1.4: CASE STUDIES OF PPP PROCUREMENTS Ned White Zanzibar, August, 2015
Session Overview • Case Study: SADC Headquarters Building PPP, Gaborone, Botswana • Case Study: Jordan’s As-Samra Wastewater Treatment Plant PPP Procurement • Case Study: Kosovo’s International Airport Concession Procurement
Design, Construction & Maintenance of SADC’s New Headquarters Building, Gaborone • SADC founded in 1982, first as a “Conference”. 1997 as a more permanent “Community” • Need for a long-term headquarters facility : "We expect to improve our service delivery since all directorates and units of the Secretariat will now be under one roof, thereby providing improved coordination of our day-to-day activities," • 2002: Government of Botswana offered land for the project; a plot in the Central Business District of Gaborone under a 99-year lease.
PPP Tendering • 2004: A “Double Troika Committee of Finance Ministers” is established to approve the technical solution and the procurement of the new facility. Committee appoints an Experts Committee to support it and the SADC Secretariat • 2005: Experts Committee hires PriceWaterhouseCoopers as PPP Transaction Advisor, plus a law firm. • 2007: Through competitive tender, PPP Contract Awarded to Bongwe Investments, a Botswanan developer to design finance, construct, and maintain the new building
Memorandum of Understanding Amongst the Member States of the Southern African Development Community on the New Headquarters of SADC, Aug. 17, 2007 • “Whereas the SADC Summit of Heads of State or Government has decided to procure the design, financing, and construction of the new headquarters accommodation for SADC in Gaborone.” • “SADC Member States thus mandate the Govt. of Botswana to underwrite the financial obligations to be incurred by SADC under the PPP Agreement in accordance with the provisions of the PPP Agreement” • “SADC Member States acknowledge that the Project has undergone a competitive procurement process, and that the final mechanism for underwriting SADC’s financial obligations is as set out in the PPP Agreement.”
SADC Member States MoU Project Financing: Govt of Botswana PPP Contract Botswana Insurance Fund Management (Bifm) Land-Lease (99 yrs.) BONGWE INVESTMENTS (SPV) Barclays Bank Infrastructure Finance Co (INCA) Stocks & Stocks Botswana (Gen. Dev.) Outsourcing Botswana (Facilities Management)
SADC HQ PPP Investment • Estimated Capital Investment: $30 million • Construction Period: 19 months • PPP Contract Term: 15 years • Opening Ceremony: November 10, 2010
Technical Scope of PPP • Structural: Single level basement parking will be provided and the offices and related facilities accommodation will be situated at and above ground level up to seventh floor. • The building structure will be mainly of reinforced concrete, with a structural steel roof on the low-rise component. A sloped structural steel glazed facade will be provided over the entrance atrium and port cochere. This roof will slope towards the rear to enable rain water to be drained away from the main entrance. A flat concrete roof will be provided over the high-rise component. • Civil: The scope of service covers the design and specification of all civil engineering aspects of the Works as well as the interpretation of the contents of the geotechnical report. The following sub-disciplines are included: Bulk earthworks, Domestic water supply, Fire water supply, Sewage reticulation, Parking and stormwater, Rainwater discharge
Other Accommodation PPPs in Botswana • 2008: “Plot 21 PPP” for GoB’s Office of the Ombudsman & Land Tribunal Office • P 54 million ($ 6.1 Million USD) • Also awarded to Stocks & Stocks Botswana, BifM, & Outsourcing Botswana • 10-year PPP contract (2007-2008) • Construction commenced on February 21, 2007. • June 20, 2008, completed. Delivered within budget and on time.
AMMAN, JORDAN Irbed Der’a Jerash Mafraq Salt Zarqa AMMAN Jafa AMMAN Madaba Qatraneh Karak Abiad Hassa Tafilah Naqqab Ma’an El-Shidiya Batn El-Ghoul Aqaba Mudawara
Amman’s Wastewater Sector • Since 1985 the As Samra Waste Stabilization Ponds had been sole wastewater treatment facility for Amman region. • Design capacity: 68,000 m3/day • Ave. Inflow (1998): 170,000 m3/day • Untreated sewage had contaminated several sources of drinking water (King Talal Reservoir) and produced offensive odors for nearby residents • Jordan’s Second Wastewater Masterplan for 2000-2025 called for reducing the amount of potable water that goes to irrigation (60%) by providing purified effluent for restricted agriculture purposes (trees and feed pastures).
Feasibility Study Results: • Location: As Samra Wastewater Stabilization Ponds • Build-Operate-Transfer (BOT) Project Structure • 25-year concession term • $169 million investment (initial estimate) • Capacity of New Wastewater Treatment Plant: • 2 million population of Amman • Average wastewater flow: 267,000 m3/day • Maximum wastewater flow: 530,000 m3/day • Plant will treat 80% of the country of Jordan’s wastewater
Feasibility Study Results: • If tariffs were increased to full cost-recovery levels (to meet the payments for the new WWTP), they would be unaffordable. • The Government of Jordan cannot afford to provide the public “off-taker” (the Water Authority of Jordan) with the subsidies needed to cover the difference between its current collections and costs of a new WWTP BOT. • So, what do you do?…
PPP Structure & Credit Enhancements • Tariff Reform: Government of Jordan raised water & wastewater tariffs on end-users during project preparation to improve cost-recovery: • 0.3 JoD/m3 for first 30 m3/month (=$0.45/m3) • 0.5 JoD/m3 for greater than 30 m3/month (=$0.70/m3) • USAID grant-funded $78 million to Min. of Water & Irrigation (MWI) to subsidize the construction costs of the project in order to ensure that end-users tariffs would be affordable to Jordanians. • Condition of USAID Grant: At least 50% of the equipment and commodities should come from U.S. firms… • Swedish International Development Agency (SIDA) grants $5 million to pay for BOT transaction advisors
PPP Procurement • Appointment of experienced international PPP Transaction Advisors provided great confidence to international bidders • One single team of advisors throughout project preparation and into operation (SIDA grant): • SWECO (Sweden) Technical & Prime Contractor • Mannheimer Swartling (Sweden) Legal & Subcontractor • SEK Advisory Services (Sweden) Financial & Subcontractor • Procurement was based upon meeting specific effluent quality standards (outputs) NOT on project design or technology (inputs) • Price: Two-part tariff with fixed and variable components • “Spending time to make the bid documents high quality, greatly improves the bids you receive – the number of bids, the quality of bids, and their clarity. You must be very, very clear to bidders on exactly HOW their bids will be evaluated.”
BOT Procurement Timeline • Sept. 1998: MWI & Advisors prepare project • Feb. 2000: Pre-Qualification packages (RFQs) sold for 1,000 JoD ($1,600) each to 34 firms • 8 consortia of firms submit Qualification Statements • 5 consortia were Qualified to Bid • March, 2001: 3 consortia submit bids (Single Stage-2 Envelopes) • Ondeo (France), Morganti (Construction), USA • CH2M Hill (USA) • Vivendi (France) • January, 2002: Announcement of preferred Bidder = Ondeo • July, 2002: BOT Project Agreement signed • December, 2003: BOT Project Financing agreements signed • 3 year construction period. Operational 2007
As Samra Wastewater PPP Lessons Learned • Without a private operator to ensure sustainability, the Capital Grant from USAID would not have been given. • Without the USAID grant, the project would not have been affordable to Jordanians. • Raising water & wastewater tariffs during project preparation helped make project sustainable • International Transaction Advisors were instrumental to the success of the project • Competitive procurement was based upon lowest price per cubic meter of influent, NOT upon plant design, etc. (OUTPUTS not inputs) • Even with PPP Transaction Advisors, projects of this size take a long time to prepare and complete. • Similar future roles for grants from Millennium Challenge Corp (MCC) & Global Partnership for Output Based Aid (GPOBA)
Kosovo’s PPP Framework & Program • Kosovo’s Population: 1.8 million • Declared Independence from Serbia in 1999 • Av. Annual GDP per capita: $3,059 • Suffers from shortages of infrastructure across many different sectors in order to sustain a viable national economy: • Roadway infrastructure • Electricity generation • Municipal services (waste management & Parking) • Water supply & wastewater treatment • Limited airport & air traffic capacity
Kosovo Background Information: • 1999-2003: Serbia’s former military airport at Pristina damaged & closed to commercial aviation. Most goods & supplies enter the country by land from Macedonia or Albania. • 2004: Govt of Kosovo adopts the priority of expanding Pristina’s old military airport into the Nation’s international commercial airport. • 2005-2006: Govt of Kosovo looks at expanding the airport through a Concession structure, but Kosovo lacks the legal and institutional framework for PPPs, including concessions.
Kosovo’s PPP Framework: • Kosovo’s PPP Policy Directive, July, 2008. Signed by the Prime Minister, this Directive provided the Government of Kosovo clear support for PPPs in order to: • Increase needed investment into infrastructure and public services; • Create better value for money; • Follow international best practices in implementing PPPs, and • Ensure fairness, transparency, and competition. • Kosovo’s Law on PPPs and Concessions in Infrastructure and the Procedures for their Award, July, 2009 The law’s seven Parts define PPPs and the required roles and responsibilities of the key parties: • General Provisions of the PPP Law • PPPs and Concessions • Institutional Coordination and Responsibilities • Identification of Potential Projects and Procedures for their Award • The PPP Agreement • PPP Procurement Review • Final Provisions of the PPP Law
Pristina International Airport: • Located 16 kms from Capital City of Pristina • 2008: • 1.2 million passengers and14,000 aircraft operations per year • Annual air traffic growth of 11.4% • Serviced by 35 different air companies reaching 30 different destinations • Owned & operated by a publicly-owned enterprise “Pristina International Airport, Joint Stock Company” • 2008 Revenue of 21.7 million Euros earns a surplus. • 89% of Revenues from aeronautical fees • 11% from commercial activities • GoK’s Goal is to expand and improve PIA into a modern international airport, capable of meeting Kosovo’s air traffic and airport infrastructure needs, while sustaining itself financially • June, 2009: GoK officially launched PPP Procurement for a Concession for the Pristina International Airport.
Pristina Airport • Built in 1965 as a military airport • Commercial flights began in 1990’s
Airport Concession Structure • Term: 20-year Concession of existing assets plus construction & operation of improvements (Design-Build-Finance-Operate-Transfer “DBFOT”) • Required Minimum Investments by the Private Concessionaire: • Construct new 25,000 m2 Landmark Terminal Building • Construct new air traffic control tower • Relocation of air traffic control & navigation equipment • Widening of airport taxiways to accommodate larger E class aircraft • Construct new apron with 9 Boeing 737 parking spaces • Construct new 1,750 car parking facility • Construct new taxi & bus stand area • Construct new access road to the Airport • Provide new water treatment plant for airport • Provide other needed airport operating equipment • Required Performance Standards: Able to meet Int’l Air Travel Association (IATA) Level C Standards within 2 years of PPP contract signing • Contract Scope: Operate and provide all airport services, except air navigation services
Airport Concession Structure: • Concession Fee: Private concessionaire will pay a percentage of its revenues to the Government of Kosovo. Final revenue-sharing percentage to be determined through competitive tender • Rates & Charges: PIA’s current schedule of rates and charges for aviation services will be capped during the term of the contract • Employment Terms: Private concessionaire will honor existing employment contracts for a pre-determined period of time • Ownership: Moveable and immoveable assets are leased to the Private concessionaire. Ownership of all assets remains with Government • Procurement: Selection of private concessionaire will be based upon international competitive tender
PPP Procurement • PPP Transaction Advisors funded by USAID, provided to Kosovo’s new PPP Unit in the Ministry of Finance Initial Plan for Airport PPP Procurement: • July – August, 2009: Request for Qualifications (RFQ) Issued • September, 2009: Submission of Qualifications by interested private consortia (teams of firms) • October, 2009: Issue Draft Bidding Documents to Qualified Bidders (consortia/teams) • October, 2009: Pre-Bid Conference • December, 2009: Deadline for Proposals & Contract Award
Airport PPP Procurement • Pre-Qualification Process took longer than planned to complete. • August 10, 2009: Request for Qualifications (RFQ) Document Released. • October 16, 2009: Qualifications Due • November 13, 2009. 3 consortia short-listed to bid: • Bouyges Batiment/Egis/ Eurokoha - PAIC Consortium; • Fraport IC ICTAS Havalimani Isletme A.S and • Limak/Aeroport de Lyon Consortium.
Airport PPP Procurement: • January 6, 2010: Draft PPP Tender Document released • January 27, 2010: Bidders Conference in Pristina • February & March, 2010: Over 700 specific questions asked by bidders on the Tender Documents regarding: • Terms & Conditions of the Draft PPP Contract • How bids will be evaluated • Technical & Financial performance standards • March 15, 2010: Final, updated, non-negotiable PPP contract released to bidders • April 28, 2010: Technical & Financial bids due • May 14, 2010: Financial bids opened in public & winning bidder announced
PPP Results: • Winning bidder: French-Turkish consortium of: • Aeroport de Lyon (France) • Limak Holdings (Turkey) • Protest by unsuccessful PIAC bidder rejected by Govt of Kosovo Procurement Review Committee in June, 2010 • PPP Contract signed in August, 2011 • 100 million Euro of new investment by private concessionaire including: • 85 million Euro project-backed loan from Vakifbank (a Turkish commercial bank, part-owned by the Government of Turkey) • 15 million Euros in equity from Aeroport de Lyon & Limak Holdings • Financial Closure reached in January, 2011 • Official “hand-over” ceremony and private operations began April, 2011
PPP Procurement Results • Revenue-sharing from private concessionaire paid to Government of Kosovo = 39.43% • Projected total of 450 million Euros of revenue will be paid to the Govt. of Kosovo by the concessionaire over the 20-year life of the PPP contract • New terminal & improvements expected to be completed at the end of 2012. • Limited-Recourse Project Finance: Final version of the contract transferred significant risks back onto the Govt. of Kosovo to guarantee the 85 million Euro loan from Turkey’s VakifBank • Government’s PPP Contract Monitoring Unit is the PPP Unit itself, NOT the Ministry of Transport or the old PIA Joint-Stock Company.
PPP Lessons Learned • PPP procurements often take longer to complete than planned, especially for large, complex projects like airports. • PPP transaction advisors are critical to the successful preparation and completion of PPP procurements • PPP procurements usually produce MANY questions from bidders and investors about contract clauses, evaluation procedures, and performance standards • Kosovo is designing and managing its new PPP framework (procedures & institutions) based primarily on this Airport Concession Experience
Discussion Questions: • PPP Tenders can take a long time to prepare and complete. What the Biggest challenges to efficient completion of Housing Sector PPP transactions in Tanzania? • When PPP Transaction Advisors are used in Tanzania, what are the most important techniques to overseeing and managing them effectively?
Session Overview Goals for this Module 2 Workshop Overview of the 5-Module PPP Capacity Building Program Review of Module 1 (June 10-12) Overview of Module 2 Workshop Curriculum & Schedule Introductions of Workshop Participants
Goals for this Workshop Understand and apply the techniques for conducting identifying & selecting appropriate candidate projects for PPPs. Be able to draft and to critique PPP Concept Papers & Pre-Feasibility Studies Be able to oversee PPP Feasibility Study Consultants and review & critique PPP Feasibility Studies.
Phases of Tanzania’s PPP Project Management Cycle: Phase 1: PPP Identification, Selection, Feasibility Analysis, & Preparation of PPP Projects Phase 2: PPP Tendering & the Private Partner Selection Process Phase 3: Post Award PPP Project and Contract Management
TANZANIA: Integrated, Cumulative 5-Module PPP Capacity Building Program 3 – Intermediate: Understanding PPP Financial Analysis & Models 4 – Intermediate: Implementing the PPP Tender Process 2 – Intermediate: PPP Project Selection & Feasibility Analysis 5 – Intermediate: PPP Contract Management & Performance Monitoring 1 – Introductory: Managing the PPP Project Cycle 43
Module 2-Workshop Program & Schedule: • Day 1 • 1.1: Workshop Overview & Introductions • 1.2: PPP Project Identification, Screening & Selection Techniques • 1.3: Case Studies of PPP Project Selection & Identification • 1.4: Group Exercise on PPP Identification & Selection • 1.5: Preparing the PPP Project Identification Concept Paper • Day 2: • 2.1: Review of Day #1 • 2.2: Group Exercise – Reviewing a PPP Concept Paper – Part 1 • 2.3: Group Exercise – Reviewing a PPP Concept Paper – Part 2 • 2.4: Managing & Completing PPP Feasibility Studies • 2.5: Case Studies of Managing & Completing PPP Feasibility Studies • Day 3: • 3.1: Review of Day #2 • 3.2: Group Exercise of PPP Feasibility Study Management – Part 1 • 3.3: Group Exercise of PPP Feasibility Study Management – Part 2 • 3.4: Workshop Review & Summary • 3.5: Workshop Test, Participant Evaluations & Workshop Conclusion
Workshop Participant Introductions • Your Name (how you would like to be called) • Your organization, title, and professional responsibilities • Your specific goals for attending this PPP Capacity Building Workshop Program. For example: • A specific PPP project you are now working on; • Specific PPP analysis techniques or skills you are most interested in learning (financial, technical, legal, stakeholder management, etc.); • Specific PPP project management issues you are most interested in (ie PPP Feasibility Analysis, PPP Procurement, PPP Contract Management & Performance Monitoring , etc.) • One interesting personal detail about yourself (special hobbies or interests, unique talents, favorite sports teams, etc.)
Contact Information Ned White International PPP Investment Specialist USA Mobile: +1-703-472-3965 email@example.com