Validation Workshop 09 and 10 August 2012 Mombasa Beach Hotel Mombasa, Kenya
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DEVELOPMENT RESEARCH & CO NSULTING
Agenda
Public infrastructure investment gap in Africa
Can telecom success be replicated
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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Coverage 50%
License
International Banks
Crdit 25 miln 6 anos, Euribor+1,5%
Funding
Citibank
Nairobi e New York
Clients
FRN
KES 4 biln (30 miln)
5 year, BT91dias+1%
Guarantee 75%
Private Divisable
Political definition
Sofia 2005
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
price
Technical solution, investment, Capex Operating options, Opex Scale, Dimension, Breakeven
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10.885,82
Receita comp
10.885
NPV Investment:
8.667
User fee reduction creates shortfall and need for taxpayer subsidy, for investment and/or operation
DEVELOPMENT RESEARCH & CO NSULTING
10 -11 telecom
2 - 6 sidewalks
9- 6 ports
User tariffs
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Works only Capex PPP Greenfield or Works & Services expansion PPP, PPP concession, toll roads, ports, etc
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PPP concession
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Procurement Contracting
Competitive procurement
Tender Standardized contract
Execution
Construction
Operations Monitoring
Entry into service
Tariff collections Quality control
Evaluation Reversion
Outputs Final approvals Control, cost, quality Ttime Miletstones Collections Maintenance Reporting Reimbursement Stakeholder relations Impact Benefits
Disbursemen t Defects
Renewal Renegotiation
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Port Concessions
Port Regulator
Capital Shareholders
Concessionnaire SPV
Financing contract
Banks
Insurance Policies
Sales contracts
Insurers
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Contractor Operator
Forms of PPP
Joint ventures PPP (Works & Services) Collaborations
Privatization
Value / Complexity
Leases, affermage
5-15 years
Outsourcing
3-5 years
Duration
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2.
3. 4. 5. 6. 7. 8.
Comparing:
Public partner Scope Duration Procurement methods Rights of State, public partner Project changes
Public Works
Any Government entity Construction to physical specifications 1-5 years All Infrastructure delivered on time and within budget Extra works paid directly
Concession
State or Municipality Provision of infrastructure and public services 20-30 years International tender, competitive dialog Provision of services to users, or the State itself Unilateral modifications subject to Rebalancing over 30 year tenor Financial rebalancing Govt investment subsidy, operating subsidy only over time Must transfer construction risk, and either traffic or availability risk
Risk sharing, transfer TCC fixed price contract can transfer some risks to builder to private partner
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diligence
due
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
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Ministry of Health
Voucher Distributors
Providers
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Operator 3
user
user
user
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user
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user
user
user
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Objective: Smallholder clusters to become commercially competitive Financing: Humanitarian donations and rehabilitation investments
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Service Center
Suppliers
Market
producers
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Market
Construction Contractor
producers
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Insurer
Exclusivity Subsidy
Microfinance
matatu
dala dala
Rural only
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Examples of pro-poor value chain projects funded by the PPP facility and implemented by GTZ
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 Pacfico 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
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Partners
Execution Delivery
Local capacity Skills transfer Control Monitoring site visits Continuity
Evaluation
Local knowledge contacts Goverment authorities Capacity Credibility Technology NGO, CBO, Association s, cademia Entreprene urs Roles in project
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Finance Parties
Creditors Donors
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Issues
Policy priorities Approval process Efficiency Cost recovery Co-financing Bankability Cost recovery
Govt Budget
IFIs EIB, EBRD, EDFIs Europeaid Donors, GPOBA Commercial Banks Private promoters investors Microfinance
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Key Activities
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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
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FUNDING SOURCES
Official IFI
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
Commercial IFI
Micro-credit institutions Intl commercial banks Capital markets Infrastructure funds Global Environment Facility IFAD
Bilateral Local banks DFID, CDC, EDFIs, Cofides, SOFID, FMO, Proparco Local credit unions USAID OPIC Local cooperatives Eximbanks KfW, AfD ECAs - export credit agencies
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Emigrants remittances
Contribution in kind (work, sweat equity)
42 http://ppplusofonia.blogspot.com
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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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Economic viability
Economic benefits exceeding economic costs
Commercial viability
Returns exceed cost plus required return on capital
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
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48 http://ppplusofonia.blogspot.com ppplusofonia@gmail.com
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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PPP Lusofonia
Obrigada!
Mariana ABRANTES de Sousa PORTUGAL ppplusofonia@gmail.com
http://ppplusofonia.blogspot.com
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