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PPPs for East Africa
Competitiveness and Trade
Expansion Program (COMPETE)
Patricio Mansilla
Director Infrastructure
Chemonics International
Nairobi-Kenya,
April, 2009
2
Agenda
1. Chemonics Relevant and Sucessful Experience in
Transport Multimodal Infrastructure Investment
2. Infrastructure Investment in East Africa Multimodal
Corridors
3. Main Expected Results of the Infrastructure
Investment Plan
3
Chemonics Relevant and
Successful Experiences in
Transport Multimodal
Infrastructure Investment
4
Our Approach to PPP
• Approach PPP infrastructure development as a Program rather
that ad-hoc transactions.
• Provide specialized Technical Assistance through the entire
project life-cycle
• Do not short-change project preparation costs
• Promote vigorous, open, and transparent competition
• Look for opportunities to leverage public sector funding
• Strengthen the legal/regulatory and institutional frameworks
5
USAID Successful PPP Program in
Peru
Chemonics PRA Project
PRA PPP Unit
Demand and
FinancialEngineering Contracts Environment
Amazon North: 960 Km.
Investments: $220 mil.
O&M: $15 mil./year
Awarded in: April 2005
Amazon Central: 854 Km.
Investments: $115 mil.
O&M: $15 mil./yearSouth ContainerTerminal
Port of Callao$364-$617mil.
Awarded: June 2006
Transport PPP
Transactions
FBT: 480 Km.
Investments: $162 mill.
Paita Port$120 mil.
Awarded: April 2009
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West
East
Matucana
Ticlio
Lima
Chosica
La Oroya
Junín
DV
Cerro de
Pasco
Huánuco
DV Tingo María
Pucallpa
9000
1000
2000
3000
4000
5000
6000
0 100 200 300 400 500 600 700 800km km
m.o.l.s.
Challenging Altitude
of Peru´s Central
Corridor
• A 25-year Concession Contract
to improve, rehabilitate, operate
and maintain 960 Km. of road
infrastructure between Paita
and Yurimaguas
• Initial investments:
– Phase I (years 1-2): US$ 95.0
million
– Phase II (years 2-4): US$
120.0 million
– TOTAL:
US$ 215 million
• Average annual O&M: US$
15.0 million
Government of Peru´s
annual contributions
US$
Millions
Annual Payment for
Construction for 10
years
US$ 29
Annual Payment for
Operation and
Maintenance for 20
years
US$ 15
Bidders request Government
contribution as part of their
proposals.
Project Example:
Amazon North Road
Amazon North Transaction Structure
Ministry of
Transport
Concessionaire
Special Purpose
Company (SPC)
Amazon North
Road Concession
Inter-American
Development
Bank
Bond
Issue
25 year
Concession
Contract
Trust
Road Improvements,
Rehabilitation ($220
m), and O&M
($15m/year)
Partial
Credit
Guarantee
Tolls
International
Capital
Markets
Ministry of
Finance
Annual O&M
Payments ($15
mill)
15 annual
construction
payments
($29 mill.)
Coupon
Payments (i + p)
Transport
Regulator Regulation
and
Supervision
($60 mill.)
Multilateral Bank
Bridge Loan
(Advances)
Results: Reduced TransportCosts/Time
BEFORE: Unpaved Road Yurimaguas - Tarapoto (125 km)
Transport of cargo
Time: 12 hours
Cost: $53/T
Cost: T/km.= $0.50
Transport of passengers
Time: 6 hours
Cost: $10/passenger
AFTER: Paved road Yurimaguas - Tarapoto (125 km)
Transport of cargo
Time: 4 hours (-70%)
Cost: $30/T
Cost: T/km= $0.25 (-50%)
Transport of passengers
Time: 3 hours (-50%)
Cost: $5/passenger (-50%)
Average Transport costs for RICE, YELLOW CORN, and HARDWOOD
Amazon
IIRSA North
Deal of the
Year 2006
Callao Port
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Phase PPP Projects
Phase 1 (1990-2004)
Arequipa-Matarani Road
Matarani Port
Lima Airport
Red Vial 5 (Ancón-Huacho-Pativilca) Road
Phase 2 (2005-2007)
IIRSA North Road
Red Vial 6 (Lima-Ica) Road
IIRSA South (Segments 2-3-4)
South Container Terminal –Callao Port
North Group Regional Airports
Costa-Sierra Program (Buenos Aires-Canchaque Road)
IIRSA South Road (Segments 1-5)
Phase 3 (2008-2010)
IIRSA Central Road
Red Vial 1 Road
Red Vial 4 Road
North South Regional Airports
Ports of Pisco, Paita, Ilo and Salaverry
Total Investments US$3 billion
PPP Evolution in Peru
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USAID/ Chemonics Impact in Peru
Results
1. Increase productivity of 42.000 small business generating more
than $300 million in sales and 82,000 new jobs. New
investments $20 million
2. Technical assistance to design and implement PPP
transactions with investments for around $1 billion and $40
million in direct infrastructure investment. Currently the
Peruvian government has a PPP Program for $3 billion
3. GDP(1998) $52 billion to $134 (2009). Exports (1998) $5,6
billion to $28 billion
Mongolia Customs and Logistic ParkPrivate
Shareholders
Logistic Park
Development Co.
Regulatory
Agency or
Regulation by
contract
Users
Bond
Issue
Contributes
Equity
Tariff Regulation
Tariffs
Capital
Markets
Min.Finance
Min. Road, Transport
SPC-UBTZContributes
Land
Payment for
services
Coupon
Payments (i + p)
MFFA
Operation
Company
Services:
Parking
Road-Rail
Rail-Rail
Consolidation
Warehouse
Construction
CompanySpecific contract
Regulation
Contributes
Equity
Operation
Contract
Fee
Payment
Dividends DividendsDividends
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USAID/South Africa PPP Unit
Program (1999-2005)
• Established the PPP Unit within the National Treasury
• Developed the policy/regulatory framework for PPP –under Regulation 16 of PFMA
• Prepared guidelines and manuals on the regulatory requirements– National Treasury PPP Manual
– Companion manual on standardized provisions of PPP/agreements
• Establish a Project Development Fund to improve quality of PPP
• Built a portfolio of transactions
• Launched a highly effective stakeholder awareness campaign to educate the private sector in procurement requirements
Key Elements1. USAID Technical Support: through the transaction life cycle
(precept/alpha-omega)
2. Credibility and Transparency: in the bidding process
3. Competition²: lowest cost reduces opportunities for corruption
4. Risk Analysis: Allocate the risk to the partie better prepared. Example:annual minimum revenue guarantee.
5. Coherent and Consistent Technical Studies: This is Private Investmentnot Public Investment. Technical studies well designed to insure privatesector buying.
6. Shadow Rating: very important to discover if the transaction businessmodel is attractive for the private sector and financially viable.
7. Partial Credit Guarantee: bring more credibility to the process and makefeasible the financial operation
8. Environmental Studies: promote citizen participation and need tomitigate environmental problems in conformance of EPA section 216****
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Infrastructure Investment in East
Africa
Multimodal Corridors
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Northern and Central Corridors
NORTHERN
CORRIDOR
Mombasa
Dar Es Salaam
Kampala
Kigali
Bujumbura
CENTRAL
CORRIDOR
1530 kms
1800 kms
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Northern Road Corridor
21
Northern Rail Corridor
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Comparative Transport Corridors
CharacteristicsCallao Port
Peru
Paita Port
Peru
Mombasa Port
Kenya
Dar El Salaam
Tanzania
Container Terminal
Operation
Dubai Ports
Under
Construction
$700 million in 3
stages (30 years
BOT contract
Tertir Terminais-Translei
(Portugal) and Cosmos
(Perú)
Adjudicated April 1/2009
$120 milion (BOT
contract 30 years)
Kenya Ports Authority
Require invest in a
second container
terminal
Hutchinson Ports
10 years contract
Demand
1.1 million TEU
0.8 million TEU
(at the time of
bidding)
0.13 million TEU 0.6 million TEU 0.3 million TEU
Gantry Cranes
(Current situation)No Gantry Cranes No gantry cranes
4 40 tons ship to shore
gantry cranes2 gantry cranes
Population
GDP (IMF forecast
2009)
Trade-Exports
29 million
$134 bill ($44
year 1994 and
$60 year 2003)
$28bill
29 million
$134 bill ($44 bill year
1994 and $60 bill year
2003)
$28bill
39 million
$33 bill
$4,1 bill
43 million
$22 bill
$2,3 bill
Road
Inventory
Road
condition
Road Traffic
HDM4
Long Run Road Strategic Plan
Multi annualRoad Program
Level of Project
Policies and
standard
INPUTSOUTPUTS
HDM-IIIData Base
Costs
Road Management System
Financial Analysis
Revenues: Toll Roads, Port Tariffs andRailways Tariffs
Revenues: Commercial Services in Portsand Railways. Real Estate and Land Use inRoads
Costs: Maintenance Costs and OperationCosts
Taxes: Value Added Tax and Profit Tax
Depreciation or Amortization of Assets
Roads PortsRailways
Equity: Capital from investors (20%-30%of investment)
Co-Funds: Governments or Donors Funds
Debt: Between 70% - 80% of totalinvestment
International Capital Market: Sponsorsmust to have strong technical and financialcredentials. Partial Risk/Credit Guaranteesare highly desirable.
Consultation with key stakeholders: Build consensus, political commitment, and public support
Due Diligence / Technical Project Design
Demand Study /Financial Structuring
Risk Allocation & Mitigation
Tech/Fin/legal Transaction Design
Define Objectives/ Select PPP option
Shadow Rating/Credit Enhancement
Environmental Studies
TransactionDesign
TransactionImplementation
Local/International Promotion
Draft bidding documents/contracts
Pre-qualification
Bidder due-diligence
Interaction with Bidders “negotiation”
PPP Contracts/Procurement Process
Contract Award / Financial Closure
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Main Expected Results of the
Infrastructure Investment Plan
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Expected Impacts
Country/Transport
Sector
KenyaNorthern Corridor under PPP
$1 billon?
Technical and Economic
Support for the
current PPP $1 billon?
Appraisal of the business
Identify the Infrastructure Needs
Attract Financing $0.5 billion?
TanzaniaCentral Corridor under PPP
$1 billon?
Technical Assistance
for PPP Central Corridor
$3.5 billon?
Appraisal of the business
Identify the Infrastructure Needs
Attract Financing $0.1 billion?
UgandaPPP or Public Investment in
Central and Northern Roads
Technical Assistance
for PPP Central Corridor
Customs Efficiency
Financing/Port Tariffs
RwandaPPP or Public Investment in
Central and Northern Roads
Technical Assistance
for PPP Central Corridor
Customs Efficiency
Financing/Port Tariffs
BurundiPPP or Public Investment in
Central and Northern Roads
Technical Assistance
for PPP Central Corridor
Customs Efficiency
Financing/Port Tariffs
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Expected Impacts 1. Adequate understanding of the multimodal transport situation in the corridors
2. Identification of regulatory/institutional problems and lack of infrastructure
3. Promote coordination between authorities and stakeholders
4. Realistic Program to accelerate investment in infrastructure in both corridors
5. Identification and adequate implementation of the PPP opportunities
6. Promote sustainability of the Infrastructure Program
7. Reduce transaction costs for private and public investment in infrastructure
8. Motivate the expansion of the financial markets
CountryGDP
(2009 IMF forecast)
Competitiveness
Index Overall
Competitiveness Index
Infrastructure
Kenya 33.044 93 91
Tanzania 22.106 113 118
Uganda 14.863 128 115
Rwanda 4.188 - -
Burundi 1.309 132 129
Many Thanks!
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