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Feasibility Study on Capital Budgeting in Jordan

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Feasibility Study on Capital Budgeting in Jordan document sample

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									    The Hashemite Kingdom of Jordan

    Jordan’s Privatization and Public Private
             Partnership Programs
                   Mohammed Al-Hiari


              OECD Focus Group on Regulatory Reform
                          Working Group IV
             Regulatory Impact Analysis Pilot Projects session
1                             Paris, France
                              May 4th 2007
                  Privatization in Jordan

 Privatization: key component of Structural Adjustment
    Programs with the main objective of raising the
    competitiveness of the national economy.
 Redistribute roles between the Public and the Private
    sectors and establish      and    strengthen   Regulatory
    Commissions.
 Current trend: Establish new projects utilizing modern
    techniques and types of privatization & PPP projects.

2
               Privatization in Jordan.
                     Main objectives

 Attract new and direct investments.
 Alleviate the debt burden off the Treasury.
 Strategic Partnerships: Transfer of new technology and
  modern management techniques.
 Improve the quality of goods and services.




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                         Success Criteria
– The political will and support.
– The Legal Framework:
    • Privatization Law no. 25/ 2000.
    • Prevailing relevant statutes & legislations *
– The Institutional Framework:
   • Privatization Council.
    • Executive Privatization Commission.
– Regulatory Commissions.
– International Best Practices in implementing the
  program.
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                     Implementation Procedures
        Stage One: preparatory phase
1.       Pre- feasibility study for the proposed transaction;
2.       Cabinet endorsement of the transaction for implementation;
3.       Forming the project’s Steering Committee and Technical Team.

        Stage Two: Retaining consultants
1.       Determining the required consultancy services;
2.       Preparation of the TOR;
3.       Advertisement for invitation of EOI;
4.       Drawing the short list of pre-qualified firms.
5.       Sending the RFP and relevant documents (including the TOR, bid documents,
         draft contract, evaluation criteria, etc..)
6.       Setting the deadline for receiving the closed Financial and Technical offers.
7.       Assessment and evaluation of the offers followed by negotiations with the best
         offer/preferred bidder leading to signing the contract.
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                     Implementation Procedures
        Stage Three: Implementing the privatization
1.       Based on the consultant’s recommendations, the privatization strategy is
         formulated including (the privatization type, the percentage slated …etc) .
2.       Preparation of the Information Memorandum (IM).
3.       Preparation of the bidding documents to be later sent to interested bidders. This
         phase encompasses drafting :(TOR, Advertising for invitation of EOI,
         Drafting the short list of pre-qualified firms).
4.       Due diligence conducted by potential bidders.
5.       Sending the RFP (including the TOR, bid document, draft contract
         evaluation criteria, etc..)
6.       Setting the deadline for receiving the closed Financial and technical offers.
7.       Assessment and evaluation of received offers followed by negotiations with the
         best offer / Preferred Bidder. Then sign the contract.
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                 Implementation Procedures



 Stage four: Announcement in the official gazette

    Upon the completion of the transaction, EPC announces, in the Official
    Gazette, all the details of the transaction including all procedures, the name of
    the bidders and their local partners, the prices and fees….etc.




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            Purpose , Application Of The
                    Regulation.

   Once endorsed, The New Regulation shall determine a
    unified and codified set of procedural rules that will govern
    the initiation and implementation of all privatization
    transactions to be executed in the Hashemite Kingdom of
    Jordan.
   All PPP projects shall be governed by the New Regulation
    although they encompass, inter alia,        Public Works
    Contracts; Contracts for the supply of goods or services to
    the State…..etc.

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                The Needs For Regulation


 Legislative Gap
 The Privatization Law allows private sector participation in the PPP
  structure , however the regulation to cover all possible structures.
 Given that the Privatization Law is the only legislation that deals with
  PPP, so the appropriate was the PPP regulations were drafted by EPC.

 The nature of the projects
 Private sector participation in infrastructure is very dependent on its
  perception of sector risks. where their the Regulation is deem that's The
  key indicator is whether the sector is independently regulated or not .



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                   The Needs For Regulation


      Regulatory Framework
      The investors need for independent regulator,
      The needs to reflect the country’s procurement framework to the
       PPP projects.
      The needs to improve the capacity to ‘regulate through contract’.
      The comfort to the private to insure that they are taking
       investment and revenue risk – is that key decisions (like tariff
       setting is not done arbitrarily).




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     The Proposed Implementation Models
              In The Regulation


  The specific model chosen for the implementation of any
   given Privatization Transaction is deemed to include the
   following:
           Public Tendering ;
           Limited Tendering; and
           Direct negotiation.



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           Principles Applicable to Execution of the
                        Transactions

 Transparency
     In accordance with the provisions of the Privatization Law and of
     the new Regulation, all Privatization & PPP Transactions are
     initiated and executed in a transparent manner.
 Openness
     In accordance with the provisions of the Privatisation Law and the
     Regulation, All Transactions are initiated and executed in an open
     and clear manner.



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        Principles Applicable to Execution of the
                   Transactions (cont’d)



    Fair Competition
     Privatization Transactions shall be initiated and executed in a
     manner allowing fair competition, equality of treatment;
     between the Interest Parties or the Bidders in accordance
     with the provisions of the Privatization Law and new
     Regulation.



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             The proposed impacts of PPP
               Transactions Regulation
The identification of a PPP Type Transaction shall be subject to a
preliminary evaluation of the relevant issues as follows:
           Private sector requirements for the success of the project
           measured in terms of access to: capital costs of funding,
           technical and managerial expertise, know-how and
           technology transfer, and, when applicable,
          The advantages brought by enhanced competition in the
           economic sector concerned;
           Demonstration of higher value of money for the project if
           implemented through a PPP Transaction vis-à-vis the
           development of the project entirely by the public sector or
           by the Government;
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           The proposed impacts of PPP
            Transactions Regulation (con.)


      High probability of a demonstrable economic, financial and
       technical viability of the project and of a positive social and
       economic impact.

      Fulfilment of all public finance management and state
       budgetary rules and, whenever applicable, of any rules or
       programs for the multi-annual planning and budgeting for
       public expenditures.

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       Thank you
     www.epc.gov.jo
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