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
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Agenda
 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
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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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State Vodafone Shareholder 40%
Capital €20 miln

African Trade Insurance Agency
Coverage 75% commercial risk 97,5% political risk

Coverage 50%

License

ONDD ECA Belgium
Guarantee 70%

TELKOM Kenya Shareholder 60%

Safaricom Ltd Kenya 2004

International Banks
Crédit €25 miln 6 anos, Euribor+1,5%

Funding

Citibank
Nairobi e New York

Clients

Siemens Bélgica Supplier
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FRN
KES 4 biln (€30 miln)
5 year, BT91dias+1%

Guarantee 75%

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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creditors and suppliers not usually exposed to risk of loss. vocal Skakeholders – Key subject for party politics. scale and network effects • Essential public services cannot close down (nor go out of business) • Asymmetric risk sharing.Public services operators are different… • Natural monopolies. protests => Need to compensate for the absence of market discipline bkp DEVELOPMENT RESEARCH & CO NSULTING 6 . State must always pay • No one is indifferent to public services – Numerous.

Public vs. consumption  Market supply. scope . public interest       Collective. demand  Allocation and access by price  Private responsibility  Private supply except in centralized economy. public opinion Impact on election. rationing  May have economies of scale. legitimacy bkp DEVELOPMENT RESEARCH & CO NSULTING  Individual demand. high inflation. indivisible Social and economic infrastructure Externality Equitable access. Collective Goods & Services Public  Constitutional definition  Economic definition. natural monopolies Private  Divisable  Political definition    Sofia 2005 Government responsibility Citizen demands. first necessity Cost of context for economy Economies of scale.

Opex Scale. Dimension.Economic determinants in public services provision Traffic and demand forecasts Service needs of population volume User supported tariff levels Affordability Willingness to pay Taxpayer supported Operating regimen Financing Sustainability price Technical solution. Capex Operating options. investment. Breakeven bkp DEVELOPMENT RESEARCH & CO NSULTING 8 .

availability payment. etc bkp Taxpayer supported (Government budget)  Investment subsidy. OBA  User subsidy. affordable and collectable  Pre-contracted (ex. inflation-indexed) or regulated  Equitable and proportionate to utilization  Differentiated. time-based toll (without traffic counting)  Other random operating subsidies to cover deficit or minimum services DEVELOPMENT RESEARCH & CO NSULTING . etc) OBA  Operating subsidy. coupon (senior discount. including donor funds.Pricing and paying for public services User supported (user fees)  User tariffs or specific taxes  Tolls. peak hour.voucher. shadow tolls distance-based toll (with traffic counting ) OBA  Operating subsidy.

667 NPV affordable revenue: 5.885 NPV Investment: 8.885.82 € Revenues Receita max Receita comp 10. for investment and/or operation DEVELOPMENT RESEARCH & CO NSULTING .Combining user tariffs with taxpayer subsidies NPV Revenues Maximum versus Affordablel NPV Revenues (discounted cash flow ) NPV maximum revenue: 3000 2000 1000 0 -1000 1 -2000 -3000 -4000 -5000 5 9 13 17 21 25 10.442 (Fee reduction of 50%) bkp User fee reduction creates shortfall and need for taxpayer subsidy.

Paying for Public Services: operating vs. capital expenses User tariff affordability vs.6 sidewalks 9. bus primary schooling municipal roads 11 9 7 5 3 1 -40 -20 0 20 40 60 80 100 120 140 1.4 hospital 3 9 5 urban metro toll road irrigation 10 -11 telecom 2 . Taxpayer subsidy sustainability 11 airport 7 water & sanitation 8 1 2 passenger transport.6 ports User tariffs bkp Receita tarifas Subsidio exploração Subsidio investimento Operating subsidy Investment subsidy DEVELOPMENT RESEARCH & CO NSULTING .

BOT. availability payments Works only Capex PPP Greenfield or Works & Services expansion PPP. toll roads. PPP concession. operating leases. ports.PPP families – sources and uses of funds Who pays ? Services only Opex PPP User paid (services) concession of existing infrastructure. shadow tolls. etc bkp PPP concession PPP concession. affermage Taxpayer paid Mixed User/Taxpayer Co-payments. investment and/or operating subsidies DEVELOPMENT RESEARCH & CO NSULTING 12 . Output Based Aid Joint ventures Collaborations Out-sourcing services Greenfield PFI .

targets.PPP Project Cycle . cost.Phases Selection Preparation Pre-FEASIBILITY Identify user needs (traffic study) Tariff affordability Technical solution. capex and opex Contracting OPTIONS Market sounding Sources of financing Policy alignment Stakeholder consultation Consensus Objectives. allocation Arrange financing Budget impact Guarantees Risk management Procurement Contracting Competitive procurement Tender Standardized contract Execution Construction Operations Monitoring Entry into service Tariff collections Quality control Evaluation Reversion Land expropriation Rights of way Cost control Inputs Inspections Verifications Audits Evaluation OUTCOMES Outputs Final approvals Control. quality Ttime Miletstones Collections Maintenance Reporting Reimbursement Stakeholder relations Impact Benefits Financial close Contract signing Disbursemen t Defects Renewal Renegotiation bkp DEVELOPMENT RESEARCH & CO NSULTING 13 . indicators Sustainability Continuity Structuring Financing Budgeting Financial modelling Scenarios User revenues Budget subsidies Financing criteria Due diligence Risk analysis.

Port Concessions State Grantor (Condedente) Concession Contract Direct Agreement Port Regulator Capital Shareholders Concessionnaire SPV Financing contract Banks Insurance Policies Sales contracts Construction Operation Contracts Insurers bkp DEVELOPMENT RESEARCH & CO NSULTING Contractor Operator .

Forms of PPP Joint ventures PPP (Works & Services) Collaborations Privatization Value / Complexity Services concession Operating Contract Hard facilities Soft facilities Services Leases. affermage 5-15 years Management Contract 5-10 years Works Contract Works Concession BOT. PFI & FBOT 15-25 years Outsourcing 3-5 years Duration bkp DEVELOPMENT RESEARCH & CO NSULTING .

8. 6. 4. 3. over time… with the private partner assuming responsability for the financing of the infrastructure and services by banks bkp DEVELOPMENT RESEARCH & CO NSULTING 2. the State or Municipality or other unit of Public Administration) transfers to… the private partner or concessionaire … the obligation to build and/or operate the public infrastracture and to provide a public service of a given quality to … the public service users or the Grantor/Concedente itself… together with the right to charge or receive fees in remuneration of the services rendered… to be paid by the users or by the Grantor/Concedant (taxpayer) itself. . 5.Public Private Partnerhip / Concession 1. 7. A multi-year (administrative) very long term contract by which … the public partner (Concedant/Grantor.

and either traffic or availability risk Rights of private partner Govt financing Revision of contract price to reflect inflation On Govt budget. operating subsidy only over time Must transfer construction risk. transfer TCC fixed price contract can transfer some risks to builder to private partner bkp DEVELOPMENT RESEARCH & CO NSULTING .Comparing: Public partner Scope Duration Procurement methods Rights of State. Govt debt Risk sharing. 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. or the State itself Unilateral modifications subject to Rebalancing over 30 year tenor Financial rebalancing Govt investment subsidy. competitive dialog Provision of services to users.

protests Low demand. • Low levels of experience of State project managers and negotiations diligence due Operating.Project Cycle . monitoring USER insatisfaction. traffic shortfall User fees increases Increase in operating costs. OPEX Frequent financial rebalancings paid by the State  Lack of reporting and low transparency       Excessive flexibility or rigidity  Very tight deadlines for decision. especially on public side  Non standardized contacts. maintenance. inadequate proposals  Unclear tender specifications  Slow tender process or suspension  Lack of consultation and involvement of Stakeholders 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 Structuring and Contracting.Risks and Threats Preparation and Tender  Project overdimensioned to traffic forecasts  Skewed selection criteria  Inadequate analysis of risks to Stategrantor. unbalanced or unrealistic risk allocation  Frequent changes in Government policies and sector programs bkp DEVELOPMENT RESEARCH & CO NSULTING . environmental  Few bidders.

3 million until Dec-2011.000 shillings  Service providers: Accredited local clinics. voucher costing 60. Pilot 2006  Payment: User co-payment of 3.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.Example 1 . Voucher Management Agency. Government budget commitment of US$ 3 million in 2012  Results: 136. selection and training clinics and distributors  Independent Verifier: MSI-U under sub-contract from Ministry of Health  Subsidies: KfW US$4. screening for STDs. attended delivery and one post-natal visit. community distributors (VCBDs)  Promoter: INGO (MSI-U). arranging.000 people treated until Dec-2011 bkp DEVELOPMENT RESEARCH & CO NSULTING 19 .000200.000 shillings.

Maternal Health Voucher with OBA subsidy KfW. OBA Verification Claims processing (by SMS) Ministry of Health Voucher Management Agency Clinic accreditation Clinics Clinics Clinics Clinics Clinics Voucher Distributors Providers bkp DEVELOPMENT RESEARCH & CO NSULTING 20 .1.

renewable. generic documentation (tender. Regional water authority oversees tariffs  Construction undertaken and financed by asset owner 21 bkp DEVELOPMENT RESEARCH & CO NSULTING . CBO. to users association. contract. NGO or local entrepreneurs  Regulation: Ministry/DG Water provides central guidelines.Example 2. management. operation & maintenance 1-5 years. with cost recovery from user tariffs. monitoring). may receive OBA subsidies for connections  Contract: Local contracting authority asset owner.Water and Sanitation affermage / O&M Contracts  Needs: potable water supply and sanitation  Project concept: operator provides services.

Water and Sanitation affermage / O&M Ministry Regional Water Dept Local Govt 1 Operator 1 docs Local Govt 2 Operator 2 Local Govt 3 Operator 3 user user user bkp user DEVELOPMENT RESEARCH & CO NSULTING user user user 22 .2.

donors. local governments and research institutions. low quality. including  Technical support.  Microfinance  Collective purchase of inputs.Example 3 . with “enterprise” value-chain approach. legal services. demonstration ponds  Business training . 2004 tsunami  Project concept: ALSC partnerships between farmers’ organizations.Small scale Aquaculture Livelihood Service Centers (ALSC) Aceh  Needs: Production hurt by shrimp diseases. 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 bkp DEVELOPMENT RESEARCH & CO NSULTING 23 .

Small Scale Aquaculture Service Centers Value Chain integration Research Institute Producer Association Government Donors Service Center Suppliers Market producers bkp DEVELOPMENT RESEARCH & CO NSULTING 24 .3.

Service fees set to cover O&M costs.000 hectare. largescale irrigation scheme to serve 6000 smallholder subsistence farmers. including energy  The contract: 8-year “enhanced” operation and maintenance. operator remunerated per performance indicators. drainage Megech (Lake Tana) Ethiopia  Needs: 60% of food gains in future will come from better irrigation. O&M contract funded by $8 million IDA loan bkp DEVELOPMENT RESEARCH & CO NSULTING 25 . over 4.Example 4 – Irrigation. has no demand risk  Financing: Investment funded by $30 million IDA loan to Government. only 4% of Sub-saharan agricultural land is irrigated  Project concept: Construction and management of a new. operator supervises construction (any savings shared with construction company).

Megech (Lake Tana) large scale irrigation project Government O&M++ BRL Ingénierie Market Construction Contractor producers bkp DEVELOPMENT RESEARCH & CO NSULTING 26 .4.

for connection costs (one off)  $100. variety of contracts  Project concept: Operator to install 400 new water connections in 2 years. competitive tender to Trandint Limited for lowest price of $270.SSIP small scale infra provider. households to pay 10% of connection costs  Contract: Standardized 5-year management contract.000 from ADA.Example 5.000 loan from bank  GPOBA provided funding for capital investment costs to support the private operator  Advisor: IFC.000 in Busembatia  Financing:  Subsidy of $300. since 2007 bkp DEVELOPMENT RESEARCH & CO NSULTING . Water  Needs: 60% of rural population lacks access to safe water.

Research institute in Kenya. 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. The plant is well adapted to the climatic and soil conditions in Ethiopia. including University of Berne.International Tef Improvement Research Project The need : To raise crop yields of TEF . 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. from the sorghum/millet family) is an African “orphan” crop. Ethiopian field research Funding: SFSA Syngenta Foundation for Sustainable Agriculture Tef (Eragrostis tef.Example 6 . Switzerland with Ethiopian researcher. and developing farm insurance in Kenya bkp DEVELOPMENT RESEARCH & CO NSULTING 28 . little studied because of limited international trade.

000  Output based donor subsidies. average US$ 83. EU for connections  PPIAF-PDF investment subsidy for major capex capital expenditure  Local micro finance institutions. based on user tariffs  Contract: to CBOs. local bank 29 bkp DEVELOPMENT RESEARCH & CO NSULTING . 13 sub-projects  Financing.Example 7. installing household or yard connections.Water micro-financing in periurban aereas  Needs: Potable water  Project concept: small scale water operations.

Fairtrade certification and linkages to markets Contract: Marketing company to pre-finance farm inputs. BDS providers selected competitively.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). to recover from coffee sales. Financing: Pilot Value Chain Grant from Matching Grant Fund (MGF) bkp DEVELOPMENT RESEARCH & CO NSULTING 30 .

(non) exclusive routes. rural (Int’l) Funds Regional Government Municipality Insurer Exclusivity Subsidy Microfinance matatu dala dala Rural only chapa Common carrier licenses. duration.Example 9: Small scale passenger services. subsidies bkp DEVELOPMENT RESEARCH & CO NSULTING . urban vs.

full transparency bkp DEVELOPMENT RESEARCH & CO NSULTING 32 . original proponent is reimbursed for feasibiltiy study as per pre-approved cost  Contract details disclosed. PA issues request for tenders (including financial proposal)  Original proponent may. or may not.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. etc  If award goes to new bidder. enjoy advantage ex. right of first refusal. bonus points.

Public / Collective goods in agriculture Tangible Intangible  Irrigation. accredited  Certification of origin. water branding rights.  Collective storage from purchasing to market facilities.  Resource quality. organic. Fairtrade. drainage and  Small producers flood control systems organization and aggregation  Drip irrigation kits  Supply chain integration. management. grazing lands  International market  Forestation access bkp DEVELOPMENT RESEARCH & CO NSULTING 33 .

pdf • bkp DEVELOPMENT RESEARCH & CO NSULTING 34 . • Fruta del Pacífico trains 600 farmers in ecological banana production and helps to set up a farmers cooperative in Ecuador. trains 250-300 farmers. • Seda & Fibras establishes silk production in Paraguay. • Cosmetics producer Wala introduces organic rose production in Romania. commits to fix purchasing prices and helps to build up an organic farmers association and a certification system. • DaimlerChrysler supports smallholder production of natural fibers for auto seats. trains advisers and helps to set up a national certification system.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. • Unilever Bestfoods rehabilitates out-dated state-owned tomato processing plant in Ghana. • Kraft Foods introduces a national quality standard for coffee production in Peru.fao-ilo. transfers ownership to farmer families and commits to pre-established prices for tomato products. including the forestation of mulberry trees and family-based cocoon production. • Fair organizer BioFach trains and organizes organic food producers and creates a Centre of Excellence in Brazil. • Deichmann introduces social and environmental standards in Indian supply chain for shoe production. targeting 2000 families. • 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.org/fileadmin/user_upload/fao_ilo/pdf/DonorApproachestoPro-PoorValueChains. creates a processing cooperative in the Philippines and supports the development of alternative fibre products.

OBA/donor funds. equitable. flexible  Replication of best practices  Central PPP Unit. responsible for design. 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.KSF and lessons learned in PPPs • Effective project risk sharing essential • Value for money must be better than under public provision • Long term partnership. external debt capacity bkp DEVELOPMENT RESEARCH & CO NSULTING 35 . standardization and coordination with line ministries responsible for technical decisions.

cademia Entreprene urs Roles in project Results for beneficiaries Reporting Transparency Improve nutrition Generate income Local community development Continuity Sustainability Follow-up Replication 36 DEVELOPMENT RESEARCH & CO NSULTING . site visit Execution Delivery Local capacity Skills transfer Control Monitoring site visits Continuity Evaluation Local knowledge contacts Goverment authorities Capacity Credibility Technology NGO. tenders Due diligence. Association s. CBO.Project Cycle – Key Success Factors Needs MDG Objectives Target population Focus of Projects Basic needs Food security Partners Project Design Development Adequate to objectives Practical and doable Tariff setting Funding for development impact User affordability willingness to pay Government budget commitments Licenses and approvals bkp Funding Donors Creditors Donors. criteria Funding cycles Co-funding Eligible projects Calls for proposals.

operations  Satisfaction of (naturally captive) Users/Clients  Optimization and collection of user charges (affordability). maintenance. output-based. for good level of utilization (load factor) consistently above breakeven. modular expansion if possible  Cost control in investment. evaluations pre-renewal  Engage Stakeholders. build consensus. aggregate bkp DEVELOPMENT RESEARCH & CO NSULTING . aim for full recovery of operations & maintenance costs  SMART Government/donor subsidies. budgeted  Minimizing fiscal risks to taxpayers (budget sustainability)  Medium term contracts.Basic principles as Key Success Factors  Dimension appropriate to demand.

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 bkp DEVELOPMENT RESEARCH & CO NSULTING 38 .

EDFIs Europeaid Donors. EBRD. or SMART subsidies based on volume and quality of services rendered Eligibility criteria Projects vs programs Economic feasibility Public procurement Risk allocation Guarantees Private Operator Procurement. professionalism Identifiable projects Public procurement Financial Feasibility Guarantees Financial feasibility Risks vs return Commercial risks.Financing: Govt vs Private operator Sources of Funding Public Asset Owner Operator Commercial management Financial self sufficiency. regulation Issues Policy priorities Approval process Efficiency Cost recovery Co-financing Bankability Cost recovery Govt Budget IFI’s EIB. GPOBA Commercial Banks Private promoters investors Microfinance bkp DEVELOPMENT RESEARCH & CO NSULTING 39 . public tender Financial self-sufficiency Govt monitoring Rigor.

implementation and evaluation of projects • To identify. and conferences bkp DEVELOPMENT RESEARCH & CO NSULTING Key Activities 40 .000 and a maximum US$ 500. operating subsidies) to facilitate the piloting of innovative.000 per project 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 • To provide funding of output-based payments (i.e. publications. workshops. studies and other inputs • To assist in the design. small-scale projects. document and disseminate best practices and emerging knowledge on OBA and public services • To build capacity with training.Sources of funding: Output Based Aid Title Funding Bracket Facility Objectives GPOBA – Global Partnership on Output-Based Aid Minimum US$ 25.

due diligence  Private creditors. sustainability  Long approval processes.Risk < financial return + Client relationships bkp DEVELOPMENT RESEARCH & CO NSULTING . technical feasibility  Commercial economic feasibility  Fully budgeted. allocation . KYC  Environmental concerns. EU international procurement rules  Financial model. integral financing  Execution capacity.Financing Criteria  Official creditors  Identifiable project. add emphasis + Risk identification. feasiblity  Identity of promoters. project team  Public tendering.

Proparco Local credit unions USAID OPIC Local cooperatives Eximbanks KfW. foundations Emigrants’ remittances Contribution in kind (work. FMO. Cofides. SOFID. AfD ECAs . CDC.blogspot.export credit agencies bkp DEVELOPMENT RESEARCH & CO NSULTING Private donors. ATF African Trade Facility African Water Facility ATI African Trade Insurance Islamic Development Bank EU/EDF Commercial IFI Other Funding Sources Suppliers (capital goods) Clients (eg petroleum) Foundations ONG-NGO Red Cross Save the Children UNICEF Micro-credit institutions Int´l commercial banks Capital markets Infrastructure funds Global Environment Facility IFAD Bilateral Local banks DFID. regional World Bank/IDA/IFC MIGA BID/CII EIB AfDB African Development Bank. EDFIs.FUNDING SOURCES Official IFI Multi-lateral.com . sweat equity) 42 http://ppplusofonia.

Attributes of the State as Grantor (Concedant) 1. with: 2. current and future. contingent PPP liabilities 7. to public service users and to taxpayers 43 bkp DEVELOPMENT RESEARCH & CO NSULTING . Authority and capacity to decide and to commit budget funds. control and ensure the provision of the public service (which cannot close down) 5. Ultimate political accountability and responsability. Continuing and ongoing envolvement in the public service provision 6. Technical capacity to define. Permanent obligation to provide the public service concessioned temporarily 3. An organism of Public Administration. Annual budget allocation and long term debt capacity to support public service to the extent not supported by user fees 4.

Government Public Service Objectives  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 bkp DEVELOPMENT RESEARCH & CO NSULTING .

local or international nongovernmental organization.NGOs and CBOs NGO. capacity building  Representation of users CBO. specialist  Needs assessment. surveys  Project design. monitoring. facilitation between public and private partners  Negotiations with OBA donors. user associations. independent verification  Selection of providers. local community based organizations. quality control  Training. cooperatives  Needs assessments  Service provider  Negotiation with public partner and OBA donor  Representation of users 45 bkp DEVELOPMENT RESEARCH & CO NSULTING .

policies. max 25% of public investment  PPP Unit or management agency      Legal.Starting point for PPPs  Public investment program / project pipeline  Cost benefit analyses. accountability bkp DEVELOPMENT RESEARCH & CO NSULTING . transparency. priorities. regulatory and institutional frameworks Public service program budgeting Learning curve for transaction / contract management Pilots projects. best practices Evaluation. consensus  Include PPP liabilities in Government budget / debt (MTEF)  PPP as only one of the delivery options.

legal. 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 & CO NSULTING .Creation of PPP Project Pipeline  Project Feasibility  Technical. environmental.

track record)  An explanation of how the work can become self-supporting or can find local sources of support.blogspot. modular  Calibration of user tariffs for O&M Opex cost recovery. compatibility with donor principles    Local self-reliance. which will   Improve the quality of life for users. food security first Mutual Support and Accountability .com ppplusofonia@gmail.What to look for in a project  Cearly defined. after donor funding ends  Alignment of the project with MDGs and Government policy. after investment subsidy. project participants and beneficiaries Be appropriately dimensioned. annual audits. proposal for an public or collective service . Lisboa June 2008 bkp DEVELOPMENT RESEARCH & CO NSULTING 48 http://ppplusofonia. short. participatory decision making Production geared toward local consumption.Beneficiaries organized in a group which offers support and accountability to its members  Description of the experience of the project team or coordinator.com . community governance . or complemented by SMART /OBA operating subsidies  The ability of the promoter to receive and apply money as intended (bank account.

II or III. 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. modular technology. prioritizing. For each project. user affordability. investors and/or donors. why the PPP option. please take 10 minutes to identify 1-2 projects to present to other Stakeholders. O&M opex Technical solution. or concedant. investors. form of contract . volume and predictability of demand. fixed costs      Financial solution. scale. if possible:  Public service or collective need (beneficiaries. procurement Potential market interest. who will pay. with/without construction/capex . which will vote to classify it as priority I. alignment with MDGs and Government sector policies Project concept: scope of services. and based your local knowledge. from private promoters. donors bkp DEVELOPMENT RESEARCH & CO NSULTING 49 . Prepare to deliver a 2-minute “elevator speech” presenting your project to the group. reliability. sources of funding from creditors. user/taxpayer support required. location). flexibility. please detail. the Authorities and potential promoters. budget sustainability Public contracting authority. outputs that can be identified and objectively measured.Exercise Phase I: Identifying.

PPP Lusofonia Obrigada! Mariana ABRANTES de Sousa PORTUGAL ppplusofonia@gmail.com http://ppplusofonia.com 50 bkp DEVELOPMENT RESEARCH & CO NSULTING .blogspot.