National Development Finance Agency
The National Development Finance Agency (NDFA) was established on 1 January 2003 to provide financial advice to State authorities undertaking major public investment projects with a capital value of more than €20 million. The NDFA mandate was subsequently extended to give it full responsibility for the procurement and delivery of all Public Private Partnership (PPP) projects in sectors other than transport and local authorities. Up to 27 January 2015 the NDFA discharged its functions through the NTMA.
On 27 January 2015 the NDFA was dissolved and its functions transferred to the NTMA which will continue to use the NDFA brand to fulfil the various statutory mandates transferred from the NDFA. A final annual report and accounts of the NDFA for the period 1 January 2014 to 26 January 2015 is being published separately.
Infrastructure Delivery
Significant progress has been made on the PPP projects within the Infrastructure Stimulus Programme, announced in 2012 by the Minister for Public Expenditure and Reform, Brendan Howlin T.D. The NDFA is responsible for delivering three education PPP projects (DIT Campus at Grangegorman, Schools PPP Bundle 4 and Schools PPP Bundle 5), one health PPP project (Primary Care Centres PPP Programme) and one justice PPP project (Courts Bundle PPP Programme), the projects having an estimated total capital value of c. €650 million. The National Roads Authority (NRA) is responsible for procuring the various road PPP projects, amounting to c. €750 million. The NDFA is financial adviser across the entire PPP programme.
2014 saw the start of construction on the first two PPP projects from the Stimulus Programme – a 57-km stretch of motorway in Galway (the N17/N18 PPP road project) and a bundle of four schools in Clare, Cork, Louth and Tipperary (Schools PPP Bundle 4) providing 3,000 pupil places. The N17/N18 project was the first Irish PPP to include institutional investor debt funding since the start of the financial crisis and was voted European PPP Deal of the Year at the 2014 Project Finance International awards.
Key events on other PPP projects in 2014 include:
- Construction of Schools PPP Bundle 3 – providing a total of 5,700 school places at eight schools in Donegal, Galway, Leitrim, Limerick, Westmeath, Waterford and Wexford – was completed on time and on budget in April 2014. (The NDFA was both procuring authority and financial adviser to this project); and
- The N7 Newlands Cross PPP road project opened to traffic in November 2014, three months ahead of schedule removing the last traffic light between Cork, Limerick, Waterford and the border with Northern Ireland. The N11 part of this project is on schedule for delivery in 2015. (The NDFA was financial adviser to this project).
Procurement is well advanced on the PPP projects where the NDFA is both procuring authority and financial adviser.
DIT Campus at Grangegorman – The Preferred Tenderer has been appointed and financial close is expected in 2016. In March 2015 legal proceedings were initiated against the NTMA and the Minister for Education and Skills in respect of the public procurement competition for this project. The NTMA and the Minister are defending the proceedings.
Primary Care PPP Programme – The Preferred Tenderer has been appointed and financial close is expected in Q4 2015;
Courts Bundle PPP – The Preferred Tenderer has been appointed and financial close is expected in Q4 2015; and
Schools PPP Bundle 5 – The Invitation to Tender has been issued, and tenders are expected in Q3 2015.
The NDFA is providing financial advice to the NRA on the following projects which are currently in procurement:
M11 Gorey / Enniscorthy – The Preferred Tenderer has been appointed, financial close is expected in Q 3 2015;
N25 New Ross bypass – The Preferred Tenderer has been appointed, financial close is expected in Q3 2015; and
Motorway service areas – Tenders were received in Q1 2015, financial close is expected in Q3 2015.
In addition the NDFA is providing advice to the Railway Procurement Agency (RPA) on the Luas Cross City (City Centre Link) project.
Separately, the NDFA is delivering 15 non-PPP school projects with a combined value of c. €80 million on behalf of the Department of Education & Skills. Three “Design & Build” contracts were awarded at the start of 2014; construction is progressing on all sites and is expected to be completed in 2015.
Infrastructure Funding Solutions
During the latter half of 2014 there was a significant resurgence of the Irish infrastructure lending market with both international and domestic funders expressing an interest in lending to Irish projects. The NDFA has seen a number of new participants including international institutional investors in the market and also a welcome recovery of the long-term debt market. Consequently, there has been a substantial improvement in the funding costs available to Irish PPP projects.
The NDFA also continues to maintain engagement with multilateral funders such as the European Investment Bank (EIB) and Council of Europe Development Bank (CEB) in order to maximise the availability of cost effective funding for Irish infrastructure.
The EIB provided direct loans to the Exchequer of €150 million in March 2014 for the extension of Dublin’s Luas light rail system and €100 million in October 2014 to finance a second tranche of water/wastewater projects (the EIB previously provided €100 million for water/wastewater projects in 2012). Overall, since July 2012, the EIB has provided €550 million in direct Exchequer loans.
In January 2014 a €41 million loan facility was signed between the CEB and Ireland to fund up to 50 per cent of the Cork Prison project and the National Children’s Detention Facility. The EIB is currently involved as a potential funder for several of the PPP projects (DIT Campus at Grangegorman and Primary Care PPP Programme) being procured by the NDFA.
The N25 New Ross By-Pass PPP project is availing of the EIB Project Bonds Credit Enhancement (PBCE) initiative. This initiative enables the EIB to provide eligible infrastructure projects with PBCE in the form of a subordinated instrument – either a loan or contingent facility – to support senior project bonds issued by a project company. The core benefit of PBCE is the enhancement it brings to the credit rating of senior bonds. The objective of the initiative is to widen access to sources of finance and to minimise overall
funding costs.
Encouraging and Supporting Wider SME Participation
In 2014 and 2015 the NDFA and Enterprise Ireland continued their ongoing programme of “Meet the Buyer” events around the country. These events offered small and medium sized companies (SMEs) within the construction sector the opportunity to meet directly with representatives of the bidding consortia for the Schools PPP Bundles, DIT campus at Grangegorman, Primary Care PPP Programme and the Courts Bundle projects. Four events were held in Dublin, Athlone, Portlaoise and Kilkenny. Over 950 SMEs attended these events and many of these have successfully bid to join the supply chain of the various PPP bidding consortia.
Miscellaneous
The NDFA provides contract administration services to the Department of Education and Skills on PPP projects which are already operational (23 schools in total). The NDFA also provides ad hoc financial advisory services to Government Departments and Agencies in relation to completed PPP projects (e.g. review of the indexation on unitary charge payments, review of loan refinancing and debt restructuring), and other projects that involve the long-term commitment of public funds.