From the very beginning, the Dutch government has strived to develop strong foundations for its PPP programme, establishing a PPP unit (Kenniscentrum) in 1999 under the umbrella of the finance ministry, with the specific aim of developing and sharing knowledge and experience on private sector participation in public infrastructure.

There is a broad support base in the Netherlands, a policy framework has been developed and there are numerous projects in the pipeline as the government is convinced that PPP projects can be implemented faster and more efficiently than purely public ventures.

A loose outline of the policy framework from the Kenniscentrum is:

• the government must know what it wants and must remain at arm's length, there must also be sufficient political support
• elements enabling processes to be modified as the occasion demands
• guidelines for the government's use of financial instruments in PPP projects (shares, loans, subsidies with benefit sharing, etc)
• standard PPP contract types, such as DBFM and other forms of partnership
• instruments for comparing PPP with traditional implementation agreements to see if it offers added value
• recommendations on the use of market consultation, so that it can be used more accurately, generate more information and cut unnecessary costs
• a guide to making effective and proper use of European Directives on public procurement of PPPs

The primary policy objective is to enter into partnership with the private sector in order to be able to implement public projects more cheaply, quickly and/or efficiently. The Kenniscentrum does emphasise that private funding can play an important role in projects, but it is not the primary aim of PPP, it is just the means of improving incentive structures.

Second Coentunnel PPP

In July 2005, the department of public works and water management announced the tender for the DBFM of the second Coentunnel with a concession period set for 30 years.

Aside from the construction of the second tunnel, the contract also included the renovation of the existing tunnel, as well as the maintenance of both tunnels. The planning envisaged that the tender would take up to a year with an expected contract value of around €600 million.

Remuneration of the concessionaire would be in the form of an annual payment, paid by the concession-awarding authority; the amount will depend on the actual availability of the infrastructure to users of the tunnels, which will connect the centre of Amsterdam with the northern part of the Netherlands.

In fact, the project took longer then expected due to a change in Dutch government policy in 2005 - standardising procurement procedures - opening up more projects to be considered as PPPs.

Three bidders were announced in the running for the project in 2006, they were:

• United Coen Company
• Gatewest
• Coentunnel Company

The Coentunnel Company was selected as the preferred bidder for the project in June 2007 with hopes high for an end-of-year financial close. The project then hit a stumbling block as the government dithered over an air pollution permit that needed further clarification before construction could begin.

The Coentunnel Company consortium comprises:

• Arcadis Nederlands
• Dura Vermeer
• Besix
• CFE
• Dredging International
• TBI Bouwgroep
• Vinci

A concession agreement was subsequently signed in April this year with financial close slated for the end of 2008, three years after the project first came to market.

Financing

On 10 June 2008, the Coentunnel Company and closed a senior debt facility of €550 million for the financing of the Second Coentunnel PPP project in Amsterdam.

The deal was club financed with the following banks:

• Fortis
• BayernLB
• Royal Bank of Scotland
• Bank Nederlandse Gemeenten (BNG)
• KfW IPEX-Bank
• European Investment Bank

Included in the financing structure are a €28 million equity bridge and a €21 million mezzanine facility.
The mezzanine facilities were provided by Fortis and BNG. Fortis also granted the equity bridge facility.

A term loan from EIB was also of €200 million with a 28 year facility with the other banks roughly providing the remainder of the debt equally.

Fortis was mandated as facility agent, security agent and inter-creditor agent for all financing facilities.

BayernLB acted as technical and insurance Bank and RBS as modelling bank. The documentation bank role was shared between BayernLB, Fortis and RBS.

Clifford Chance acted as legal advisor to the consortium. Denton Wilde Sapte and Nauta Dutilh acted as lenders' legal advisors. Rabo Bank and RebelGroup acted as financial advisors to the consortium.

Pipeline projects in the Netherlands

In the last two years, the Netherlands has reached financial close on nine transport/social infrastructure PPP projects, highlighting its drive to deliver projects not on time but on budget.

These projects include:

• Second Coentunnel PPP - June 2008
• Netherlands Ministry of Finance Redevelopment - November 2006
• Utrecht Kromhout Barracks PPP - July 2008
• Rotterdam Airport (Zestienhoven) Detention Centre PPP - May 2008
• Groningen Tax Office PPP - June 2008
• Maasvlakte 2 Container Terminal - January 2008

Future projects include:

• A15 Maasvlakte-Vaanplein
• A12 Utrecht -Veenendaal
• A4 Delft-Schiedam
• A27 Breda -Utrecht
• Ring Utrecht
• Corridor A6/A9 Schiphol-Almere
• Schiphol Airport Group privatisation
• Schiphol Airport Justice Complex PPP

Conclusion

Despite clear evidence from the early pilot projects that PPPs deliver greater cost effectiveness and efficiency than traditional procurement methods, the development of the PPP market in the Netherlands has been sluggish due to intermittent deal flow, lengthy procurement timetables and high transaction costs.

Now, however, the PPP market in the Netherlands may be entering a significant new stage due to the government's recent policy initiatives, as well as the launch of the 'PPP assessment' which are widely expected to act as a significant stimulus to the Dutch PPP market.