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Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameSupporting Public-Private Partnership (PPP) Execution in Egypt

2. Requestor Information

Name: Ramy AfifiTitle: Program Coordinator for International Financial Institutions and the MENA Transition Fund

Organization and Address: Ministry of International Cooperation, 8 Adly St, Down Town, Cairo

Telephone: +20-2-23918971 Email: rafifi@moic.gov.eg

3. Recipient Entity Name: Atter Hanora Title: Director, PPP Central Unit

Organization and Address: PPP Central Unit, Ministry of Finance of Egypt, Tower #2 – Ext of Ramsis str. Nasr City, Cairo

Telephone: +20-2-23421283 Email: atter@mof.gov.eg

4. ISA SC RepresentativeName: Hildegard Gacek Title: Managing Director, Southern and Eastern

Mediterranean

Organization and Address: European Bank for Reconstruction and Development, One Exchange Square, London EC2A 2JN, United Kingdom

Telephone: +44 20 7338 7703 Email: gacekh@ebrd.com

5. Type of Execution (check the applicable box)√ Type Endorsements Justification√ Country-Execution Attach written endorsement

from designated ISAJoint Country/ISA-Execution Attach written endorsement

from designated ISA(Provide justification for ISA-Execution)

ISA-Execution for Country Attach written endorsement from designated ISA

(Provide justification for ISA-Execution)

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25 / 4 / 2016

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ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

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6. Geographic FocusIndividual country (name of country): Egypt

Regional or multiple countries (list countries): N/A

7. Amount Requested (USD) Amount Requested for direct Project Activities:(of which Amount Requested for direct ISA-Executed Project Activities):

USD 2,270,000

Amount Requested for ISA Indirect Costs:1 USD 136,200 (6% of direct Project costs), of which:• 3% (equal to USD 68,100) for Monitoring and Evaluation.• 3% (equal to USD 68,100) for Preparation, Administration and Management of the Project.

Total Amount Requested: USD 2,406,200

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: November 2016 Closing

Date:November 2018 End Disbursement

Date:December 2018

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

√ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

√

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labor market policies, increasing youth employability, enhancing female labor force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal

Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

√

1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.

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policies and social safety net reform.

B. STRATEGIC CONTEXT

10. Country and Sector Issues Municipal services in Egypt all face urgent demands for investment to provide better access and improved quality. Key challenges exist in upgrading and decentralizing the municipal infrastructure sector. Such challenges can be identified across all basic municipal infrastructure sectors, notably including the transportation and water sector. As a result, Egypt’s largest cities suffer from severe congestion and air pollution problems and large investment gaps exist in mass transit systems, bus operations and river transportation services. Low sanitation coverage, particular in rural areas, in combination with deficiencies in wastewater treatment, results in severe water quality problems. Insufficient managerial and financial autonomy, very low tariffs, lack of incentives to improve performance, and continued overstaffing also lead to a poor financial situation of most utility companies. In addition to that, the regulatory and legal organization of the sector shows weaknesses hampering new investments and the efficient provision of services.

To tackle such problems, authorities have shown an increasing interest in pursuing partnerships with the private sector to fund infrastructure projects. A Public Private Partnership (“PPP”) programme was commenced in 2006 and a new PPP Law enacted in 2010, establishing a sound regime for private participation in large infrastructure projects. The creation of a PPP Central Unit (PPPCU) in the Ministry of Finance in 2006 and the adoption of the PPP programme aimed to allow for and promote the retraction of the government’s role in the economy and pave the way towards a market economy in which the private sector is an active participant. It addresses the inefficiencies of the public sector in managing state assets, and assists the burdened government in solving the problems of a declining national budget and limited resources by bringing in capital, knowledge, and the technology and management expertise of the private sector. Ultimately creating a more attractive investment arena for the private sector and compensating for historical weaknesses in the investment process that may have deterred the private sector. Nevertheless, the effects of such changes remain to be tested in practice. Further challenges remain in the planning and implementation of PPP structures, especially in the municipal infrastructure sector. Best practice precedencies through the implementation of pilot projects have not yet been established, key impediments such as the public perception of PPPs as privatization and the resistance to change pose further challenges to the agenda. Hence, the PPPCU - responsible for establishing the national PPP policy framework for implementation, manage PPP transactions and provide technical and advisory support as well as ensure compliance with legislative framework - encounters significant obstacles and a high workload burden.

11. Alignment with Transition Fund ObjectiveThe Transition Fund Objective is: “to improve the lives of citizens in transition countries, and to support the transformation currently underway in several countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms.”.

The proposed Technical Cooperation is in line with the overall objective of the Transition Fund, in particular it aims at:

Improving the quality, reliability and access to municipal services

Municipal services in Egypt all face urgent demands for investment to provide better access and improved quality. Urban traffic management and inadequate solid waste management are the top priorities among urban environmental issues. Non-sovereign financing is not widespread, but developing decentralized financing solutions can encourage improved cost recovery and commercial discipline. However, further tariff reforms will be needed to improve the sustainability of municipal services going forward. Egypt’s largest cities suffer from sever congestion and air pollution problems and large investment gaps exist in mass transit systems and bus operations.

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In the growing urban-industrial centers, local municipal infrastructure struggles to keep the balance between environmental protection, safe waste disposal and provision of clean water and financing in the sector should aim to provide the population with wider access to better quality urban services. The development of transport and municipal infrastructure can deliver significant improvements in quality of life and support economic development. In developing municipal services efforts will be made to understand the differentiated priorities and needs of men and women so as to effectively address them and ensure that both can equally share in the benefits of the proposed investments and so have an opportunity to improve their respective employment opportunities and socio-economic status.

The delivery of essential services should be a driving force in improving the environment, with a focus on people’s welfare and quality of life; decentralized, transparent and accountable institutions; engagement with stakeholders; and economic and environmental efficiency. The Government of Egypt has decided that, in part, the private sector should be engaged in achieving these objectives. The focus is on improved municipal services, notably in water and wastewater, public transport, urban roads and lighting, solid waste management, district heating and energy efficiency. The aim of an enhanced PPPCU is to deliver quality, sustainable, market-based and demand-driven infrastructure that is responsive to people as citizens. This will help address the challenge of providing essential services in areas with very different demographics.

Establishment of PPPCU Support and the setting of PPP methodologies and guidelines in line with the local legislation

The large presence of the public sector in the economy poses a challenge both to private sector development and to the reduction of market distortions. Although the mechanisms for involving the private sector overall remain incomplete, it is generally acknowledged that the inclusion of the private sector will require a number of prior steps. In addition, any such private sector participation (PSP) would need to be country-led and subject to clear and transparent procedures, in line with international best practice, supported by appropriate institutional structures. This requires creating confidence in the PSP process, by both potential investors as well as the Egyptian public. One important step towards developing a more sustainable future is to ensure that all knowledge and tools are available to contribute towards development and delivery of solutions. One main initiative sought by the Government is support for the PPPCU with the Ministry of Finance.

The objective is to provide day to day support to the PPPCU to: (i) ensure improved overall quality and reliability of contracts entered into and therefore the improved municipal services; (ii) promote sub-sovereign financial solutions and proactively engage with both public utilities and private sector participants to identify opportunities for future PPP investments as well as to assist the PPPCU in designing, structuring and implementing such projects; and (iii) improve the overall standards of services in Egypt.

Promote sub-sovereign financial solutions and proactively engage with both the PPPCU and private sector participants to identify opportunities for future PPP investments as well as to assist the PPPCU in designing, structuring and implementing sound projects

The role of international and national private companies, small contractor companies and the informal sector is undoubtedly recognized by relevant Ministries and is needed to achieve the desired efficiency and proper service quality in municipal services management, despite the past unfavorable experience of Private Sector Participation (PSP) for the past 15 years.

PSP is now viewed as necessary for engaging and contracting private entities to handle the growing challenge in providing quality basic services and also acknowledging the lack of capabilities within the public system to manage the services to the level of high public satisfaction. The priority challenge to public entities is not only technical or administrative but is a chronic financial deficiency. Poor national budget allocations coupled with a lack of enthusiasm of the general public to share in the cost of municipal services, have put a significant burden on both official entities to seriously seek the cooperation of expert private companies, in meeting their contractual obligations. For example, in the country report on the solid waste management (SWM) in Egypt, issued by SWEEP-Net in 2010, it was estimated that there is a 35 per cent funding gap between the cost of

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operating the current municipal solid waste management system and the revenues that are raised through user fees imposed on households and businesses. Indeed PPPs do not necessarily reduce the cost of services but improve the quality and efficiency; EBRD has experienced in many countries the willingness of service users to pay more for better services.

The PPP market in Egypt, although developing, lacks a strong body of knowledgeable and capable firms to partake in tenders. It is important that this base is developed if public sector led PPPs are to continue to be a success in Egypt.

The requested Technical Cooperation is complementary to broader EBRD engagement and financing package in Egypt, which includes a number of projects in the municipal sector that are structured as PPPs, for example projects that have EBRD involvement are listed below, however, this intervention would support other similar projects:

EBRD’s priorities in the municipal sector are to (i) ensure right incentives to use water more efficiently through: the introduction of cost recovery principles and developing appropriate tariff methodologies to cover costs; metering to enable water companies to monitor consumption; improving collections; introducing improved contractual arrangements; active policy dialogue to promote legal and regulatory frameworks to promote local autonomy and long term sustainability; and to (ii) improve efficiency and service levels through financial and operating performance improvement programs; promote energy efficiency; and introduce monitoring and benchmarking programs. EBRD is committed in sharing lessons learned and best practice with Egypt, replicating its successful engagement in the municipal water sector in its traditional region of operation (Central and Eastern Europe, and Turkey) in the last 20 years.

EBRD is already supporting Egypt to prepare two projects in the public sector for private sector finance. Throughout the preparation of the two below outlined projects, it was recognized that the PPPCU would benefit support to enhance its capability and capacity. These projects are otherwise not directly related to this intervention.

The Nile River Ferries project will improve the provision of ferry services and to expand the scope of river transport on the Nile through a PPP process being led by the PPPCU in cooperation with the Ministry of Transport. The project is an important step in addressing Cairo’s challenging transport situation, which accounts for 20 million motorized person-trips per day and approximately 13 million tonnes of CO2 a year. The project will help to alleviate Cairo’s traffic congestion levels, which cause high economic losses, have been estimated at 4 per cent of Egypt’s GDP or equivalent to around USD 8 billion on an annual basis. The EBRD intends to provide financial support to the winning concessionaire, who will renovate, operate and maintain the Nile River Bus transportation fleet and buy up to 41 vessels. Additionally, the 15 existing piers will be modernized, made more commercial and managed, and potentially increased to 27 piers, all under a 30-year concession contract.

The Project will expand and upgrade the Abu Rawash Wastewater Treatment Plant from a primary to secondary treatment process. The PPP process is being led by the PPPCU in cooperation with the Ministry of Housing. The objectives of the Ministry of Housing are to enter into a PPP with a view to: (i) provide an environmentally safe WWTP; (ii) achieve participation of the private sector in the development of infrastructure to better allocate and manage the resources, reducing the fiscal burden of building new infrastructure; (iii) increase the WWTP’s capacity; (iv) make optimal capital investments; and (vi) ensure long-term financial, technical and environmental sustainability of the system, taking into account end-user affordability constraints.

12. Alignment with Country’s National Strategy

In 2006 the Government of Egypt adopted a new long term policy, the Public Private Partnership policy, that encourages partnerships with the private sector in order to access new sources of investment capital and the financing required for infrastructure projects. The aim of the initiative was to reduce sovereign borrowing, limit the

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associated risks and reduce the burden on the state budget. The overall objective of the policy was to “drive the creation of local long-term funding markets, create a new private sector facility management market, expand the economy, stimulate job creation, provide an improved service to the citizens of Cairo and increase the quality of public services”2. In 2010 a new PPP law was enacted, to govern the policy; the PPPCU was established with the task of overseeing and implementing the policy, to bring benefits, such as private sector efficiency and enhanced management skills, into the provision of public services across all sectors.

In the provision of basic services, all relevant Ministries and policies promote the increase of PSP to enhance the quality and reliability of service provision. In the water sector the Ministry of Water Resources and Irrigation have developed an integrated framework, which in part relies on decentralization and PSP (through the use of PPPs). The management of solid waste, in Cairo specifically, is the responsibility of the Cairo Governorate and while there have been some negative experiences with private waste management companies in the past, key stakeholders feel that the public system is currently lacking both capacity and capability for the delivery of a satisfactory service. Urban transport provision is the responsibility of the Ministry of Transport, who despite large publically funded projects in Cairo, are seeking ways to increase PSP where possible. All PPPs in Egypt are managed, to varying degrees, by the PPPCU and therefore the capacity of the Unit to support these counterparts is key in ensuring that value for money, improved services and quality contracts are negotiated.

EBRD, through its loans and the Technical Cooperation financed by the Transition Fund will contribute to the implementation of Egypt’s Strategy by (i) laying the ground for an efficient and effective institutional reform that would attract PSP; and (ii) by aiming at progressively introducing appropriate tariffs and incentives in order to promote sustainable municipal services. Moreover, the increased operational capacity of the PPPCU will be pivotal to advance the country in the design of effective PPPs and to pro-actively engage with the private sector to identify future opportunities.

C. PROJECT DESCRIPTION

13. Project Objective

The Project Objective is to enhance the quality and reliability of public service provision in Egypt. In order to achieve this, the specific objective of this initiative is increase the ability of the Government of Egypt to process and implement PSP in the provision of basic services and therefore to build sustainable capacity within the PPPCU to design, structure and implement PPP projects in the municipal infrastructure sector. The PPPCU will be better prepared to coordinate the PPP program in Egypt and have the capacity and knowledge and skills provide support and assistance to the involved Ministries.

14. Project Components

The Ministry of Finance has requested support for the PPPCU to provide experts (the “Consultant”) to increase the capacity of the PPPCU to identify and prepare projects where PPPs can be fostered. These services would be mainly focused on the managerial, technical, financial, legal and social/environmental advice to support the PPPCU in the municipal infrastructure sector.

The Consultant will operate within the PPPCU, deliver active support and work with relevant staff members of the PPPCU to enable the transfer of skills and knowledge. Specifically, one of the roles of the Consultant is to assist the PPPCU in developing and promoting PPP structures in the municipal infrastructure sector to achieve increased efficiencies, including operational and financial sustainability and an improved quality of service.

2 PPP Central Unit: http://www.pppcentralunit.mof.gov.eg/Content/Home/Pages/The%20Vision.aspx

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COMPONENT 1: CAPACITY BUILDING INCLUDING TRAINING

This shall include training of key staff at the PPPCU, aimed at developing the Unit’s administrative and technical capacity throughout the project development and implementation cycle (e.g. project identification, preparation of feasibility studies, project designs, tender documents, procurement, project monitoring and reporting, etc.). The Consultant shall prepare a training plan for key staff of the PPPCU in the fields of PPP preparation and project finance which should include primarily on-the-job interventions with minimal discrete training. Project finance training will form a core part of this component to ensure that staff is able to set-up accurate, reliable, appropriate, flexible, structured and transparent models for project approval as well as to present to potential co-investors or lenders. The Unit will be in a position to work with experts in the field and determine whether a financial expert would be beneficial as part of the permanent staff in the PPPCU. Delegates will be able to understand financials to the level necessary to enable them to work on projects,, highlighting risks that could affect the project, including affordability, and its bankability as well as the design and management of fair contracts. Any training must be participatory and should use relevant practical materials along with illustrative and information case studies and examples. The Programme shall be extremely practical and allow delegates to work on examples of different models within a live project context.

Sub-component 1.1: Capacity Building and training at the PPPCU will focus on the ability of the Unit to manage the processes of undertaking a PPP from inception to financial close, whether the managing partner is a line ministry or the Unit itself. This will involve the day to day support of the PPPCU in decision making, project planning and coordination, PPP processing, financial modelling and will result in considerable knowledge transfer.

Sub-component 1.2: Capacity Building at the satellite units in the line ministries to ensure that the information flow, regulations, processes and procedures are understood and adhered to at all points of the process. The sub-component will train relevant staff in the satellite units in the line ministries alongside the PPPCU and individually.

COMPONENT 2: PROJECT PREPARATION AND THE PREQUALIFICATION AND TENDER PROCESS

The PPPCU should be confident in managing technical, financial, legal and social/environmental expertise to foster the design and implementation of sound and bankable PPP structures in the municipal infrastructure sector in Egypt. Additionally, the Consultant will enable transfer of knowledge to the staff of the PPPCU and increase the cooperation and coordination between relevant stakeholders in the municipal services sector in Egypt, including the PPPCU, the Ministry of Finance, Ministry of International Cooperation (“MoIC”), utility companies and other relevant parties. The knowledge, know-how, procedures and methodologies developed during this assignment will contribute to the long term efficiency and sustainability of the PPPCU.

Sub-component 2.1: Assist the PPPCU in managing the preparation and assessment of technical, financial, legal and social/environmental due diligence including: the preparation, review and update of feasibility studies and/or technical designs as required; financial analysis; ensuring project’s compliance with the national law and national environmental, social, health and safety, labor and public consultation requirements. It should be noted that the Consultant will assist the PPPCU to organize, commission and assess all PPP project preparation, but that project specific studies will be carried out by third-parties. The Consultants should work with the PPPCU to determine a small number of projects where PSP is sought and use these as training examples, pilot projects, to gain experience and exposure of such processes.

Sub-component 2.2: In relation to the PPP management, the PPPCU should be able to be aware of and coordinate their activities in relation to the capital investment (CAPEX) programme in the relevant sectors. The CAPEX programme is financed by different IFIs in the municipal services sector, and the PPPCU is responsible for including the definition of workflows and data information processing for all PPP business processes.

Sub-component 2.3: The launch and management of PSP tenders, including prequalification of tenderers, attendance to project meetings, conduct evaluation of applications and tenders, should be able to be confidently managed by the PPPCU. Assist selecting and nominating a preferred tenderer and in negotiating and signing a project agreement and any other legal documentation related to the project. The evaluation will help prepare the initial set of ‘value for money’ analyses taking into account capital and operating costs, project risks and the level of urban sector

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investment, with a view toward transferring this tool to the PPPCU. The Consultant will also ensure that the PPPCU are able to:

- Ensure that all critical contractual conditions are included in the legal documentation in accordance with best-practice infrastructure concessions, such as termination clauses, lenders’ step-in rights and tariff policies.

- Ensure that the tendering procedure and award of the PPP Contract is in line with and best international practices as well as local legislation.

- In respect to evaluation of bids, devise a proper process for the evaluation of tenders, including both the criteria and the process to be used. The process and the evaluation criteria (including any weightings) shall be described in the tender documents.

The above mentioned activities will be carried out by the PPPCU with the support of the Consultant on a number of pilot projects. Close attention will be paid by the Consultants to the progress and an iterative process adopted to ensure that lessons learnt are captured and taken into account.

COMPONENT 3: SUSTAINABILITY OF THE INTERVENTION – GUIDELINES:

The Consultant shall support the PPPCU prepare standard PPP guidelines and methodologies, including project documents, contracts and PPP policies and assist in identifying a pipeline of projects that can be implemented with PPP, in line with Egypt’s existing strategic plan. For projects that have been identified as potential investments in the sector, the Consultant will provide support to the PPPCU, for designing and structuring the projects and overseeing a PPP tendering process.

For the duration of the intervention, the Consultant shall support the PPPCU to monitor and evaluate ongoing projects and to take into account lessons learnt from these activities in project design going forward. Within the guidelines, the Consultant should include a section on lessons learnt and monitoring and evaluation techniques to ensure that the PPPCU can sustain active control over PPP projects and provide support to project counterparts and the satellite units.

To further ensure the sustainability of the sector, the Consultants will work with the PPPCU to determine how to build the capacity of firms to partake in PPPs. This component will propose and implement methods of communication to potential private sector partners on specific project opportunities but also educating partners on the mandate and processes of PSP and levels of participation.

15. Key Indicators Linked to Objectives

Key indicators linked to the TC Objectives:1. Improved regulatory frameworks and implementation mechanisms.2. Additional PSP in the municipal services sector in Egypt.3. Increased capacity of the PPPCU to evaluate, process and monitor PPPs.4. Full set of guidelines for PPP processes endorsed by relevant ministries.5. Government bodies, institutions and local government units received support services aimed at increasing their capacity to delivery public services to constituents.

Key indicators linked to the Objectives for the EBRD financial package include (but are not limited to):1. Improved management and efficiency of municipal services.

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)

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Providing services to donors and partners to leverage supporting relationships in Egypt:

The proposal aims at advancing existing partnerships and coordination mechanisms that are built around the PPPCU. The consultants will work closely with the PPPCU to ensure that they are able to provide services for the full range of donors and partners that are active in the municipal sector in Egypt and will create additional opportunities to build new partnerships and advance existing ones. Specifically, one of the roles of consultant is support the PPPCU to advance the design of PPPs, which will increase opportunities for sustainable collaboration between donors, Public and Private Sector in the municipal services sector.

17. Coordination with Country-led Mechanism/Donor Implemented Activities

Coordination at the global level: In 2011, in response to calls from the international community and from Arab countries themselves, the EBRD’s shareholders gave unanimous backing to the expansion of the Bank’s mandate, allowing activities in the Southern and Eastern Mediterranean region, including Egypt. EBRD was heavily involved in the Deauville Partnership coordination platform from its inception: facilitating high-level information sharing; improved overall coordination in monitoring and identifying opportunities for collaboration on financing, technical assistance, and policy and analytical work.

Coordination at the Local Level: EBRD works closely with relevant satellite units within line ministries, funding agencies and the private sector to establish the level and type of support required to create a more attractive environment, and projects, for investors.

Advancing partner’s cooperation: As part of this proposal, partners and supporters to the PPPCU and the satellite units in the line ministries are coordinated with. The PPPCU has benefitted from support both in the form of financial assistance to enable staff to attend international training courses and in the form of project specific technical assistance, such as for the example projects described in section 11. This initiative complements the past and existing support by providing sustainable capacity building to ensure the quality and timeliness of PPP projects processed by the PPPCU. Previous support has targeted either individual staff members, or specific projects and has enabled the PPPCU to manage the level of demand, however, with an increasing emphasis on PSP within the Government and line ministries, it is important that the technical assistance provided to the PPPCU is not discrete but facilitates the long term sustainability of the PPPCU.

The PPPCU has been the beneficiary of a number of donor funded activities that have provided short term, targeted training to relevant staff, as follows.

Training Course for Public Officials on PPP models and mechanisms: 10-14 February 2013 - IFC and Ministry of Finance [Fairmont hotel, Cairo, Egypt].

Advanced training course for Financial Modeling for Audit and Negotiation, PPP projects: 3-7 March 2013 - IFC. [Cairo, Egypt].

Capacity Building for PPP projects / Value for Money: August 2014 – IMF and OECD [Kuwait]. Project Finance Workshop for the PPP central unit and public officials: October 2014 – Ernst & Young [Ministry

of Finance, Cairo Egypt]. Training course on key issues of Successful PPP program for Governments: 23-28 November 2014 - UK-AID

[London, UK]. Financial Modeling in PPP projects Training for Tendering Authorities: Organized by PPP Central Unit – 23-26

March 2015 - Ministry of Finance & EuroMoney Training [Sonesta Hotel, Cairo Egypt]. 8 consecutive Training courses for PPPCU and Satellite Units in line ministries for mechanisms and

methodology of PPPs procurement: August - October 2015 – EU [Cairo Egypt]. Advanced Financial Modeling Course for the PPP Central unit & Public and PPP Satellite Units in line ministries:

10-14 January 2016 - EuroMoney Training [InterContinental Hotel, Cairo, Egypt]. National Infrastructure Planning study course for Egyptian delegation: 9-11 March 2016 - [London, UK].

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The proposal complements the previous training by providing day-to-day support to the PPPCU in the PPP process, including supporting key processes, decision-making and documentation production and review. The Consultants will also propose and coordinate training for PPPCU and satellite unit staff for the assignment period and recommend an action to plan to ensure that the knowledge gained is retained within the system, contributing to it’s sustainability. Bidding firms/consortiums will be requested to propose a full training schedule and workplan for the duration of the assignment as part of their proposal; this will form a crucial part of the evaluation in terms of their understanding of the needs or the PPPCU and satellite units. An indicative workplan/training schedule is included in Annex 1, however, it should be noted that this is subject to change depending on the winning firm/consortium.

EBRD has extensive experience in assisting counterparts to increase the involvement of the private sector in the provision of municipal services and will use their expertise to provide oversight of the assignment.

18. Institutional and Implementation Arrangements

Overall project management responsibility will rest with the PPPCU. The Consultant will be based at the offices of the PPPCU, which will provide suitable working space and required equipment. The Consultant will be responsible for providing suitably qualified interpreters/translators to work with their staff as well as for all local transportation required by their staff throughout the duration of the assignment.

The PPPCU will also provide administrative and technical support to the activities implemented by the Consultant, including dedicating staff that will subsequently be able - after the project finishes - to continue the work of the PPPCU effectively.

The PPPCU will dedicate staff with a responsibility for the execution of the project to work alongside the Consultants employed to manage the implementation of the project. The PPPCU will ensure that both a team leader and financial and technical expertise are available, who are partially assigned to project implementation (i.e. typically work half time on their normal tasks and half time on project implementation). This is a way to build capacity in the PPPCU and ensure knowledge stays within the organisation after the project has been completed. The PPPCU will assign representatives to participate in the implementation as a way to ensure that the PPPCU benefits from knowledge sharing.

Procurement of external Consultants to implement the project will be carried out by the PPPCU in line with EBRD Procurement Policies and Rules (“PPRs) for Consultancy Services. With regards to a Transition Fund grant, a safeguarding system ensuring PPPCU control over funds is built into the EBRD disbursement mechanism and would be used for the Project. The PPPCU will tender for consultancy services and disbursements under awarded contracts will be done directly from EBRD to the Consultant. A Grant Agreement would be signed between EBRD and the PPPCU and a Consultancy Contract would be signed between the PPPCU and the consultant. Procurement of the Consultants is anticipated to take 6 months, after which time the project would be launched.

Disbursement of funds to the Consultant is subject to approval from the PPPCU and EBRD, to ensure that EBRD provides quality control to the outputs and can monitor progress.

EBRD staff (based in Cairo and in London) will be responsible for the monitoring of the project. Staff from London will make regular visits to Cairo and project counterparts as well as visiting the satellite units to evaluate progress.

19. Monitoring and Evaluation of Results

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The responsibility to carry out implementation of specific Technical Cooperation (TC) activities will be under EBRD, which will provide (i) regular reporting and oversee communication and (ii) monitoring and evaluation arrangements for the indicators specifically related to this TC in partnership with the PPPCU. EBRD will continue to monitor the project for 1 year after the Consultant’s work is complete.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs3)

The Project is expected to leverage considerable finance by IFIs, private sector concessionaires and other co-financiers. EBRD alone is considering investing in a number of PPPs in Egypt for the total amount of approximately USD 175 million. EBRD will aim to mobilize additional donor funding to support preparation and implementation of these investments.

3 ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project. Also see Paragraph 47 of the Operations Manual.

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Cost by Component Transition Fund(USD)

Country Co-

Financing (USD)

Other Co-Financing (USD)

Total(USD)

Component 1: Capacity Building(a) Sub-component 1.1: PPPCU

(b) Sub-component 1.2: Satellite Units

300,000

300,000

In-kind*

600,000

Component 2:(a) Sub-component 2.1: Preparation and

assessment

(b) Sub-component 2.2: Coordination of activities

(c) Sub-component 2.3: Launch of tenders

300,000

300,000

800,000

Addition donor funding to be mobilized to support selected PPP projects:

EBRD due diligence and project preparation for Nile River Ferries and Abu Rewash WWTP, USD 2 million4.

EBRD legal compliance support for PPPs, USD 227,000.

EBRD gender and inclusion study to identify appropriate measures in projects, USD 85,000.

3,712,000

Component 3:(d) Preparation of Guidelines 270,000 270,000

Total Project Cost 2,270,000 2,312,000 4,582,000

*Egypt is providing in-kind contributions, including: the PPPCU is hosting the Consultants and providing administrative and technical support to the activities implemented by the expanded team including dedicating staff permanently to this initiative who will subsequently be able - after the project finishes - to continue the work of the unit effectively.

21. Budget Breakdown of Indirect Costs Requested (USD) Description Amount (USD)

For grant preparation, administration and implementation support:monitoring and evaluation 68,100Project preparation and management as well as administration of grant funding

68,100

Total Indirect Costs 136,200

4 Funded by the EU Neighbourhood Investment Facility

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F. Results Framework and Monitoring

Project Development Objective (PDO):

Enhance the quality and reliability of public service provision in Egypt. In order to achieve this, the specific objective of this initiative is increase the ability of the Government of Egypt to process and implement PSP in the provision of basic services and therefore to build sustainable capacity within the PPPCU to design, structure and implement PPP projects in the municipal infrastructure sector.

PDO Level Results Indicators* Unit of Measure BaselineCumulative Target Values**

FrequencyData Source/Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.)YR 1 YR 2 YR3

Indicator One:PPP Projects reaching financial close

Project signings

0 1 3 5 Annually Project documentation

PPPCU to provide to EBRD

Projects signed with private parties

Indicator Two:Processing time of PPPs reduced

Months reduction from inception to financial close

0 4 8 12 Annually PPPCU data PPPCU to provide to EBRD

Time from project inception to financial close

Indicator Three:Quality of contracts signed improved

Consultants review

0 1 2 3 Annually Consultants reports

Consultants to EBRD

Risks in contracts balanced etc

Indicator Four:Government bodies and institutions including Local governments supported

Number of Units receiving support

0 2 4 6 Annually Consultants reports

Consultants to EBRD

Government bodies, institutions and local government units received support services

INTERMEDIATE RESULTS

Intermediate Result (Component One):CAPACITY BUILDING INCLUDING TRAININGIntermediate Result indicator One: Staff of the PPPCU complete training courses

Certification of training

0 5 15 15 Annually Consultants and PPPCU reports

PPPCU to provide to EBRD

Consultants to devise certification

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methodologyIntermediate Result indicator Two: Staff of the satellite units complete training courses

Certification of training

0 10 20 30 Annually Consultants and PPPCU reports

PPPCU to provide to EBRD

Consultants to devise certification methodology

Intermediate Result (Component Two):PROJECT PREPARATION AND THE PREQUALIFICATION AND TENDER PROCESS

Intermediate Result indicator One: Management of project preparation

Analysis of due diligence

0 1 2 3 Annually Consultants and PPPCU reports

PPPCU to provide to EBRD

Ability to decide on structure following analysis

Intermediate Result indicator Two: Management of the tender process

Efficient and accurate processing

0 1 2 3 Annually Consultants and PPPCU reports

PPPCU to provide to EBRD

Project to reach financial close

Intermediate Result (Component Three):SUSTAINABILITY OF THE INTERVENTION – GUIDELINESIntermediate Result indicator One: Guidelines approved by relevant counterparts and endorsed

Ministerial approval

0 1 1 1 End year one complete

Ministerial endorsement

PPPCU to EBRD Guidelines for PPP management

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Annex 1: Training and Capacity Building Workplan

This shall include training of key staff, aimed at developing the PPP Unit’s administrative and technical capacity throughout the project development and implementation cycle (e.g. project identification, preparation of feasibility studies, project designs, tender documents, procurement, project monitoring and reporting, etc.). The capacity of the PPPCU and satellite units will be enhanced through two mechanisms: targeted training and by focusing on delivery of the core business of the PPPCU. These two mechanisms will take place in parallel over year 1 of the assignment, followed by an assessment to identify target areas where further effort is required in year 2.

Month 1-2 3-4 5-6 7-8 9-10 11-12 Training theme*

Affordability Market Financial Legal and Regulatory

Further mainstreaming PSPTechnical / E&S

Focus on delivery**

Role During Project Inception and Feasibility

Role During the Procurement Process

Role During Project Development, Delivery and Exit

*TRAINING THEME

The PPPCU intends to hire a number of staff to work directly under the tutelage of the consultants selected to carry out this assignment. It is expected to be approximately 7 staff positions. Following an initial assessment of the qualifications, capacity and capabilities of the PPPCU and satellite unit staff, the Consultant will deliver targeted group and individual training based on the following themes. This training will be designed to ensure that the PPPCU is appropriately staffed with the full range of knowledge, skills and personal attributes necessary to successfully identify, design and deliver PPPs.

The training will be delivered by the Consultants core team where possible and outside specialists where necessary to supplement specific knowledge gaps. A training calendar will be agreed between the consultant and PPPCU management with enough notice to ensure staff availability. Training will take place in the form of a classroom, seminar or workshop style and be held offsite; in EBRD’s experience, training that takes place outside of the workspace of participants is significantly more effective. It is the consultants responsibility to ensure that all key staff members complete the appropriate training themes to facilitate project delivery.

Affordability:General description about the implication of the PPP implementation on the Municipal Sector / local economy in terms of value for money, affordability of the service etcMarket:Risk assessments public-private and allocationsProcurement strategy (Method, Prequalification, Contracts Module)List of the potential private-parties/ lenders, which could be interested in participating in such projectsStrategy for road shows Legal and Regulatory:

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Policy & Legal framework review in the Municipal SectorFinancial:General description why these projects are considered suitable for PPP Financial analysis and bankability confirmation Stakeholders analysis Technical:Project Area (Location & characteristics)Scope of Work (Components & proposed sizes)Project Team (Construction, O&M)Project Cost (Estimate for the Capital and Running costs)Projects Alternatives/ Options (this will be subject to the project scope and characteristics)Environmental / Social:Preliminary Environmental AssessmentsFurther mainstreaming: Findings and RecommendationsRoad Map

**FOCUS ON DELIVERY

In parallel to the above targeted training, the consultant will provide capacity building support to PPPCU and satellite staff on a day to day basis. The consultant will be responsible for ensuring that staff fully understand their individual roles and responsibilities, as well as those of their colleagues. Staff should be given the tools to perform their role effectively and an understanding of the overall process of project delivery and an appreciation for where they fit into the system. It is important that staff not only understand their role in the process and feel confident in their ability to carry out their responsibilities and feel pride and ownership of the process.

The consultant will be responsible for identifying where there are gaps in the project delivery process and focus on providing appropriate support. The consultant will have a core team who are based permanently in the PPPCU for the duration of the assignment, to ensure that they can react to needs in a timely manner. This will also allow the consultants to have not only a high, theoretical level view of the PPPCU but also an on the ground and in depth understanding of the processes and relationships in the PPPCU.

1. Role during Project Inception and Feasibility- Key steps and tasks in project inception- Engaging PPP advisors and transaction advisors- Managing the pre-feasibility and feasibility analysis process- Understanding, managing and tracking risks- Principles of PPP project administration and knowledge management- The importance of project management and project leadership- Needs and solutions analysis: balancing government goals with realistic PPP outcomes- The importance of effective and timely decision making- Communicating early with stakeholders- Developing a good working relationship with the Transaction Advisors

2. Role during the Procurement Process- Overview of the PPP procurement process and the role of the PPP Project Officer- Developing a checklist for compliance with international and local contracting norms

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- Optimizing the relationship with financiers- Ensuring administration of the bidding process is according to the book to avoid legal

challenges- Effective reporting on procurement process and results- Negotiation preparation, skills development, and methods for win-win solutions- Communicating with stakeholders and managing political pressure- Providing project leadership

3. Role during Project Development, Delivery and Exit

- Monitoring based on contract vs. prevailing legislation and regulatory institutions- Key tasks and reporting requirement of managing and monitoring PPPs- Maintaining and reporting on detailed project data- Managing conflict and dispute resolutions- Managing employees and staff attrition- Communication with stakeholders, particularly labor - Tasks for successful project closure- Institutionalizing project experience and lessons learnt

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