operation performance evaluation review

Operation Performance Evaluation Review

Warsaw Metro

& Public Private Partnership

Task Force Support

Poland

(A Technical Cooperation Operation)

June 2006

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:

Evaluation Department

OPERATION PERFORMANCE EVALUATION REVIEW (OPER)

PREFACE

This Evaluation Report The subject of this Operation Performance Evaluation Review (OPER) is the technical cooperation (TC) assignment providing support for the Warsaw Metro and the Public Private Partnership Task Force. The city of Warsaw and the government of Poland (represented by the Ministry of Infrastructure) were the clients. Overall the TC was intended to facilitate an envisaged private sector follow-on investment operation. This TC was in the amount of €1.5 million (originally equally shared between the Warsaw Metro and the Public Private Partnership Task Force) and was financed through the Bank’s Technical Cooperation Fund Programme (TCFP) by the European Union (EU) under its Bangkok 2002 Facility. The evaluation has been executed by Wolfgang Gruber, Senior Evaluation Manager of the European Bank for Reconstruction and Development’s Evaluation Department (EvD). Guido Bruggeman, urban transport specialist with the Municipal and Environmental Infrastructure (MEI) team, and the main operation leader for this TC assignment, prepared the TC Project Completion Report (PCR). The operation team and other relevant Bank staff commented on an early draft of this report. The Basic Data Sheet on page iii of this report and the PCR in Appendix 5 are complementary to this review and designed to be read together. Relevant teams and Bank departments contributed information on the as did external sector and industry sources. Fieldwork was carried out in February 2006. Post-Evaluation Selection and Process EvD selects a TC assignment for post-evaluation according to the following criteria: relevance to the Bank's likely future operations; potential lessons learned; size of the TC commitment; balance among countries of operations; balance among sectors and types of operations and relative priority of the TC assignment within EvD's overall work programme priorities and resources. The Bank's post-evaluation process is described in Chapter 8 of the Operations Manual. The responsible operation leader first writes a PCR. The PCR serves as a self-evaluation and establishes the basic facts and lessons from the operation's implementation as well as its future prospects. EvD’s independent evaluation follows, using the PCR as one of several inputs.

Exchange Rates used in this Report

In this report, as per February 2006 €1.0 = USD 1.19 = PLN 3.92

i

Map:

WARSAW METRO (Poland)

ii

TABLE OF CONTENTS

Page PREFACE ABBREVIATIONS AND DEFINED TERMS ii BASIC DATA SHEET iii 1. THE PROJECT 1 INTRODUCTION 1 TC IMPLEMENTATION 2 2. PROJECT RATIONALE 3 3. ACHIEVEMENT OF OBJECTIVES 4 4. OVERALL ASSESSMENT 6 5. TRANSITION IMPACT AND THE BANK'S ADDITIONALITY 7 OVERALL TRANSITION IMPACT 7 ENVIRONMENTAL IMPACT 8 ADDITIONALITY 8 COMPLIANCE WITH THE BANK’S COUNTRY STRATEGY AND SECTOR POLICY 9 6. BANK HANDLING 9 7. KEY ISSUES AND LESSONS LEARNED 10

IMPORTANCE OF TIMELY INTERVENTION BY SENIOR MANAGEMENT AT CRITICAL OPERATION JUNCTURES 10 OPTIMISATION OF BANK INPUT RESOURCES 11

LIST OF APPENDICES

Appendix 1 Operations Performance Ratings Appendix 2 Transition Impact Analysis Appendix 3 TOR Compliance Record Appendix 4 EBRD Technical Cooperation Funds Report

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ABBREVIATIONS

BIC Business Information Centre Capex Capital expenditure EIB European Investment Bank EU European Union EUR Euro EvD Evaluation Department EIRR Economic Internal Rate of Return IEI Invitation for Expressions of Intent LTT Legal Transition team MEI Municipal and Environmental Infrastructure OGC Office of the General Counsel (EBRD) OL Operation Leader OPER Operation Performance Evaluation Review Opex Operational expenditure OpsCom Operations Committee OT Operation team PPP Public Private Partnership PP and R’s Procurement Policies and Rules PSC Public Sector Comparator RO Resident Office TC Technical Cooperation TI Transition Impact TOR Terms of Reference USD United States Dollar XMR Expanded Monitoring Report

DEFINED TERMS the Bank European Bank for Reconstruction and Development. the OPER team Staff of the Evaluation Department and the independent sector consultant

who jointly carried out the post-evaluation the Operation team the staff in the Banking Department and other respective departments

within the Bank responsible for the Operation appraisal, negotiation and monitoring, including the XMR.

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BASIC DATA SHEET Operation Code 26228 Location: Poland Operation: Warsaw Metro and PPP Task Force

Sector: Transport Type: Technical Cooperation Facilitators: European Union PHARE Bangkok Facility Bank Unit: Transport

A. Funding / Type of Technical Cooperation TC TCFP Commitment Commitment

number Commitment title Amount €

TC1 ECP2000-2002-12-06

Warsaw Metro and Public Private Partnership Task Force Support

1,485,837

B. Procurement Mode Sources by country

Consultant services Evaluation of proposals The Netherlands

C. Visits Type of Visit No. of Visits Person-daysEvD/OPER 1 4

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1. THE PROJECT

1.1 INTRODUCTION

The Warsaw underground rail system, a map of which is shown in front of this report, is one of the youngest in Europe and dates back to 1918.1 More recently in 2002, the city of Warsaw approached the Bank for assistance in developing the expansion of its underground system, the Warsaw Metro, through a Public Private Partnership (PPP) project. The PPP project would draw on a recently completed pre-feasibility study funded from the city’s own resources and carried out by a consulting firm in 2001. Coincidentally, and with a broader focus on exploring new avenues for the financing of infrastructure projects more generally, the Polish government, through the Ministry of Infrastructure, had approached the Bank for possible support of its own PPP initiative. As an indication of the increased interest by the Polish authorities in the potential for PPP, (particularly in transport infrastructure projects), the Polish government established an inter-ministerial task group in March 2003.2 This group was led by the Deputy Prime Minister and the Minister of the Economy, and included representatives from the Ministry of the Economy, the Ministry of Infrastructure, the Ministry of Finance, the Office for Public Procurement and the head of the government office for European Union Integration. In addition, the Ministry of Infrastructure had established an internal section to examine PPP issues.

Combining both initiatives and preparing for a Warsaw Metro investment operation as a pilot case under new PPP legislation promised mutual benefits and synergies (see Section 7.3). The combination was also called for because the envisaged municipal Warsaw Metro project raised a number of questions of national significance, including regulatory issues, central government financial support and some possible grant-funding in the near future by the EU.3 In this context it is also noteworthy that in October 2002, the EU launched a tender for a “Pre-feasibility study for the sustainable development of the Warsaw Transport Node in connection with Pan-European Corridors I, II and VI Poland, Mazowieckie Voivodship”, that would look into the traffic needs from a broader regional perspective for the municipality of Warsaw and its surrounding conurbation at the core, and would cover road, rail, airport and multi-modal transport infrastructure.

Against this background, and secured by a 2002 city council resolution in support of the

Metro project, the Bank and the city of Warsaw signed a mandate letter on 13 September 2002 addressing responsibilities and obligations for both parties regarding the Warsaw

1 An historic overview is provided in the following web link: <http://en.wikipedia.org/wiki/Warsaw_Metro>. 2 The PPP task force group was composed of several working groups within the Ministry of Infrastructure,

namely the PPP division of the infrastructure financing department, the PPP steering committee and the PPP advisory group. Apart from intra-ministerial initiatives, a PPP government group operating on a broader scale was initiated in March 2003.

3 Given the scale of the envisaged Warsaw Metro project (estimated cost: €2.7 billion), this would have been one of the largest infrastructure projects in Europe, and certainly one of the largest PPP projects world-wide. There were, therefore, critical linkages between the investment project itself and the national authorities, particularly regarding legislative issues (changes to laws needed to enable the metro project to go ahead), co-financing with the EU Structure Funds (the Warsaw Metro was expected to be one of the first projects which Poland aims to have funded under the Regional Funds after accession), and Polish government financial support (annual funding contributions and possible guarantees). The EBRD had therefore agreed with the city of Warsaw and the Ministry of Infrastructure to seek EU support for a consultancy services project that would have two sub-teams coordinating closely with each other to support preparation activities for the Warsaw Metro and broader support for the infrastructure ministry in strengthening its nascent PPP Task Force, drawing on and generalising on the national-level issues raised by the Warsaw Metro project.

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http://en.wikipedia.org/wiki/Warsaw_Metro

Metro PPP Project and the related technical cooperation (TC).4 The letter was also referred to as a “Prefinancing Agreement,” since it confirmed the Bank’s readiness, in principal, to finance the envisaged follow-on (PPP) investment project if it were chosen as financier by the private-sector winner of the contract following a competitive PPP tender process.5 Furthermore, a letter of intent was signed with the Ministry of Infrastructure (representing the national government), the city of Warsaw and the Bank on 11 September 2002. The importance of this document was to solidify the joint support of the TC assignment and the envisaged follow-on investment operation in view of the different parties in power at municipal and national levels, as explained below.

1.2 TC IMPLEMENTATION The Initial/Final Review Memorandum formulated by the Municipal and Environmental

Infrastructure (MEI) team was approved by the TC Review Committee on 29 May 2002. Approval for the required €1.5 million of financing of from the PHARE Programme under the EU-EBRD Cooperation Agreement, Bangkok Facility 2000 was obtained on 18 July 2002. The EBRD launched a corresponding procurement notice on 17 June 2002 based on prior EU funding approval. The Invitation for Expressions of Interest (IEI) specified that, for both components respectively, €750,000 should be earmarked. The terms of reference, among other things, prescribed that the assignment should start in December 2002 and be completed by late 2003; the consultant should provide two teams (one to assist the city on the metro component and one to support the Ministry of Infrastructure PPP task force) and a steering committee with representatives from the city, the Ministry and the Bank should supervise TC implementation. In addition, it also specified results the consultant should deliver).6 The TC consultant assignment actually started in January 2003 (regarding the procurement process, see Chapter 6).

In August 2003, the consultant presented a preliminary report on the financial and economic feasibility of enlarging the Warsaw Metro System. The consultant concluded that the construction of metro lines 2 and 3, as originally envisaged in an earlier pre-feasibility study, was not economically and financially feasible, although a much shorter alternative covering the central section of the proposed metro line 2 was seen as economically justifiable, albeit marginally (see map in front of the report).7 After intensive

4 The mandate letter stipulates a fee for project preparation in the amount of €50,000 to be paid by the city to

the Bank and a break-up fee of €400,000. 5 For clarification, through this agreement the Bank did not become the pre-designated financier irrespective

of the tender result – a structure that would not have been in compliance with international, competitive and open tender procedures. Instead, the agreement was to introduce an element of security by signalling to potentially interested private sector parties that financing is available in principle. Hence, a Bank follow-on investment operation was not necessarily a foregone conclusion, and the risk for ultimately not being selected by the winner of the tender rested with the Bank.

6 These results included an inception report covering both the Metro and PPP Task Force Support projects), various working papers and monthly reports, a working paper comparing alternatives, Warsaw Metro PPP draft tender documents, and both draft and final reports for the Warsaw Metro project and PPP Task Force Support project.

7 The consultants’ findings, first voiced at the steering committee meeting on 2 September 2003, were that although the full project, including all of line 2 and line 3, was expected to create significant economic benefits in terms of employment and travel time, the total value of the economic benefits would not offset the required costs. However, the central section of the proposed line 2 was regarded as economic viable, albeit marginally only (Full Metro: Economic Internal Rate of Return = 3.0 per cent, Cost Coverage (revenues/O&M + reinvestments: 43 per cent, annual financial contribution by city: €92.8 million; Central Section: EIRR 6.1 per cent, Cost Coverage (revenues/O&M + reinvestments: 54 per cent, annual financial contribution by city: €21.0 million). In both scenarios the city would have to contribute on an annual basis to

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discussions in the project steering committee about the report, the city of Warsaw concluded that the associated low economic internal rate of return (EIRR) did not justify proceeding with the metro project. The city then decided that alternative transport solutions should be considered, taking account of the findings of the consultant, other ongoing transport planning work and the more recent transport data available since previous planning exercises were carried out. The MEI team, in response, made clear to the steering committee that an additional and comprehensive general study on transport alternatives would change the scope of work considerably and would not fit within the original scope or budget of the TC assignment (preparation of the Warsaw Metro project on the basis of a PPP structure).

Eventually, in December 2003, the Bank and the city finally agreed at a meeting that the Warsaw Metro project should be prematurely terminated, and the Bank confirmed the understandings reached during that meeting in a letter dated 18 December 2003. As a consequence of the early termination of the Metro project, €302,403 was not used and was reallocated to cover additional services under an amended PPP Task Force Support project.8 This project was implemented smoothly.

2. PROJECT RATIONALE

The city of Warsaw already had an existing underground metro. At the time, the system consisted of a single line (line 1) running for 14.2 km between the south of the city (Kabaty) and the city centre (Ratusz, at Plac Bankowy). Construction of line 1 began in the early 1980s and had proceeded at an intermittent pace, financed on a pay-as-you-go basis, with funding from city and national budgets. The first section was put into service in 1995. Work was proceeding on a further 3.6 km section north to Plac Wilsona, for which the city had recently taken on loan financing. Construction contracting had so far been carried out section-by-section on a design and build basis, supervised by staff of the Warsaw Metro.

In the absence of a formally stated rationale for the Metro expansion, it is assumed that the

main idea behind it was to reduce the road congestion by expansion of the network at the lowest cost to the public. Supporting this assumption is the fact that the existing north-south line 1 runs entirely east of the Vistula River and that east-west road traffic is

cover the heavy capital expenditures (capex); the operating expenditures (opex) were to be covered by user fees, the affordability of which was confirmed by the consultant.

8 Since the decision taken by the city was defensible on economic grounds, the termination of the Warsaw Metro project was justifiably not regarded as a break-up that would have triggered the payment of the agreed €400,000 break-up fee. The Bank’s view was, however, that the shorter central part of line 2 could have been pursued and that the EIRR, although not impressive, was acceptable and in line with the experience gained from recent metro projects in Western Europe. On the other hand, the OPER team gained the impression that the low rates of return were used to an extent as a pretext, camouflaging the indecisiveness of the new municipal administration in view of alternative potential sources. The new municipal administration anticipated access to substantial EU grant funding and to concessional lending from the European Investment Bank (EIB) once the country’s accession to the EU was completed in May 2004. Consequently, it was reluctant to commit firmly, by way of completing the Metro project (notably including procurement preparation), to a financing structure that was regarded as comparatively less advantageous. In fact, a consultant working paper titled “ERDF and Joint Implementation Funding” notes that grant-funding from the European Regional Development Fund (ERDF), one of the four EU Structural Funds, is the most promising source of funding and, based on Ministry of Infrastructure information, suggests that €100 million may be available for the Warsaw Metro extension. In a similar vein, meeting the requirements for reducing emissions of greenhouse gases such as carbon monoxide in the wake of a modal shift from road to metro would provide access for financing under Joint Implementation (in the context of the Kyoto Protocol).

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hampered by narrow road bridges over the river, particularly during rush hours. Socio-political arguments can be quoted in support of an east-west metro link, including expected environmental benefits, travel time savings and others. Hence the Bank regards its involvement, through a feasibility study that offers the potential for a follow-on investment, as justified.

The rationale for the PPP Task Force support was twofold. The specific project-focused goal was to help undertake the envisaged investment operation. The longer-range goal was to help improve the so-called enabling environment by providing a PPP legal framework from which other investment endeavours could benefit in the future. The main objective of the draft law on public private partnership was to stimulate public sector investments, specifically in infrastructure, by providing an optimum legal framework for public-private undertakings by removing the obstacles that result in considerable risk to PPP undertakings for both parties under the current legal framework. In a broader context, the law is aimed at eliminating psychological barriers related to the role and function of the government in the execution of public tasks with the participation of a private partner. The law is intended to enable public and private entities to establish a relationship in the form of a PPP contract to carry out public tasks. It is also meant to prevent such situations where a PPP undertaking becomes a political instrument or is vulnerable to political pressures.

3. ACHIEVEMENT OF OBJECTIVES

The consultant submitted the earlier-specified documents as requested under the terms of reference, except those that became redundant owing to the premature termination of the Warsaw Metro project, that is, particularly those concerning the preparation of the procurement process (pre-qualification/short-listing documentation and tender documents). All tasks under the revised terms of reference were carried out diligently and the respective consultant’s input is regarded as generally of good quality.9 Appendix 4 provides a detailed list of tasks and their accomplishments, including subsequent revisions. In this assessment, the results of the TC assignment and the overall achievement of objectives are rated Marginal, the same rating as that in the Project Completion Report (PCR). From a narrower consultant assignment perspective, the OPER team is of the view that the Bank and the TC beneficiaries - the city of Warsaw and the government of Poland - received value for money In summary, the Warsaw Metro feasibility study was executed in time and on schedule, but the envisaged follow-on investment operation did not materialise (See Section 1.2). The PPP law, for which the successful execution of the PPP Task Force Support was instrumental, received parliamentary approval on 28 July 2005 and came into force in October 2005, but its benefits neither immediately resulted in a Bank investment operation, nor has any other PPP investment project materialised in Poland, so far. The consultant’s findings regarding the economic and financial viability of the Warsaw Metro investment were, for the most part, not surprising. Mainly owing to the very substantial capital expenditures (capex) required and taking into account affordability considerations, the full metro option - that is, the option that included all of lines 2 and 3 as originally envisaged - proved neither economically nor financially viable. Although the consultant determined that the central section investment would be viable, the Bank ultimately could not persuade the city to go for this reduced scope option.

9 The OPER team learned about quality deficiencies at the draft report stage, prompting the operation leader to

request an improvement of the consultant’s work. This was provided to the satisfaction of the Bank without detrimental cost or schedule implications.

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The OPER team sees its assessment of the PPP Task Force Support work, notably regarding the results on the ground as confirmed in related observations by the Bank’s Legal Transition team (LTT). According to the draft Legal Annex of the 2006 Country Strategy that is currently under consideration by the Bank, (the cut-off reference date was before the PPP-Law came into force), several complementary elements are missing or are weak: among them, the legal, policy and institutional frameworks, and public-awareness building. For instance, the PPP Law • does not contain any detailed procedures; instead, it provides a number of references to

the procurement law, leaving it open to what extent the latter is comprehensive and binding

• and similarly refers to model PPP contracts to be developed by the Ministry of Economy in connection with its enactment, but never makes clear whether such model contracts will serve as guidance only or could become binding

• refers to Polish law as applicable to dispute resolution, but does not expressly discuss the possibility of international arbitration; nor are there references to the availability of security instruments over concessionaire’s interests in favour of lenders, including step-in rights however, the latter may be possible under the general legal framework

• is not a comprehensive piece of legislation and will require secondary legislation in order for it to work in practice. Authorities are reported to be working on regulations, standard documentation and guidelines aimed at facilitating the application of PPP schemes. In this context the OPER team was informed about the existence of a pipeline of several infrastructure projects in diverse sectors including road transport, education, tourism and health, that are being considered for PPP financing despite the difficulties posed by the current political situation (see Chapter 7)

• has only begun to build up awareness among the group of potential beneficiaries more recently, although the commentary process, during its drafting stage, laudably involved a wide audience has only taken force more recently. This process was aided by the development of a web-based PPP tool-kit that provides basic PPP information to its audiences.10

A graphical presentation of the current PPP-situation is captioned in the following spider-graph.

10 According to the terms of reference item B2.1, the consultant was asked to “develop a PPP tool kit, targeting

public authorities (ministries, local governments) that are planning PPPs.” This tool kit was developed and can be accessed from the web site: www.ppp-toolkit.pl, although not easily; access is only possible via a sub-link dealing with “investment in Poland” and in Polish language only. It appears that the web page is no longer serviced, is outdated, and may have somehow lost ownership. Moreover, it is the OPER team’s view that the content of this web site is of a rather general nature only, providing some sort of an overview in Polish language. A more sophisticated tool kit providing more in-depth guidance and possibly including sample templates for various types of concession contracts and covering a sample of sectors, would possibly have been beyond the assignment's scope, particularly given the existing TC budget.

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http://www.ppp-toolkit.pl/

0

20

40

60

80

100General policy framework

Concession specific legal framework

Definitions and scope of theconcessions law

Selection of the concessionnaireProject agreement

Government support and availablefinancial securities

Settlement of disputes and applicablelaw

Poland

International standards

Note: the extremity of each axis represents an ideal score in line with international standards such as the UNCITRAL Legislative Guide for Privately Financed Infrastructure projects. The fuller the ‘web’, the more closely concessions laws of the country approximate these standards.

Source: EBRD Concessions Sector Assessment 2005

4. OVERALL ASSESSMENT Overall the TC assignment is rated Partly successful. The individual components contributing to this rating are summarised in Appendix 2. This assessment is also broadly in compliance with the discussion in the TC project completion report that is attached as Appendix 5.

The fulfilment of objectives for the combined feasibility study for Warsaw Metro investment, and PPP Task Force Support, is rated Marginal. The Metro feasibility study was executed in time and on schedule but the envisaged follow-on investment operation did not materialise (see Section 1.2). The PPP law, for which the successful execution of the Task Force Support was instrumental, received parliamentary approval on 28 July 2005 and came into force in October 2005, but its benefits neither immediately accrued to a Bank investment operation, nor has any other PPP investment project materialised in Poland, so far. Consultant performance can generally be rated as Good as well, and the Bank obtained ratings of value-for-money throughout.

Bank handling was rated Good, particularly in view of the banking team’s laudable efforts to protect this TC assignment in the wake of political changes, with varying levels of commitment toward the TC assignment and the envisaged investment. Environmental Performance was rated Satisfactory and the Extent of Environmental Change, given the

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nature of this type of TC assignment, which is not geared to generate environmental impacts, is rated None.

The transition impact of this TC assignment assignment overall is rated Satisfactory, with a Low risk rating for the longer term. This risk rating is mainly related to the PPP Law which, although instigated in support for the Warsaw Metro investment, has implications for the country as a whole and could potentially influence PPP laws in other countries. The risk assessment derives mainly from the fact that Poland became an EU country in May 2004, which has provided stimulus and momentum for private sector solutions for activities that were formerly regarded as wholly in the realm of the public sector.

The Bank’s additionality is assessed as Verified in all respects. The TC assignment is in full compliance with the relevant Country Strategy and Sector Policy. Both documents refer to the need for municipal infrastructure improvements and for private sector undertakings, to which PPP Law support is contributing.

5. TRANSITION IMPACT AND ADDITIONALITY 5.1 OVERALL TRANSITION IMPACT The transition impact of this TC assignment overall is rated Satisfactory for the short term

as well as for the longer term, with a Low risk rating for the longer term. This risk rating is mainly related to the work of the PPP Law which, although instigated originally in support for the planned Warsaw Metro investment has, by its very nature, implications for the country as a whole, and could influence other countries as well (Chapter 7). The risk assessment derives, again, from the fact that Poland became an EU country in May 2004, which has provided stimulus and momentum for private sector solutions for the activities that were formerly regarded as solidly in the realm of the public sector.

5.1.1 Company impact The company impact (here referring to the Bank’s two immediate clients: the Warsaw

municipality and the Ministry of Infrastructure) was rated Good. Company impact pertains mainly to the transfer of skills and know-how, as well as to the introduction of new standards. This process of skills transfer came about primarily due to the involvement in the consultant procurement process in line with the Bank’s Procurement Policies and Rules. This process demonstrated how the competition between consultant proposals by itself provides valuable insight into alternative approaches towards a complex matter, and also how to arrive at a justifiable, open and transparent selection. The clients have apparently internalised the merits of a transparent procurement process. A second set of impacts came from working together with the chosen consultant. It provided a valuable insight into certain aspects of the content of the two assignments.

5.1.2 Industry impact and impact on the economy as a whole

The impact on the macro was rated Satisfactory. More specifically, the Bank’s clients were, for the first time, confronted with a situation that required direct cooperation across institutional border lines. The agreements the Bank reached with its clients prior to TC implementation (see Section 1.1) required the establishment of, and cooperation in, a joint TC steering committee. The OPER team learned that this discussion across turf-lines on matters of common interest broadened participants’ horizons and led to a building of trust previously unseen. This is also believed to have stimulated cooperation among the parties

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beyond the framework of this TC assignment. The OPER team was informed that this approach was replicated in other instances. Another point in a similar vein that deserves mentioning concerns the broad consultation process in the wake of preparing for the PPP Law. Again, a wide range of public and private institutions were included in a commentary process to capture all interests. It is through this consultation process that an awareness of a broader range of alternative financing sources was raised, giving rise to the hope that the PPP Law may ultimately be put into practice, even despite current political realities.

An indisputable success of the TC assignment is the passage of a PPP Law. This has

markedly improved the so-called enabling environment in the country as a whole, at least in terms of legal infrastructure. Worryingly, however, the OPER team learned that the new national government that came into power as a result of national elections in October 2005 is expressly non-sympathetic towards PPP financing and this will defer related transition prospects in the future.11 On the positive side, the earlier-mentioned awareness-building process seems to have created pressure from the bottom up in terms of huge service needs of citizens and communities for which public budgets are vastly insufficient, hence requiring alternative financing sources. Not all such project ideas lend themselves for EU financing and most would be channelled in the traditional way through public budgets. There is reasonable optimism that the PPP Law will come to fruition.

5.2 ENVIRONMENTAL IMPACT In line with the terms of reference, the consultant was asked to carry out a preliminary

environmental analysis and, on the micro-level, to consider the environmental impacts of new construction on the metro (line 2). In response, the consultant prepared a working paper on engineering and environmental review and noted that due to the lack of detailed engineering information regarding the planned extension, no “value engineering” had been possible.12 Instead, the consultant provided information for the municipality on how best to use planning, management and engineering techniques during the various phases of the envisaged project.

The environmental performance was rated Satisfactory and the Extent of Environmental

Change, given the nature of this type of TC assignment, which is not geared to generate environmental impacts, was rated None.

5.3 ADDITIONALITY

There is little doubt about the Bank’s additionality, either from a financial or design and functioning perspective. It is hardly conceivable that any private sector party would have provided grant funding of the required magnitude for a TC assignment for which the intended follow-on investment project was not a safe bet (see Section 1.1). Also, apart from providing such grant funding, the Bank provided considerable additional input in

11 In a recent exposé Prime Minister Marcinkiewicz explicitly mentioned that a number of “strategically

important” enterprises will be left in government hands and privatisation in these areas will not be considered (the list included, among others, National Forests, TV, Radio, Post, PKO BP, Lotos, PKN Orlen, KGHM and BOT). While he did not refer explicitly to PPPs, it was commonly understood as a statement of policies that are less friendly towards widespread private involvement in the economy.

12 The information required would have included the precise location and details of tunnel construction by route segment; the precise location and details of station and other underground structural construction; the identification of principal quantities and dimensions; the selection of likely materials to be used in construction; the definition of design codes that are to be applied and cost estimates based on the detail items in the list above.

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terms of its own staff resources, but also in terms of intellectual input regarding the PPP issue, where the MEI team responsible could build on a considerable record of past experience. The latter helped in structuring and supporting the PPP component. The Bank’s additionality is assessed as verified in all respects.

5.4 COMPLIANCE WITH THE BANK’S COUNTRY STRATEGY AND SECTOR POLICY The TC assignment is in full compliance with the relevant Country Strategy and Sector

Policy. Both documents refer to the need for municipal infrastructure improvements and for private sector undertakings, to which the PPP Law is contributing support.

6. BANK HANDLING The Bank’s handling of the TC assignment was commended and rated Good. The

consultant procurement process was compliant with the Bank’s Procurement Policies and Rules. Out of a greater number of IEI responses, the evaluation committee (composed of MEI, CSU, OGC and Warsaw RO staff) invited eight short-listed firms to submit proposals. Eventually, out of six proposals (three from Poland, two from the UK and one from the Netherlands), two firms passed the minimum score of at least 80 technical merit points and adequate financial offers. In the end, a consortium was awarded with the contract. It is worth noting that representatives of the city of Warsaw and the Ministry of Infrastructure attended the evaluation meetings as observers and that this working group concurred with the evaluation committee’s conclusion.

It deserves a particular mention that the MEI team provided good brinkmanship in having

obtained city council approval of the metro project in principle, prior to TC implementation. It also secured the clients’ continued commitment and ownership of the TC assignment in the aftermath of the municipal elections in 2002, by obtaining a revalidation of the terms of reference. The OPER team also commends the Bank-led approach and foresight in consulting a broad audience during the preparation of the PPP law. EvD felt, however, that the Bank could have made more use of its PPP experience in Poland for the benefit of other countries of operations, had the Legal Transition team been appropriately involved in the first place.13 Many of the underlying documentation and toolkit materials are of a generic nature, and promoting and marketing these on a broader scale could contribute to an improvement of the so-called enabling environment on a larger scale, beyond Polish borders. However, as became clear from the OPER team’s contact with the Ministry of Infrastructure, bilateral contacts among PPP-minded experts from Poland and the Czech Republic and others, have helped to fill this gap. The MEI team also referred to its contacts in Romania in this regard. A more systematic approach in this respect would generally not only be desirable from a transition impact perspective (increasing TC effectiveness), but also from the point of view of reducing related TC cost in the future (increase of TC efficiency).

13 According to the OPER team’s information, the TC Review Committee had rightly advised that the Legal

Transition team be involved. The team became involved, but only at the fringes of the TC preparatory process; in other words, by commenting on the Initial/Final Review Paper on the TC. The LTT was not a participating party in PPP Task Force support, whether this included authoring the project’s terms of reference, helping with the consultant selection process, or monitoring and self-evaluating the Task Force Support project.

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7. KEY ISSUES AND LESSONS LEARNED

7.1 IMPORTANCE OF TIMELY INTERVENTION BY SENIOR MANAGEMENT AT CRITICAL OPERATION JUNCTIONS The Bank has built its TC work on the already existing pre-feasibility work funded by the city and, in a sense, the Bank jumped on the bandwagon and accepted the support of the Warsaw Metro system (compared with other options) as a forgone conclusion. This acceptance was based on the city council’s earlier approval of a Metro expansion scheme in principle and on the city’s clear ownership of this decision, as demonstrated by the use of its own budget to commission the pre-feasibility study. Having a mayor who was highly committed to the cause helped as well, and the combination was regarded as a sufficiently conducive environment in which to build the Bank’s TC commitments. As shown, the envisaged Warsaw Metro investment operation eventually derailed and the PPP Task Force Support operation stalled, both under the influence of politics. The resulting cost of both in lost opportunities is difficult to determine. In spite of all the built-in safeguards discussed earlier (Chapter 6 and Section 5.1.2), what could not have been predicted was the disrupting influence (e.g. new staff/decision-makers in public authorities who lacked background knowledge of previous incumbents; new political orientation; etc.) in the aftermath of municipal and national elections, on this already politically charged project.14 With the benefit of hindsight, the Bank’s senior management (possibly on the first vice president or president level) might have sought a focussed early policy dialogue with the newly appointed political leaders of the city administration (after September 2002) and with the national government (after October 2005). Such a dialogue might have clarified the role of the Bank as a non-partisan ‘honest broker’ for transition as well as the importance of the envisaged investment for the city of Warsaw and that of the PPP Law for the country as a whole.15 Most likely, the political element would have played far less of a role had the Metro system been pursued in a city other than the capital, where municipal and national politics are often inseparably intertwined. Unfortunately, both TC components were supposed to come to fruition during critical political junctures.

Lesson learned: Politically charged operations require the particular attention of Bank senior management. As is well known, elections in general, while a natural and desirable phenomenon in democracies, can jeopardise operational continuity. Conditions conducive to stable political frameworks are an important factor influencing the outcome and impact of operations. Therefore, operations of politically high visibility (such as major infrastructure investments in capital cities) require special oversight by the Bank’s most

14 As the result of the municipal elections in September 2002, the former governing party Citizenship Platform

(understood to represent liberal, central-to-right wing politics) was replaced by the opposition Law and Justice Party (understood to represent conservative, right wing politics), whilst at the national level a left-wing party was in power until October 2005, when it was replaced by the Land Justice Party. Staff attrition at municipal levels in the aftermath of this change not only caused a brain drain in terms of municipal authorities’ project understanding, knowledge of infrastructure issues, and familiarity with the role of the Bank, but also brought with it a general scepticism towards decisions and arrangements made under the former municipal administration.

15 In this context the OPER team learned from TC consultant sources that a crucial meeting convened by the Bank in 2004 and calling upon senior officials from line ministries (actually, calling upon the minister or senior deputy minister level) to attend, did not receive the expected responses. This was also attributed to the fact that the Bank was not planning to send representatives of an equivalent level of rank to those in the Polish government.

10

senior management who, in a sense, should shadow, albeit not interfere with, normal monitoring activities at working levels. Shadowing allows timely and decisive high-level management-by-exception interventions at crucial junctures, since staff of Bank Resident Offices occasionally cannot muster sufficient leverage and weight.

7.2 OPTIMISATION OF BANK INPUT RESOURCES The Bank’s Legal Transition team (LTT) from the Office of the General Counsel was

involved in the PPP Task Force Support preparatory process, albeit more by accident than default. From the project files and discussions with LTT staff, it would appear that LTT became involved in January 2004 only once the re-allocation of freed Warsaw Metro project funds to PPP Task Force Support required a revision of the terms of reference (Section 1.2).16 This seems to have happened only after a specific request by the TC review committee. While this is a testimony to the TC review committee’s role and foresight, it raises the more fundamental question why LTT was not involved in the first place when the original terms of reference for the PPP Task Force Support project were prepared? Concessions law reform is included in LTT’s portfolio as a strategic key component.17 LTT staff were surprised to learn that the sunk cost part of PPP Task Force Support was around €750,000 to which some further €300,000 were added following the staff’s involvement. By contrast, the LTT, in its own activities fostering PPP frameworks normally would have to make do with only a fraction of such funding for a comparable initiative. Arguably, some of the weaknesses highlighted in Chapter 3 could have been avoided, had the LTT been included as a main stakeholder in this TC assignment from the beginning.

From a different perspective, it is interesting to note that the focus of this TC assignment

changed completely without this having any consequences for the Bank’s internal process. Originally, and from an MEI perspective, PPP Task Force Support can be regarded as an “add-on” that was meant to help facilitate the Warsaw Metro project where an investment was in the offing.18 The justification for assigning the operation leadership to MEI under these circumstances is understandable, but this does not provide a sufficient argument for MEI not teaming-up with LTT right away to work on the PPP legal framework activities that did not fall within its remit. Eventually, the priority for the Warsaw Metro project faded away (and, arguably, with it MEI’s TC ownership).19 PPP Task Force Support clearly became the prime and sole focus. But still, this did not prompt any handing over of

16 Whilst the responsible MEI team claims an active LTT involvement, the LTT confirms the OPER team’s

view, namely that LTT’s involvement was limited and that its “Concessions/PPP specialist did not take part in any meetings, rather limiting his role to providing comments and sharing thoughts, mostly on the phone”.

17 Reference is made to the following web link: <www.ebrd.com/country/sector/law/concess/index.htm> 18 The MEI team challenges this view and argues: “MEI had a broader strategic interest in PPP in Poland,

having undertaken several projects with a PPP dimension (either as MEI or with Transport) which were ultimately unsuccessful partly due to lack of a legal regime (e.g. Poznan Water Project, SKM/WKD Urban Transport, Dolnyslask Regional Transport, Szczecin Regional Rail, Road 19 PPP); the PPP law component was therefore more than an add-on to metro, but a way of tackling a barrier which had affected a large number of operations.” While the OPER team has no doubt about MEI’s genuine interest in promoting PPP law and also accepts that the PPP Task Force Support was “more than an add-on”, it appears unlikely that MEI would have spearheaded, or would have been assigned the operation leadership of, a purely PPP law initiative, without such investment opportunity behind it.

19 The MEI team counter-argues that it had seen “the TC through to its conclusion”. This is correct, but that is where it stopped: TC completed (in other words, disbursed funds and fulfilled the terms of reference, but no active follow-up. With an LTT leadership of this component this TC initiative would most likely have become an integral part of a continuous effort, with and without follow-on investment.

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http://www.ebrd.com/country/sector/law/concess/index.htm

the operation leadership to LTT, as one could expect. The earlier-noted synergy potential (see Section 1.1) eventually did not materialise.

Moreover, it is felt that the TC resources allocated to PPP Task Force Support could have

benefited a wider audience reaching beyond Poland. Concession law reform is pursued by the Bank in various guises, most visibly through the Legal Transition Programme (LTP) and LTT, as referred to earlier, but also through integrated components of various other (mainly TC) Bank interventions, this assignment being a case in point. Also from an accountability perspective the Bank should make maximum use of existing TC work and studies and explore consistently (this may be a task of the office of the TC Review Committee) whether certain know-how has not already been obtained elsewhere and paid for earlier. This point was raised by the Evaluation Department in the past and, in this context, EvD also suggested introducing a repository library for consultant final reports. This was supported by management and its administration was designated to the Business Information Centre. It is the OPER team’s impression that the success of this repository library is limited since it lacks discipline from the delivery side, that is, from the operation units. A practical way out would be electronic safeguarding by way of integrating TC files into the LiveLink or ProjectLink systems that the information technology department introduced in 2004.

The question needs to be asked whether two totally different activities (private sector investment and public sector partnerships) can be combined and can be implemented successfully. After all, the underlying motivations for the key actors (volume-driven deal-making in a short time period as opposed to efforts to achieve transition impact over the longer term) are incongruent.

Lesson learned: The Bank’s optimisation of its own resources and delegation of work needs more focus. If, for practical reasons, combining different tasks is considered (by nature of the activities and by motivation base for their execution), such tasks need to be assigned to multi-disciplinary teams endowed with commensurate time and budgets. Any shifting priorities between the tasks would need to be reflected in adjusted team and budget compositions. In this case, the sector team in the Bank should have teamed up with the Legal Transition team much earlier.

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TC OPER: Warsaw Metro & PPP Task Force Support Appendix 1 Page 1 of 1

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1

OPERATION PERFORMANCE RATINGS

Performance Indicator

Rating OVERALL TRANSITION IMPACT (Analysis in Appendix 3): (Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Negative)

Satisfactory

ENVIRONMENTAL PERFORMANCE OF THE PROJECT AND SPONSOR: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

Satisfactory

EXTENT OF ENVIRONMENTAL CHANGE: (Ratings: Outstanding, Substantial, Some, None/Negative) Add comments

None

ADDITIONALITY: (Ratings: Verified in all respects, Verified at large, Verified only in part, Not verified) Add comments

Verified in All Respects

PROJECT FINANCIAL PERFORMANCE: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

N/A

COMPANY FINANCIAL PERFORMANCE: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

N/A

FULFILMENT OF PROJECT OBJECTIVES: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

Marginal

BANK HANDLING: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

Good

BANK’s INVESTMENT PERFORMANCE: (Ratings: Excellent, Good, Satisfactory, Marginal, Unsatisfactory, Highly Unsatisfactory)

N/A

OVERALL PERFORMANCE: (Ratings: Highly Successful, Successful, Partly Successful, Unsuccessful)

Partly Successful


_______________________________________________________________________________

TRANSITION IMPACT ANALYSIS

TI checklist categories

STEPS OF RATING TRANSITION IMPACT

EX POST

Short-term verified impact

Longer- Term transition impact potential

Risk to potential

TI

STEP I: CHANGE BY THE PROJECT AT CORPORATE LEVEL

Rating1 Rating2 Rating3

3

Private ownership. The TC, per se, did not aim at corporatisation or privatisation of the recipient entities.

N/A N/A N/A

5

Skill transfers The City Administration as well as the Ministry of Infrastructure benefited from their active involvement in the TC consultant procurement process, but also on content issues from closely working with the consultants during TC implementation. Poland’s EU membership is regarded to provide safeguard for the TI progress.

Good Good Low

6

Demonstration effects. The Evaluation Team found no evidence for the experience gained from this TC having permeated to other public sector entities.

N/A N/A N/A

7

New standards for business conduct. It is believed that the positive experiences from the transparent international consultant procurement process have been internalised, i.e. adopted as procedures. Poland’s EU membership is regarded to provide safeguard for the TI progress.

Good Good Low

STEP II: TRANSITION IMPACT AT THE LEVEL OF THE INDUSTRY AND THE ECONOMY AS A WHOLE

Rating Rating Rating

1 Competition. If the Warsaw Metro investment would have gone ahead, this would have constituted transport alternatives and increased competition.

N/A N/A N/A

2

Market expansion. Even if the Warsaw Metro investment would have gone ahead it appears unlikely that this would have generated substantive incremental forward/backward linkages beyond those already in existence through the Metro’s line 1 operations.

N/A N/A N/A

1 This range is: Excellent/Good/Satisfactory/Marginal/Unsatisfactory/Negative. 2 This range is: Excellent/Good/Satisfactory/Marginal/Unsatisfactory/Negative. 3 This range is: Low/Medium/High/Excessive.


_______________________________________________________________________________

3

Private ownership. The TC, per se, did not aim at corporatisation or privatisation of the recipient entities.

N/A N/A N/A

4

Frameworks for markets. The envisaged application of the PPP-Law did not materialise since the investment operation was terminated pre-ante. The PPP-Law passed Parliament and became effective, but national elections in late-2005 and the new Government appear less enthusiastic regarding PPP models and the steep learning curve anyway tends to retard developments initiated under the previous Government. Still, there are credible signs in support of future advancement on the PPP agenda

Satisfactory Good Medium

5

Skills transfers. Beyond the group of primary stakeholders no TC-attributable impacts are believed to have occurred.

N/A N/A N/A

6

Demonstration effects. Whilst progress on the PPP agenda, in the wake of the national elections in late 2005, appear to have retarded or even stalled, the earlier rapid move was carefully monitored by other countries. PPP-minded sources of the Czech Republic kept close contact with the Polish PPP Task Force to learn from their experience.

Satisfactory Satisfactory Low

7

New standards for business conduct. The consultant procurement process in line with the Bank’s Procurement Policies and Rules involved three main stakeholders: Warsaw City Administration, the Ministry of Infrastructure, and the Ministry of Economics. The involvement of the combine generated high visibility, and the thus created momentum is believed to be sustainable due to Poland’s meanwhile completed accession process.

Good Good Low

SUMMARY OF VERIFIED, POTENTIAL AND RISK RATINGS

Satisfactory Satisfactory Low

OVERALL TRANSITION IMPACT RATING:4

Satisfactory

4 This range is: Excellent/Good/Satisfactory/Marginal/Unsatisfactory/Negative.

TC OPER: Warsaw Metro & PPP Task Force Support Appendix 3

Page 1 of 12 ____________________________________________________________________________________________________________

TOR Compliance Record

Tasks & Activities Achievement

RatingComments

A Metro Project Preparation

AI Financial and Economic Feasibility

A1.1 Estimate metro ridership and revenues between 2004 and 2020, for several scenarios. A limited number of scenarios will be defined taking into account: socio-economic parameters, surface public transport network restructuring, parking policy and tariff policy. The Consultant should take into account related studies, such as the "Warsaw Nodes Project"

100%

A1.2 Estimate likely metro ridership to an accuracy appropriate for dimensioning the system, as a basis to formulate preliminary operating assumptions (train length/number of cars; frequency) and, estimate metro operating costs and changes in public transport system operating costs.

100%

A1.3 Estimate metro and public transport system farebox and other revenues.

100%

A1.4 Set the probable scope of the City’s yearly investment budget, payments for maintenance and other payments towards the PPP between 2004 and 2030, and compare this with current and future funding capacity of the City and financing instruments available to the City for capital and operating expenditure

90% No assessment has been made of the current and future funding capacity of the City because of lack of

multi-annual budget projections of the City

A1.5 Specify and examine variants of functioning concepts of the 100%

Rating Scale: Over Achieved; Achieved; Partly Achieved; Not Achieved


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Metro network, in the context of asset ownership, tariffs, ticketing and fare collection systems, management contracts and franchising.

A1.6 Taking into account likely farebox revenues and the annual payments by the City to Concession Company net of farebox revenue, estimated by the Consultant; assess the public finance implications of the above-specified variants on the City's long-term budget forecast and financial situation, taking account of the consolidation of the City’s budget from 2003.

90% See comment A1.4

A1.7 Estimate the economic internal rate of return (EIRR) of the Project, taking into account both user and non-user benefits.

100%

A1.8 Prepare a financial analysis of the business case for the metro including an assessment of alternative financing instruments (eg. loans, bonds).

90% No assessment of alternative financing has been made other than the alternative of private financing in

general. Nevertheless various PPP options have been analysed and compared with traditional procurement

optionsA1.9 Prepare mechanisms for the City to monitor financial and

macro-economic impacts of the Project. 100%

A2 Assessment of the Prospects for Grant Co-financing with

EU and other Sources

A2.1 Assess the possibilities and implications of using EU Funds (European Regional Development Fund, Cohesion Fund) for co-financing the Project, including case studies of projects already funded in the EU, definition of grant conditions, requirements for preparation of the funding application, impacts of the grant process on project process, procurement arrangements, timetable and structure; the assessment should

100%



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consider several possible variants of grant contribution (e.g. zero grant; co-financing from the private partner with grant funds and maximum grant funding (100%).

A2.2 Assess the potential for grant support from Joint Implementation under the Kyoto Protocol including analysis of the anticipated reduction in CO2 and other greenhouse gases from road vehicles. Identify other possible sources of grant co-financing.

100%

A2.3 On confirmation by the City and the Polish Government on the prospects of obtaining EU Structural Funds, to co-finance the Project, prepare an application to ERDF ready to be signed by the City.

0% No confirmation by the City

A3 Public Sector Comparator A3.1

Prepare and apply a methodology to establish a public sector comparator (PSC) acceptable to the Ministry of Finance, taking into account inputs from the Ministry of Infrastructure PPP Task Force.

100% See deliverables Task B

A3.2 Carry out PSC analyses as Project information is refined.

The first analysis will be carried out at the start of the assignment, and will include a comparison, on the basis of information available and suitable assumptions, between PPP and other alternatives for implementation of the metro project and including the application of various different financial instruments (which alternatives and instruments will be agreed with the City and the EBRD during the

50% A qualitative assessment has been made of various PPP options, no quantitative assessment though



Page 4 of 12 ____________________________________________________________________________________________________________

inception period), and will assess the advantages and disadvantages of the PPP approach in comparison with the other alternatives available, in a quantitative way to the fullest extent possible.

A4 Procurement & Contracting Strategy A4.1 Develop a Procurement & Contracting Strategy covering all

contracts through to contract award, identifying tasks, milestones and timetable. Ensure consistency with national, EU, EBRD and European Investment Bank (EIB) requirements.

0%

A4.2 Prepare the procurement approach for later phases/extensions and include in the Strategy.

0%

A4.3 Prepare tender documents for the Project including information that the City should provide to tenderers (note: some information might not be available within the assignment period to permit the Consultant to finalise all the tender documents); this will involve preparing final documents for the “Invitation for Shortlisting” (for the first stage of the tender), and outline tender documents for the “Request for Proposals” (for the second stage of the tender, and to include a full contents page and final or summary inputs under each heading as appropriate, with identification of additional inputs required in cases where the section is not yet final); describe pre-tender activities of the City (e.g. geotechnical, topographical surveys etc) and the appropriate level and type of pre-bid support, if needed.

0%



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A4.4 Prepare criteria and methodology of the tender procedure.

A4.5 Prepare a draft PPP contract between the City and a Private Partner (to include the full contents list for the contract and final or summary inputs under each heading as appropriate, with identification of additional inputs required in cases where the section is not yet final).

0%

A5 A5. Project Structure A5.1 Define in detail the Project structure and PPP contract

structure including the advantages and disadvantages of combining or separating civil works, electrical & mechanical systems, rolling stock and operations. It is expected, that several variants will be presented and evaluated.

100%

A5.2 Identify and elaborate the roles and obligations of all parties to be involved in the PPP transaction and the proposed contractual relations between the parties.

100%

A5.3 Propose a risk allocation, taking into account the analysis in the PriceWaterhouseCoopers Prefeasibility Report, for the chosen project structure and contractual arrangements.

0%

A5.4 Organise a market consultation ("investors' conference") to acquire responses from the private sector on the proposed PPP structure.

0%

A6 A6. Legislative Issues A6.1

Review the conclusions of the PriceWaterhouseCoopers 100%



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Prefeasibility Report with respect to legislative constraints and update in relation to any legislative changes since the date of the report. The Consultant will focus especially on:

A6.2 Land ownership and development rights under- and over-ground.

100%

A6.3 Public finance law implications of the payments to Private Partner being treated as public debt.

100%

A6.4 Public procurement law implications of the term of the PPP contract.

100%

A6.5 Legal aspects of tax treatment.

100%

A6.6 Legal aspects of construction risk.

100%

A6.7 Legal implications of possible collateral damage to the environment as a result of construction.

100%

A6.8 For each of the above, propose the most appropriate approach including, where necessary, draft amendments to legislation.

100%

A6.9 Prepare draft City applications to the relevant authorities, with attached enacting legal documentation.

0%

A6.10 Consult with appropriate City/national authorities concerning the suitability of solutions proposed, and refine as

0%



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appropriate. A6.11

Provide specific examples of legal solutions used to address such problems in selected EU and other countries, evaluating their success and the suitability for application to the Project.

100%

A7 Design and Project planning

A7.1 Review existing engineering designs and specifications and identify the main opportunities for value engineering. To the extent feasible within the time and budget constraints of this assignment, make proposals to reduce capital costs, consistent with respecting safety and service quality requirements.

100%

A7.2 Assess the metro preliminary design to identify specific issues in relation to the PPP structure.

100%

A7.3 Functional requirements and design standards; 0% A7.4 Technical and operational interfaces. 0% A7.5 Health and safety issues. 0% A7.6 Carry out environmental due diligence including the

following aspects with the final scope to be refined at inception stage taking account of on-going or planned work organised by the City outside the scope of these Terms of Reference, to avoid duplication and ensure coordination. (i) carry out a preliminary Environmental Analysis, consistent with EBRD’s “Environmental Procedures”. On the micro-level, consider the environmental impacts of new

0%



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construction (Line 2). Aspects to be considered include: (a) land take; (b) energy consumption; (c) emissions; (d) noise and vibration; (e) visual intrusion; (f) severance; (g) safety; and (h) ecological impacts; (ii) assist the City to conduct a Scoping Meeting for the Project and prepare Terms of Reference for a full Environmental Impact Assessment (EIA).

A7.7 Prepare a schedule for Project preparation. 0% A7.8 Prepare an Implementation Schedule, taking into account the

time required to: (a) commission and complete any required pre-tender surveys; (b) complete tender preparation (including all tender documents); (c) acquire any land parcels and/or underground or overground rights, and obtain all necessary approvals and permits; (d) for the City and potential financiers to appraise investments; (e) for the City, concessionaires, contractors and financiers to negotiate contract terms and conditions; (f) for the City and financiers to obtain the necessary approvals; (g) tender and award of PPP contracts; and (h) planning and implementation of surface public transport restructuring.

0%

A7.9 Prepare the schedule for implementation supervision. 0% A7.10 Provide on-the-job training and training workshops for staff

of the City and other institutions selected by the City; 0%

A7.11 During the Consultant’s contract, provide the City with general advice.

A7.12 Any further studies connected with traffic and fare-box revenue needed for the Project to reach financial close, including preliminary budget.

0%

A7.13 Organization of a Project Management Unit. 0% A7.14 Effective, efficient and transparent decision-making process 0%



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necessary for Project implementation.

B PPP Task Force Support

B1 Legislative Issues B1.1 Develop generic solutions to PPP legislative issues arising

from Warsaw Metro, draft amendments to legislation and advise Ministry of Infrastructure/Government of Poland through the process of parliamentary approval.

100%

B1.2 Assess legislative issues arising from other PPP projects under development and assist Ministry of Infrastructure/Government of Poland to find solutions.

100%

B1.3 Provide examples of legal solutions used in selected EU and other countries, evaluating their success and their suitability for the Polish context.

100%

B1.4 Advise on the need for specific PPP legislation vs. amendments to existing legislation.

100%

B2 Tool-kit

B2.1 Develop a PPP Tool-kit, targeting public authorities (ministries, local governments) that are planning PPPs.

100%

B2.2 Provide standard Terms of Reference for consultants/transaction teams with indicative budget estimates and guidance for public authorities on how to manage the process.

100%

B2.3 Establish model concession clauses/agreements. 100% B2.4 Develop a Public Sector Comparator methodology and

guidance. 100%

B2.5 Set out procurement strategies and tender evaluation methodologies.

100%



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B2.6 Prepare sector-specific guidance notes, covering transport, health and water.

100%

B2.7 The Tool-kit should be developed throughout the assignment and finalised towards the end, drawing on experience gained with actual transactions in Poland and best practice examples tailored to the Polish context. Set out instructions for using the Tool-kit.

100%

B3 PPP and EU Structure Funds

B3.1 Present examples of PPP projects that involved co-financing with the EU Structure Funds (Regional Development Funds, Cohesion Funds).

100%

B3.2 Analyse issues involved in grant rates, timing, procurement, asset ownership, documentation of funding applications, including implications for project financing structures.

100%

B4 Public Sector Comparator

B4.1 Provide an overview of treatment of value for money/public sector comparator in selected EU countries, USA and internationally and explain any country-specific factors that influenced the approach taken.

100%

B4.2 Advise on the benefits and problems of carrying out such analyses (distinguish by sector and by types of project, as appropriate).

100%

B4.3 Provide an anthology of worked examples covering the transport, health and water sectors.

100%

B4.4 Set out an appropriate PSC methodology for Poland, acceptable to the Ministry of Finance.

100%

B4.5 Advise on the timing and approach for carrying out PSC analyses.

100%



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B4.6 Assist Ministry of Infrastructure in setting a PSC policy and define the role of the PSC in the decision-making process.

100%

B5 Training and Institutional Support

B5.1 Advise on the structure, functions and budget of the PPP Task Force.

100%

B5.2 Review models applied internationally and draw out the relevance for Poland.

100%

B5.3 Advise on the interface which the PPP Task Force should have with “clients”.

100%

B5.4 Assess and recommend options for funding the Task Force. 100% B5.5 Provide on-the-job training and training workshops for PPP

Task Force and other staff. 100%

B6 Public Finance

B6.1 Assess the public finance implications of PPP in Poland, taking account of.

100%

B6.2 National level public finance treatment of concession payments and different kinds of sovereign obligations and their impact on public debt.

100%

B6.3 Local-level public finance treatment by RIOs/gmina/powiat/voivodship self-governments and the impact on local government borrowing limits.

100%

B6.4 Assess the likely impact of PPP on sovereign/local government credit ratings.

100%

B6.5 Provide a detailed description of the public finance treatment of PPPs in the EU, USA and selected other jurisdictions.

100%

B6.6 Advise on mechanisms for central/local government to monitor financial/macro-economic impacts of PPPs.

100%

B6.7 Propose changes in the Polish system, if needed. 100%



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B7 Ad-hoc Advice on Specific Projects

B7.1 Within the time and budgetary constraints of this assignment, advise on generic issues and support the PPP Task Force staff in problem-solving and advising on other specific PPP projects, including direct advice, assistance in the preparation of terms of reference for consultants to address project-specific issues.

100% Road 19 preparation project


operation performance evaluation review

Documents