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. Its 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 the local authorities. It discharges its functions through the NTMA. The Chief Executive of the NTMA is the ex officio Chairperson of the NDFA. A director of the NTMA is Chief Executive of the NDFA.

The NDFA is required to submit an annual report and accounts of its activities to the Minister for Finance, which is published separately.

Infrastructure Stimulus Programme

In July 2012 the Minister for Public Expenditure and Reform, Brendan Howlin TD, announced on behalf of the Government a €2.25 billion Infrastructure Stimulus Programme, including €1.4 billion of projects to be delivered as PPPs.

The planned PPP investment is being directed towards projects that meet key infrastructural needs and are in line with the priorities identified in the Government’s Investment Framework, covering education, health, justice and transport. The NDFA is responsible for delivering three education PPP projects, one health PPP project and one justice PPP project with 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 advisor across the entire PPP programme.

The funding of these PPPs is expected to come from the European Investment Bank (EIB), the National Pensions Reserve Fund/Ireland Strategic Investment Fund, domestic and international banks and institutional investors. The proposed capital expenditure under the stimulus package is additional to the existing Exchequer-funded investment programme.

In April 2014 the first project launched under the stimulus programme – the N17/N18 road PPP project (a 57-kilometre stretch of motorway linking Gort and Tuam in Galway) – successfully reached financial close and construction works are underway. The EIB provided €144 million of the total project funding requirement of €290 million, with the remainder coming from commercial and institutional investors including French banks Natixis and Société Genérale, Belgian insurer Ageas and Bank of Ireland. This project is the largest in the stimulus programme to date and the first Irish PPP to include institutional investor debt funding since the financial crisis. It is expected that over 450 construction jobs will be created during the construction phase. The competitions for all the other projects in the stimulus programme are now underway. 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 and construction is underway at all sites.

Engagement with Potential Investors, Funders, Contractors and Service Providers

The NDFA has actively engaged with sponsors, equity providers, contractors, professional service providers, and with potential international and domestic project funders to build awareness and support for the delivery of the Infrastructure Stimulus Programme. The participation of institutional investors in the N17/N18 (Gort Tuam) road project is a strong sign of renewed international interest in the Irish PPP market.

In conjunction with the Department of Finance and the Department of Public Expenditure and Reform the NDFA has facilitated discussions between the EIB and a number of Government Departments regarding the provision of direct loans to the Exchequer. The EIB has approved a total of €450 million of direct loans to the Exchequer since July 2012, comprising €100 million in July 2012 and €100 million in June 2013 for traditional (non-PPP) school building projects, €100 million in November 2012 for water/wastewater projects and €150 million in January 2014 for the extension of Dublin’s Luas light rail system.

In January 2014 a €41 million loan facility was signed between Council of Europe Development Bank and Ireland to fund up to 50 per cent of the Cork prison project and the National Children’s Detention Facility.

Project Procurement and Delivery – Key Developments

Education
On 9 November 2012 the NDFA awarded the PPP contract for Schools Bundle 3 to BAM PPP PGGM Infrastructure Cooperatie, a joint venture between BAM PPP and Dutch pension fund administrator PGGM. Funding was provided by the EIB and Bank of Ireland with a stand-by credit facility provided by the National Pensions Reserve Fund. All eight schools in this bundle were delivered on schedule in 2013 and 2014. The schools, which provide a total of 5,700 school places, are located in counties Galway, Donegal, Leitrim, Limerick, Westmeath and Wexford.

The fourth and fifth bundles of School PPP projects were launched together in 2013. The preferred tenderer for Schools Bundle 4 – comprising four schools – was selected in June 2014 and it is expected that the construction of these schools will commence before the end of the year. The preferred tenderer for Schools Bundle 5 – comprising six schools – is expected to be selected in Q1 2015 with construction to commence in Q3 2015.

Up to 1,000 construction jobs are expected to be created during the construction phase of the two projects.

One of the larger PPP projects in the stimulus programme is the development of two university buildings as part of the new city centre campus for Dublin Institute of Technology (DIT) at Grangegorman. The NDFA has shortlisted three candidates and it is expected that a preferred tenderer will be selected in Q3 2015. Construction of the Central and East Quad buildings is due to be completed in early 2018. Up to 1,500 jobs are expected to be created during the construction phase.

Roads
In April 2013 the contract for the N11/N7 PPP Project (a 50-kilometre section of the N11 road network and the N7 Newlands Cross free-flow junction) was awarded to the joint venture consortium of BAM PPP and Dutch pension provider PGGM Infrastructure Cooperatie. Funding was provided by the EIB and Bank of Ireland with a stand-by credit facility provided by the National Pensions Reserve Fund. The NDFA was financial advisor to this project. Construction work is underway and is due to be completed in 2015.

Health
The NDFA is engaged with the Health Service Executive on the procurement of up to 14 regional Primary Care Centres. The procurement process for the Primary Care Centres PPP project commenced in December 2013 and three consortia were shortlisted in June 2014. Financial close is currently scheduled for Q3 2015.

Justice
The Courts PPP Bundle comprises seven regional courthouses which involves a mix of new courthouse buildings in Drogheda, Letterkenny, Limerick and Wexford and the refurbishment/extension of existing courthouses in Cork, Mullingar and Waterford. The procurement process commenced in April 2014 and expressions of interest received in June are currently being evaluated.

Meet the Buyer Initiative
As part of a programme-wide initiative with Enterprise Ireland, a series of “Meet the Buyer” events have been held around the country offering small and medium sized companies within the construction sector the opportunity to meet directly with representatives of the bidding consortia for the projects. To date over 300 companies have attended these events. It is intended to hold further such events in the second half of 2014 and 2015.

Miscellaneous
The NDFA provides contract administration services to the Department of Education and Skills on PPP projects which are already operational. The NDFA also provides ad hoc financial advisory services to different 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 which involve the long-term commitment of public funds.