PPP Training Program 4.3 Marketing & Promoting PPP Bidding & Investment Opportunities - PowerPoint Presentation

1. PPP Training Program4.3 Marketing & Promoting PPP Bidding & Investment Opportunities

2. Session OverviewThe Role marketing and promotion to achieving successful PPP procurementsMenu of options to promote & market PPP bidding opportunitiesPPP Investment Information Memoranda (InfoMemos)Request for Expressions of Interest (RfEoI) for a PPP project

3. 1. Role of PPP Investment PromotionUnless private investors, developers, lenders, and operators know about Tanzania’s PPP program, and its specific PPP projects, they may not bid on them… PPP investment promotion is especially needed for the first group of PPP transactions. After that, the performance & profitability of these pilot PPPs (or lack thereof) will speak for itself…In practice, private investors often look at what other private investors are doing and where they are making money (which sectors & countries) and where they are not.The MOST effective form of PPP investment marketing is the returns and profits that a current PPP project in the country & sector is already making.

4. Example: Philippines Navotas BOT Power ProjectLate 1980’s (Post-Marcos) Philippines faced chronic electric power shortages that were crippling the economy1988: Proposal from a private real estate developer to Build-Operate-Transfer a $41 million, 200 MW, 12-year combined cycle emergency power project, (using old, existing generating equipment from a peaking power plant in the USA, built back in 1975, that was under-used and no longer needed…).In 1989 There was no policy, legal, or institutional framework for PPPs in the PhilippinesNavotas was one of the very first IPPs in the developing worldAlthough intended as a peaking plant for just 3-hours per-day (paid higher “spot market” prices, ala “emergency power” ), Navotas IPP was run as a base-load generator (13 hours per day) by the National Power Corp. due to the severe power shortage in the country. It earned much higher than expected profits for its investors.Most observers (private investors, international donors, private power developers, commercial lenders, etc.) all expected that the Govt of Philippines would force the renegotiation of this the PPA contract and reduce the prices paid and the private profits earned…

5. Navotas IPP Philippines ExampleInstead the GoP let the terms and prices of this first PPP stand1990 Philippines “BOT Law” Passed & “BOT Center” Created inside the powerful “Office of the President” (High-Level Political Leadership)NAPOCOR allowed to accept unsolicited proposals and issue direct awards for IPPs. Private power investors, operators, and lenders from all the world came to the Philippines to invest in the attractive and growing new market.Over $37 billion of new private investments in power generation 1990-2017Biggest factor cited by int’l private power investors in their decisions to pursue IPP investments in the Philippines is the proof of clear profits being earned by other developers (ie Hopewell Holdings, Inc’s Navotas IPP) “The best marketing the Govt could have hoped for!”Private PPP investors & commercial lenders will likely place more importance on the proven track record of PPPs that are already making money in Tanzania, rather than on published public relations and paid investment media marketing.

6. Philippines: $56 Billion in Private Investments in Infrastructure (1990-2017)

7. 2. What Do Investor’s Look For When Preparing PPP Investments? (WB Survey)

8. Why PPP Investments Have Succeeded or Failed…

9. PPP Investment Promotion Conferences & “Road Shows”PPP Investor Conferences are meetings conducted by public authorities to promote private investor interest in an individual or a group of related PPP investment projects and contracting opportunities.PPP investment conferences, which seek to distribute key information about new projects, may be conducted within Tanzania, or may even feature investment “road shows” beyond the region, which will target potential foreign investors and operators.

10. Promoting PPPs to Local and Regional Private Developers, Investors & FinanciersDetermine the target audience for PPP investment and operation promotion. For all PPP projects, local service providers including private investors, construction and design firms, equipment suppliers, as well as commercial banks and lenders should be given the opportunity to bid on their own or in partnership with regional and/or international partners. Investment Promotion Agencies can be an important source of assistance in preparing and implementing local and regional investors’ conferences and promotional activities.

11. Promoting PPPs to International Investors, Contractors & FinanciersFor international investment “road shows,” foreign trade and development agencies, and commercial attaches (especially from OECD countries) may be willing to support the costs of travel and transportation for high level delegations to visit their countries as well as the costs of preparing relevant marketing and promotion materials about a specific project and its contracting opportunities. Only publicly known information needs to be discussed during road shows. Good practices also recommend maintaining a formal record of matters discussed and information provided during the road shows.

12. 3. Drafting the Invitation for Expressions of Interest (EoI)Because EoIs are used at an early stage of planning, it is important that the communications are clear about its nature and purpose so as not create an expectation that would disappoint the market or the citizens if the project were not pursued. An Invitation for EoI document should generally contain the following information so as to obtain valid results:

13. PPP Request for Expressions of Interest - ContentsName and brief description of the public authority’s functionsBackground with respect to the present state of the relevant serviceObjectives and overview of the project, drawing upon the Project Initiation, Screening & Selection and PPP Feasibility Analyses & Proposed Risk-Allocation Structure Nature of the partnership being considered (i.e., Lease, PFI, concession, etc.)Services that the private sector is expected to deliverProposed PPP risk-allocationExpertise being sought from the private sector

14. 4. The PPP Investment Information MemorandumThe Information Memorandum (or “Info Memo”) is a summary of the most relevant information that private investors would need to understand the overall purpose, objectives, key components, and major financial requirements and return opportunities from the new project. Unlike full PPP feasibility studies, which can go into great technical detail describing and analyzing a PPP project, an Info Memo provides a summarized version (usually just 30-75 pages) of these different analyses and describes the PPP project’s risk-allocation structure to allow investors and financiers to decide whether and how to invest in the project.

15. PPP Project “Info Memos”Based upon all of the available sources of information about the project prepare an Information Memorandum of roughly 30 – 75 pages that addresses (can be read in one sitting….):Introduction – Brief description of the PPP projectEconomy – Background information on Tanzania’s economy, its recent performance data, the investment environment, the environment and performance of foreign investment, foreign exchange issues, commercial lending opportunities, and other key economic issues important to the PPP ProjectTanzania’s PPP Program – Descriptions of the key elements of Tanzania’s PPP program including objectives, accomplishments, key elements, legal & regulatory framework for PPPs, etc.

16. PPP Investment "Info Memo"The organization and description of the relevant infrastructure sector – sector size, scope and performance; sector policies; sector investment plans & forecast demand levels; institutional roles in the sector; The Specific PPP Project – Description of scope, size/capacity & output standards; descriptions of key elements of the PPP contract including risk-allocation and available public sector contributions; procurement timetableAnnexes – Further information on output service delivery standards, other project requirements, etc.

17. PPP Project Information Memorandum

18. Egyptian PPP Pipeline Projects – 5 years plan – 2008 – 2012 -

19. Egypt: New Public Schools Pilot PPP Project2,100 New Public Schools in Egypt (7 batches)Project Description1st batch of 345 schools to be tendered out by GAEB jointly with MOF. IFC Transaction advisorPrivate Service Provider shall design, finance, construct, furnish maintain, operate and provide non-educational servicesLocation over 27 Governorates & Project Duration 15 YearsRemaining 6 batches of schools to be tendered over coming 5 yearsPLANNED Project TimeframeNovember 2007 Issuance of RFQJanuary 2008 Announcement of Qualified Bidders April 2008 Issuance of Pre-Final Tender DocumentsJune 2008 Issuance of Final Tender Documents November 2008 Bid Submission DeadlineJanuary 2009 Contract SignatureApril 2009 Commencement of Construction

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21. Egypt Schools PPP: Info Memo Contents Introduction EconomyEconomic PerformanceInvestment EnvironmentForeign InvestmentExchange RatesBank Credit & Interest Rates The PPP ProgramObjectivesKey Elements of the ProgramLegal & Regulatory Framework

22. D. Education SectorEducation SystemEducation PolicyEducation SpendingGeneral Authority for Education Buildings (GAEB)E. ProjectProject DescriptionPPP ContractProject FinancingProject Financial ModelTender Process & TimetableAnnexesSummary of Service ObligationsEgypt Schools PPP: Info Memo Contents

23. PPP Project ScopePrivate sector to design, build, furnish, finance and provide non-educational services (maintenance, cleaning, security, etc.) for 300 new schools (as first tranche of a projected 2,210 new school PPPs)GAEB has identified the land, conducted soil analyses, and completed all data gathering on the physical characteristics (location, etc.) All relevant data will be distributed to interested bidders on CD-ROM

24. Discussion Questions:Which PPP bid promotion techniques would be most appropriate for your country’s/organization’s PPP Projects?Would PPP Info Memos be a useful tool for generating private investor interest in your country’s PPP Projects?What would be the most important contents to include in PPP Info Memos for your country’s PPP Projects?

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