m. asheque moyeed investment officer ppp division ... · malaysia kl-selangor expressway bina puri,...
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I s l a m i c D e v e l o p m e n t B a n k 0
M. Asheque MoyeedInvestment Officer
PPP Division - Infrastructure Department
March, 2013
Islamic Development BankPublic - Private Partnership
Providing resources, fighting poverty, restoring dignity
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I s l a m i c D e v e l o p m e n t B a n k 1
ABOUT IDB
A multilateral development bank based in Jeddah, Saudi Arabia
Owned by 56 member countries who are also members of OIC
End of year 1432H (Nov 2011)
– Balance sheet size was ID 10.35 billion (approx. USD 16.1 billion)
– Equity was ID 6.63 billion (approximately USD 10.34 billion)
Rating of AAA by S&P and Fitch and Aaa by Moody’s
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I s l a m i c D e v e l o p m e n t B a n k 2
Total Financing : US$ 20+ bn
Active Projects : US$ 8.5 bn
INFRASTRUCTURE DEPARTMENT
Infrastructure ScorecardWalid Abdelwahab
Director, Infrastructure
Department
Irfan Bukhari
Division Manager,
Public-Private Partnerships
Farrukh M. Mian
Division Manager,
Energy & ICT
Walid A. Fagih
Division Manager,
Transport
Idrissa Dia
Division Manager,
Urban Dev. & Services
Organizational Structure
Sovereign Guaranteed OperationsNon- Sovereign
Approval 1432H : US$ 2.6 bn
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I s l a m i c D e v e l o p m e n t B a n k 3
Multiplies management & financial resource mobilization;
Equitable risk sharing between public and private sector;
Transfer of technology and best practices;
Expedites development and ensures quality service delivery;
Enhances predictability of cost.
BENEFITS OF PPP
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I s l a m i c D e v e l o p m e n t B a n k 4
Capacity in the Public Sector:
– Clear rules / precedence for PPP concessions;
– Ability to select bankable projects
– Well prepared projects with credible & adequate data
– Transparent and competitive procurement process;
– Supervision and enforcement of PPP agreements;
Legal and Regulatory Framework:
– Rights of the investors and lenders;
– Sector Policies;
– Taxation/Forex/Ownership etc.
– Islamic Finance
ENABLING ENVIRONMENT
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I s l a m i c D e v e l o p m e n t B a n k 5
EQUITABLE RISK ALLOCATION
Project Risk
– Construction
– Operations
– Financial-Market
– Technological
– Force Majeure
Country
– Regulatory, Political
– Macro Economics
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I s l a m i c D e v e l o p m e n t B a n k 6
RISK ALLOCATION
Private Sector
Technology, design, engr.
Financing
Construction cost
Availability & performance
Cost efficiency
Life of the asset
Force Majeure
Exchange rate
Demand
Public Sector
Political & regulatory risks
Demand
Land, other infrastructure
Feedstock supply
Collection risk
Exchange rate risks
Inflation
Force Majeure
Interest Rate
Based on country, sub-sector, market appetite, the risk allocation differs
The risks in italic fonts are often very difficult for private sector to manage
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I s l a m i c D e v e l o p m e n t B a n k 7
IDB’S PPP OPERATION
Limited/non-recourse long term finance in infrastructure projects
Risk due diligence is in line with the PF industry practices
Financial instruments are in accordance with Sharia’ principles
Most common products are: Leasing, Istisna and Installment Sale
Product selection depends on the ownership / assignment ability
Financing is generally extended in USD or Euro and for long term
Co-finance with other reputable Islamic and conventional lenders7
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I s l a m i c D e v e l o p m e n t B a n k 8
IDB’S PPP OPERATION
• More than USD 3 Billion approved so far
• A total of 45 projects, including 14 line of finance
• Current commitment is more than USD 2.6 Billion*
8
23%
23%
17%
15%
16%6% Power & Water
Petrochemicals & Fertilizer
Transport
Mining & Metals
Funds & LoF
Others
* Including projects that are currently under documentation process
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I s l a m i c D e v e l o p m e n t B a n k 9
Multisource Financing
Project Company
Common Security Pool
(IDB) Islamic Facility Conventional Facility
1. Common Terms Agreement2. Shared Security Agreement
IDB Owned Asset
In the event of a liquidation the
common security pool is shared by all
lenders on a paripassu basisLease
Leased Assets Added to the
Pool by the ICA
Common Security Pool Sharing of Proceeds: Pari Passu
PARI PASSU WITH OTHER LENDERS
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I s l a m i c D e v e l o p m e n t B a n k 1 0
DUE DILIGENCE FOCUS
Sponsors
Country & regulatory & legal
project concessions and project contracts
Project completion (Sponsor, EPC, E&S, Finance etc.)
Counterparties, roles, obligations, rights, risks
Demand & competitiveness
Governance
E&S
Financial mode 10
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I s l a m i c D e v e l o p m e n t B a n k 1 1
USD 560 million in six projects directly
Another project through PE
Financed in the toll roads, airports, sea port
Projects in Asia, Africa and the Middle East
Both greenfield and brownfield
traffic risk under appropriate circumstance
Issues:
• Regulatory and legal aspects11
TRANSPORT
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I s l a m i c D e v e l o p m e n t B a n k 1 2
Concession
Counterparty dependencies and risks
conflict of interest: Project company vs. EPCC
E&S, mitigation, resettlement
Existing baseline number and cashflow vs. greeenfield
Quality of traffic survey
Traffic forecast, tariff rate & escalation ability, ramp up
Substitution risk
Soil tests and detailed design
Exchange rate and inflation
Financial model 12
TRANSPORTTRANSPORT
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I s l a m i c D e v e l o p m e n t B a n k 1 3
IDB PPP TRANSPORT
Country Project Main Sponsors IDB
Commitment(equiv USD Mn)
Jordan Queen Aalia Airport J&P Avax, Abu Dhabi
Investment Co., Noor
Financials, others
100
Malaysia KL-Selangor Expressway Bina Puri, Arean Irama Bhd 100
Malaysia SKV Expressway Dato’ Rahmat Abu Bakar 90
Djibouti Doraleh Container Terminal Port Autonome, DP World 65
KSA Hajj Terminal, Jeddah Saudi Binladin Group 100
Senegal Aeroport International Blaise Diagne Senegalese Government 91
Asia Tintin (code name) (equity in a
portfolio of four toll road assets)
n/a PE Fund: 50
Indir. IDB: 28
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I s l a m i c D e v e l o p m e n t B a n k 1 4
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THANK YOU
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I s l a m i c D e v e l o p m e n t B a n k 1 5
IDB AND TURKEY
Among the top 10 shareholders of IDB
Shareholder in other IDB Group concerns
IDB Group’s cumulative approval is USD5.9 billion since inception
2010-13 target envelope is USD 2 billion including trade finance
USD 1.3 billion is for public / private sector project finance
Energy and transport are among the focus sectors
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I s l a m i c D e v e l o p m e n t B a n k 1 6
ANEX: POWER & ENERGY
USD 760 million in nine power & energy projects
Key focus has been on IPP / generation projects
Financed thermal, run-of-river hydro and wind power
Minimum off-take & back to back feed stock supply
FX risk mitigation
Merchant power projects – yet to invest16
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I s l a m i c D e v e l o p m e n t B a n k 1 7
ANNEX: POWER & ENERGY
Tariff competiveness
feedstock supply, hydro / wind resource risk
Government support
Land and resettlement
Counterparties
Energy:
• Production stage financing
• Validation of reserve estimation
• Price volatility risk and focus on competitiveness
• Cash sweep 17
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I s l a m i c D e v e l o p m e n t B a n k 1 8
ANNEX: IDB ENERGY PPP PROJECTS
18
Country Project Main Sponsors IDB Commitment
(equivalent USD Million)
Qatar Ras Lafan C (IWPP) Qatar Petroleum, QEWC,
Mitsui & Suez Energy
150
Jordan Qatrana KEPCO
Xenel
80
Pakistan Patrind Hydro K-Water
Deawoo
60
Pakistan New Bong Escape Hydro Hub Power Co. 37
Pakistan Uch II Power IP / GDF Suez 90
Pakistan Foundation Wind Fauji Foundation 140*
Iran Fars IPP MAPNA Group 90
Uzbekistan Khauzak-Shady Uzbekistan Luk Oil 95
Senegal St. Louis Rural
Electrification
ONE 8.7
*including 70 million tranche guaranteed by ADB