small and micro ppps in africa - eastafricanchamber.org · mariana abrantes de sousa validation...
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bkp DEVELOPMENT RESEARCH & CONSULTING
REINFORCING THE CAPACITIES
OF EAST AFRICA TO IDENTIFY,
DEVELOP AND
PROMOTE PPPs FOR
INFRASTRUCTURE
Small and Micro PPPs in Africa: Mariana ABRANTES de Sousa
Validation Workshop
09 and 10 August 2012
Mombasa Beach Hotel
Mombasa, Kenya
bkp DEVELOPMENT RESEARCH & CONSULTING
Public infrastructure investment gap in Africa
Can telecom success be replicated
The economics of public investment and PPP projects
Forms of PPP and the Project Cycle
Project phases
Project risks
PPP examples – sectors
Sources of project funding
Project starting points
Project roles
Project pipelines
Project identification exercise
2
Agenda
bkp DEVELOPMENT RESEARCH & CONSULTING
Public investment needs in Africa over the
next 10 years: USD 50 bn, excl. telecom
Services of General Economic Interest Recent past: Large scale telecom absorbed 74% of the investment in the
82 PPP projects the five EAC countries 1990-2011, (according to PPIAF)
Future: smaller and micro scale, replicable
Transportation
Water and sanitation (municipal and rural)
Energy production and distribution
Irrigation and water resource management
Agri-business value chain integration and food security
Social Services
Education
Health
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bkp DEVELOPMENT RESEARCH & CONSULTING
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International Banks Crédit €25 miln
6 anos, Euribor+1,5%
ONDD ECA Belgium
Siemens Bélgica Supplier
Vodafone Shareholder 40%
African Trade Insurance Agency
TELKOM Kenya
Shareholder 60% Safaricom Ltd
Kenya 2004
Clients
FRN KES 4 biln (€30 miln)
5 year, BT91dias+1%
State
License
Citibank Nairobi e
New York
Guarantee
75%
Guarantee
70%
Coverage
50%
Coverage
75% commercial risk
97,5% political risk
Funding
Capital €20 miln
bkp DEVELOPMENT RESEARCH & CONSULTING
Telecom in Africa: Can success be
replicated in other sectors?
Large but modular scale
Imported innovative technology with ECA funding
International management skills
International regulatory standards
Economies of scale and falling prices boosted
user airtime volume and affordability
Low collection risks and costs with pre-paid
services (pioneered by TMN in Portugal in 1995)
Closed network, cancellation of (non-essential)
services acceptable
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bkp DEVELOPMENT RESEARCH & CONSULTING
Public services operators are
different…
• Natural monopolies, scale and network effects
• Essential public services cannot close down (nor go out of business)
• Asymmetric risk sharing, creditors and suppliers not usually exposed to risk of loss, State must always pay
• No one is indifferent to public services – Numerous, vocal Skakeholders
– Key subject for party politics, protests
=> Need to compensate for the absence of market discipline
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bkp DEVELOPMENT RESEARCH & CONSULTING
Sofia
2005
7
Public vs. Collective Goods & Services
Public
Constitutional definition
Economic definition, public interest
Collective, indivisible
Social and economic infrastructure
Externality
Equitable access, first necessity
Cost of context for economy
Economies of scale, natural monopolies
Political definition
Government responsibility
Citizen demands, public opinion
Impact on election, legitimacy
Private
Divisable
Individual demand, consumption
Market supply, demand
Allocation and access by price
Private responsibility
Private supply except in centralized economy, high inflation, rationing
May have economies of scale, scope
bkp DEVELOPMENT RESEARCH & CONSULTING
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Economic determinants in public services provision
Traffic and demand forecasts
Service needs of population
User supported
tariff levels
Affordability
Willingness to pay
Technical solution, investment, Capex
Operating options, Opex
Scale, Dimension, Breakeven
Taxpayer supported Operating regimen Financing Sustainability
price
volume
bkp DEVELOPMENT RESEARCH & CONSULTING
User supported (user fees)
User tariffs or specific taxes
Tolls, affordable and collectable
Pre-contracted
(ex. inflation-indexed) or regulated
Equitable and proportionate to utilization
Differentiated, peak hour, etc
Taxpayer supported
(Government budget) Investment subsidy, including
donor funds, OBA
User subsidy,voucher, coupon (senior discount, etc) OBA
Operating subsidy, shadow tolls distance-based toll (with traffic counting ) OBA
Operating subsidy, availability payment, time-based toll (without traffic counting)
Other random operating subsidies to cover deficit or minimum services
Pricing and paying for public services
bkp DEVELOPMENT RESEARCH & CONSULTING
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
1 5 9 13 17 21 25
NPV RevenuesMaximum versus Affordable
Receita comp
Receita max
NPV of maximum revenue: 10.885
NPV of affordable revenue: 5,442
(Fee reduction of 50% due to user protests)
10.885,82 €
NPV Investment: 8.667
User fee reduction creates shortfall and need
for taxpayer subsidy, for investment
and/or operation
NPV of
Revenues
(net present
value,
discounted
cash flow )
Combining user tariffs with taxpayer subsidies
Revenues
bkp DEVELOPMENT RESEARCH & CONSULTING
-40 -20 0 20 40 60 80 100 120 140
1
3
5
7
9
11
Receita tarifas Subsidio exploração Subsidio investimento
11 airport
7 water & sanitation
8 passenger transport, bus
1 primary schooling
2 municipal roads
1- 4 hospital
3 urban metro
9 toll road
5 irrigation
10 -11 telecom
2 - 6 sidewalks
9- 6 ports User tariffs Operating subsidy Investment subsidy
Paying for Public Services: operating vs. capital expenses
User tariff affordability vs. Taxpayer subsidy sustainability
bkp DEVELOPMENT RESEARCH & CONSULTING
PPP families – sources and uses of funds
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Who pays ? User paid Taxpayer paid Mixed
User/Taxpayer
Services only Opex PPP
(services) concession of existing
infrastructure, operating leases,
affermage
Out-sourcing services
Co-payments, Output Based Aid
Joint ventures Collaborations
Works only Capex PPP
Greenfield PFI , BOT, shadow tolls,
availability payments
Works & Services PPP
Greenfield or expansion PPP,
concession, toll roads, ports, etc
PPP concession PPP concession,
investment and/or operating subsidies
bkp DEVELOPMENT RESEARCH & CONSULTING
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Selection
Preparation
Structuring
Financing
Budgeting
Procurement
Contracting
Execution
Construction
Operations
Monitoring
Evaluation
Reversion
Pre-FEASIBILITY
Identify user needs (traffic
study)
Tariff affordability
Technical solution, capex
and opex
Contracting OPTIONS
Market sounding
Sources of financing
Financial
modelling
Scenarios
User revenues
Budget
subsidies
Financing
criteria
Competitive
procurement
Tender
Standardized
contract
Land
expropriation
Rights of way
Cost control
Inputs
Entry into
service
Tariff
collections
Quality control
Outputs
Inspections
Verifications
Audits
Evaluation
OUTCOMES
Policy alignment
Stakeholder
consultation
Consensus
Objectives, targets,
indicators
Due diligence
Risk analysis,
allocation
Arrange
financing
Budget impact
Final approvals Control, cost,
quality
Ttime
Miletstones
Collections
Maintenance
Reporting
Reimbursem-
ent
Impact
Benefits
Sustainability
Continuity
Guarantees
Risk
management
Financial close
Contract
signing
Disbursemen
t
Defects
Stakeholder
relations
Renewal
Renegotiation
PPP Project Cycle - Phases
bkp DEVELOPMENT RESEARCH & CONSULTING
Concessionnaire SPV Banks
Insurers Contractor Operator
Port Concessions State Grantor (Condedente)
Concession Contract
Capital
Financing contract
Direct Agreement
Insurance Policies
Sales contracts
Shareholders
Construction Operation Contracts
Port Regulator
bkp DEVELOPMENT RESEARCH & CONSULTING
Privatization Joint ventures Collaborations
Duration
Valu
e / C
om
ple
xit
y
Works Contract Outsourcing 3-5 years
Works Concession
BOT, PFI & FBOT
15-25 years
Services concession Operating Contract Leases, affermage 5-15 years
PPP
(Works & Services)
Hard facilities
Soft facilities
Services
Forms of PPP
Management Contract 5-10 years
bkp DEVELOPMENT RESEARCH & CONSULTING
1. A multi-year (administrative) very long term contract by which …
2. the public partner (Concedant/Grantor, the State or Municipality or other unit of Public Administration) transfers to…
3. the private partner or concessionaire …
4. the obligation to build and/or operate the public infrastracture and to provide a public service of a given quality to …
5. the public service users or the Grantor/Concedente itself…
6. together with the right to charge or receive fees in remuneration of the services rendered…
7. to be paid by the users or by the Grantor/Concedant (taxpayer) itself, over time…
8. with the private partner assuming responsability for the financing of the infrastructure and services by banks
Public Private Partnerhip / Concession
bkp DEVELOPMENT RESEARCH & CONSULTING
Comparing: Public Works Concession
Public partner Any Government entity State or Municipality
Scope Construction to physical
specifications
Provision of infrastructure and
public services
Duration 1-5 years 20-30 years
Procurement
methods
All International tender, competitive
dialog
Rights of State,
public partner
Infrastructure delivered on time
and within budget
Provision of services to users, or
the State itself
Project changes Extra works paid directly Unilateral modifications subject
to Rebalancing over 30 year
tenor
Rights of private
partner
Revision of contract price to
reflect inflation
Financial rebalancing
Govt financing On Govt budget, Govt debt Govt investment subsidy,
operating subsidy only over time
Risk sharing, transfer
to private partner
TCC fixed price contract can
transfer some risks to builder
Must transfer construction risk,
and either traffic or availability
risk
bkp DEVELOPMENT RESEARCH & CONSULTING
Preparation and Tender Project overdimensioned to traffic forecasts Skewed selection criteria Inadequate analysis of risks to State-
grantor, environmental Few bidders, inadequate proposals Unclear tender specifications Slow tender process or suspension Lack of consultation and involvement of
Stakeholders
Structuring and Contracting, due diligence
• Low levels of experience of State project managers and negotiations Excessive flexibility or rigidity Very tight deadlines for decision, especially
on public side Non standardized contacts, unbalanced or
unrealistic risk allocation Frequent changes in Government policies
and sector programs
Construction and execution
Delays on various sides Unilateral modifications and variation
orders with additional costs, incremental CAPEX which threatens cost/benefit of project
Poor risk management Frequent tacit approvals
Operating, maintenance, monitoring USER insatisfaction, protests Low demand, traffic shortfall User fees increases Increase in operating costs, OPEX Frequent financial rebalancings paid
by the State Lack of reporting and low
transparency
Project Cycle - Risks and Threats
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 1 - Maternal Health Vouchers
Needs: to improve maternal health and reduce mortality
Project concept: OBA subsidized voucher for “outputs”— “safe
delivery” (SD) including 4 prenatal visits, attended delivery and one
post-natal visit, screening for STDs. Pilot 2006
Payment: User co-payment of 3,000 shillings, voucher costing 60,000-
200.000 shillings
Service providers: Accredited local clinics, community distributors
(VCBDs)
Promoter: INGO (MSI-U), Voucher Management Agency, arranging,
selection and training clinics and distributors
Independent Verifier: MSI-U under sub-contract from Ministry of Health
Subsidies: KfW US$4.3 million until Dec-2011, Government budget
commitment of US$ 3 million in 2012
Results: 136,000 people treated until Dec-2011
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bkp DEVELOPMENT RESEARCH & CONSULTING
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Voucher Management Agency Clinic accreditation
Ministry of Health KfW, OBA
Clinics
Clinics Clinics Clinics
Voucher Distributors
Clinics Providers
Verification Claims processing (by SMS)
1.Maternal Health Voucher with OBA subsidy
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 2- Water and Sanitation
affermage / O&M Contracts
Needs: potable water supply and sanitation
Project concept: operator provides services, with cost
recovery from user tariffs, may receive OBA subsidies for
connections
Contract: Local contracting authority asset owner,
management, operation & maintenance 1-5 years,
renewable, to users association, CBO, NGO or local
entrepreneurs Regulation: Ministry/DG Water provides central
guidelines, generic documentation (tender, contract, monitoring). Regional water authority oversees tariffs
Construction undertaken and financed by asset owner
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bkp DEVELOPMENT RESEARCH & CONSULTING
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Ministry
Local Govt 1
Local Govt 2
Local Govt 3
user
Operator 1
Operator 2
Operator 3
docs Regional Water Dept
user user user user user user
2- Water and Sanitation affermage / O&M
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 3 - Small scale Aquaculture
Livelihood Service Centers (ALSC) Aceh
Needs: Production hurt by shrimp diseases, low quality, 2004 tsunami
Project concept: ALSC partnerships between farmers’ organizations,
donors, local governments and research institutions, with “enterprise”
value-chain approach, including
Technical support, demonstration ponds
Business training , legal services,
Microfinance
Collective purchase of inputs, aggregation
Collective stock management and post harvest services
Collect marketing and gaining access to international markets
Objective: Smallholder clusters to become commercially competitive
Financing: Humanitarian donations and rehabilitation investments
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3. Small Scale Aquaculture Service Centers Value Chain integration
Service Center
Government
Donors Research
Institute
Producer Association
Market Suppliers
producers
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 4 – Irrigation, drainage Megech (Lake
Tana) Ethiopia
Needs: 60% of food gains in future will come from better irrigation,
only 4% of Sub-saharan agricultural land is irrigated
Project concept: Construction and management of a new, large-
scale irrigation scheme to serve 6000 smallholder subsistence
farmers, over 4,000 hectare. Service fees set to cover O&M costs,
including energy
The contract: 8-year “enhanced” operation and maintenance,
operator supervises construction (any savings shared with
construction company); operator remunerated per
performance indicators, has no demand risk
Financing: Investment funded by $30 million IDA loan to
Government. O&M contract funded by $8 million IDA loan
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bkp DEVELOPMENT RESEARCH & CONSULTING
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4. Megech (Lake Tana) large scale irrigation project
BRL Ingénierie
Government
O&M++
Construction Contractor Market
producers
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 5- SSIP small scale infra
provider, Water
Needs: 60% of rural population lacks access to safe water; variety of
contracts
Project concept: Operator to install 400 new water connections in 2
years, households to pay 10% of connection costs
Contract: Standardized 5-year management contract, competitive
tender to Trandint Limited for lowest price of $270,000 in Busembatia
Financing:
Subsidy of $300,000 from ADA, for connection costs (one off)
$100,000 loan from bank
GPOBA provided funding for capital investment costs to support
the private operator
Advisor: IFC, since 2007
bkp DEVELOPMENT RESEARCH & CONSULTING
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The need : To raise crop yields of TEF , an African “orphan crop” which is the most widely cultivated cereal in Ethiopia The project concept : Joint research to develop “semi-dwarf” plants that won’t topple over The operator: Various non-profit partners, including University of Berne, Switzerland with Ethiopian researcher, Research institute in Kenya, Ethiopian field research Funding: SFSA Syngenta Foundation for Sustainable Agriculture Tef (Eragrostis tef, from the sorghum/millet family) is an African “orphan” crop, little studied because of limited international trade. The plant is well adapted to the climatic and soil conditions in Ethiopia, and the he seeds contain high levels of protein are free of gluten. Also working with Borlaug Global Rust Initiative on a new wheat rust which first appeared in Uganda, and developing farm insurance in Kenya
Example 6 - International Tef Improvement Research Project
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 7- Water micro-financing in
periurban aereas
Needs: Potable water
Project concept: small scale water operations,
installing household or yard connections, based on
user tariffs
Contract: to CBOs, 13 sub-projects
Financing, average US$ 83,000
Output based donor subsidies, EU for connections
PPIAF-PDF investment subsidy for major capex capital
expenditure
Local micro finance institutions, local bank
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bkp DEVELOPMENT RESEARCH & CONSULTING
Example 8 – Business Development
Services (BDS)
Needs: Coffee Farmers Cooperative needs to improve
quality and yields and create brand
Project concept: To strengthen competitiveness and raise
added value with business development services (BDS),
Fairtrade certification and linkages to markets
Contract: Marketing company to pre-finance farm inputs,
to recover from coffee sales. BDS providers selected
competitively.
Financing: Pilot Value Chain Grant from Matching Grant
Fund (MGF)
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bkp DEVELOPMENT RESEARCH & CONSULTING
Example 9: Small scale passenger services,
urban vs. rural
Regional Government Municipality
matatu
Microfinance Insurer
Common carrier licenses, duration, (non) exclusive routes, subsidies
(Int’l) Funds
Exclusivity Subsidy
Rural only chapa dala dala
bkp DEVELOPMENT RESEARCH & CONSULTING
Example 10– Unsolicited proposals
Private proponent identifies need and presents
project (technical) concept to Public Authority
PA either rejects the techncial concepts or asks
proponent to prepare feasibility study
If technical proposal is accepted, PA issues
request for tenders (including financial proposal)
Original proponent may, or may not, enjoy advantage
ex. right of first refusal, bonus points, etc
If award goes to new bidder, original proponent is
reimbursed for feasibiltiy study as per pre-approved
cost
Contract details disclosed, full transparency
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bkp DEVELOPMENT RESEARCH & CONSULTING
Public / Collective goods in agriculture
Tangible
Irrigation, drainage and
flood control systems
Drip irrigation kits
Collective storage
facilities, accredited
Resource
management, water
rights, grazing lands
Forestation
Intangible
Small producers
organization and
aggregation
Supply chain integration,
from purchasing to market
Certification of origin,
quality, organic, Fairtrade,
branding
International market
access 33
bkp DEVELOPMENT RESEARCH & CONSULTING
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• The export company Target Agricultures trains 320 farmers in organic production (dried pineapple & papaya) in Sri Lanka and commits itself to accept their produce for export.
• Fair organizer BioFach trains and organizes organic food producers and creates a Centre of Excellence in Brazil.
• DaimlerChrysler supports smallholder production of natural fibers for auto seats, creates a processing cooperative in the Philippines and supports the development of alternative fibre products.
• Fruta del Pacífico trains 600 farmers in ecological banana production and helps to set up a farmers cooperative in Ecuador.
• Deichmann introduces social and environmental standards in Indian supply chain for shoe production. • Seda & Fibras establishes silk production in Paraguay, including the forestation of mulberry trees and
family-based cocoon production, targeting 2000 families. • Kraft Foods introduces a national quality standard for coffee production in Peru, trains advisers and
helps to set up a national certification system. • Cosmetics producer Wala introduces organic rose production in Romania, trains 250-300 farmers, commits
to fix purchasing prices and helps to build up an organic farmers association and a certification system. • Unilever Bestfoods rehabilitates out-dated state-owned tomato processing plant in Ghana,
transfers ownership to farmer families and commits to pre-established prices for tomato products. • A Flower Importers Association introduces a flower label program which establishes and certifies social
and environmental standards in flower production in Zimbabwe and Kenya http://www.fao-ilo.org/fileadmin/user_upload/fao_ilo/pdf/DonorApproachestoPro-PoorValueChains.pdf
Examples of pro-poor value chain projects funded by the PPP facility and implemented by GTZ
bkp DEVELOPMENT RESEARCH & CONSULTING
KSF and lessons learned in PPPs
• Effective project risk
sharing essential
• Value for money must
be better than under
public provision
• Long term
partnership,
equitable, flexible
Replication of best practices
Central PPP Unit, responsible for
design, standardization and
coordination with line ministries
responsible for technical
decisions, in order to accelerate
flow of smaller scale deals
Ministry of Finance responsible
for financial due diligence and
budgeting and allocation of
scarce and valuable taxpayer
support, OBA/donor funds,
external debt capacity
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bkp DEVELOPMENT RESEARCH & CONSULTING
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Project Cycle – Key Success Factors Needs -
MDG
Objectives
Partners Project Design
Development
Funding
Donors
Creditors
Execution
Delivery
Evaluation
Target
population
Focus of
Projects
Basic needs
Food security
Local
knowledge
contacts
Goverment
authorities
Capacity
Credibility
Technology
Adequate to
objectives
Practical and
doable
Tariff setting
Funding for
development
impact
Donors,
criteria
Funding
cycles
Co-funding
Eligible
projects
Local capacity
Skills transfer
Control
Monitoring
site visits
Continuity
Results for
beneficiaries
Reporting
Transparency
Improve
nutrition
Generate
income
NGO, CBO,
Association
s, cademia
Entreprene
urs
Roles in
project
User affordability
willingness to pay
Government
budget
commitments
Licenses and
approvals
Calls for
proposals,
tenders
Due
diligence,
site visit
Local
community
development
Continuity
Sustainability
Follow-up
Replication
bkp DEVELOPMENT RESEARCH & CONSULTING
Dimension appropriate to demand, for good level of utilization
(load factor) consistently above breakeven, modular
expansion if possible
Cost control in investment, maintenance, operations
Satisfaction of (naturally captive) Users/Clients
Optimization and collection of user charges (affordability), aim
for full recovery of operations & maintenance costs
SMART Government/donor subsidies, output-based, budgeted
Minimizing fiscal risks to taxpayers (budget sustainability)
Medium term contracts, evaluations pre-renewal
Engage Stakeholders, build consensus, aggregate
Basic principles as Key Success Factors
bkp DEVELOPMENT RESEARCH & CONSULTING
Stakeholder Roles and Functions
Users and
beneficiaries
Governments
Public contracting
entity
Regulator
Third Party Payor of
subsidies
Investor/creditor
Sponsor and
promoters
Operators
Contractors
Suppliers
Equity investors
Finance Parties
Creditors
Donors
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bkp DEVELOPMENT RESEARCH & CONSULTING
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Financing: Govt vs Private operator
Sources of
Funding
Public Asset Owner
Operator
Private Operator
Issues
Govt Budget
Commercial management
Financial self sufficiency, or
SMART subsidies based
on volume and quality of
services rendered
Procurement, public tender
Financial self-sufficiency
Govt monitoring
Rigor, professionalism
Policy
priorities
Approval
process
IFI’s
EIB, EBRD, EDFIs
Europeaid
Donors, GPOBA
Eligibility criteria
Projects vs programs
Economic feasibility
Public procurement
Identifiable projects
Public procurement
Financial Feasibility
Guarantees
Efficiency
Cost
recovery
Commercial Banks
Private promoters
investors
Microfinance
Risk allocation
Guarantees
Financial feasibility
Risks vs return
Commercial risks,
regulation
Co-financing
Bankability
Cost
recovery
bkp DEVELOPMENT RESEARCH & CONSULTING
Sources of funding: Output Based Aid
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Title GPOBA – Global Partnership on Output-Based Aid
Funding
Bracket
Minimum US$ 25,000 and a maximum US$ 500,000 per project
Facility
Objectives
To provide increased access to reliable basic infrastructure and
social services to the poor in developing countries through the
wider use of Output Based Aid (OBA) approaches
Key
Activities
• To provide funding of output-based payments (i.e. operating
subsidies) to facilitate the piloting of innovative, small-scale
projects; studies and other inputs
• To assist in the design, implementation and evaluation of
projects
• To identify, document and disseminate best practices and
emerging knowledge on OBA and public services
• To build capacity with training, publications, workshops, and
conferences
bkp DEVELOPMENT RESEARCH & CONSULTING
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Financing Criteria
Official creditors Identifiable project, technical
feasibility
Commercial economic feasibility
Fully budgeted, integral financing
Execution capacity, project team
Public tendering, EU international procurement rules
Financial model, feasiblity
Identity of promoters, KYC
Environmental concerns, sustainability
Long approval processes, due diligence
Private creditors, add emphasis
+ Risk identification,
allocation
- Risk < financial return
+ Client relationships
bkp DEVELOPMENT RESEARCH & CONSULTING
http://ppplusofonia.blogspot.com
42
Official IFI Commercial IFI Other Funding Sources
Multi-lateral, regional World Bank/IDA/IFC
MIGA
BID/CII EIB AfDB African Development Bank,
ATF African Trade Facility African Water Facility ATI African Trade Insurance
Islamic Development Bank EU/EDF
Micro-credit institutions Int´l commercial banks Capital markets Infrastructure funds
Global Environment Facility
IFAD
Suppliers (capital goods)
Clients (eg petroleum) Foundations ONG-NGO
Red Cross Save the Children
UNICEF
Bilateral
DFID, CDC, EDFIs, Cofides, SOFID, FMO, Proparco
USAID
OPIC
Eximbanks
KfW, AfD
ECAs - export credit agencies
Local banks Local credit unions Local cooperatives
Private donors, foundations
Emigrants’ remittances Contribution in kind (work, sweat equity)
FUNDING SOURCES
bkp DEVELOPMENT RESEARCH & CONSULTING
1. An organism of Public Administration, with:
2. Permanent obligation to provide the public service concessioned
temporarily
3. Annual budget allocation and long term debt capacity to support
public service to the extent not supported by user fees
4. Technical capacity to define, control and ensure the provision of the
public service (which cannot close down)
5. Continuing and ongoing envolvement in the public service provision
6. Authority and capacity to decide and to commit budget funds, current and
future, contingent PPP liabilities
7. Ultimate political accountability and responsability, to public service
users and to taxpayers
Attributes of the State as Grantor (Concedant)
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bkp DEVELOPMENT RESEARCH & CONSULTING
More public infrastructure faster
Overcome short term budget constraints
Mobilize local counterpart funds for external grants
Avoid cost overruns of traditional public works
Improve quality as well as coverage of public services
Government Public Service Objectives
bkp DEVELOPMENT RESEARCH & CONSULTING
NGOs and CBOs
NGO, local or international non-
governmental organization,
specialist
Needs assessment, surveys
Project design, facilitation
between public and private
partners
Negotiations with OBA donors,
independent verification
Selection of providers,
monitoring, quality control
Training, capacity building
Representation of users
CBO, local community
based organizations, user
associations, cooperatives
Needs assessments
Service provider
Negotiation with public
partner and OBA donor
Representation of
users
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bkp DEVELOPMENT RESEARCH & CONSULTING
Starting point for PPPs
Public investment program / project pipeline
Cost benefit analyses, priorities, consensus
Include PPP liabilities in Government budget / debt (MTEF)
PPP as only one of the delivery options, max 25% of public
investment
PPP Unit or management agency
Legal, regulatory and institutional frameworks
Public service program budgeting
Learning curve for transaction / contract management
Pilots projects, policies, best practices
Evaluation, transparency, accountability
bkp DEVELOPMENT RESEARCH & CONSULTING
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 and sustainability
Direct and/or contingent liabilities
Value for money assessment of PPP option
bkp DEVELOPMENT RESEARCH & CONSULTING
Lisboa
June 2008
http://ppplusofonia.blogspot.com
48
What to look for in a project
Cearly defined, short, proposal for an public or collective service , which will
Improve the quality of life for users, project participants and beneficiaries
Be appropriately dimensioned, modular
Calibration of user tariffs for O&M Opex cost recovery, after investment subsidy, or complemented by SMART /OBA operating subsidies
The ability of the promoter to receive and apply money as intended (bank account, annual audits, track record)
An explanation of how the work can become self-supporting or can find local sources of support, after donor funding ends
Alignment of the project with MDGs and Government policy, compatibility with donor principles Local self-reliance, community governance , participatory decision making
Production geared toward local consumption, food security first
Mutual Support and Accountability - Beneficiaries organized in a group which offers support and accountability to its members
Description of the experience of the project team or coordinator.
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Exercise Phase I: Identifying, prioritizing, and
building consensus regarding PPP projects
Good PPP investment planning starts with a diverse project pipeline:
Your task: Working in groups of 3-4 people, and based your local knowledge, please take 10
minutes to identify 1-2 projects to present to other Stakeholders, the Authorities and
potential promoters, investors and/or donors. Prepare to deliver a 2-minute “elevator
speech” presenting your project to the group, which will vote to classify it as priority I, II or III.
For each project, please detail, if possible:
Public service or collective need (beneficiaries, location), outputs that can be identified and
objectively measured, volume and predictability of demand, alignment with MDGs and
Government sector policies
Project concept: scope of services, with/without construction/capex , O&M opex
Technical solution, scale, modular technology, reliability, flexibility, fixed costs
Financial solution, who will pay, user/taxpayer support required, user affordability, budget
sustainability
Public contracting authority, or concedant, form of contract , why the PPP option, procurement
Potential market interest, from private promoters, investors, sources of funding from creditors,
donors
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Obrigada! Mariana ABRANTES
de Sousa
PORTUGAL
[email protected] http://ppplusofonia.blogspot.com