Transcript Slide 1
Fifth Astana Economic Forum Dr. Anand Chiplunkar Director, CWUW Central and West Asia Department 22 May 2012 Outline 1. Pre requisites for mainstreaming PPPs 2. How to identify projects and create a pipeline? 3. How to develop projects? 4. Financing Options MAIN STREAMING PPP PROJECTS Needs Range of Interventions Project Identification & Prioritization Advocacy, Capacity Development PPP Policies, Guidelines & Tool Kits Project Development PPP Mainstreaming Transaction Advisors PDF / VGF Model PPP documents Project Financing Facilitating PPPs Institutional Set-up (PPP Unit, RMU) • Capacity building and training • Quality control and due diligence • Standard PPP documentation • Project pipelines and prioritization • Review of PPP processes Viability Gap Funding as needed • Grant Support to the Project • Capital or O&M Grants • Funding up to 1040% of total project costs Market Financing Facilities • Long term debt funds • Refinancing of bank loans • Development of capital markets Institutional Support is Critical Dedicated Government PPP units are critical Play multiple roles and act as Government focal Upstream & downstream work need different skills Use advisors but build internal capacity over time Unit needs active relationship with stakeholders Investors – understand appetite and terms Advisors, other jurisdictions – learn PPP best practices Ministries – develop buy-in and capacity Critical to establish credibility with stakeholders IDENTIFYING PPP PROJECTS FOR A PPP PROJECT PIPELINE ADB Project Prioritization and Screening Country Diagnostic Study CPS / COBP cycle Project identification (based on CPS) Project Screening Prefeasibility study on private sector content and finance potential Projects Projects Projects Private Finance Projects Private + Public Finance Public Finance Project Development (Detailed Feasibility) Target sectors and projects … Which have Government buy in for PPP approach – sectors and projects That have necessary legislation in place Where private sector involvement offers large benefit With several potential follow-on projects Made attractive to investors – alternative investment options with stable cash flows Creation of PPP Project Pipeline Project Feasibility Technical, legal, environmental, social Economic viability Economic benefits exceeding economic costs Commercial viability Returns exceed cost plus required return on capital Affordability Direct and/or contingent liabilities Value for money assessment Value for Money (VfM) What is Value for Money? Measure for efficient and effective delivery of public services Best available outcome – taking into account all benefits, costs and risks over project life Who (public/private) is best suited for improving quality and reliability of services at lower cost Caution Needs good public sector data for delivery of comparable services Public investment gaps may warrant private sector investment anyway for economic growth Lessons from PFI, UK VfM related recommendation… “…Value for money will be improved through officials being proactive in: collecting data to inform decision-making; ensuring they have the right skills; establishing effective arrangements to test, challenge and, if necessary, stop projects; and using commercial awareness to obtain better deals…” DEVELOPING PPP PROJECTS Project Development Process Project Preparation Developer Search Marketing Track 1 Site Finalisation Project concept Procurement of Technical & Legal Consultant Land acquisition issues Contracts and Documentation – Bundling/ Unbundling Track 2 Proposal for complementary Project Funding from Identified Source(s) • Expression of • Direct mailers Interest • Media release • Request for • Establishing a Qualification Developer • Request for Network Proposal • Facilitate • Pre-Bid Consortia formation • Proposal Evaluation • Address concerns • Finalize Developer • Finalize Govt PreAgreements clearances, Facilitation and Decisionmaking Project development process integrates the parallel steps Project Delivery Process Bankable Project Development • Identification • Detailed Feasibility/ Structuring • Project scheduling • SPV formation • • • • Financing Structures Bidding Structures Contractual Frameworks Legal Documentation Monitoring A Continuous Process Procurement • Project Bidding • Selection of Operator/ Investors • Compliance with Performance std. • Regulatory mechanism • Auditing/Reporting • Project Transfer FINANCING PPP PROJECT DEVELOPMENT AND INVESTMENT Outcomes/ Impact Objectives Activation of PDF Project Development Fund Setting up PDF Panel of Transaction Advisers •Supporting project development costs •Encourage transparent procurements •Ensure well structured projects • Enable fast access, provision of quality consultancy services •Ensure transparency and Accountability Possible cofinancing from IFIs and DFIs Consultancy services get enhanced country wide Pilot Project Initiative • Support entire cost of project development •Ensures administrative push •Hand-holding and advise to public entity A set of Priority Projects taken as ‘PILOT CASES’ Pilot Cases Best projects first – build momentum Not too big, not too small Strong revenue generation projects preferable Government ministries and other stakeholders committed Builds expertise and develops the PPP process Financing PPPs Debt Commercial banks – usually short term, take out financing may be needed Multilateral and bilateral development banks and finance institutions Infrastructure bonds Institutional investors such as pension funds – can come in after project commissioning Equity Private sector and Markets Govt. may also take enabling equity commitment Cofinancing and Guarantees Cofinancing ADB promotes cofinancing, defined as financing mobilized from sources other than the borrower or project sponsors to augment its own assistance Funds from (i) commercial financial institutions, (ii) official funding agencies, and (iii) export credit agencies Guarantees ADB provides partial risk guarantees Enables financing and also lowers cost of financing Cover commercial and/or political risks Investor Considerations Early success critical to establish a track record and attract investment Government sponsored funds can play an important catalytic role (India, etc.) Investors hate surprises - don’t launch until legal, institutional frameworks ready Investors love “comparables” – copy successful PPP mechanisms where practicable Investor base shifting from Europe to Asia THANK YOU!