Design, Build, Finance, Operate & maintenance (DBFO)

You are convinced with all the benefits of combining Construction & Operation (Design Build Operate model) but:

• You are reluctant to finance, on your own budget, the capital investment (Capex); this can be for various reasons:
  - You prefer to allocate your financing capabilities to serve projects that are more in your core business
  - You do not want to increase, or need to decrease, your debt levels & ratios…
• You need to secure an affordable and predictable tariff/fee for the services that the asset is meant to deliver; tariff/fee is meant to cover
  - Fixed component for amortization and financing costs of the asset (new or expansion) + fixed O&M costs (manpower, asset maintenance, …)
  - Variable component for variable O&M costs (energy, chemicals, …).

We structure the financing of 100% of the Capex, usually with a “project finance” scheme, as follows:

• Special purpose company (SPC) created for the project
• We provide for SPC’s equity, along with other partner investors
• Equity shareholders secure a long-term debt, usually from a pool of lenders and on a non-recourse basis

We structure the financing for a portion of the Capex (still with “project finance” scheme), the remaining portion being financed by a third party, usually provided by you (typically, an International Financing Institution or a Grant provider)

The main benefits of Design, Build, Finance & Operate solution over Design, Build & Operate solution:

• Capex financing is no longer on your balance sheet
• You have a predictable tariff/fee in your budget to pay for the services rendered by the asset

• Capacity building: the DBFO is an elaborated collaboration model which requires that you staff well qualified team
• Governance stability: DBFO requires long-term (typically, from 20 to 30 years) in order to optimize the tariff, which requires stability in the governance of your authority
• Stakeholders management: DBFO involves several stakeholders (commercial lenders, international financing institutions or donors, regulatory agencies, non-governmental organizations, …) who need to be managed in good faith and persistently

In a Design, Build, Finance & Operate for a desalination plant, the cost of power to operate the treatment line can represented 50% of the water tariff, which confirms that over the full lifecycle of an asset, Operation & Maintenance costs are frequently the major component.

Our references include Design, Build, Finance & Operate contracts that have reached their contractual term (asset ownership has been transferred from SUEZ to its client) as well as contracts whose duration is extended with asset expansion.