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7th ADB Business Opportunities Fair

Thematic Opportunities: Public-Private Partnerships


Presentation by: Takeo Koike
17 March 2016

Public-Private Partnership and Business Opportunities


Huge need for infrastructure development
Conventional public investment: greater tax mobilization and/or
borrowings,
Tapping private sector resources: public-private partnerships (PPPs)

Use of private sector resources is not merely about financing


PPP deploys technical, operational and management expertise and
efficiency

Partnership is the most important


Inviting the private sector The public sector should become hands-off
PPP should be discussed as one of the methods to deliver infrastructure
services where public sector undertaking remains critical

Public-Private Partnership and Business Opportunities


Private sector roles are diverse and critical
Private sector
Consultants

Policy advisory
Project design
Transaction advisory
Owners engineer
Project management
Lenders engineer
Legal advisory
Financial advisory
Insurance advisory

Investors

Equity
Management
Project development
Project management
Operations

Contractors

Project design
Technology
Equipment
Services (operations
and maintenance)

Financiers
Loans
Guarantees
Insurance

What characterizes a PPP contract?


Private

A PPP is a contract between a public sector


entity and private sector entity that
leverages the strengths of both parties by
appropriately allocating risk between the
two for an extended period

Investment into new / existing infrastructure


and full operation by private sector
Risk profile: Flexible, but likely with
technical, financial, operational risks to
private sector
Duration: 1550 years approx.

Relative Risk

Concession
Contract
Facility / operations management
Risk profile: Private sector receives fee
based on performance; private sector may
have limited capital investment
Duration: 515 years approx.

Management
Contract
Service
Contract

Lease
Contract
Private sector fully responsible for
providing services and operational
improvements
Risk profile: Flexible; possible to give
revenue risk to private sector
Duration: 1030 years approx.

Maintenance of assets
Risk profile: private sector receives fee for
services
Duration: 15 years approx.

Ownership / Capital Investment

Private

ADBs PPP Operational Framework and Modalities


Pillar 1

Pillar 2

Pillar 3

Pillar 4

Advocacy and capacity


development

Enabling
environment

Project development

Project financing

Assist in the development


of pathfinder projects
Provide support (including
advisory support)
throughout the process
from structuring to bid
management and contract
award/financial close.

Provide long-term debt


financing including local
currency
Catalyze commercial
financing by equity, debt
and guarantees.
Provide public sector
financial support through
schemes to ensure
viability and cash flow
sustainability.

Create awareness
Invoke leadership
Identify PPP potential in
sector planning and the
private sector
development agenda
Develop capacity of
Government
Enhance external
knowledge management
links

Develop policy, legal,


regulatory and
institutional framework
to facilitate, guide and
manage the development
of PPPs (country and
sector specific)

ADB is unique in having comprehensive operational modalities to support PPP


Knowledge dissemination,
training

PPP Act; Streamlined PPP


regulation; Tariff reform

Feasibility studies

Nonsovereign financing

PPP units;
Planning and coordination

Preparation support

Sovereign financing

Transaction
Advisory Services

How can ADB catalyze more PPPs?


Donors

Sovereign Financing & Assistance (Loan, TA etc)


Transaction Advisory
Services

Host Country Government /


Ministry of Finance / Line Ministry

On-lending program
Donor-funded
facilities

Sovereign PPP project support


Project Viability Gap Funding
Project availability payment
Funding of government debt/equity

State-owned
Financial intermediary
Non-Sovereign
Financing
- Project Debt / Equity
- Project Guarantees

National Project
Preparation Facility

Public Sector
Contracting Authority / Line Ministry
Publicly-financed
Infrastructure

PPP
Project Company
Private Sector
O&M Service

Private Financiers
& Investors
Private Investment
Fund/Vehicle

BOT / Concession

Service/Mgmt Contract

Asia Pacific Project Preparation Facility (AP3F)

Financing Partners
contributions

Financing Partners

Asia Pacific Project


Preparation Facility
(AP3F)
$73 million
Technical
assistance
and support

Management

Office of Public-Private Partnership

Contribution

Regional Departments
Coordination with DMCs

Project Preparation and Structuring


Prepare and structure infrastructure projects with private
sector participation and bring them to the global market

Client Public Sector


Agencies / Ministries

Capacity Development and Policy reform


Reform and improvement of policy, legislative, regulatory
and institutional practices

Project Monitoring and Restructuring


Project monitoring and project restructuring

ADB has supported its client agencies through upstream


PPP development and transaction advisory
Mongolia
Mongolia
$1.3 mandated
billion CHP5
reached
concession
signing for $1.3
ADB
as Project
transaction
advisor
to government
Mongolias
PPP Mongolias first PPP
billion
CHP5first
project
ADB mandated
transaction
advisor
to government
Project
reached as
concession
signing
in June
2014

Turkmenistan, Afghanistan,
Pakistan, India
ADB mandated as
transaction advisor for $8
billion TAPI pipeline
project that spans 4
countries

India
21 PPP cells established across the country; over
$81 billion of projects implemented via PPP
Long history of ADB support through TA, loans,
and credit enhancements
Sri Lanka
ADB acted as lender and equity investor for Queen
Elizabeth Quay in Colombo, Sri Lankas first PPP
ADB is mandated transaction advisor to Sri Lanka
Ports Authority for development of the Colombo East
Container Terminal via PPP

Philippines
ADB mandated as transaction
advisor for $3.8 billion North
South Railway Project
ADBs Project Development and
Monitoring Facility allows PPP
Center to pay for feasibility
studies and transaction support

Viet Nam
ADB assisted MPI on PPP Decree,
which was approved in March 2015
ADB supported Ministry of
Transport on prioritization of road
projects via PPP

Bangladesh
ADB helped PPP office prepare PPP Guidelines;
now approved in 2015
More than 40 projects identified and approved
as PPP pipeline projects

ADB has provided financings to support private sector


participation in infrastructure
Infrastructure
n Renewables/Efficiency
n Other Energy
n Transport/ICT
n Water
n Other Sectors

Azerbaijan

Peoples Republic of China

n Shah Deniz Stage II Gas Field Expansion

Kazakhstan
n Akmola Electricity Distribution

Georgia
n Adjaristsqali Hydropower

Armenia
n SevanHrazdan Cascade Hydropower

Myanmar
n Connectivity Infrastructure Development
n Yangon Urban Renewal and District Cooling
n Myingyan Natural Gas Power

Pakistan
n New Bong Escape Hydropower
n Uch-II Gas Power
n Patrind Hydropower
n Zorlu Wind Power
n Engro Fast-Track Liquefied Natural Gas Regasification
n Gulpur Hydropower

Lao PDR
n Nam Ngiep Hydropower

Thailand
n
n
n
n

India
n ACME-EDF Solar Power
n Dahej LNG Expansion Phase III
n Delhi Electricity Distribution
n NSL Renewable Power
n Ocean Sparkle Ltd.
n ReNew Power
n Hippocampus Rural Education
n Off-grid Pay-As-You-Go Solar
n Solar and Wind Power

n Clean Bus Leasing in the PRC


n Natural Gas for Land and River Transportation
n Rural Smart Wastewater Treatment
n Urban and Rural Integration Water Distribution
n Wastewater Treatment & Reuse
n Western Counties Water and Wastewater
Management
n Small and Medium-Sized Enterprise Industrial
Wastewater and Sludge Treatment

Bangladesh
n Bibiyana II Gas Power

Central Thailand Solar Power


NED Solar Power
Provincial Solar Power
Subyai Wind Power

Philippines

Indonesia
n East Jakarta Water Supply
n Rantau Dedap Geothermal Power
n Sarulla Geothermal Power Generation

n Mactan-Cebu International Airport Terminal


Philippine Investment Alliance for
n
Infrastructure Fund

Contact information

Takeo Koike
Director
Office of PublicPrivate Partnership
concurrent Technical Advisor (PPP)
Tel:
+63 (2) 632 6438
Email: tkoike@adb.org