Generic PPP project Proposal Template

PPP/T2

THE REPUBLIC OF ZAMBIA

MINISTRY OF FINANCE
PUBLIC PRIVATE PARTNERSHIP DEPARTMENT
“Creating a shared vision for sustainable Economic development”

Generic Public Private Partnership Project

Proposal Template
Generic PPP project Proposal Template

Preamble

The purpose of this document is to give guidance for stakeholders (e.g contracting Authority)
wishing to pursue PPP projects in the development of project proposal to be submitted to the
PPP Department. This will guide in determining proposed project’s suitability, including its
financial, technical, environmental, and economic feasibility. This exercise will help both the
PPP department and the CAs understand and identify information gaps and possible in
determining the optimal project type or method of procuring.
Instructions
The proposal, should address every question across the following eight sections:
1. Project Background and Justification
2. PPP suitability: Value for Money potential
3. Project PPP Model
4. Economic Feasibility
5. Financial Feasibility
6. Fiscal Impact
7. Environmental and Social Risks
8. Project Readiness and Timeline
Provide as much detail as you have already or can produce at a low cost to the Contracting
Authority. To strengthen the proposal, do the following:
1. Understand the PPP approval process by studying the PPP Act 2009 read together with
the amended PPP Act of 2018 (for solicited sections 20 to 38 and unsolicited section 42
or you refer simplified guiding templates)
2. Fill in the blanks with as much detail as possible focusing on the content
3. When addressing the each section where yes/no questions, provide justification
4. Attach any supporting materials and studies.
Generic PPP project Proposal Template

A. Cover note for the Proposal

Project Name:
Contracting Authority:
Location:
Sector:
Project Model:
Contact Name:
Contact Position:
Contact details (email and phone):
Submission Date:
Project Cost (ZMK, US$ etc):

B. Project Background and Justification

Describe the problem or critical issue which the Project seeks to resolve, clearly outlining the service
gap the Project will address. Example: By building two hostels with a combined 5,000 beds capacity,
the Project will respond to the increased demand for student accommodation, which the existing
facilities cannot meet.

Describe the desired outcomes of the Project.

Example: The Project will build student accommodation complex to house additional 5,000 students.

Describe the services to be provided and who the primary beneficiaries of these services will be.
Example: The Project will provide housing, cafeteria, and common areas to 5,000 students.

Prerequisite Conditions
How does the Project relate to national development strategies (e.g. Zambia Vision 2030)?
How does the Project fit in the Contracting Authority’s development program?
Example: The Project will be instrumental to achieving the objectives set out in University’s 10-year
Strategic Plan and the broader national development plan, Zambia Vision 2030.
Generic PPP project Proposal Template

1. Alignment with government priorities

i. Does the project have high strategic importance for the country and could enable
significant private sector investments in the economic development of the country?
Yes/No provide comments

ii. Will the project lead to an improvement in quality of life for the people? For example,
by way of reduced costs of living or improved livelihood for the people. Yes/No provide
comments

Please describe the quantity of output / service to be provided or produced by the Project.
(Example: a bulk water project in m3/day; a road project in kilometers; a power project in MW)

Identification of service need

i. Is there a clear articulation and substantiation of the service deficiency? Yes/NO Provide
comments
ii. Is the desired service outcome well defined and can be used to scope out the project?
Yes/NO Provide comments
iii. Is there a consensus on users’ and stakeholders’ expectations from the project? Yes/NO
Provide comments

Describe demand for the services the Project will provide and how the Project plans to
adapt/accommodate to future shifts in demand. (Link to population growth rates and other relevant
statistics to provide a justification for the proposed scope services to be provided.)
Example: The number of students enrolled at the University is projected to increase by more than 140
percent between 2020 and 2033. The Project will partially offset the student housing deficit by adding
5,000 beds.

Describe the technical characteristics of the Project, including inputs and how the Project will
generate the desired outputs.

Provide any additional details about the Project that may be helpful to evaluate its overall viability
as a public project, and its suitability to PPP implementation.
Generic PPP project Proposal Template

Assessment of service delivery options

i. Has there been an assessment of all possible technical solutions to address the
identified need? Yes/No provide comments

ii. Does the technical solution clearly address the service need in accost-effective and
affordable manner? Yes/No provide comments

Please describe the quantity of output/service to be provided or produced by the Project.

(Example: a bulk water project in m3/day; a road project in kilometers; a power project in MW)

C. PPP suitability: Value for Money potential

Describe why the Project may be attractive to investors. In your description, consider whether the
CA has received any Privately Initiated Investment proposals to provide similar services, or whether
similar projects have reached financial close in the country or regionally or have been undertaken in
Zambia using an alternative procurement methodology?

Value for Money - Quantitative Assessment (%)

1.Value for money from the project

2.Threshold value for money

Describe how the Project can have lower whole life costs if procured through PPP.

Return Expectations (%)

1. Project IRR (base case)

2. Project IRR (stress case)
3. Threshold Project IRR
4. Minimum DSCR (base case)
5. Minimum DSCR (stress case)
6. Threshold Minimum DSCR
7. Economic IRR
8. Threshold Economic IRR
D. Project PPP Model
Has a similar project been done using a PPP model in the sector in Zambia or in the SADC?
Generic PPP project Proposal Template

Has a pre-feasibility study been prepared? (If yes, please describe the recommendations of the report,
include key figures, and attach the findings of the study)

Has an environmental and social assessment, community/stakeholder impact, legal analysis, land
acquisition needs analysis, preliminary market sounding, willingness and ability to pay analysis, or
any other preliminary assessments been undertaken? (If yes, please summarize key messages /
findings of the report below and attach these analyses to the submission)

What is the proposed PPP arrangement? Design, Build, Finance, Operate, Maintain, Transfer. Also,
describe the functions that the Contracting Authority and the private party or concessionaire will
assume. (Refer to the 1st Schedule of the PPP Act).
Note: this will help inform the allocation of risks matrix later in this template

What is the duration of the PPP? (In determining the duration Example: The Project will be
constructed in 2 years, after which the investor will operate the facility for 25 years.

Please provide the breakdown of project costs (detailed capital expenditure on construction,
equipment, approvals, land; annual operations and maintenance costs; costs of borrowing money;
land acquisition, if applicable). Note: operations costs can be described as a percent of annualized
capex or as an annual amount across the life of the project.

Please list output specifications and performance indicators for the Project’s operations. Example:
CA will monitor and may penalize the private investor for not complying with the pre-agreed standards,
including construction time delays, number and value of defects, poor service delivery, availability of
service, length of time to make repairs, unscheduled shutdowns etc.

Additional information
Land Status
Who owns the land for the Project?
If the Contracting Authority owns the land,
answer the following:
▪ Does CA have a valid title?
▪ Is there any dispute of the land
ownership?
▪ How much land is available for Project?
Generic PPP project Proposal Template

▪ What is the estimated land value? (US$,

Kwacha etc)
If the CA does not own the land:
▪ Has it prepared or committed to prepare
a fully-budgeted land acquisition plan?
▪ Have there been substantial delays in
land acquisition in similar projects in the
past?
Is the proposed site location adequately
accessible and offers manageable
challenges during construction? (Please
include in the discussion the squatters or
people living or earning a living on the land
that would require relocation or
compensation, including what type of
people, e.g. employees of the CA or the
public)

RISK ALLOCATION MATRIX

Will the public or private sector assume the following risks? In other words, who is likely to be
responsible for each action below. (Check which party assumes risk. Check both if it is shared.) The
CA may include other project specific risks that may not have been captured in the list below.

Examples of risks…. Not comprehensive Public Private

Delay in land acquisition
Design
Construction
Equipment
Operation
Maintenance
Demand
Finance
Environmental and social

Foreign Exchange Risk Profile

1. Will the project be exposed to foreign exchange risk? Yes/No
2. What has been the five - year average national currency depreciation vis-à-vis a benchmark
currency? (%)
Revenue Profile
Main source of project revenues/ How will the private partner be paid for the services provided (user
fees, availability payments, hybrid payment)? Indicate the source and level of user fees (e.g. per use
charges, tariffs, rental fees, insurance payments, etc.) and the current tariffs/rates for the service.

Example: Currently, the students pay for on-campus housing an average of K3,000 per semester.
Preliminary willingness and ability to pay analysis provides evidence that raising room charges by 10%
Generic PPP project Proposal Template

will still contribute to full occupancy in the new accommodation complex. The private investor will be
paid for services provided through user-charges, which it will collect directly from the students in the
form of room charges.

E. Economic Feasibility
Has preliminary cost-benefit analysis of the Project been prepared in compliance with the PPP Act
2009?
If yes, summarize the outcomes of that analysis below.

Who are the primary beneficiaries of the Project? Describe how many people are expected to
benefit from the project, both directly and indirectly. Example: The Project will create benefits that
will likely extend to multiple parties: 5,000 students will benefit from affordable housing options, the
university will attract more qualified students, workers will benefit from employment during
construction and operation, etc.

Has an ability and willingness to pay among users been assessed? If yes, please summarize the
findings then attach any supporting documentation

What are the primary economic costs and benefits of the Project? Describe the sources of these
costs and benefits. What is the Net Present Value of economic benefits? (K, US$ etc) What is the
Economic Internal Rate of Return (%)?

How is the Project expected to provide better access to essential services? If the answer is yes,
describe exactly how the Project will do this.

How does the Project plan to minimize environmental impact/reduce pollution levels/greenhouse
gas emissions?
Example: University is considering using green technology in the construction phase to improve the
Project’s ecological footprint, by incorporating solar energy, water recycling, and natural lightning.

If applicable, will the Project create resilience and adaptability to long term climate changes and
hazards? If the answer is yes, describe exactly how the Project will achieve this.
Generic PPP project Proposal Template

F. Financial Feasibility
Has a business case or commercial feasibility study been prepared? If yes, describe the key findings /
recommendations and attach all supporting documents.

Has an initial market sounding been conducted? Has the private sector indicated interest? If yes,
describe or summarize the findings of this research and indicate which parties have expressed interest.

Has any financial analysis of the Project been conducted?

If yes, summarize the key findings of this analysis and attach the financial model or summary report
with the submission.

Are there financiers who will be, or have expressed interest in the PPP?

Are the life cycle costs for major components of the project – reasonable and affordable?

Describe all potential revenue sources for the Project (compensation from a public fund, subsidies,
charges or fees collected from users for the service provided, or some combination).

Are the user charge assumptions backed by user surveys or consistent with the tariffs in similar
projects?

Are the demand or volume projections backed by surveys or demand forecasting models using
reliable historical data?

G. Fiscal Impact
Generic PPP project Proposal Template

Government Support
Will the Government invest in the project, and if so, what is the estimated Government investment
in the Project? (K, US$ etc)

Is the Government expected to provide any guarantees? If yes, list the guarantees and describe.

Is the Government expected to share any costs? If yes, describe these costs and indicate how much
Government is expected to contribute and whether the CA has already budgeted for this contribution.

Does the Project require an upfront Government payment to make it viable (Viability Gap Funding)?
If yes, provide an estimate of the amount and justify why it is in the public interest to provide this
funding.

Please describe whether other Government contributions will be needed and justify why these will
be needed.

What options has the CA considered to minimize government support to the project? Has the CA
considered additional sources of revenue, tariff adjustments, optimizing Project scope and/or
adjusting contract period?

Is there a clear strategy to mitigate fiscal risks emerging from the PPP contract that aligns with the
Fiscal Commitments and Contingent Liabilities (FCCL) framework?

Will the Project create contingent liabilities for the Government? If yes, provide an estimate of the
amount of these liabilities. Will the impact of direct and contingent liabilities of the Project be within
an acceptable level for the government?
Generic PPP project Proposal Template

H. Environmental and Social Risks

Are the costs of mitigating the environmental and social impacts of the Project considered in the
PPP?

Is there a reliable initial environmental analysis related to the project?

Will the completed project likely to be carbon neutral or net carbon negative, in terms of GHG
emissions?

Will the project have any significant negative impact on any natural resources or protected land?

Will there be contractual measures to ensure that the Project financials are reset in the event of
delays in executing mitigation for reasons beyond the control of the project company?

What will the Project’s impact on land and communities be?

Is land acquisition likely to lead to substantial involuntary human and economic resettlement? If yes,
is there a mitigation strategy and budget?

Will the Project have a significant adverse impact on health or quality of life of users, workers, or
the local population?

Is the Project likely to be socially sustainable or have manageable social impacts?

Is there a reliable initial social analysis related to the project?

Generic PPP project Proposal Template

Climate Change and Resilience Profile

1. Reduction in greenhouse gas emissions

2. Resilience and adaptability to long term climate changes and hazards

Legal Risks

Is there a plan to address the legal barriers through appropriate executive action or legislative
reforms
I. Project Readiness and Timeline
Has the Contracting Authority formed a PPP Node/ focal point?

If the Contracting Authority expects to take demand risk or to make availability payments to the
Project, has the Contracting Authority contacted the National Treasury to understand Treasury’s
comfort with these commitments?

Is there a project plan on the next stages with identified deadlines and responsibilities allocated?

Has the Contracting Authority budgeted funds, or does it have access to funds, to complete project
preparation? This includes the costs of preparing required studies, securing land, resettlement costs,
and environmental and social impact cost mitigation, the procurement of a transaction advisor, and
tendering support.

Are there any constraints that could delay the Project from getting to the market?

Does the Contracting Authority have experience developing similar projects? If so, please describe
some of the projects, the timelines it took to develop them, and the current status of the projects.

What government agencies and stakeholders will be involved in the preparation of the Project and
what roles they will play in project development and approval?
Generic PPP project Proposal Template