Presentation Continues Improvement Country Risk

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Presentation Continues Improvement Country Risk Powered By Docstoc
					By:

Shahid Ahmed Khan,
Managing Partner                                          17 May 2010
Anjum Asim Shahid Rahman                              Islamabad, Pakistan

                           Anjum Asim Shahid Rahman                     1
           PRESENTATION ROADMAP
   Presentation Objective


   What is Public Private Partnership


   Financing in PPP Transactions


   Policy and regulation for PPP’s in Pakistan


   Supporting Pakistanis development through Public Private Partnership


•   Q&A




                             Anjum Asim Shahid Rahman                      2
       PRESENTATION OBJECTIVE




“TO DEFINE THE CONCEPT OF PUBLIC PRIVATE
PARTNERSHIP AND THE WAYS BY WHICH CAN CREATE A
MEANINGFUL IMPACT ON DEVELOPMENT IN PAKISTAN”




                 Anjum Asim Shahid Rahman        3
Anjum Asim Shahid Rahman   4
          DEFINITION OF PPP



THE ARRANGEMENT IN WHICH PRIVATE SECTOR
SUPPLIES “INFRASTRUCTURE ASSETS AND SERVICES”
TRADITIONALLY PROVIDED BY THE GOVERNMENT
(THROUGH USING EXTERNAL FINANCING ARRANGED BY
THE PRIVATE SECTOR)




                Anjum Asim Shahid Rahman        5
                     HISTORIC PROSPECTIVE
•   Nationalization leading to concentration of business in the hands of the
    government
•   Privatization and divestiture launched due to the weakening of the public sector
    ability to conduct business- this was the first step in the PPP arrangement.
•   The realization that public sector is still involved in provision of service especially
    utilities and regulated sectors led to the introduction of the “ Build & Own” based
    regime- the second tier in development of the PPP framework. This further led to
    the regulatory bodies, concession based arrangements and limited recourse
    financing.
•   Subsequent realization that many of the sectors such as social sectors and those
    which were not regulated continued to remain outside the scope of development
    through the prevailing regime of private participation – Therefore scope of
    Public Private Participation extended to cover lesser unregulated sectors such as
    health , education, water, sewage, solid waste management , urban transport, and
    roads through and all embracing concept of Public Private Partnership


                                   Anjum Asim Shahid Rahman                               6
                                   DEFINING PPP
•   There are two parties- Public & Private and in this the public sector includes public sector of
    other countries as well multi laterals and bi laterals

•   Typical commitment of each are as follows:
     • Public Sector provides
          a) Enabling framework and
          b) Commitment to purchase output
     • Private Sector provides
          a) Financing
          b) Performance

•   Method of service delivery that involves the private sector in the provision of traditionally
    “public” services

•   Emphasize service or capability that public sector requires instead of assets used to provide
    them

•   Performance-based contracting in which the private sector accepts a level of performance risk

•   PPP arrangements are typically long-term in nature
                                        Anjum Asim Shahid Rahman                                    7
                      KEY ADVANTAGES OF PPP
• Deliver value to the public through:
      Lower Cost
      Higher levels of service
      Reduced Risk

• Deliver value for money through synergies from combining private sector skills

• Creates long-term approach to provision of public services

• Quality of service maintained over life of project

• Flexibility of approach to allow consideration for all types of infrastructure and services

• Pricing and timing certainty - international benchmarks on average state
      Only 24% of PPPs late vs. 73% for Public projects
      Only 22% of PPPs over budget vs. 73% of public projects
      These risks borne largely by private sector




                                       Anjum Asim Shahid Rahman                             8
                   WHEN ARE PPPs EFFECTIVE?

                                          Larger
                                         Projects                   Service
                 Scope for
                                                                 rather than
                innovation                                        just assets



 Private                                                                                Clear
 sector                                                                               boundaries
expertise
                                           When?
                                                                                         Suitable
                                                                                           Risk
Public sector                                                                           allocation
procurement
    skills
                                                                                   New
                                                                                scheme or
                                                                                significant
                          Low
                                                   Performance                   upgrade
                       technology                     can be
                           risk                     measured




                                    Anjum Asim Shahid Rahman                                         9
                       MAJOR TYPES OF PPP
1. Privatization / Divestiture of public sector assets: Partial or complete sale of Government
    ownership to private sector
2. Concession based regimes: ( right to us government assets is contracted to private sector
    under a concession – based contractual arrangement defining sharing of risks and rewards
     • Operation and Maintenance Contract (O & M) - Contract O&M of business on a fee
        basis
     • Lease- Develop- Operate (LDO) – Long lease of asset in which development and
        operation by private sector
     • Licensing Arrangement – Such as telecom, radio, TV
     • Build- Own- Operate- Transfer (BOOT) – Examples are IPP’s Roads
     • Build- Own- Operate (BOO)
     • Design - Build – Finance - Own – Operate (DBFOO)
 3. Public – Private Partnership
      • Social Private Partnership
      • Public Private Product Development Partnership
      • Public Public Partnership
      • Promoting private participation

                                     Anjum Asim Shahid Rahman                               10
Anjum Asim Shahid Rahman   11
          PRINCIPALS OF FINANCING PPP
                 TRANSACTION
Concession Based PPP:

• Senior Debt arranged by commercial banks

• Equity injected by private sector over construction period

• Greenfield project usually cover single asset

• Long term concession agreement is made with host government

• Regular payments from user agency against supply of service on
  availability basis

                              Anjum Asim Shahid Rahman             12
TYPICAL PPP FINANCING TRANSACTION STRUCTURE

                                                               Grantor Agreement
                                     Grantor


                                          PPP (BOT) Contract

    Sponsors
                    Equity
                                                                       Commercial
                                  Concessionaire          Loan
                                                       Agreement
                                                                          Bank
                                       SPV                               Lenders
     Turnkey
   Construction
     Contract                               Operating Contracts


   Construction
                                     Operator
    Contractor
                                                                Operator
                                                               Agreement
                     Contractor
               13
                     Agreement
SO WHAT ARE FINANCING AGENCIES LOOKING FOR
•   Acceptable gearing levels (dependent on risk)
•   Adequate cover ratios
     ADSCR: Annual Debt Service Cover Ratio: = Net cash flow available for debt
       service (i.e. revenues – O&M costs and taxes) in the next year / debt service
       falling due within next year
     LLCR: Loan Life Cover Ratio: = NPV of net cash flow available for debt service
      during the loan period / amount of loan
      PLCR: Project Life Cover Ratio: = NPV of net cash flow available for debt service
        during the PPP Contract period / amount of loan
•   Secure repayment stream
•   Hedging for any open exchange or interest rate risk
•   Security package that is enforceable
•   Sponsors with expertise and financial strength
•   Experienced and capable contractor(s)
•   Experienced and capable operator(s)
•   Strong support from Government
•   Mitigation of key risks (e.g. technological, environmental)

                                  Anjum Asim Shahid Rahman                             14
POLICY & REGULATION FOR PPP IN PAKISTAN




              Anjum Asim Shahid Rahman    15
     Pakistan’s Experience with PPP Policy
• In the 1990s, Pakistan put in place PPP policies pertaining to the
  Telecom and Energy sectors

• Subsequently sector specific PPP policy has been developed for:
  Railways, Power and Highways

• These sectors have benefited greatly from the policy and regulatory
  frameworks, with private national and international investment
  burgeoning in these sectors

• Power policy provided confidence to the investors

• PPP Policy provides regulatory and operational framework for other
  (un-regulated) sectors such as transport, water supply, sanitation,
  healthcare, education


                            Anjum Asim Shahid Rahman                   16
                              PPP Policy 2007
•   Approved in Nov 2007 by ECC of the Cabinet
•   Policy in line with deregulation & liberalization reforms of Government
•   Sectors covered under PPP 2007 policy: Transport & Logistics, Mass Urban
    Transport, Municipal Services, Small Scale Energy Projects
•   Institutional structure comprising the Task Force, IPDF, Viability Gap Fund (VGF)
•   Infrastructure development described through a structured PPP Project life cycle
•   Policy does not infringe on Provincial & Local Govt. autonomy: Provinces may
    develop their own legislation laying out their arrangements for procuring PPP
    projects- Sindh & Punjab now have their own PPP acts.
•   Establishment of a facilitation unit at the Federal level: IPDF to act as market maker
    and facilitation unit for PPP projects
•   Provides eligibility criteria for federal assistance through VGF
•   Defines procedure for submission and evaluation of unsolicited proposals to
    promote innovation while maintaining competitive bidding and selection
•   Provision of monitoring and evaluation mechanism for government to provide
    requisite administrative, institutional support to PPP projects
                                    Anjum Asim Shahid Rahman                             17
           Issues Amended in 2009 Policy
• Roles of the public and private sectors clearly defined in a PPP
  arrangement

• Role of public institutions explicitly given

• Comprehensive Financial Framework: in addition to VGF, Project
  Development Fund (PDF), Infrastructure Development and Financial
  Institution (IDFI) and Risk Management Framework introduced

• Comprehensive Legal Framework introduced into the policy

• Risk framework; comprising the identification, allocation and mitigation of
  project risk is likewise added




                               Anjum Asim Shahid Rahman                     18
         OBJECTIVE OF THE PRESENT POLICY
• Protect the interests of all stakeholders (users, private party, Government)

• Provide a comprehensive guideline to develop and implement infrastructure
  projects transparently under PPP modality

• Create an enabling economic environment to encourage private investment

• Sets up efficient and transparent institutional arrangements for identification
  and development of projects

• Provide risk management framework

• Provides mechanisms for various funding options available to pertinent
  infrastructure projects


                                 Anjum Asim Shahid Rahman                        19
       PREVAILING PPP FRAMEWORK OF PAKISTAN
•   Presently lead managed by Ministry of Finance (MoF) . Implementation of Federal level
    without infringing on Provincial and Local Governments
•   Policy & regulation being finalized, based on international best practices with enactment
    of PPP law in process expected to be completed by end of 2010. Present Policy covers
    Transport, Municipal Service and Small Scale Energy Projects.
•   Comprehensive Financial , Legal and Risk Framework defined
•   Framework implementation through various institutions under the MoF:
      Infrastructure Project Development Facility (IPDF): generate, support and facilitate
        PPP projects including transaction structuring, feasibilities, implementation etc.
      Infrastructure Project Development Facility (IPDF): provides long term, rupee based
        financing facility for the higher risk PPP Projects.
      Guarantee Funds (GF): systematic mechanism for providing guarantees to
        infrastructure PPP projects and enabling the GOP to effectively manage fiscal risk
        (under implementation )
      Viability Gap Funding (“VGF”): funded through government and donor funding to
        provide support funding for PPP projects that pass the test of economic viability but
        fail the financial feasibility test. Funding will be capital or revenue contributions to
        make the project output affordable for the institutions or the end users – this is under
        implementation


                                     Anjum Asim Shahid Rahman                                20
                                    Financial & Institutional Framework
                                                                                                                                                                                      Risk Management Unit


                                                                                                                                                                                   Monitor           Credit
                                                                                                                                                                                 Contingent       Enhancement



                                                           Stage II: Project Feasibility Assessment
                                                                                                                                                                                  Liabilities
Stage I: Project Inception




                                                                                                                      Financially




                                                                                                                                                                                                                     Stage IV: Financial Close
                                                                                                                                               Stage III : Project Structuring
                                                                                                                                                                                 Comm. Banks            IDFI
                             LM’s                                                                                     Feasible
                                                                                                                      Project
                                              PPP   IPDF                                              IPDF
                                      PC                                                                                                                                             Project Financing
                                                                                                                                        IPDF
                             SOE’
                                                    PDF                                               LM

                                      PSDP                                                                           Financially
                                                                                                                     Non- Feasible

                                                                                                                                                                                             Project
                                                                                                                                                                                            Finalized

                                    Project Flow
                                    Funds Flow                                                                         VGF

                                                                                                             Anjum Asim Shahid Rahman                                                                           21
             Legal and Regulatory Framework
•   The GoP is in process of introducing a robust legal framework; the ‘PPP Law which will:
     – Establish the function of the Federal Government and responsibilities of the
         implementing agencies
     – Provide legal protection to all stakeholders
     – Develop clear legal framework for PPP investment consistent with existing national
         and international regulatory practices
•   Until the passage of the PPP Law, all PPP projects will be governed by contract law
    (concession agreements and other related agreements), utilizing IPDF’s Standardized
    Provisions
•   Also PPP law being revised so as to structure it as a over arching facility also connecting
    with provincial regulations on the same subject
•   Guidelines available as standardized documents include (a) Project Inception Guidelines,
    (b) Project Feasibility and Preparation Guidelines, ( c) Procurement Guidelines for PPP
    Projects, (d) Viability Gap Fund Guidelines (e) Risk Management Framework (f)
    Standardized Contracts (user-based and annuity based)

                                     Anjum Asim Shahid Rahman                             22
         EXAMPLES OF SUCESSFUL PPP’S
       SECTOR                       PROJECT                        BASIS OF PPP
Energy (Thermal Power )   Various IPP’s including HUBCO,    BOO, based on cost + tariff
                                    and others                       regime
     Hydel Power             New Bong hydro power                    BOO Basis
       Telecom               Various concessions to        License / Leased Build Operate
                                   operators
  Renewable Energy                Zorlu Energy               License / BOO, with Govt.
                                                                    concessions
        Health                  Harvard Medical             Govt. Support through land
                                                                 and concessions
      Education            Foreign University Campus        Govt. Support through land
                                   under PPP                     and concessions
      Agriculture                  Cool Chain                    Promoting Private
                                                                   Participation
        Roads                Lahore, Faisalabad dual        BOT- Concession based with
                              carriage way project                  Prov. Govt.
  Municipal Services      Solid Waste Management and        Concession based structure
                            Composting Plant - Lahore                                     23
          EXAMPLES OF FAILED PPP’S
    SECTOR                PROJECT                 BASIS OF PPP

    Water          Karachi Wastewater Reuse     Concession based

Culture / Sports      Lahore Sports City        Concession based

    Roads            Karachi / Hyderabad      Concession based- BOT




                                                                      24
Anjum Asim Shahid Rahman   25
    AREA’S OF DEVELOPMENT IMPACTED BY PPP
There are various impediments in the process of development faced by Pakistan today.
However most of it has to do with lack of
(a) resources including our ability to generate resources,
(b) our ability to use resources efficiently and with transparency and
(c) a system which can best ensure the timely receipt of donor funding

With the above in mind our two greatest challenges which can be overcome by the
induction of PPP as a means of affective participation are
1. The lack of an acceptable framework which can encourage donors to provide
    committed funding which presently is the main source of funding for Pakistan- donors
    collectively highlighted that using PPP would possible enable them to make the
    funding more effectively and timely as it covered many of the gaps in the present
    system.
2. The lack of funding for infrastructure development which over the next 5 years is
    estimated at around USD 110 billion- this could be better supported by involving
    execution through a PPP based initiative which could help to
Therefore In addressing the above, what collectively emerged was the use of Public Private
Partnership could provide the solution for addressing both the above.

                                    Anjum Asim Shahid Rahman                             26
 NEED FOR PPP - DONORS CONFERENCE OF
AUGUST 2009 ISTANBUL & JANUARY 2010 IN
                 DUBAI

                Istanbul Donors conference – Aug 2009

Enabling Support by FoDP countries and donors through participation of the
Private Sector (of Pakistan and the friends) involving initiatives such as PPP
which ensures better implementation, greater impact and benefit to all
under a fully transparent and participative process.



                    Dubai PPP conference – Jan 2010

 Donors organized a conference for facilitating investment through PPP held
 in Dubai in January 2010, in which over 500 opportunities in which
 investment on PPP basis could be enabled with the support of donor
 funding to be carried out not as direct funding to the government but as a
 means of leveraging greater investment in various sectors.
                             Anjum Asim Shahid Rahman                            27
       DEVELOPMENT USING DONOR FUNDING FOR
              DIFFERENT PPP OPTIONS


• PPP options to support investment from bilateral and multi lateral for
  development , as follows: -


• 1. PROJECT BASED FINANCING SUPPORT FOR PPP PROJECTS


• 2. INVESTMENT SUPPORT FOR DEVELOPMENT FINANCING INSTITUTIONS


• 3. INCENTIVIZING / PROMOTING PRIVATE SECTOR PARTICIPATION



                              Anjum Asim Shahid Rahman                     28
     PROJECT BASED FINANCING SUPPORT FOR PPP
                     PROJECTS
 Involves initiatives in which donor support is utilized for
 project funding involving substantial participation from the
 private sector

PROVISION OF EQUITY AND DEBT FINANCING FOR PPP PROJECTS –
Financing can be made available on soft terms for use for specific infrastructure
projects undertaken by private sector. Such financing can either be project specific,
sector specific or even area specific. For example financing facility placed with
financial intermediary (selected by donor) for disbursement of financing support for
Bhasha Dam construction (Project Specific), Mineral Development projects (sector
specific) or Baluchistan Based Projects (area specific). In each of these the private
sector is the implementer through use of such funds and funding is provided through
above financing facility representing public sector participation.



                                Anjum Asim Shahid Rahman                           29
     PROJECT BASED FINANCING SUPPORT FOR PPP
                     PROJECTS
TIED FUNDING FOR PRIVATE PARTICIPATION IN PROJECTS: -
Project Specific Funding can be tied up with implementation support (supply of good
and services) to be provided by the donor countries private sector players involving
supply of technology, equipment and implementation contracting. For example
funding provided for specific project identified for implementation by contractor of
the donor country.


PROVISION OF FUNDING TO REPLACE GOP SHARE IN PPP TRANSACTION –
Funding can be made available for enabling the public sector participation in a PPP
transaction through which the GoP participation is supported through donor
intervention. For example the Cool Chain project for implementation of food
preservation infrastructure requires government support in some form – one
possibility is for government to provide equipment. This can in turn be provided
through donor support replacing GoP cost for such commitment .


                                Anjum Asim Shahid Rahman                              30
      INVESTMENT SUPPORT FOR DEVELOPMENT FINANCING
                      INSTITUTIONS
Involves initiatives in which donor support can be utilized towards
funding requirements for establishing development financing vehicles
created for supporting development.
Certain funds already existing and successfully operating such as the Pakistan Poverty
Alleviation Fund or the Competitive Support Fund are not stated above since they are
substantially covered


 CSF VENTURE CAPITAL FUND (VCF)

 ALTERNATE ENERGY DEVELOPMENT FUND (AEDB)

 INFRASTRUCTURE PROJECT FINANCING FUND (IPFF)

 VIABILITY GAP FUND (VGF)

 GUARANTEE FUND (GF)
                                     Anjum Asim Shahid Rahman                            31
             PPP TRANSACTION SUPPORT FUNDS
Involves initiatives in which donor support can be utilized towards
funding requirements for establishing development financing vehicles
created for supporting PPP transactions.

   These include the following which have already been defined earlier in the
   definition of the PPP framework

   INFRASTRUCTURE PROJECT FINANCING FUND (IPFF)
   VIABILITY GAP FUND (VGF)
   GUARANTEE FUND (GF)

   Financing for the above could be provided and included in the funding package
   under consideration for each of the above institutions




                               Anjum Asim Shahid Rahman                            32
INCENTIVIZING / PROMOTING PRIVATE SECTOR PARTICIPATION

Involves initiatives in which donor support can be obtained towards
facilitating through incentivized or subsidized arrangements which promote
foreign private sector participation.

 FINANCING OF INVESTMENT CONSIDERATIONS/STUDIES:
 Setting up of new funding or subsidizing existing facilities for funding
 which can be used for studies to undertake investment in Pakistan
 through financing project feasibility study, market studies, partnering J.V
 arrangements etc. for example such facility through OPIC or EU can be
 incentivized for Pakistan based investment.
 PROVISION OF RISK COVER FOR BUSINESS / INVESTMENT IN PAKISTAN:
 Provision of subsidized preferential rate and process risk coverage
 facility available through various risk agencies to cover business and
 country risk for investment and contract execution in Pakistan including
 coverage by OPIC, HERMES, COFAS at a country level coverage through
 etc.
                            Anjum Asim Shahid Rahman                      33
 POSSIBLE AVENUES FOR INVESTMENT UNDER PPP

 Power
 Alternate and renewable energy
 Oil and gas
 Agriculture
 Transport, Communication and Logistics
 Municipal Services / Mass Urban Public Transport
 Education
 Health
                         Anjum Asim Shahid Rahman    34
 PAKISTAN’S GREATEST NEED – DEVELOPING ITS INFRASTRUCTURE

  Pakistan’s Main Challenge for Economic Growth and Sustainability is development of its
        infrastructure requiring US$ 110 billion over the next five years (US$ 22 p.a.)

Infrastructure development
impacted by terrorism, IDPs,       • Throw-Forward                             $31 billion
resource shortage delayed
                                   • Maintenance backlog                       $10 billion
projects and maintenance
backlog of US$ 41 billion
Average annual requirement for
                                   • Multipurpose Water Reservoirs             $ 22 billion
infrastructure development is
US$ 14 billion per annum for       • Other Energy Projects                     $18 billion
next five years equal to US$ 68    • Transport, Comm. & Logistics              $16 billion
billion.
                                   • Urban Mass Transport                       $ 4 billion
                                   • Municipal Services                         $ 3 billion
                                   • Health and Education Infrastructure        $ 5 billion
Resource availability per annum for infrastructure investment =            US$ 5 billion
Requirement as above per annum (US$ 8 billion + US$ 14 billion)=           US$ 22 billion
Shortfall expectation per annum                                =           US$ 17 billion
                                    Anjum Asim Shahid Rahman                            35
Project          Capacity         Fuel              Location           Estimated Cost                   Project
Name             (MW)                                                                                   implementation
1200 MW          1200 MW          Indigenous        Gadani,            Total cost - US$ 2               Initiation 2010
Imported                          coal from         Baluchistan        billion                          Completion 2014
Coal Power                        Indonesia,        or
Project                           Australia         Khalifa Point,
                                  and South         Baluchistan.
                                  Africa

Proposed Partnership under PPP arrangement :
A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and
private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power
Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft . Role of both entities is described
below
• Public Entities: Power Purchaser (Port Authorities / PIDC     • Private investor:
  for developing & operating the jetty) with
                                                                  31% direct equity injection
     Up to 20% equity shareholding                               Raising remaining equity i.e. 49% either through partners or
     Arranging Land for the project                               IPOs
                                                                  Arranging loan
     Arranging consents from public sector entities
                                                                  Development/Construction of project
     Resolving Environment and resettlement issues
                                                                  Operation & Maintenance

                                                 Anjum Asim Shahid Rahman                                                  36
Project           Capacity         Fuel              Location              Estimated Cost                   Project
Name              (MW)                                                                                      implementation
Asrit-Kedam       215 MW           Hydel             In the vicinity       Total Cost - US $                Initiation 2010
Hydropower                         Project           of Swat               405.60 million                   Completion 2014
Project                                              Valley,
                                                     NWFP,

Proposed Partnership under PPP arrangement :
A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and
private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power
Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft loan. Role of both entities is described
below:
• Public Entities: Power Purchaser and Provincial                • Private investor:
  Government of NWFP with

      20% equity shareholding                                             80% equity Shareholding
      Arranging Land for the project                                      Arranging of equity (arranging of loan)
      Arranging consents                                                  Development/Construction of project
      Resolving Environment and resettlement issues                       Operation & Maintenance




                                                  Anjum Asim Shahid Rahman                                                37
Project           Capacity         Fuel              Location               Estimated Cost                   Project
Name              (MW)                                                                                       implementation
Madian            157 MW           Hydel             In the vicinity        Total Cost - US $                Initiation 2011
Hydropower                         Project           of Swat                438.40 million                   Completion 2015
Project                                              Valley,
                                                     NWFP,

Proposed Partnership under PPP arrangement :
A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and
private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power
Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft loan. Role of both entities is described
below:
• Public Entities: Power Purchaser and Provincial                •     Private investor:
  Government of NWFP with

      20% equity shareholding                                              80% equity Shareholding
      Arranging Land for the project                                       Arranging of equity (arranging of loan)
      Arranging consents                                                   Development/Construction of project
      Resolving Environment and resettlement issues                        Operation & Maintenance




                                                  Anjum Asim Shahid Rahman                                                38
               Investment Opportunities in Fuels

• Oil Sector:                                                        Potential     Untapped*
   – Exploration and Production,                                                    (%age)
      Refineries, Pipelines, Distribution           Oil                  933           313
                                                    (M barrels)                      (33.6%)
• Gas Sector:
   – Exploration, Compression,                      Gas                   53            30
     Transportation, Distribution,
                                                    (TCF)                            (56.6%)
     Storage

• Coal Mining:
   – Exploration, Extraction,
                                                    Coal                 187         99.9%**
     Gasification, Integrated Power
     Generation                                     (Billion
                                                    Tons)



*Large Untapped Potential in Coal, Gas & Oil.
                                                            Source: Pakistan Energy Yearbook
** Single largest untapped coal reserve
 of 175.5 billion tons in Thar, Province of Sindh
Investment Opportunities in Energy
                  • Hydel:
                      – Water Storage / Irrigation Network
                      – Conjunctive Hydro Power
                        Generation
                      – Run of the River
                      – Low Head Hydels

                  • Integrated CBM/Coal & Power
                    Generation Project

                  • Renewable Energy Generation

                  • PPP on BOO & BOOT basis

                  • Incentivized Packages for
                    Investment with Security /
                    Protection Arrangements
              Railways Investment Proposals
            Track           Kilometers
1.    Doubling                 300        8.  Proc / manu of HD wagons        3,500
2.    Replacement       700               9.  Proc / manu of DE locos         150
3.    Rehabilitation           500        10. Overhauling of locos     27
4.    New tracks               800        11. Proc of DE multi train sets
5.    High speed train        1650
      (Karachi-Peshawar)                  12. Workshop, plant & machinery
                                              procurement
6.    Regional linkages 5-10,000
7.    Replacement of                      13. Procurement of mechanized track
                                              maintenance machinery
      obsolete signaling
      system

14.   Private train sector operation under excess policy
15.   Private train operation
16.   Cargo development handling & development
17.   Privatization of PR manufacturing facilities
18.   Outsourcing of repair / maintenance of tracks, rolling stock and services
                                                          Estimated
  Project Name     Connecting Cities        Length                            PPP Structure
                                                             Cost
                  Pindi Bhattian –        53 km                   -    Operating Concessions for
M-3
                  Faisalabad                                           20 years
                  Islamabad –             155 km                  -    Operating Concessions for
M-1
                  Peshawar                                             20 years
                  Multan - Sukkur         208 km                  -    Operating Concessions for
                                                                       20 years
N-5 Sections
(Grant Trunk      Peshawar - Lahore       440 km                  -    Operating Concessions for
Road)                                                                  20 years
                  Lahore - Multan         330 km                  -    Operating Concessions for
                                                                       20 years
Port Qasim        NA                      NA              US $ 250.0   Management rights
Shipyard                                                    million
                  NA                      NA              US $ 250.0   Management rights
Gwadar Shipyard
                                                            million
Project




                                       Anjum Asim Shahid Rahman                                42
Project Name           Connecting Cities     Length       Estimated Cost           PPP Structure
                       Karachi -           52 km         7.5 billion PKR    Toll collection and
Karachi Northern
                       Hyderabad                                            maintenance for a period of 5
Bypass (KNB)
                                                                            years
                       Muzzaffargarh –     53 km         5.5 billion PKR    Cross subsidy of Shershah
National Highway (N-
                       D.G Khan                                             Bridge and viability gap
70)
                                                                            funding by GOP/ADB
                       Salt Range          15 km         12.7 billion PKR   Concession of full motorway
Realignment of Salt    (Lahore -                                            with revenue sharing formula
Range (M-2)            Islamabad
                       Motorway)
                       Karachi –           135 km        13.0 billion PKR   Concessionaire to finance and
Karachi – Hyderabad    Hyderabad                                            manage construction and then
Motorway (M-9)                                                              maintain and operate the
                                                                            facility




                                         Anjum Asim Shahid Rahman                                   43
                   Airport Infrastructure
• Major airports: Karachi, Lahore & Islamabad

• Secondary airports: Peshawar, Quetta, Multan, Faisalabad, Sialkot & Sukkur

• Several regional airports

•   Air craft movements at airports (000)            197,486
•   Passengers handled (million)                       141.2
•   Cargo (million tonnes)                                      31.6
•   Mail (million tonnes)                                 5.3

• Investment Opportunities:
     –   New airports / upgrading of existing airports
     –   Cargo terminals / villages
     –   Outsourced operations, facilities and services
     –   MOB for aircrafts at Karachi
                    Ports & Shipping
• Main ports: Karachi, Qasim and Gawadar

• Port entries: 3372 vessels with registered tonnage of 50
  million tonnes

• Cargo handled 64.8 million tonnes

• Cargo in containers 5.9 million tonnes

Investment opportunities
   –   Cargo villages & industrial parks
   –   Container terminals
   –   Outsourced operations, facilities and services
   –   KPT enclave
   –   Miscellaneous supporting infrastructure
   Investment Opportunities in Agriculture
• Farm equipment / machinery &       HORTICULTURE INVESTMENTS
  pressurized irrigation systems
                                     Production
• Commercial production of olives,   • Hybrid seed & plant material
  edible oil seeds, tea, herbs and   • Vegetables under green houses /
  cut flowers                           plastic tunnels
                                     • Herbs & flori culture
• Certified seed incl. hybrid/BT     Processing
  seeds & Nursery Production
                                     • Dehydrated fruits & vegetables
                                     • Juices, concentrates & pulps
• Silos/Warehouse Storages (30-35
  million tonnes)                    • Canning & frozen packaging
                                     • Tomato paste
• Absence of wholesale markets       • Essential oils
  and commodity exchanges            Infrastructure
                                     • Cool chain systems
                                     • Export houses
                                     • Packaging technology
              Investment Opportunities in Livestock
              Product                  Production   LIVESTOCK INVESTMENTS
                                                    • Commercial dairy farming
Milk (b of Lts)                           42.2
Beef (m of mt)                            1.6       • Dedicated livestock farms and
                                                      calf fattening for halal meat
Mutton (m of mt)                          0.6         production
Hide & Skins (m of mt)                    47.5
Poultry Meat (m of mt)                    0.6       • Sheep goat rearing for Hajj

Eggs (billion)                            10.7      • Camel breeding farms
• Livestock product export    $ 457 m (3.2%)
• 5 years avg. livestock growth 4.6%                • Veterinary & lab services
•3rd largest milk producer
                                                    • Feed mills & fodder prod.
• Only 3-4% milk processing
•Demand increasing                                  • Silage facilities
     • Milk                            12-13%
     • Red meat                           2-5%      • Cool chains
     • Poultry meat                14-15%                        Source: Economic Survey 2008-09
     Fisheries Investment Opportunities
SALIENT FEATURES                       INVESTMENT POTENTIAL
• Share in GDP 1%                      • Coastal and inland aquaculture

• Production 565,000 tons (60%         • Hatcheries & fish breeding farms
  marine captured)                     • Exploitation of cold water fisheries
                                       • Market & other infrastructure
• Consumption per capita 1.8 kg per
  year                                 •Promotion in domestic market
                                       • Upgrading of Karachi/Korangi fish
• Exports $ 160-200 million            harbors & fishing fleet

• Export potential in value added      • New fish harbors at Pasni & Gawadar
  form $ 1 billion                     • Value addition and fish processing with
                                       compliance on international quality &
• Coastline 1,146 km’s                 health standards

• Inland water bodies    4.5% of the
  total area
           Investment Opportunities in Health
  HEALTH OVERVIEW                                 INVESTMENT POTENTIAL
  • Health care spending is US $ 3 billion        •   State of the art private sector tertiary hospitals
     annually with US $ 2 billion in out of
     pocket payments                                  and transplant facilities
                                                  •   Private wings in public sector hospitals
  •    Primary health indicators unsatisfactory
                                                  •   Trauma, burns and reconstructive surgery
  •    High burden of infectious diseases             infrastructure and services
       resulting from poor sanitation and unsafe
       water 12%                                 •    Dental health infrastructure

  •    High burden of communicable and non-       •   Medical education & training
       communicable diseases
                                                  •   JV’s on education and training of public health
                                                      managers, nurses, paramedics & other auxiliaries
  •    Inadequate public sector hospital
       infrastructure and human resources         •   State of the art diagnostics facilities
  •    70% health care in private domain albeit   •   Vaccine production & Vaccinology center
       few standard quality health facilities
                                                  •   Pharmaceutical manufacturing including generics
                                                  •   Contraceptive manufacture
Liberal package for investment in health
facilities under PPP available including land
within public sector health facilities and
elsewhere on discounted rates
            Investment Opportunities in Education
SALIENT FEATURES                                 INVESTMENT POTENTIAL
•   Literacy rate 56%,female 42% & urban 71%     •   To pursue the objectives of the development of a
                                                     knowledge based society in which competence
•   Net primary enrollment rate 55% & female         exists to be internationally competitive, priority
    52%                                              areas identified for PPP include:

•   Participation rate is skewed against the
    remoter provinces and areas                       –   State of art universities and colleges

•   Enrollment in universities and colleges is        –   Centers of excellence for natural & social
    1.3 m i.e. 5% of the 29 m person between              sciences Infrastructure for demand driven
    17-23 years of age                                    vocational and technical training

•   Education is not demand based with
    professional education & technical/               –   Establishment of campuses of foreign
    vocational training opportunities limited             universities in Pakistan

•   Public sector infrastructure for education        –   JV’s with public or private sector in upgrading
    and its quality is limited                            existing higher education institutions or
                                                          setting up new ones
•   Mushrooming private sector schools and
    professional education institutions
                                                      –   Publication of quality textbooks and other
                                                          printed material
 Cost Sharing Within the Framework of Public-
            Private-Foreign Concept
                                                Private- Sector       Foreign-Partners
        Item            Public Sector Share
                                                     Share                 Share
        Land            Provide Land On lease    Provide Land


    Infrastructure                -                  100%                      -
  Faculty and Staff               -                    -               Responsibility of
       Hiring                                                         Foreign Universities
IT and Lab Equipment              -             50% Cost Sharing       50% Cost Sharing


Faculty Development             50%                   50%
Operational Expenses      30% Cost Sharing                  70% Cost Sharing
        (Fee)
Quality Assurance and                                                  Responsibilities of
    Accreditation                                                     Foreign Universities



           Estimated total cost (excl. land cost) :           $100.00 million
                                                            Estimated
 Project Name         City            Sector                            PPP Structure
                                                               Cost
 Charsaddah        Charsaddah    Municipal Services         US $ 8.00   To be decided
 Solid Waste                                                 million
 Management
Faisalabad Solid   Faisalabad    Municipal Services     US $ 40.00      To be decided
     Waste                                                million
 Management
  Faisalabad       Faisalabad    Municipal Services             -       To be decided
      WASA
Billing/Metering
 Environment         Karachi     Mass Urban Public      US $ 50.00      To be decided
Friendly Public                     Transport             million
Transport (CNG
    Buses)
 Islamabad-        Islamabad –   Mass Urban Public      US $ 400.00     To be decided
 Rawalpindi         Rawalpindi      Transport             million
 Mass Transit



                                 Anjum Asim Shahid Rahman                               52
Anjum Asim Shahid Rahman   53
           CONCLUSION / RECOMMENDATIONS

•   Pakistan today needs all initiatives which can support and facilitate development in
    these extremely challenging circumstances. One initiative which clearly stands out
    is of Public Private Partnership – therefore its implementation must be fully
    supported in priority

•   Developing PPP opportunities into a coherent opportunity database.

•   Strengthening and finalizing the institutional and regulatory framework for PPP.

•   Encouraging support to enable donor funding flow towards PPP in preference to
    public sector funding

•   Facilitating the private sector with more support towards undertaking PPP
    transactions

•   Facilitating information flow of all facilities and concession available in the PPP
    framework
•   Providing full commitment at the govt. level for success of the PPP initiative.

                                   Anjum Asim Shahid Rahman                               54

				
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Description: Presentation Continues Improvement Country Risk