Transcript Slide 1

Anouj Mehta
Senior Infrastructure Finance Specialist
(Public Private Partnerships)
ADB’s Assistance for PPP’s in India
On-Going & Proposed Initiatives
26-27 February 2009, Bhopal,
BACKGROUND: Growth Fuelled Infrastructure Pressures
Years of Investment Lags
Rapid economic growth
Population, Income & Consumption
Levels Growth
POWER
Rapid Urbanisation
Severe
Capacity
WATER
Pressures
TRANSPORT
On
All
Sectors
SOCIAL
SECTORS
BACKGROUND: Huge Investment Needs Estimated at
US$ 500 billion over next 5 years
Sectors
US $ billion
ELECTRICITY
150.37
ROADS
81.24
TELECOMS
65.12
RAILWAYS
62.20
PORTS
18.03
AIRPORTS
8.46
WATER SUPPLY &
SANITATION
48.57
IRRIGATION
52.98
OTHER – Storage / Gas
10.46
TOTAL
497.55
Sectoral Shares
(%)
Sector-wise
Public (%)
Sector-wise
Private (%)
30.2MW Capacity
73.6
• 70,000
/ Coverage 26.4
expansion
16.3
66.2
33.8
3.6
26.3
73.7
• 6,500 km Golden Quadrilateral / North-South
13.1
73.6 / 11,113 km
26.4
and East-West
corridors
Nat.
Highways
Expressways 17
/ 7,616 km
12.5 / 1,000 km 83
National Highways in North East
• Dedicated
freight corridors
1.7
25.8
74.2
• 10,300 kms of new railway lines
9.8
97.3
2.7
• 21 stations’
modernisation
10.7
100
• 485 MT in major ports
--
2.1
50/82.4
50/17.6
100.0
70.8
29.2
A huge ask of private sector
Not Just Funds…….but also
EFFICIENCIES
Poor Institutional
Structures
Weak Incentives
Poor Tariffs,
Cost Recoveries &
Financial
Sustainability
SUSTAINABLE
INFRASTRUCTURE
DIVERSE
FUNDING
SOURCES
EFFICIENT
USAGE OF
ASSETS
EFFICIENT
DEMAND
MANAGEMENT
OF
RESOURCES
Outdated MIS and
FM
Systems
IDEAL
REALITY
Majority Public
Large T&D / NRW
Losses
Large Wastages
• Increasing impact on natural resources which are fast depleting
Interlinked – Efficient, predictable, financially sustainable enterprises will attract
diverse funding options
Typical Situation
Bulk water sourced
Technical Losses Upstream
Water post treatment avail for distr
Commercial Losses - Theft
Billed Quantity
Collection Efficiency
Collected Bills - related Quantity
Population 2009
End Amount Supplied
Operations Today
187 m litres p.d.
5%
178 m litres p.d.
16%
149 m litres p.d.
67%
100 m litres p.d.
1,000,000
100 lpcd
Lost Water
9 m litres p.d.
28 m litres p.d.
49 m litres p.d.
87 m litres p.d.
31,762 m litres p.a.
• Implications
•Less than 135 lpcd supplied – even the above 100 lpcd hugely un-even
•Coverage poor
•Sewerage situation even worse
•WILL GET WORSE as population increases
•Bulk water sources under severe pressure – looking for sources 50 kms
away from city now
•Investments of Rs 500 + crores required in BWS, Distribution etc
Even the 4 buckets a day will fall to 2 if nothing is done!!
Funding??
•Normal focus will be
•To enhance bulk water
•Find investments from government for capex
•JNNURM – limited supply
•Commercial finance – limited
•SUSTAINABILITY is the key – both JNNURM and banks want that for
lending
Rs
Tariff
Revenues
Billed
Collected
Operating Costs (extrapolated)
Operating Ratio
Net Bleed Every Day
21 Rs per kilo litre
3,133,746
2,099,610
4,031,251
1.92
(1,931,641) PER DAY
Certainly not sustainable!!
Phase in a PPP Solution
o Focus is not just funds but IBM:
•
•
•
Institutional ring fencing and efficient delivery
Benchmarking and measuring performance improvements
Managing for MAINTENANCE not just CAPEX
• PPP Phase in
•
•
Short term for technical baseline development, institutions development and
revenue enhancements - for improving financials and confidence
Medium term for expansion and larger capex investments
Simple Things:
a) Improve collection efficiency
b) Reduce commercial losses (cum)
c) Improve tariffs - 15% increase
d) Improve cost management - power
Available funds per day now
Improvement
90%
5%
24
10% reductions in cost
Increase in Collection by
(Rs per day)
720,761
1,090,096
1,545,768
1,971,677
40,036
ADB Assistance for PPPs
PPP is seen as one key solution
• Attract FRESH FUNDS into sector
• Develop Utility Institution’s
EFFICIENCIES
• Faster response to CONSUMERS
P
Policy Strengthening
• Policy for private –
domestic & foreign
investment
• Regulation & Monitoring
• Incentives for PPP’s
• User charges policies
• Viability support
S
Strong Stakeholder
Capacities
• Local and central
government capacities to
contract with and monitor
PPPs
• Good transaction
advisory support
• Good domestic
contractors / operators
Need for an Enabling Environment
P S S T
S
Supply of long term
funds
T
Trust Amongst ALL
Stakeholders
• Long term to match long
gestation infrastructure
• Awareness for all – ee’s,
consumers, private
players
• Competitive and risk
based
• Strong domestic funding
institutions with risk
analysis ability
• Transparency in process
• Participatory processes
ADB’s Support to Government of India for Mainstreaming PPPs
Follows the Value Chain
Technical Assistance (TA)
- Funds
- Expertise
Catalytic Lending Products
- With & Without Recourse
- Co-financing
- Credit enhancement products
Awareness &
Capacity Building
• For all stakeholders
Sector Specific
PPP Policy
Development
PPP Project
Structuring –
Demonstration
Projects
•Frameworks for PPP
•Good early precedents
Lending Window for
PPP Projects
-Non / Sub Sovereign
Facility
•Catalytic risk sharing funds
ADB Initiatives: Capacity Building - State Level
TA 4890: Mainstreaming PPP at State Level (on-going)
SCOPE
• $ 3 million Technical Assistance program
• Further $2 million in final stage of Board
approval – approved already by President
• Focused on 15 states
FOCUS: Strengthening PPP Cells and Capacities by a)
providing PPP and MIS in-house consultants for an
extended period and b) access to legal advisory services
•
PREPARATORY: PPP constraints identification, PPP
Frameworks and policies development
•
CAPACITY DEVELOPMENT: Training, manuals, good practices,
improving systems for bid document and project appraisals, risk
management systems
•
INSTITUTIONALISATION: MIS development, consultations with
stakeholders, quality checks and improvements on PPP/bid
documents, project pipeline conceptualisation and supervision of
projects
ADB Initiatives: Capacity Building - State Level
TA 4890: Mainstreaming PPP at State Level (contd.)
•
STATUS
 13 PPP Specialists – 12 states and DEA
 14 MIS specialists appointed – 14 states and DEA
 A Legal Advisory Panel
 A large number of activities are taking place within the PPP Cells:
 Workshops and training activities – including on risk, capacity
development, sector focus (urban, health, education), etc
 Exposure Visits and consultations with private sector and international
governments
 Value added assistance being provided by cells to projects from across
sectoral departments and ministries in project risk structuring, improving
bid documents
 Assistance being provided for financial closure including VGF applications
 Development of action plans for project pipeline development – urban,
health, education
 Several project concepts for PPP projects are being developed within the
states for further DEA / ADB assistance
Tremendous Response from States
ADB Initiatives: Capacity Building - Central Level
TA 4993: Mainstreaming PPP at Central Line Ministries (on-going)
SCOPE
 $ 2 million Technical Assistance program
 Focused on 6 line ministries
 Strengthening PPP Cells and Capacities
FOCUS Strengthening PPP Cells and Capacities by a) providing PPP and
MIS in-house consultants for an extended period and b) access to legal
advisory services
 PREPARATORY: PPP constraints identification, PPP Frameworks and
policies development
 CAPACITY DEVELOPMENT: Training needs assessments, training, good
practices inculcation, improvement in systems for project appraisals and
bid processes
 INSTITUTIONALISATION: MIS development, consultations, quality
checks and improvements on PPP/bid documents, project pipeline
conceptualisation and supervision of projects
ADB Initiatives: Sector Specific PPP Policy Assistance
Health & Education PPP Frameworks (TA 4890 Related)
SCOPE
 Assistance provided for
developing a PPP Framework for
Health and Education
 KPMG Consultants recruited
 Cross sector-division ADB team
worked with DEA (SAGF, SAUD,
SANS)
 Urban PPP workshops for all
states held in Jaipur and
Hyderabad in October 2007
(cross ADB divisions)
 States developed action plans
for PPP projects
 Follow up activities co-ordinated by PPP Cells leading
to pipeline of over 20 PPP
project proposals from states
ACTIVITIES
 Consultation Visits with 5 states - T.N., Orissa,
Uttarakhand, Rajasthan, A.P.
 ADB-KPMG Consultants Report Produced
 6 PPP Models Identified
 Framework for PPP development outlined
 Consultation Workshops on Draft Report held Ahmedabad & Panjim (February and April) 2008
 Workshop to evolve project concepts held - Panjim,
April 08 – leading to a proposed concept pipeline of
20 projects
 Assisted by PPP Cells in co-ordination and
workshops – now assisting on project proposal
development
 Meetings being held with DEA and ADB for
structuring projects and taking to market
Tremendous interest from states in developing projects further in a challenging area
ADB Initiatives: PPP Project Structuring Assistance
TA PPP Pilot Projects Initiative
CONCEPT
 Projects being evolved in the PPP Cells and across states and sectors
 Need for assisting in structuring good pilot PPP projects
• Create “demonstration” models
• Allows for replication across country
• ADB presence will improve risk perception
• Catalyse private sector involvement
 List of potential projects for TA already identified by DEA with assistance
from PPP Cells – further can be added on
 TA will leverage ADB TA funds with GOI development funds (IIPDF) to
quickly provide transaction advisory and project preparation assistance to
PPP proposals
 Flexible, value added, quick response modality – first such TA from ADB
THANK YOU
For inquiries:
Anouj Mehta
Tel No.: +632 632-5930/5968
Fax No.: +632 636-2337
Email: [email protected]