most of the guidelines have not really provided a specific details regarding the timetable and also what area should be inspected. Those details are not there. The financing and the incentives should also be another key element that most of the guidelines already mentioned. There are still no details there. A few P3 guidelines also mentioned that the residual value as a requirement of residual life of the assets of the requirements and the detail about the calculation of the residual life it's also lacking there. So I can move the slide. So we start to look at the international experience on P3 handback. And we want to really know is there any good example of the best practice of even some field of handback there. So we focused on the best practice especially because when we take a look at the project that achieved the handback most of the time we want to know what happened and is that a successful handback? The first question we have here is how do we define the handback, a successful handback? So we want to really define the handback from both the outcome and the process perspective. So the handback is successful when the asset has been returned back to the public meeting and exceeding requirements defined in the P3 agreement, if the original P3 contract include detailed handback requirements. But many times that requirement is not there. So we have to rely on some subjective judgment or subjective criteria here. For example, instead of using the baseline defined in the original contract we will basically ask the project participants there whether this asset has met the standard condition or standard performance condition compared to other assets with a similar age. And also is there any capital expenses after the handback, especially from the public agency-- the public side. So those are all criteria that we want to define a successful handback from outcome perspective. Another perspective we define success from a process perspective which means that whether the handback process followed the standard and the clear procedures defined in the original contract, if the original contract does not really include detailed handback procedure or inspection requirements there. So we'll also rely on subjective criteria, for example, whether the handback avoided some conflict, whether there is a dispute. How did they handle that dispute? Something related to the litigation and also whether the result, inspection results make sure that the asset quality after the handback. So those are quite basically to try to examine the international experience regarding the handback. Is there any questions? Or probably I'll just pause for 10 seconds if you have a question.

Patrick DeCorla-Souza: Yeah, so we don't have the lines open right now. But you can type your questions into the chat box. And we will open the lines at the end of the webinar. But during the webinar the best way to ask the question is to put your questions in the chat box. So I don't see any questions, nor is anybody typing. So QC I think you can go ahead with the second segment.

Qingbin Cui: Okay. So I'm going to introduce the three P3 project case that we investigate on the handback. So the first one is the East-Link Bridge in Dublin Ireland. It is one of the first-- well I think it's the first P3 project in Ireland. It was built in 1984 with 30 years of total concession. So in 2015 so the toll bridge was handed over to the Dublin city council. So this is the first P3 project in Ireland. And at that time the project was built around 8 million pounds. In the private company is called National Toll Roads. So even though it's called National Toll Roads it's a private company that signed a 30-year DBF OM contract with Dublin city council. And they built a special project vehicle named East-Link LTD. So East-Link LTD is SPV in that project. So this is a very interesting project that the city and the private company and as well as the port authority is called the Dublin Port Company. So the port it's a semi-government organization incorporated back in 2003. So those three organizations basically share the risk and share the revenue. And National Toll Roads, that private concessionaire, take almost 60 percent of the revenue and then the city council and the port authority-- the port company, Dublin Port Company, share the rest of the 40 percent there. And the project achieve pretty good, I think, the traffic revenue. They are currently-- well before they reduced the toll a couple of months ago the East-Link can generate almost 10 million euros a year. And with only 23 staff member right now the O&M costs is around 4 million euro there. So the contract basically expired December 31, 2015 so on January 1, 2016 the East-Link Bridge is transferred back to the public agency. And the interesting thing here is that, in fact, the original contract is very brief. And they call it a gentleman's agreement. So if you take a look at the original contract it's less than 60 pages there, which is very brief. And there is no language on handback. When we talk to the city council folks there so they especially mentioned here they don't call this a handback, a P3 handback. They call it expiration there. So the handback implies some conditionality, it means that you could-- if the condition is not really met you cannot really handback. So it's basically a contract of expiration there so they call it. On the other hand, the project is very-- the handback process is very smooth. The unique organizational set up in this project probably help the entire concession operation and handback. So at the beginning about three members from the Dublin city council will join the board of the SPV. Another two members from the port company, Dublin Port Company also become a member of the board. So you have like five members on the SPV board from the public side. So that also ensures that all of the maintenance work during the 30 years concession meet the requirements and also serve the public interest there. And also, of course, there is a close and very good relationship between the SPV East-Link and the city council there. Another very interesting point, an interesting area with respect to this project here is the toll-- when the private company operated this toll bridge the toll has been set just after the handback is about 1.75 euros to use that for a passenger car. It's a little bit higher for a truck. On the other hand, when they transfer the ownership back to the public and there is a strong voice from the general public to remove the toll because currently this is all from the public, it's operated by the public. So just a couple of months ago the city council had to really lower the toll. And right now the toll is less than 1.75 euros there. So that's one interesting but during the entire 30 years of operation of the concession operation the toll continued to increase as planned. So this is the East-Link Bridge in Ireland. And it's an interesting project on the <inaudible 00:19:43>. Another project in Europe is Highway 4 in Finland. This is also the first P3 project in Finland. And the project was built-- well the construction cost and also the construction times was very successful in terms at the beginning that the project was anticipated to complete in three years for construction. And then the actual construction time was 2.5 years. And the construction cost is also 5 million euros below the budget. So it was considered a very good experience for Finnish Transportation Agency. In the handback happened at midnight on August 30, 2012. And it was also considered as an overall success. Even the public agencies, the Finnish Transport Agency has considered this as a model for future P3 handbacks here. And the project at the beginning was built back in 1997 and with 15 years concession. It was not really a concession. So it's basically the shadow toll project, 15-year contract. So over the 15 years that FTA will pay the private company based on the traffic Highway 4 really accommodates there. The handback, in fact,-- well, the original contract includes some details about the handback requirements including the specifications or including the roadway performance criteria. For example, they even include the rotting dabs and also some other functionality requirements for storm water or other kind of assets there. And this is the only one that we investigated that include some detail of the handback requirements. And the original contract required the SPV to initialize the handback process the three years before the contract that expired. So three years before the actual handback the private company really request-- sent a request to the public agency and started the handback process. And that served the public agency and also the private company. They worked together. And typically with some frequent meetings and to talk about the potential issues there. The entire handback served very well. One interesting area here in the Highway 4 here is that even after the handback the private company provided two years' warranty to ensure no significant cost expenditures from the public if, you know, any significant issues of default-- defect from the assets there. So that's one unique requirement that we identified from this case study here. And, of course, that SPV discontinued right after this handback. So the FTA, the Finnish Transport Agency also allowed the shareholder of the SPV, that's Skanska, to take over that warranty and other responsibilities after the SPV discontinued right after the handback. So that SPV is just an LLC so it discontinued after that. Even the original contract did not really allow this kind of responsibility transfer but the public agency feel a big firm as Skanska serving as the responsible party/entity would benefit this kind of arrangement. So they allowed and agreed on this kind of change. So this is Highway 4 in Finland. And the third case study that we investigated is the M4 Motorway, that's a toll way basically because M4 is a very long highway and which include toll and non-toll parts. So M4 Tollway is also one of the first P3 projects in Australia. And the handback occurs at midnight on February 15, 2010. In the project, in fact, includes very few or even no details or nothing about the handback requirements there. It's a very brief requirements on how the asset should be hand over back to the public agency. But the public agency and also the private company can work together and establish temporary organizations to handle the handback. So two years before the actual handback and they start to build a range agreement and also define the process on the handback issues here. It's very important to note there just three years before the handback the SPV that it's called the concessionaire basically-- ownership of the concessionaire has been transferred to Transurban. So Transurban becomes the majority owner of the SPV. And Transurban owned many toll roads in Australia and other countries. So they have been working closely with the public agency on all P3 projects there. The handback-- their good relationship with the public agency really helped the handback. Even there are some discussion about how the lack of detail on the handback requirements there but both the public agency and the private company can work together and solve some of those issues there. Of course, the public agency did note the requirements for the P3 handback there. So the auditor general of New South Wales, the government agency basically recommended in the future that P3 handback should be detailed and also specified in the future contracts. And they did. So the new M5 project they are including more detailed requirements on P3 handback there. To summarize those three P3 handback here so we generally found that all three P3 handback were very successful even without detailed handback requirements there. And the primary driver, in fact, we see here is the good relationship between the public agency and the private company there. And the East-Link project, for example, was the first project that I just mentioned there. And even from the outcome perspective right after the-- well, because the East-Link Bridge project they did not really have inspection processes. So because the board members include members from the city council and the port authority there so they continue to track and monitor the maintenance activities over the entire 30-year concession period. So they follow five-year inspection cycle and after the handback the toll bridge handback and the city council did some inspection and they did not really find critical issues about the asset's condition there. And there is one small issue, small default that was designed related way back to the earlier stage. And they also found that the spend and it was not really big enough for large vessels there so that's considered all of the issues, outcome, performance there and the city considered this a good and successful handback. And, of course, the organizational establishment-- very unique. The organizational establishment is very unique because of the involvement of the public officials in the SPV board so that help the entire concession operation and also the handback. There was no conflict and no additional cost from the public after the handback. The performance was good. And, in fact, no impact on the general public during the handback. Even before the handback the legal teams were trying to advise the city council to establish some detailed requirements in terms of what items should be included and the procedures and the penalty. And the city council did not really follow that but they trusted the private SPV because of their unique organizational establishment there. So it was very successful, in fact. However, this kind of unique organizational feature is not really observed in other P3 projects. Probably only one in Ireland over about the 14 P3 projects in Ireland there. Highway 4 is also considered a successful project. And the highway performance meets all of the requirements in terms of all of the criteria performance indicators defined in the original contract including the rotting and roughness index they all meet that requirement. And from the process perspective the SPV followed the handback requirements. Three years before the handback because they initialized the handback process and they transferred all of the maintenance documents there and all of the information that is required. They follow the timeline defined in the original contract. And so it's a very small handback just after 15 years of operation and maintenance from the private company. And for Tollway that's also considered a successful handback. The Tollway meets performance conditions of similar assets. And the only added capital costs was to repair pre-concession bridge defect. From the process perspective the process was also free of dispute or conflict and no significant additional cost to the public. And also the performance impact is minimal there. One more thing here is that on the M4 Tollway is after the project is handed back to the public and there were strong worries also from the general public and also the political side, I think the Labor Party. So they removed the toll after the concession contract expired. Okay. I'll pause for a minute if you have any questions here.

Patrick DeCorla-Souza: All right. Please do type your questions into the chat box. And we do have one question already in the chat box, QC. And the question is from Jose Luis Echeverry. Besides the two-year warranty did the SPV have to give extra warranties over the overall assets that had to be returned to the Finnish Transportation Agency? For example, quality guarantees over the assets such as five years for pavement, et cetera? QC.

Qingbin Cui: Yeah. So as I understand that two-year contract is for the entire project. And there is some equipment probably sometimes you could see that with the longer warranties there. They did not really specify any additional requirements or warranty requirements from the SPV. So SPV just provide that two-year warranty for the assets. And we don't see any other requirements on any other assets, in fact.

Marcel Ham: Can I add one thing to this?

Patrick DeCorla-Souza: Yeah, sure.

Marcel Ham: Because I think it's helpful to make a distinction between the warranty, the financial warranty itself and then also the handback requirements. So what we're talking about here is a financial warranty that exceeds the life of the contract. So beyond the end date of the contract there is a two-year warranty which is considered exceptional. That is different from the requirements regarding the assets upon contract end dates. For example, a requirement can remain in use for the life of, the same pavement needs to be this or remaining useful life. So that is the specification itself. And then upon handback the SPV needs to convincingly demonstrate that it's meeting those requirements. But in this particular case were talking about the financial warranty beyond the life of the contract, again, which is exceptional because typically the SPV is really only there for the life of the contract and not much longer. I just wanted to point out the difference.

Patrick DeCorla-Souza: Thanks, Marcel. So we also have another question from John Burns. Was public sentiment part of the criteria for a successful handback, maybe in terms of public use, on tolling rates, final level of service or capacity of the facility or other user costs? So the question is more was the public's view taken into consideration? Were they satisfied with the process, I guess?

Qingbin Cui: Yeah, I do agree. In fact, the public sentiment or public opinion on those given P3 toll road is very important. Unfortunately, we did not really include in our study. Our studies only focus on whether the handback is successful-- whether the P3 assets has been successful handback to the public. And in fact, on the other hand, in fact, I want to point out here that the public opinion or the public sentiment can be easily-- can easily change after this kind of positive or negative news here. So just today I see that in the Washington Post that probably everyone see that the I-66 hit the $47. It's the highest record toll, 47. And you can take a look at all the comments after that news article. Most of them they are negative on this kind of toll. And, in fact, we did some social media study on public opinion on toll. Virginia is pretty, I would say, positive state. But we do see some trends. After this kind of news continues to publish and will definitely change people's opinions on this. So we see that the public opinion has somehow shift to relatively negative about this kind of high toll. And there is some equity issues within this kind of P3 projects here. So I do agree that it's very important issues here to consider the P3 a success.

Patrick DeCorla-Souza: Thanks, QC we have another question from Amir. In your case studies, have you seen any cases that the SPV was changed during the concession period? And how changing in the SPV can affect the handback process and P3 projects?

Qingbin Cui: Yeah, that's an interesting question. In fact, two of the three project cases that we investigated has SPV change. So the first one East-Link Bridge the National Toll Road sold the SPV to, I believe, it was DIF, another company. But we don't see a significant impact on the ownership change of SPV on East-Link toll bridge. In fact, I guess, East-Link Bridge is very unique because of their organizational features here. And the M4 Tollway in Australia we also see that the Statewide Road, that's the original concessionaire, they sold-- well, basically it's a transferable purchase the majority ownership of the Statewide Road. So it's also in the ownership change somehow that you can consider. On the other hand, that Transurban has many relevant assets in Australia. They continue to maintain a good relationship and goodwill with the public agency. So from our very limited experience or very limited case study here the SPV change has not really made any significant impact on the handback or the success of the handback there.

Patrick DeCorla-Souza: All right. Thanks, QC. I see we are about a quarter of three. There are remaining questions but let's take them after Marcel has had a chance to talk about key takeaways. So Marcel, I'd like to turn it over to you at this point.

Marcel Ham: Thank you. So, of course, we looked at a very limited sample set but still we can define some key takeaways on the basis of the case studies that we looked into. On the first one, as QC just explained, on the Finnish example the Highway 4 for had pretty specific procedures and handback requirements in the contract. Those other case studies did not. So they did not specify any procedures, nor any handback requirements. But all of the representatives of the projects actually in our discussions with them indicated that it would've been very useful to have more contractual guidance on handback. So that's one key takeaway, actually, across the board. In all of the case studies, respondents indicate it is helpful to be more specific about the procedures and requirements. The second key take away is throughout all of the case studies, sooner or later, parties have come up with procedures and a joint inspection process. So, of course, there's specificity so when we talk about the East-Link Bridge there's almost automatically a joint inspection process because of the very close involvement of the city council in the project entity. So there is a, one could say, free flow of information. There is access to information about the states of that bridge, the state of the assets. So the joint inspection process is emphasized by respondents as very important. And can, of course, be included in contractual procedures. The next key takeaway is about the financial incentives and protections as we just discussed. None of the case studies actually used those financial incentives because it was not necessary. But all respondents indicated it was very useful-- that it would've been very useful or it was actually very useful to have those incentives in place. It creates some leverage for the public agency. So I do make sure that both parties will go through and will work together in getting through a smooth handback. So, again, all public agency representatives indicate that those financial incentives even though not being used were still very helpful. And then when we talk about those financial incentives we're talking about either maintenance reserves, letters of credit. But there's various structures that have been used across those case studies. Then a next observation is there's always going to be a need for flexibility and handback requirements because we are defining these handback specifications upon commercial close or even before and that can be 20 or 30 years out. So we need to be flexible when it comes to necessary adjustments of those handback requirements. Now, the more outcome-based those handback requirements are the easier that should be. Or there shouldn't be as much need for flexibility or changes over the life. Of course, most P3 contracts have pretty common and functional change provisions so they should be helpful too. I think another main consideration, although that is not a direct result from the case studies, are the handback requirements very different from the requirements throughout the life of the contract? And I think if I've seen a few contracts in which there was a very big distinction between the regular performance requirements and then the handback requirements. And then, of course, it can become more tense. And then it become more tricky if throughout the life of the project we have been looking at the same requirements, the same specifications all along and there have been inspections already. And then the handback itself is not too different that should also make it easier the whole handback process. But, again, just like for any other performance requirements P3 contracts need some sort of flexibility to deal with necessary changes due to environmental changes or regulations. The fifth key take away is that it looks like shorter-term contracts reduce challenges for the same reason. Right? So we now can specify realistic handback requirements. The Highway 4project was only a 15-year project. The operational phase of the project was 15 years. Now, it should be easier to anticipate the realistic handback requirements 15 years out rather than 50 years out. So, of course, shorter contracts would reduce challenges when it comes to handbacks. At the same time, that of course, needs to be balanced with opportunities for lifecycle costing because that should be one of the main considerations to consider a P3 in the first place. The next take away is collaborative approach. Throughout all of the case studies we've seen a collaborative approach but for different reasons. So the East-Link Bridge, as we discussed, has a very interesting institutional set up where the city council members are actually board members in the special-purpose vehicle. I do want to point out that particular structure may not be as common but in many more European and also Australian contracts some sort of alliance or partnering is actually more common. In many cases, we are also seeing the public agency holding equity in the special-purpose vehicle. And we haven't seen that in the U.S. So institutionally the European and other approaches to P3's are different from the U.S. And I am not convinced that it is easily transferable to U.S. context. So that's one reason why collaboration may be easier. Another one is as we saw in the M4 project is that the same concessionaire is working with the same public agency on multiple projects so that creates some level of relational contracting which, of course, almost automatically leads to a need for collaborative approach. Maybe the Highway 4 project in Finland is the only project that is the collaborative approach seems to be the result of the contract itself and also the culture of how these P3s function. And in a sense that project is a textbook example of the handback process and the collaboration with that. The final point that we wanted to make, and this is really a key takeaway from the East-Link Bridge project is the workforce transition upon handback can be very complicated. Just like sometimes in some contracts there's a workforce transition at the start of a project, for example, public sector staff and then moves over to a concessionaire, can be very complicated, equally complicated or maybe even more complicated will be the transition of workforce at the end of the contract. And with that, I want to open it up for questions.

Patrick DeCorla-Souza: Marcel, why don't you keep going and then we'll take all of the questions at the end?

Marcel Ham: That makes sense. Let me then on the basis of, again, very limited evidence list some of the key recommendations. And I'm going to do this fairly quickly. So one is as we just saw the various cases I showed yes it is actually helpful to have the detailed handback procedures and requirements and they also need to be flexible. They also need to be clear in specifying who is responsible for what. So the roles and responsibilities need to be very clear. And just like for any other procedure and requirements in a P3 contract there needs to be some level of flexibility. So far pretty straightforward. I would say another key recommendation is if you look at the various case studies, in many cases the handback was not so special. It was a logical continuation of inspections and performance monitoring that had been going on throughout the life of the contract. So that is actually a perspective that I think is worth emphasizing that we shouldn't make handback to special or unique. The handback comes at the end of the contract and should be a logical consequence of what has happened before. So in some P3 contracts and procedures we actually see that the handback is not much more than the extension of a lifecycle maintenance plan. So throughout the life of the contract there will be a lifecycle maintenance plan and other maintenance plans that will be continuously updated and simply has to be met upon handback. So that is actually an interesting perspective. And I think that when the first P3s were developed that was not really considered. Handbacks were considered very different and all of a sudden we needed different types of specifications. But if you look at the actual experience then the handback process as such is much more an extension of performance monitoring throughout the life of the contract. And also if you take that seriously throughout the life of the contract and be involved as a public agency, be involved in those inspections than a handback shouldn't lead to big surprises either. The final recommendation is on the financial protections as already discussed this is actually pretty common these days. The P3 contracts have these financial incentives towards the end of the agreements, typically three years from the contract end date there will be an initial inspection. And then an additional financial security will be built up if there is a need to. So if there is the expectation that there is a need to invest in order to meet the handback requirements then the typical approach is that there is an additional security. Because, of course, the security that's until the end date the agency has is withholding any toll revenues or withholding any availability payments. But, of course, if the necessary investments in the asset would exceed those toll revenues and availability payments then, of course, there would be a need for additional financial security. And getting closer to the end date, that natural security of outstanding toll revenues and availability payments decreases which can typically increases the need for additional security. But there is actually pretty common guidance on this topic, mostly in the form of escrow or handback reserve accounts. With that, I would like to move on to the questions.

Patrick DeCorla-Souza: All right. Thanks, Marcel. Let's go over the questions that we didn't get to first and see what we can cover. Marianna Menitti asks do you have any example of how difficult it is to trigger the handback in case it is necessary? Any experience on that?

Marcel Ham: So maybe we should have explained a little clearer that we have been looking at handback procedures at the end of the contract. So we are not looking at early termination. So we have been focusing on those contracts that were not early terminated but made it all the way through the term of the contract and were then handed back to the public agency. Still you need to start the handback process. And so typically these days P3 contracts include a certain timeline and a trigger for the start of that process. And the case studies also show that it really makes sense to start with that process a few years prior to the contract end date. But we haven't run into any particular difficulties. But I do-- I would also be very interested to look into early termination and how then a handback would function. But that's a whole different story. So we haven't looked into that.

Patrick DeCorla-Souza: All right. So there's another question for you, a follow-up. Could you please elaborate a bit more on the financial guarantee? Did it have a limit? What events did it cover?

Marcel Ham: At this moment I do not have that information right now. I am absolutely convinced that yes it does have a limit. But right now from the top of my head I don't know if it has any specific conditions or specific triggers. So I could follow up on that.

Patrick DeCorla-Souza: The next question is can you comment on whether the three case studies met traffic and/or revenue forecasts?

Qingbin Cui: I can say pretty much yes. So the East-Link toll bridge as you can see that the original cost is about eight million pounds. And the height of the traffic, I believe, it was some years ago the daily traffic about 22,000. And currently it's around 16. But they already generate almost 10 million euros there, 10 million euros a year. The operating/maintenance costs is around 4 million euros there. And the M4 Tollway the government audit report especially mentioned something related to the traffic issues here. So the private company has been able to achieve 17 percent rate of return. There is one discussion during the handback especially what kind of assets, for example, the equipment should they really return back to the public? And of course, there was an argument talking about those equipment has been paid before the dividend so it should be included in the handback assets. And, if not, the return, the rate of return for a private company would be higher than that 17 percent there. The Highway 4is a shadow toll project. So that's also how it reached the revenue forecasted there too.

Patrick DeCorla-Souza: We have a last question before we leave. And it's Paloma, again, asks on the East-Link Bridge were the members of the DCC and port authority part of the SPV board from the very beginning of the concession? Or from the beginning of the handback period?

Qingbin Cui: From the beginning of the contract, in fact. So it's a very unique set up, very interesting. But I do know some of-- in other countries, for example, I know that in China their P3 project here the public also in any country that the P3 project include the public funds, many projects, the majority of the projects include the public funds there. In the U.S. probably the public agency does not have a stake in the SPV. But in other countries, China for example, the public agency or the state government does take a stake in the SPV. So this one is very similar that the public agency, the Dublin city council has a stake and also included members in the SPV board so that they can monitor and track all of the operating activity and the maintenance to meet the city council's requirements there.

Patrick DeCorla-Souza: Thanks, QC. We are at the end of our time. Jordan, I would like you at this time to put up the evaluation poll. And while you're doing that I would like to thank both of our presenters for an excellent review of the handback experience internationally. And we appreciate all of you who have joined us in this presentation with your questions. Thanks, everyone. I wish you a good afternoon. Bye.

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