Public-Private Partnerships IFC Advisory - UN ESCAP
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Public-Private Partnerships IFC Advisory Creating opportunity where it’s needed most
Transcript of Public-Private Partnerships IFC Advisory - UN ESCAP
Public-Private Partnerships
IFC Advisory
Creating opportunity
where it’s needed most
Agenda
About IFC
Key Challenges in Infrastructure
Our Experience
Advantages of PPP
Agenda
About IFC
Key Challenges in Infrastructure
Our Experience
Thimphu Parking PPP Project
Advantages of PPP
About IFC and PPP Advisory
World Bank Group
• IFC is the private sector arm of the World Bank Group which
comprises five agencies
International Finance Corporation
Technical assistance and advice to governments and businesses
World’s largest multilateral provider of financing for private enterprises
$30+ billion in outstanding investment commitments
Key Challenges in Infrastructure
Road
Road transport
ensures the
mobility of
people and the
production and
distribution of
goods.
1.7 billion cars will be on the world’s
roads by 2035
31% of the world’s population
lacks access to an all-
weather road
1.24 million
people die every year on
the world’s roads
Energy
Depletion of fossil fuel reserves
Rising energy costs
One in five people lack access to electricity and the computers,
refrigerators and lighting that most of us take for granted. The
energy gap is inequitable and it is unsustainable. Ban-Ki Moon, Secretary-General of the United Nations
“ ”
Food Security
50-80% the amount of income spent
on food by the poor.
1/3 of food produced
is lost or wasted
70% of additional food that needs to be made
available by 2050.
Health
Lack of infrastructure
Shortage of trained staff
Limited resources
PPPs offer various advantages
Key advantages of PPPs
1. Combine the different skills and resources of various partners in
innovative ways.
Key advantages of PPPs
1. Combine the different skills and resources of various partners in
innovative ways.
2. Allow for the sharing of risks and responsibilities.
Key advantages of PPPs
1. Combine the different skills and resources of various partners in
innovative ways.
2. Allow for the sharing of risks and responsibilities.
3. Provide access to industry best practices, as well as the experience
and expertise of the private sector.
Key advantages of PPPs
1. Combine the different skills and resources of various partners in
innovative ways.
2. Allow for the sharing of risks and responsibilities.
3. Provide access to industry best practices, as well as the experience
and expertise of the private sector.
4. Allow governments to focus on policy, planning and regulation.
Key advantages of PPPs
1. Combine the different skills and resources of various partners in
innovative ways.
2. Allow for the sharing of risks and responsibilities.
3. Provide access to industry best practices, as well as the experience
and expertise of the private sector.
4. Allow governments to focus on policy, planning and regulation.
5. Bring value for money as a result of the competitive bidding
process.
Global Experience
The partner of choice in PPPs
350
Global market
knowledge
projects since 1989
Objectivity &
transparency
Neutral partner
IFC’s record of success
Ongoing/Successful
Water/Sanitation
Transport
Health
Agribusiness/Food Security
Power/
Renewable energy
Impact of IFC’s PPPs
in fiscal benefits
35.5 million
people with first-time or improved access to
education, electricity, health, sanitation, water,
and other basic services.
$3,000,000,000 in private investment
$2,000,000,000
Developmental impact of IFC projects closed FY05 to FY13
Success Stories
98,800 people with improved
access to services
$6 million in investment
Upgraded diagnostic
radiology facilities.
7-year concession to provide
advanced radiology services across
4 government hospitals/
medical colleges.
Awarded to Wipro GE Healthcare
Ltd. And Medall Healthcare Private
Ltd.
Andhra Pradesh Radiology (2010)
10,000 people with improved
access to services
$12 million in investment
7,154 metric tons of GHG
emissions avoided
5 MW rooftop solar panels.
25-year concessions to build,
own, and operate solar panels on
residential and public buildings and
connect to the grid.
Awarded to Azure Power and
SunEdison (two concessions, 2.5
MW each).
Gujarat Solar (2012)
500,000 people with improved
access to services
$8 million in realized private
investment
$6 million in fiscal benefits
6,667 farmers reached
New modern, temperature-controlled
50,000 metric tons grain
silos.
30-year concession to build,
and operate grain storage facility.
Awarded to LT Foods.
Punjab Silos (2010)
Bhutan Experience: Thimphu
Parking PPP
Need for Parking
Increasing Congestion &
Parking Demand
Increase in population
Linear City
Vehicle ownership
growth
13.6% growth
In line with the Thimphu Structure Plan notified in 2004, RGoB proposed an Integrated
Transportation Strategy to reduce congestion in Core City Area by providing off-street
parking facilities to enable the removal of Norzim Lam
Team
• IFC and Thimphu Thromde / MoF entered into an agreement on December 2012.
• Thimphu Thromde created a multi-sector steering committee to provide speedy
approval at various stages.
• IFC brought together strong international and local expertise to deliver the project
Technical Consultant
Legal Consultant
Bhutan Legal Consultant
Pre-feasibility Technical Consultant
Key Due Diligence Activities
Site Planning and Traffic Flow
Site Planning and Traffic Flow
Two (2) entry/ exit points planned for Site 1 for better
traffic distribution
Legend
Site 1
Site 2
Two way
One way
It is estimated that the V/C of roads surrounding Sites 1 and 2 will remain
below 1 even if 100% capacity is added to traffic volume in peak time
Key Due Diligence Activities
Site Planning and Traffic Flow
Demand supply Analysis – User Surveys
Demand Supply Analysis
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2017 2036 2046
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2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
Off-street On-street
Intra-day Demand
Future Demand
User Opinion
Nearly 50% of car users surveyed expressed that the increase in parking fees in July 2012 reduced
the number of their car trips to the Core City Area (Source: UMTC surveys, March 2013)
– Observed decrease in parking demand by ~8%
97% of car users surveyed expressed a willingness
to be allowed to park within the Core City Area
Willingness to pay
– 88% of car users surveyed expressed a preference (i.e., Highly Likely) to pay the current parking fees
– 36% car users are willing to pay 25% more than the current tariff for improved services (including
increased safety, etc.)
On-street parking
reduces road capacity
Users feel parking
facilities are unsafe
and inadequate
Key Due Diligence Activities
Site Planning and Traffic Flow
Demand supply Analysis
Technology Option Analysis
Technology Option Analysis
Technology Car spaces per 1000 sq m*
Accommodate Required capacity at sites?
Suitability for multi-level car park in Thimphu
Surface off-street
38 No • Inefficient use of prime space in core city area
Manual Ramp Based
83 Yes
• Suitable for medium to large sites • Allows for efficient utilization of space • Common and tested parking method • Minimum dependence on technology for operations • Creation of local employment
Semi-Automated
114 Yes
• Suitable for small sites • Allows for very efficient utilization of space • Relatively new technology • Requires spare parts that may not be easily available
in Bhutan
Fully-Automated
139 Yes
• Suitable for small sites • Allows for most efficient utilization of space • Relatively new technology • Requires spare parts that may not be easily available
in Bhutan
Key Due Diligence Activities
Site Planning and Traffic Flow
Demand supply Analysis
Project Costing – Financial Viability Analysis
Technology Option Analysis
Project Costing and Financial Viability
Concession Term 10 years 15 years 20 years 30 years
Equity IRR (based on parking revenues)
15.16% 21.18% 23.03% 24.13%
Total Parking Rent paid to Thromde (NPV, Nu million)
82 103 118 138
х Not Financially viable for private investor
Profitable scenario for private investor
Significant payments received by Thromde
Upside to Thromde for monetization of greater parking revenues post concession term
KEY PARAMETERS Nu Mn $ Mn
Site Preparation 10.50 0.18
Civil Construction for Parking including electrical 269.22 4.56
Installation costs 22.36 0.38
Pre-operative 49.72 0.84
Interest During Construction 27.73 0.47
Off-street Parking, including Sites 1 and 2 Surface Lots 78.35 1.33
Total Capital Cost (Including Off-street) 481.90 8.17
Key Due Diligence Activities
Site Planning and Traffic Flow
Demand supply Analysis
Project Costing – Financial Viability Analysis
Legal Due Diligence
Technology Option Analysis
Transaction Structure
Concessionaire
Escrow Account
Commercial Lenders
Off-Street MLCP/
Surface Lots
Thimphu Thromde
Bidding Company /
Consortium
On-Street Parking
Spaces
Parking Rent
Equity Injection
Debt Disbursement
Independent
Engineer
(construction)
Performance Monitoring & Reporting Fee
Debt Repayment
Capital withdrawal
Parking User
(cars,, trucks, etc…)
Parking spaces within Concession Area
Parking Fee
Subcontractors
Design, Construction,
Technology, Operation
Subcontract payment
Bid Process
Financial Bid Bid Award
Return Bid
PASS
Qualification FAIL
• Six entities bought the bid documents
• Two bidders submitted the proposal to undertake the project
• Based on the evaluation the winning bidder was successfully
awarded the contract
Submission of
Proposal
Results : Benefits to Thromde and RGoB
Fiscal Benefit
No upfront
investment
(Nu 400 Million)
Significant increase in
parking rent
Introduced Efficiencies
Through better planning and
organization, cost optimization, and
risk management
Mitigated Risk
Construction cost overrun
Time Overrun
Continued Engagement : Post Transaction Support
Condition Precedents of the Contract
Procurement of Independent Engineer
Project Performance Monitoring
Capacity Building through workshops and site visits
Tashi Delek!
