IFC, partner of Municipalities for a

successfull introduction of the private

sector in waste management services

April 2015, Belgrade

Creating opportunity where it’s needed most

Agenda

1. Who we are

2. What we do

3. Sector Experience

International Bank for Reconstruction and Development

1945

Lends to governments

of middle income

developing countries.

International

Finance

Corporation

1956

Provides loans, equity

and technical

assistance to

stimulate private

sector investment in

developing countries.

International Development Association

1960

Provides

concessional loans

to governments of

the poorest

countries.

Multilateral Investment Guarantee Agency

1988

Provides

guarantees to

foreign investors

against non-

commercial risk

International Centre for Settlement of Investment Disputes

1966

Settles investment

disputes between

foreign investors

and host

countries.

WORLD BANK GROUP

IFC is the private sector arm of the World Bank Group, with a mission to reduce poverty by promoting

private sector investment in developing countries

IFC’s Global Reach100+ country and regional advisory services offices worldwide

Dakar

Nairobi

Johannesburg

Cairo

Washington

Mexico City

Bogota

Beunos Aires

Sao Paulo

Port-of-Spain

Moscow

IFC HQ/Hub Offices

IFC Operational Centers

IFC Country Offices

Hong Kong

New Dehli

Almaty

Istanbul

IFC also provides technical assistance and advice to governments and businesses

Investments Advisory

IFC is the world’s largest multilateral provider of financing for private enterprises with over US$26 billion in outstanding investment commitments

•Loans

•Equity

•GuaranteesEnvironment &

Social Sustainability

Access to Finance

Business Environment

PPP Transaction

Advisory Enterprise Assistance

IFC’s Main Business Lines

IFC has two business lines: Investments and Advisory

Investment (“Buy-side”) Advisory (“Sell-side”)

• We advise governments on how attract private sector

investment in infrastructure

• To date, we have advised on 165 projects in over 60

countries, mobilizing over $8 billion of private sector

investment

IFC’s Main Business Lines

• We lend to and invest equity in private-sector

businesses.

• Europe and Central Asia represent 22% of the global

portfolio of $12.2bn, or approximately $2.7bn in

commitments

IFC is an investor for its own account and a service provider to third parties.

Consumer &

Social Services

4%

Infrastructure

13%Manufacturing

7%

Other Sectors

1%

Telecommunications

& Information Technology

3%

Agribusiness & Forestry

4%

Financial Markets

25%

Funds

4%Oil, Gas & Mining

2%

Trade Finance

38%

Investments by Industry, FY11

Sub-Saharan

Africa 25%

East Asia and Pacific

13%

South Asia 11%

Latin America

and Caribbean 9%

Global 17%

Europe and

Central Asia 17%

Middle East and

North Africa 8%

Advisory Services by Region, FY11

• IFC’s PPP Transaction Advisory Services department specializes in advising public

sector on the introduction of private sector participation in the delivery of

infrastructure services . We work on the following types of transactions:

Structuring Public-Private Partnerships (e.g. concessions, BOFT)

Disposal of publicly owned assets

Upstream advisory work (regulatory, legal framework)

• Covering the following sectors: roads, rail, power, airports, ports, water, waste,

mining, education and health.

• The IFC PPP Transaction Advisory is organized regionally within the following 6 main

regions and the HQ in Washington, USA: Latin America & Caribbean, East Asia,

East Asia and Pacific, Middle East and Northern Africa, Africa and Europe &

Central Asia.

IFC PPP Transaction Advisory

Agenda

1. Who we are

2. What we do

3. Sector Experience

Options for Private sector participation

Full Divestiture

Technical

Assistance

Service

Contract

Management

Contract

Lease

Contract

Concession

Contract

BFOT

3-5 yrs5-15 yrs

1-3 yrs

15-25 yrs

Ris

k t

ransf

err

ed t

o p

rivate

secto

r

As the contract term increases, an increasing amount of risk can be allocated to the private sector

Contract Duration

Limited risk transfer

Government control

Full risk transfer

No government control

Substantial risk transfer

Government control

Most

common

PPP model

12

3

4

5

7

Design

Build

Operate

6

15-20 yrs

Equipment providers

Insurance Companies

Lenders

City / Households

Government

OperatorShareholders

ConstructorSub-Constructors

Typical PPP Projects: the BFOT structure, and…

Banks

Project

Company

Sub-contracts

Guarantees

Incomes

Concession

Building Contract

Shareholders Agreements

... its financing, or…

Public Sector

Special Purpose

VehicleInvestors

EquityBank (s)

Debt Financing

Planning/Construction/

RefurbishmentOperation/Maintenance

Construction Company

Sub-Contracts

Facility Management - Provider

Sub-Contracts

…the design, build and operate structure (“DBO”)

The private sector brings its expertise in the design (choice of

technology), management of the construction / site rehabilitation,

and operations, while…

The public sector provides financing.

The advantages for the contracting public authorities are:

- Have access to the best available currently available and proven technological solution

and operation practices (optimization of O&M costs)

- Have access to the best practices in term of financial and procurement management.

- Lower the cost of finance by beneficiating from the credit standing of the public sector.

Therefore having a positive impact on the user tariff, while:

- Having access to all best practices in term of environmental and social responsibility

- Beneficiating from knowledge transfer

•Presentation Title

IFC’s Two Phased Implementation Approach

PREPARATION PHASE

Technical

Review

Financial/

Operational

Review

Legal Review

Preliminary Memo/

Research

Market sounding

Agree the PPP

structure

Phase 1:

Diagnostic and

Strategic Review (DSR)

(Legal Consultant)

(Technical Consultant)

IMPLEMENTATION PHASE

Info Memo –

Marketing/

Road show

Bidder

Prequalification

Valuation

Report

Discussions with

bidders

Bidders’ Due

Diligence

Bid, Evaluation &

Closing

Negotiate Bid

Documents

Phase 2:

Restructuring and

Implementation

3-6 months 10-14 months

PPP Transaction Advisory does not only produce reports, our role does not finish until a suitable private

investor has committed to execute a project*

* Note: PPP transaction advisory only charges a portion of the project costs, if the project is not successfully closed (i.e. IFC loses

money if our advise does not bring you a suitable investor)

Typical Timeline in PPP Process

Define

Project

Review of

PPP

options

Market

sounding

Project

Approval

Planning

Phase

Marketing

Phase

Solicitation &

Evaluation Award

(3 months)(2-4

months)

(3-6 months) (1-4 months)

RfQ

Issuance

Information

Memorandum

Issue

RfP

Marketing

And

Short

listing

Tender

Period

Tender

Evaluation

Select

Preferred

Bidder

Contract

Negotiation

Fund

Approval

Financial

Close

DIAGNOSTIC PHASE IMPLEMENTATION PHASE

Why IFC PPP Transaction Advisory?

Experience

Investors (private

sector and IFI)

Transparent tender process

• IFC guarantees a clean and transparent tender

process ensuring political cover from potential

accusations from opposition parties;

• IFC has committed relationships with investorsand other international financial institutions (e.g.

World Bank, EBRD, IMF etc.);

• IFC is in direct contact with all the key solid

waste operators and understands how the project

should be structured to raise interest;

• Excellent access to debt providers; debt

providers know that IFC will structure a bankable

transaction;

• IFC has extensive experience in the sector and

similar environments with reputable and top quality

operators.

• Do not be prescriptive in the choice of technology and collection cycle.

• Temper any expectation that a PPP solution will not require a gate fee…

• Ensure there is appropriate political support for the proposed project.

• Realistic risk allocation matrix is of utmost importance - what are the risks and who is

the best party to handle those risks?

• Review the regulatory framework’s soundness.

• Get the key stakeholders to agree on key items before the tender process, not after.

• Speak to investors early to gauge their interest.

• Engage in a sustainable solution.

Lessons Learned

WHAT’S IMPORTANT FOR SUCCESSFUL PPP?

IFC Solid Waste Management Projects

Agenda

1. Who we are

2. What we do

3. Sector Experience

Water and Waste

Recent activity in the water and waste sectors

Loan

Construction facility

and preferred shares

in desalination

complex in Tianjin,

China

IFC Principal Division

Loan

€25m to fund

expansion into Middle

East and Africa

IFC Principal Division

Privatization

Privatization of Water

and Electricity

sectors in Gabon

IFC mandated as

Financial Adviser

Reconstruction

Reconstruction of Sao

Paulo water supply in

Brazil

IFC mandated as

Financial Adviser

Advisory

Advisory Services of

ACB-BOT Water in

Cambodia

IFC mandated as

Financial Adviser

Advisory

Water and other

waste treatment in

the Gambia

IFC mandated as

Financial Adviser

Investment

$25m of Investment

in Chennai Water in

India

IFC Principal Division

Concession

Dakar Long-term

water supply in

Senegal

IFC mandated as

Financial Adviser

PPP

Private Sector

Participation in

Mauritius Water and

Sanitation

IFC mandated as

Financial Adviser

Privatization

Lagos State Water

Privatization in

Nigeria

IFC mandated as

Financial Adviser

Privatization

Privatization of New

Cairo Water Utility in

Egypt

IFC mandated as

Financial Adviser

Investment

$200,000 for

Clearwater fishing

Project in Guinea

Bissau

IFC Principal Division

Contacts

Cesar VargasPPP Transaction Advisory Europe,

xxxx

xxxxxxx

Web Site: www.ifc.org

Bernard Atlan Sector Leader– Waste management

PPP Transaction Advisory

Bul. Kralja Aleksandra 86-90 - 3rd Floor

11000 Belgrade, Serbia

Tel: (381) 11 330 8948

Fax: (381) 11 3023 740

E-mail: BAtlan@ifc.org

Web Site: www.ifc.org