Press release

Session on investment in infrastructure: key aspects of the new legislation

09/05/2017

SEOPAN, Accuracy, Fitch Ratings, AON and Pérez-Llorca organised a round table discussion on “Investment in infrastructure: key aspects of the new legislation”. The session, presented by Julián Núñez, President of SEOPAN, analysed the infrastructure investment climate in Spain, reflected on the concession model in the country, and described the major transactions in the sector with a focus on the development of the profile of the investor, all from the perspective of expert analysts and lawyers from Accuracy, Fitch Ratings, AON and Pérez-Llorca.

Julián Núñez, President of SEOPAN, Association of Construction Companies and Infrastructure Concessionaires, explained that, “ensuring the competitiveness and social well-being of our country is a crucial objective and achieving it will not be possible if we do not fulfil the commitment to infrastructure that our country needs. At the moment, we are lagging behind the rest of the EU and we still invest only 40 % of the average of the 4 biggest European economies. Spain has a large investment deficit in several areas of infrastructure which are of great social significance and a state agreement should be reached, in isolation from the electoral cycle, which prioritises infrastructure and ensures its implementation. The agreement must respond to the reality we encounter: the budgetary funding is insufficient to undertake the necessary infrastructure and so alternative formulas should be considered, primarily by means of well-structured concessions.”

Laura Cózar, Director of the consulting firm Accuracy, concluded that, “the combination of greater rationalisation of planning with a more stable macroeconomic environment in Spain, should, in the coming years, lead to the development of efficient, economically attractive and bankable projects, with the participation of national and international investors. Rationalisation, in terms of encouraging priority infrastructure in sectors with a deficit such as the integral water and waste cycle. Attractive, in terms of well-structured projects, with good predictability and a balanced allocation of demand and operating risks.”

Stéphane Buemi, Head of EMEA Transportation Infrastructure at Fitch, commented on how creditors and the rating agency view the various financial, operational and regulatory risks facing the Spanish infrastructure market. In addition, he compared issuers and the operating environment in Spain to those in other European markets such as France and Italy. Lastly, he pointed out that the ratings reflect how the debt structure and financial leverage mitigate the operational and regulatory risk of projects in Spain.

Jon Chapman, Director of Construction and Energy at AON Spain, then spoke of the importance of having a good understanding of the risks associated with infrastructure projects and managing these risks by contracting insurance. He also highlighted the importance of developing an insurance programme which is specific to each project, not just to protect income from the project but also to achieve the financial closure which is necessary for the project to be viable.

Lastly, Elena Veleiro, Counsel of the Public law practice area, and José María de Paz, Partner of Corporate law and Infrastructures, both from Pérez-Llorca, discussed the most sensitive legal aspects associated with the investment and management of infrastructures such as the containment of risk of the concessionaire, the regulation of the economic balance of the contract, the impact of the so-called “remunicipalisation” of public services and the current status of joint ventures as a tool to coordinate the indirect management of the service. In addition, they commented on some of the most significant aspects of the latest draft of the Public Sector Contracts Act which related to investment in infrastructure.

The round table, which was held at Pérez-Llorca’s Madrid headquarters and was moderated by José María de Paz, Partner of Corporate law and Infrastructure at the firm, concluded with an enriching debate between the speakers and some of the attendees on the subject.

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