SUMMARY EXECUTIVE Municipal Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Introduction 02 2.0 Municipal PPP: What & Why 03 3.0 Understanding the Context 05 4.0 PPP Project Cycle 06 3.1 Public 05 4.1 Project Selection & Prioritization 06 3.2 Private 05 4.2 Project Development 08 4.3 Procurement & Award 09 4.4 Implementation 10 5.0 List of References 11 Executive Summary Introduction 2 1.0 Introduction This framework is specifically designed for municipal1 governments and staff seeking to implement public-private partnerships (PPPs) to help meet their infrastructure development needs. It is written with their perspective in mind, with an emphasis on practical guidance that reflects the varied contexts and real-world challenges that city and other local governments face. This framework is modular, comprising a guidance note, 20 topic- specific modules that provide more information and guidance on key issues, and a collection of project summaries that highlight innovative approaches to municipal PPP around the world. This executive summary provides a summary of the guidance note. As used throughout this 1 framework, the term thegpsc.org ‘municipal’ is intended to cover the many forms and names of subnational government public bodies serving | local communities under The World Bank different administrative, legislative, and constitutional systems around the world. Executive Summary Municipal PPP: What & why 3 2.0 Municipal PPP: What & Why The term public-private partnership (PPP) to specifications. At the same time, the private encompasses a variety of approaches to long-term partner will need to be compensated for risk 2 See  Guidance Note partnerships between municipalities and private borne. Thus, the more risk that is transferred to the Sections 1.1 and 1.2 entities to deliver infrastructure services, with the private partner, the higher the cost of capital.6 As for more information on defining municipal PPP. private partner bearing significant project risks. a PPP is never “free” from the perspective of the 3  See Module 15: As used herein, a municipal PPP is simply a PPP municipality,7 the cost of capital is a major factor Sector Issues for more where the government entity is a municipal body in evaluating whether a PPP is the most desirable information on issues related to particular and where the public asset or service is a municipal delivery method for a particular project. Transferring infrastructure sectors. asset or service.2 too much risk to the private partner can unduly 4 See Guidance Note  increase the cost of the project and even result in Section 1.2 for more information on types of PPPs are part of a fundamental, global shift in the project failure. PPP project structures. role of the municipal government – from being the 5  See Guidance Note direct provider of public services, to becoming A PPP requires careful preparation. This begins Section 1.2 for more information on project the planner, facilitator, contract manager and/ at the earliest stage of project identification and risks and risk allocation. or regulator who ensures that local services are continues through final execution of the PPP Also see Module available, reliable, meet key quality standards, and agreement,8 as more project-specific details and 3: Project Concept Note for an example are affordable for users and the local economy.3 data become known.9 of a provisional risk Within this broad paradigm, the structure of a PPP allocation matrix and used for a specific project is flexible, with a wide If well-designed and managed, PPPs can deliver Module 4: Feasibility Study for information variety of options available that allocate different high-quality, cost-efficient infrastructure, while on how risk allocation is rights and responsibilities to the parties to the leveraging private capital to increase the amount developed and evolves PPP. The appropriate project structure can only be of infrastructure that can be delivered by the during the project development process. determined with reference to the unique context of municipality within the same budgetary envelope.10 6  The cost of capital the municipality and a particular project. PPPs can help municipalities deliver better and refers to the amount of more reliable quality of service at a better cost return on investment that the private partner There are a few general principles with which to the municipality when compared to what can will require to make its the municipality should be familiar. The project be achieved by public sector delivery alone. By investment in the project structure determines the extent of the private mobilizing private expertise, human, and financial worthwhile, considering, inter alia, the risk of loss sector’s participation in the underlying project, for resources, PPPs can accelerate the construction and opportunity cost of instance whether the private partner is responsible of infrastructure, improve the efficiency of public that investment. only for operating and maintaining an existing asset, services, and foster innovative solutions that offer 7 See Guidance Note  Section 1.3, Remark or whether it is responsible for designing, financing, a better response to user needs than would often on “Mythbusters” for and building a new asset.4 In turn, the extent of poorly functioning public service provision. further explanation. the private sector’s involvement in the project 8  As used herein, PPP agreement affects the amount of risk that may be transferred At the same time, PPPs are only one of many refers to the contract to the private sector. As the private partner’s role tools available to municipalities to meet their signed between the increases, so too does the amount of risk it may infrastructure needs and should be viewed as such. municipality and the private partner to be asked to bear. The reverse is also true, as the The private sector can do some things better than implement the PPP private partner assumes more risk, it will require the public sector, in particular around innovation, project. See Guidance more operational control over the project in order it service delivery, commercial orientation, and Note Glossary and Section 5.1. manage those risks. operational efficiency. When properly structured, 9 See Guidance Note  a PPP can leverage the distinct incentives and Sections 3.1 and 4.2 An appropriate allocation of risks between the capabilities of the private sector11 and create for more information on determining the optimal parties is a key determinant of project success.5 “win-win” arrangements. However, a PPP will not project structure. From the perspective of the municipality, always be the most effective option for delivering a 10 See  Guidance Note transferring risk to the private partner is a particular project and implementing a PPP presents Section 1.3 for more information on the significant benefit of a PPP, for instance the risk that unique challenges for the municipality, including benefits of PPPs. construction is completed on time and according increased project preparation requirements, direct Executive Summary Municipal PPP: What & why 4 and contingent fiscal liabilities, and oversight responsibilities.12 In considering whether and why to pursue a PPP, the municipality needs to consider the relative pros and cons of using PPP as compared to the other options for delivering the same project, in particular through the lens of efficient service delivery, public investment management,13 fiscal risk management,14 and capital planning; i.e. whether the project represents “value for money” or “VfM”.15 To this end, the municipality should assess how PPPs factor into its broader planning and budgeting systems, and ensure adequate processes are in place to determine the most effective use of limited public resources and fiscal space.16 11  ee Guidance Note S Section 1.3 for more information on the private sector’s distinct abilities and incentives in delivering public infrastructure services. 12 See Guidance Note  Section 1.3 for additional information on some of the challenges PPPs can present for municipalities. 13 For further discussion,  see: www.pefa.org and International Monetary Fund’s Public Investment Management Assessment tool (2018). 14 For more information, see Irwin, Timothy C, Samah Mazraani, and Sandeep Saxena. 2018. How to Control the Fiscal Costs of Public- Private Partnerships. Washington DC: International Monetary Fund. 15 The definition of VfM will  differ by municipality, depending on priorities and needs. VfM is not a strict, mathematical assessment, but rather a set of criteria to help understand whether the municipality gets a better deal from a PPP solution than other uses of public resources and opportunities. 16 See Guidance Note  Sections 1.3, 2.1, thegpsc.org 3.1, and 3.2 for more information on the importance of planning and budgeting systems, as they relate both to | good project selection The World Bank and the municipality’s capacity to implement PPP. Executive Summary Understanding the Context 5 3.0 Understanding the Context Before attempting a particular PPP project or sector context, from institutional capacity to funding program, the municipality must understand PPP, and the private sector context, namely the the broader context in which the project will be key issues and concerns that will influence private developed and delivered. This includes the public investors’ interest in investing in a PPP project. 3.1 Public Before considering the potential to implement a advisers to assist with project preparatory work; PPP, it is important to first clearly understand the The municipality’s creditworthiness, financial •  municipality’s context as it relates to successful PPP capacity, and overall credibility as a contractual delivery.17 Key issues include: partner; and The municipality’s investment planning and •  The applicable legal and regulatory framework, •  budgeting processes; including as it relates to the municipality’s legal The institutional capacity of the municipality •  authority to enter into a binding PPP agreement. to deliver a PPP, including its internal human resources and its ability to procure outside Note Funding PPP Municipal PPPs need a robust revenue stream to fund capital and operating expenses, including debt service and equity return. The municipality should follow a hierarchy of possible revenue sources that begins with maximizing sustainable revenues from direct beneficiaries, then explores options to capture value from indirect beneficiaries. Finally, and only then, should public money or guarantees be used to enhance project viability, and only where that public support represents VfM for the government, the community, and the economy.18 3.2 Private In preparing and structuring a municipal PPP, the and intention to make any payments due under municipality should consider the project from the the PPP. If foreign investment is sought, private perspective of a private partner.19 In particular, a investors and lenders will need a means to manage private investor will want to know that the project is foreign exchange risk and will need to trust the well-studied and -prepared, with reliable forecasts domestic courts to fairly adjudicate contractual of costs, demand, and revenue, as well as an claims or enforce arbitration awards, should a appropriate allocation of risks. A prospective private dispute arise. By considering issues like these partner will also be concerned with the broader from the outset, the municipality will increase the context in which the project will operate. It will likelihood of identifying, preparing, and procuring a need confidence that the municipality will fulfill its successful PPP. contractual obligations and will have the capacity 17  ee Guidance Note Section 2.1 for more information on the municipal context. Also see Module 1: Municipal Readiness, which S provides a tool for assessing a municipality’s readiness to implement a PPP. 18 For more information and guidance on funding PPP, see Guidance Note Section 2.4 on Funding PPP, Module 1: Municipal  Readiness, Module 2: Project Concept Assessment Tool, Module 3: Project Concept Note, Module 4: Feasibility Study, Module 16: Harnessing Land Value Capture, Module 17: Capturing Commercial Value, and Module 20: Summary Practical Advice for Decision Makers. 19 See Guidance Note Section 2.2 for more information on the private sector context. Also see Module 19: Private Sector Context  for a deeper discussion of the relevant issues. Executive Summary PPP Project Cycle 6 4.0 PPP Project Cycle The full life-cycle of a PPP consists of four phases: municipality, and make the project more likely to i) selection; ii) development; iii) procurement and fail. The municipality is unlikely to have sufficient award; and iv) implementation.20 These phases are internal human resources in this regard, especially not necessarily linear, a project may move back when undertaking its first PPP project or program. and forth between these phases as needed to Internal human resource capacity can and should ensure that it is well prepared. Furthermore, in some be developed over time, through appropriate hiring, jurisdictions the applicable legal and regulatory formal trainings, and direct, on-the-job experience framework may set out specific requirements and with PPPs. In many respects, expertise is best processes that must be followed with respect to acquired by actually working on a PPP (i.e., learn- some or all the stages in the project cycle. by-doing), provided that emphasis is placed on knowledge sharing to ensure that lessons learned Implementing a successful PPP requires significant are shared among staff and preserved within upfront investment, both in terms of time and institutions despite staffing changes. money, but this investment will generate substantial benefits over the life of the project and greatly In the interim, gaps in internal capacity can be reduce the likelihood of costly changes or otherwise overcome by seeking external assistance with incurring significant liabilities from the project in project development. To this end, recourse may the future. A robust development process will help be made to national or state-level PPP units and ensure, among other things, that the project: other government departments and entities at the Provides value for money to the municipality •  local or national level with PPP experience that can versus other delivery options; provide hands-on support to the municipality. In Does not expose the municipality to excessive •  addition, the municipality will almost certainly need liabilities; to procure qualified, third-party consultants for Attracts more and higher quality bidders, which •  project-level advisory services. This may include increases competition and so may reduce the assistance with initial project selection, preparation 20  ee Guidance Note S project cost, and makes it more likely that the of a feasibility study, and transaction advice through Sections 3-6 for more winning bidder will have the capacity to deliver to selection of the private partner, signing the PPP information on each step the project to the municipality’s specifications; agreement, and financial close. Costs for these in the project cycle. 21  For more information Minimizes or eliminates negative environmental or •  services vary significantly based on the size and and guidance on social impacts from the project; and complexity of the project and the capacity of the understanding and Provides high quality and affordable services to •  municipality. These services may be paid for by building internal capacity and accessing the project’s beneficiaries. national or local PPP units or by the municipality external assistance with directly from various funding sources (e.g., project development, Failure to invest adequate time and resources technical assistance from development partners, see: Guidance Note Section 3.2, box on for project development can reduce the value or special funds created for such purpose at the Project Inception of the project, result in significant costs for the national or state-level, among others).21 Support, Guidance Note Section 3.3 on Preparation Funding, Guidance Note Section 4.3 on Hiring Advisers, Module 1: Municipal 4.1 Project Selection & Prioritization Readiness, Module 3: Project Concept Note, thegpsc.org Module 5: Managing In the selection phase, the municipality identifies Screening potential projects for PPP suitability Consultants, Module and selects a project for development as a PPP. should occur as part of the municipality’s regular 6: Sample Consultant The purpose of the selection stage is to determine investment planning processes and should include Terms of Reference, which projects appear most suitable for delivery consideration of projects to improve or expand | and Module 13: The World Bank Capacity Building. via PPP and then to prioritize those projects, in existing services, not only new builds,22 as well as 22 See Guidance Note  view of the municipality’s priorities and capacity as ad hoc projects that may arise from time to time, for Section 3.1, Note on “The Temptation of New well as the private sector appetite for investment. instance as a result of a natural disaster. Build.” Executive Summary PPP Project Cycle 7 This might require reversing the municipality’s summary information (that is, need, project usual approach to infrastructure investment description, project rationale, identified sources of planning. Common planning processes focus revenue and financing).24 Projects that are more on the efficient allocation of public funding, and ‘ready’ and more attractive candidates for PPP will therefore the most feasible projects are generally move on to the next phase. allocated public funding and financing. More risky 23 S  ee Guidance Note or complicated projects tend to be relegated to The municipality must then prioritize the potential Section 3.1 for more information on project private development, including PPP. However, projects,25 in view of its development priorities screening. Also see private financing is risk based, i.e. private financing and capacity, including resource constraints, in Module 2: Project for more risky projects attracts a higher financing terms of both staffing and funding, that may limit Concept Assessment Tool and Module 3: cost, less risky projects can be financed at a the number of PPPs that can be pursued at one Project Concept Note lower interest rate. Therefore, the usual allocation time. In addition, the municipality should consider for more guidance on dynamic should be reversed—the least risky, most the market appetite and its expected evolution evaluating projects. 24 See Module 3: Project  feasible projects should be developed with PPP. For in the short to medium term, which will influence Concept Note for a example, there are countries where for every project the number projects that should be prepared as template and sample that asks for public funding, the project team must a priority to fit with and avoid exceeding market project concept note. 25 See Guidance Note  elaborate why the project cannot be implemented appetite. Section 3.2 for more through a PPP structure. information on project Note that at the selection phase, the amount and prioritization. 26  See Guidance Note In general, projects should be evaluated and quality of data is likely to be very poor. Definitive Section 2.6 for more screened based on the strength of the underlying decisions should not be taken against such information on small rationale for the project, institutional readiness to preliminary data, but rather indicative to help projects. 27  See Guidance Note implement the project, project readiness, and PPP guide the municipality and identify additional data Section 2.6, box on suitability, using common and objective criteria and required and further analysis to be done. This initial “Small Project, Small scoring.23 As part of the analysis, the municipality assessment should be updated and repeated as Liabilities?”. should prepare a concept note to capture key appropriate where new data is accessible. Note Implementing Small Projects One common initial screening criteria is the size of the project cost. ‘Small’ projects, generally referring to those that cost less than US$ 5 million equivalent, have a number of disadvantages in terms of PPP delivery, in particular transaction costs are not proportionately lower for small projects and therefore tend to be disproportionately high. So, small projects may be screened out early, on this basis. However, a growing practice in small PPP has led to the development of mechanisms to mitigate some of these challenges.26 These mechanisms may need to be implemented at the national level, by the municipality, or by the PPP team as they develop projects. Some of these mechanisms include: • A simplified approval process for small PPPs; • Standard processes and documents that can make similar types of small projects easier and cheaper to prepare and deliver; and • Aggregating small projects (i.e., pooling or bundling them into one project), to leverage economies of scale to reduce total cost and speed development, while also making the investment larger and more attractive for larger, more experienced investors and lenders. At the same time, it is important to note that small projects do not necessarily mean small liabilities for the municipality.27 Accordingly, consideration should be given to the full extent of fiscal liabilities created by a project and the municipality may consider limiting the type or amount of government support available to small PPP. Executive Summary PPP Project Cycle 8 4.2 Project Development In the development phase, the municipality the project’s size, scope, outputs, structure, and undertakes a comprehensive feasibility study financing and funding mechanisms. In brief, in the to assess the viability of the project: technical, feasibility study the project is not only analyzed economic, financial, fiscal, environmental, social, and assessed but also further developed and legal, risk allocation, and so on. In addition to elaborated. providing a detailed assessment of the feasibility of the project as initially conceived, this stage may At this stage, if not earlier, the municipality must involve significant revisions to the project as more appoint a project manager. The project manager is information becomes known. The findings of the responsible for supervising and managing the PPP studies undertaken for the feasibility study may, project on a daily basis.28 for instance, necessitate or advise changes to Recommendation The Feasibility Study The better and more complete the feasibility study, the more sustainable the project will be. Any temptation to cut corners to save money on this analysis, or when time is scarce and when expectations are unrealistic, must be avoided. Municipalities, even large ones, in general do not have the required human resources to carry out a full feasibility study by themselves. Therefore, feasibility studies are prepared by an external adviser or firm hired by the municipality. The feasibility study report informs the decision-making body in the municipality about the feasibility and desirability of undertaking the project as a PPP, and about the readiness of the project to proceed to procurement.29 Project preparation and development needs to structures that meet market requirements and market involve the community, those directly affected by the appetite for certain projects and sectors. Market project and those less immediate, the poor, women, consultations should be performed at various times and disenfranchised groups.30 during project selection and preparation, with the extent, participants, and location (e.g. foreign or In addition, at this stage if not before, the municipality domestic) determined by the circumstances of the should consult the market to understand project particular project.31 28  ee Guidance Note Section 4.1 for more information on the project manager. Also see Module 1: Municipal Readiness, for S thegpsc.org guidance on internal staffing needs. 29 For more information and guidance on the feasibility study and procuring and supervising external advisers to complete this  study, see: Guidance Note Section 3.3. on Preparation Funding, Guidance Note Section 4.2 on Feasibility Study, Guidance Note Section 4.3 on Hiring Advisers, Guidance Note Section 4.5 on Approval for Tender, Module 1: Municipal Readiness, Module 2: Project Concept Assessment Tool, Module 4: Feasibility Study, Module 5: Managing Consultants, and Module 6: | Sample Consultant Terms of Reference. The World Bank 30  See Module 18: Community Engagement. Also See Module 14: Communication Strategy. 31  See Guidance Note Section 4.4 for more information on market consultations. Also see Module 6: Sample Consultant Terms of Reference for additional information on the role of advisers in market soundings. Executive Summary PPP Project Cycle 9 4.3 Procurement & Award In the procurement and award phase, the the particular context of the municipality and the municipality conducts an open, competitive project. As with the other stages of the project procurement process to select a private partner cycle, the municipality will likely require external for the realization of the project.32 The particular assistance in preparing the tender documents 34 processes and requirements for procurement are (i.e., requests for qualification 35 and proposals 36 likely governed by local or national procurement and the draft PPP agreement 37) as well as with laws and regulations, which will vary by jurisdiction. evaluating bids and negotiating the final PPP The guidance note and related modules address agreement with the preferred bidder.38 the basic steps and provide model documents for both a single-stage and two-stage procurement process,33 which will need to be adjusted to fit Note The Procurement Process The procurement process generally entails soliciting and evaluating bids that set forth the qualifications, technical proposals, and financial proposals of interested bidders.39 Once a preferred bidder is selected, the final PPP agreement is negotiated and signed; this is referred to as ‘commercial close.’ ‘Financial close’ is the moment when the lending agreements become binding on the lenders.40 Note that the municipality may at times receive an with no particular advantage to any bidder is the unsolicited proposal (USP). A USP is submitted best way to implement a successful PPP. In certain by a private party to the municipality to undertake cases, direct negotiations with a single, preferred a PPP project at the private firm’s initiative, private partner may be permitted, for example in a rather than as a response to a request from the national state of emergency or for small changes to government. It is advisable for the municipality existing projects (where there is no real prospect of to exclude USPs entirely, 41 as many countries competition). Nonetheless, the municipality should do, particularly until it has a significant depth of obtain expert advice when approaching such experience in PPPs. An open, competitive process negotiations, which can be complex. 32  ee Guidance Note Section 5 for more information on procurement and award. Also see Module 7: Procurement. S 33  See Guidance Note Section 5.2 for more information and guidance on procurement options. See Guidance Note Section 5.1 for more information and guidance on preparing the tender documents. 34  35 Module 8: Sample Request for Qualifications (RFQ). 36 See Module 9: Sample Request for Proposals (Single Stage) and Module 10: Sample Request for Proposal Document Two-Stage Bid  Process. 37  See Guidance Note Section 5.1 for more information on the key terms of the PPP agreement. Also see Module 11: Sample PPP Agreement. 38 Provincial or national government may have approval rights over the project at various stages, in particular where government  financial support is to be provided. The approval stages should be mapped out to manage appropriately. 39 See Guidance Note Section 5.2 for more information on bidders, particularly regarding special purpose vehicles.  40 For more information and guidance on the procurement process and accessing external assistance, as well as model tender  documents, see: Guidance Note Section 3.3. on Preparation Funding, Section 4.3 on Hiring Advisers, and Section 5 on Procurement and Award. Also see Module 1: Municipal Readiness, Module 5: Managing Consultants, Module 6: Sample Consultant Terms of Reference, Module 7: Procurement, Module 8: Sample Request for Qualifications (RFQ), Module 9: Sample Request for Proposal Single-Stage Bid Process, Module 10: Sample Request for Proposal Document Two-Stage Bid Process, and Module 11: Sample Municipal PPP Agreement. 41 See Guidance Note Section 5.4 for more information and guidance on USPs, including best practices for jurisdictions where USPs  are allowed. Executive Summary PPP Project Cycle 10 4.4 Implementation During the implementation phase, the project The contract manager and team are generally is constructed, the private sector begins responsible for:45 operations, and services are delivered. The Monitoring the performance of the private •  role of the municipality in this phase consists of partner and checking it against the contract contract management and the monitoring of the requirements; performance of the private operator.42 Budgeting and settling payments due from the •  municipality under the PPP contract (if any); Managing a PPP agreement requires a different Handling contract events according to the •  approach from managing a conventional public provisions of the PPP contract (for instance, tariff procurement contract. A conventional public adjustments, non-compliance with performance procurement contract is short term (usually at most requirements, changes in law, contract two or three years) and pertains to the execution of amendments, force majeure, refinancing, precisely defined activities. A PPP agreement, on disputes, and early termination); the other hand, is long term and output based. The Reporting on the performance of the PPP to the •  key success factor of effective contract management municipality and to stakeholders; and is a good relationship between the municipality and Preparing for the handover of the project’s •  the private partner. The essence of PPP is that both residual assets from the private partner to parties proactively work together to manage conflict, the municipality, in accordance with and on avoid defaults, and deliver public services. conclusion of the PPP agreement. Note that the municipality must decide how the project On project implementation, the project manager services will be provided after the termination of should be replaced by a contract manager the PPP agreement well before the end date of to act as the primary point of contact of the that agreement, in order to ensure uninterrupted municipality with the private partner. In some service delivery. cases, the contract manager may be assisted by a contract management team that combines the various disciplines that are needed to monitor the performance of the private partner and manage the PPP contract.43 A contract management plan (CMP) determines the composition and function of this team. The CMP is prepared (usually by the transaction adviser) even before the award and signing of the PPP agreement, and is updated after the signing of the PPP agreement.44 42  ee Guidance Note S Section 6 for more information on the municipality’s role during the implementation phase. Also see Module 12: Contract Management. 43 See Guidance Note  section 6.1 for more information on the project manager and project management team. 44  See Guidance Note Section 6.2 for more information on the CMP. 45  See Guidance Note thegpsc.org Section 6.3 for more information and guidance on contract management. Also see Module 12: Contract Management for | more detailed guidance The World Bank on contract management procedures. Executive Summary List of Reference 11 5.0 List of References Irwin, Timothy C, Samah Mazraani, and Sandeep Saxena. 2018. How to Control the Fiscal Costs of Public-Private Partnerships. Washington DC: International Monetary Fund. GUIDANCE NOTE Municipal Public-Private Partnership Framework TABLE OF CONTENTS Preface 04 Acknowledgements 05 1.0 Overview 06 2.0 Making Municipal Public-Private 16 Partnerships Work 1.1 Introduction 08 1.2 What are Municipal PPPs? 09 2.1 Municipal Context 18 1.3 Why PPPs? 12 2.2 Private Context 19 2.3 PPP Project Cycle 21 2.4 Funding PPP 21 2.5 Success Factors 25 2.6 Implementing Small Projects 26 3.0 Phase I: Selection 28 4.0 Phase II: Development and 36 Approval 3.1 Project Screening 30 3.2 Prioritization 32 4.1 Appointing a Project Manager 38 3.3 Preparing Funding 34 4.2 Feasibility Study 39 4.3 Hiring an Adviser 41 4.4 Market Consultation 42 4.5 Approval for Tender 43 5.0 Phase III: Procurement and Award 44 6.0 Phase IV: Implementation 52 5.1 Preparing the Tender Documents 46 6.1 PPP Contract Manager 55 5.2 Procurement Options 47 6.2 Contract Management Plan 55 5.3 Approval of Award and Financial Close 50 6.3 Contract Management 55 Unsolicited Proposals and Direct 5.4  51 Negotiations. 7.0 List of References 58 Glossary 66 LIST OF MODULES Module 1 Municipal Readiness Module 2 Project Concept Assessment Tool Module 3 Sample Project Concept Note Module 4 Feasibility Study Module 5 Managing Consultants Module 6 Sample Consultant Terms of Reference Module 7 Procurement Sample Request for Qualifications (RFQ) Module 8  Module 9 Sample Request for Proposal Single-Stage Bid Process Module 10 Sample Request for Proposal Two-Stage Bid Process Sample Municipal PPP Agreement Module 11  Module 12 Contract Management Module 13 Capacity Building Module 14 Communication Strategy Module 15 Sector Issues Module 16 Harnessing Land Value Capture Module 17 Capturing Commercial Value Module 18 Community Engagement Module 19 Private Sector Context Summary Practical Advice for Decision Makers Module 20  Guidance Note Preface 4 Preface This Guidance Note is designed to support Knowledge Lab . Accessed July 19, 2019. municipal governments and staff; it is written with https://library.pppknowledgelab.org/ their perspective in mind. Though it is written from a documents/4699. government perspective, it is also useful for decision • Ahmad, Aijaz and Shyamala Shukla. 2014. makers and practitioners across a range of municipal A Preliminary Review of Trends in Small- infrastructure sectors and services. Scale Public-Private Partnership Projects (English). Washington, DC: World Bank Group. The term ‘municipal’ is used in the Guidance Note http://documents.worldbank.org/curated/ to cover the many forms of local government public en/658281468128125129/A-preliminary- bodies serving local communities under different review-of-trends-in-small-scale-public-private- administrative, legislative, and constitutional systems partnership-projects. around the world. The Guidance Note focuses on • Asian Development Bank. 2017. “Cities the common and unique features of public-private Development Initiative for Asia”. https://cdia. partnerships (PPPs) for municipal authorities, which asia. in turn need to be applied according to specific local • Delmon, Jeffrey. 2017. Public-Private Partnership frameworks and procedures. Projects in Infrastructure: An Essential Guide for Policy Makers. Second Edition. New York: The Guidance Note proposes a ‘light touch’ Cambridge University Press. process, to provide enough control for the • Delmon, Jeffrey. 2016. Private Sector Investment municipality, without burdening the municipality or in Infrastructure: Project Finance, PPP Projects the project with significant bureaucratic processes. and PPP Frameworks. Third Edition. Wolters Kluwer. The Guidance Note provides a simple summary of the issues. A detailed discussion of key issues The municipal PPP framework can be found at is provided in 20 modules to allow the reader to https://www.thegpsc.org/knowledge-products/ access more information on specific topics as and municipal-finance-and-ppp and https://ppp. when needed. The Executive Summary provides worldbank.org/municipalppp a summary of the Guidance Note. Finally, project summaries (maximum of two pages each) describe municipal PPP projects with innovative solutions for some of the key challenges facing municipalities. For further information on municipal PPP, see the following: • Amirtahmasebi, Rana, Mariana Orloff, Sameh Wahba, and Andrew Altman. Regenerating Urban Land: A Practitioner’s Guide to Leveraging Private Investment. 2016. Urban Development Series. Washington, DC: World Bank. doi: 10.1596/978-1- 4648-0473-1”. • World Bank. n.d. “Public-Private Partnerships thegpsc.org Legal Resource Center.” PPPLRC. Accessed July 19, 2019. https://ppp.worldbank.org/ public-private-partnership/. This includes links to | national municipal PPP programs in South Africa, The World Bank the Philippines, Canada, and India. • World Bank. n.d.”PPP Reference Guide 3.0”. PPP Guidance Note Acknowledgements 5 Acknowledgements The team was led by Jeffrey Delmon and included Alex Weber, Angelica Toro, Sarah Budiyani, Christopher Crow, Denada Ishmi, Stan Turner, Abhijit Baumik, and Ned White. Early materials were developed by Rebel Consulting. Internal reviews were chaired by Sameh Wabha, Sebnem Erol Madan and Fatouma Toure Ibrahima. Peer reviewers were Marc Forni, Steven Rubinyi, Satheesh Sundararajan, and Daniel Pulido. The team is grateful for advice and guidance from Roland White, Neeraj Gupta, Craig Sugden, Natwar Gandhi, David Painter, Uri Raich, Richard MacGeorge, Aijaz Ahmad, Xueman Wang, Lincoln Lewis, Joshua Gallo, Valerie Santos, Mohit Ganeriwala, Seong Hong, and Alice Laidlaw. Framework development was funded by the Global Platform for Sustainable Cities. The framework is influenced heavily by the lessons learned from the Tanzania Sub-sovereign PPP Project funded by the U.K. Department for International Development. A pilot of the framework in Indonesia is funded by Canada’s Department of Foreign Affairs, Trade and Development. The World Bank | thegpsc.org Overview Introduction What are Municipal PPPs? Why PPPs? Guidance Note Overview 8 1.0 Overview 1.1 Introduction For the first time in history, more than half the world’s and human and financial resources, PPPs can population lives in cities, with 90 percent of urban accelerate the construction of infrastructure, growth taking place in the developing world. This improve the efficiency of public services, and foster high rate of urban growth has put pressure on cities innovative solutions that offer a better response to in various ways.1 Rapid urbanization is swelling user needs than would poorly functioning public municipal populations globally, putting pressure on service provision. an often old and insufficient infrastructure. Municipal budgets cannot keep pace with investment needs. A growing number of local governments are As devolution strategies evolve, municipalities turning to PPPs for municipal services, solid waste 1 A  mirtahmasebi, Rana, are increasingly responsible for the funding and management, recycling, water and sanitation, Mariana Orloff, Sameh provision of public services but often in constrained energy-efficient street lighting, primary health care, Wahba, and Andrew Altman. Regenerating and uncertain budget environments. Municipalities local transport terminals, public markets, parking Urban Land: A have several tools available to them to deliver facilities, parks, affordable housing, municipal Practitioner’s Guide infrastructure services in a more efficient and facilities and ‘Smart City’ applications. Even the to Leveraging Private Investment. 2016. Urban fiscally effective manner, including long-term debt most efficient and functional municipalities such as Development Series. issuances (loans and bonds), asset sale or lease, Singapore 6 and Hong Kong, SAR China, use PPP Washington, DC: World and partnering with private investors.2 to achieve specific goals. However, the experience Bank. doi: 10.1596/978- 1-4648-0473-1”. of PPPs at local levels and with smaller municipal 2  As discussed, these The relative pros and cons of each should be projects has received less attention than larger, tools may be subject to considered, in particular, through the lens of efficient national PPPs. restrictions or approvals, for example, from central service delivery, public investment management,3 government authorities. fiscal risk management,4 and capital planning.5 To deliver infrastructure well, a PPP must be 3  For further discussion, These tools provide a link between the municipality’s properly prepared, well structured, and carefully see www.pefa.org and International strategic vision, its urban land use plan, its annual implemented, as appropriate to the municipality’s Monetary Fund’s Public budget, and its fiscal position; they identify context. But this preparation can be costly and time- Investment Management anticipated public infrastructure and investment consuming, in particular for small projects without Assessment tool (2018). 4  See Irwin, Timothy C, projects, as well as a financing approach. economies of scale. This Guidance Note provides Samah Mazraani, and municipalities with a rigorous procedural framework Sandeep Saxena. 2018. Public-private partnerships (PPPs) create a long- and a set of practical tools to enable them to How to Control the Fiscal Costs of Public- term partnership between municipalities and the identify promising projects, where PPPs can deliver Private Partnerships. private sector, under the premise that the private benefits, to prepare and implement those projects Washington DC: sector can do some things better than the public well, all on a programmatic basis to reduce costs International Monetary Fund. sector, in particular around innovation, service and improve efficiency. 5 For instance, the  delivery, commercial orientation, and the drive for Government of South efficiency. In some cases, a municipality can simply Africa established guidelines on capital hire a private entity to provide a service or deliver planning that provide a product, for example, under a contract for sale advice to departments or a construction contract. But for many services, on how to appraise the best way for a project to mobilize the combined thegpsc.org capital projects and proposals that will strength of the municipality and of the private sector be submitted to the is a PPP, where both parties share critical risks and National Treasury for evaluation and funding liabilities to align interests and coordinate efforts. | consideration (National The World Bank Treasury of Republic If they are well designed and managed, PPPs of South Africa 2017). can deliver quality, reliable, and cost-efficient infrastructure. By mobilizing private expertise Guidance Note Overview 9 Tool Public-Private-Partnership Legal Resource Center •  This World Bank managed web-site provides sample checklists, guidelines, laws, regulations, contracts and other resources for the development of PPP projects. https://ppp.worldbank.org World Bank’s Private Participation in Infrastructure Database •   Provides information regarding more than 6,400 projects with private sector participation, in low- and middle-income countries. The database contains information on the contractual arrangements used, the funding and financing sources, and principal investors. https://ppi.worldbank.org 1.2 What Are Municipal PPPs? For these guidelines, PPP will include different The structure of a PPP used for a specific project 6  ee Public Private S approaches to private entities partnering with is flexible. Each approach to PPPs has different Partnerships in Ministry municipal authorities to deliver infrastructure characteristics and priorities. Figure 1 shows the of Finance of Singapore. https://www.ifaq.gov.sg/ services, with the private sector making a long-term relationship between a few of the more common MOF/apps/fcd_faqmai. commitment and taking significant project risks. structures. Note that the terms of art associated aspx?qst=hRhkP9BzcBI A municipal PPP is a PPP where the government with PPPs do not benefit from a common definition msx2TBbssMsxu7lqt6U JK70a1wAEVmydmntnl% entity is a municipal or local government body and (see the glossary for some of these terms). Some 2FAOlN2tQRU4ZLpZlgE where the public asset or service is a municipal PPP structures like concession or affermage have 5B%2FtUOWfkV%2F05t asset or service. the added complexity of being defined at law in BMT2iM%2Bk%2FPAF8 LWw2e3c8436dh5msez different jurisdictions. Therefore, care needs to be tnq24wt31l088IqrJCij4xr taken when using these terms as the person you mnlFmyuVkNwuL5TCWf speak to may have a different perception of the ooeFMtuIbxseSZ5g3uan %2F%2BmRWZ9Nq3Na term and the relevant legal system may have its 2d%2FsavCclsiUctowKr own definition.7 G2RWWPJkOlvyo%2B3j D9eqwe54tVCXGafgQ% 3D#TOPIC_176. 7 For further discussion  of these terms, their Figure 1: Common Structures for Public-Private Service Arrangements usage, and meaning, see Delmon, Jeffrey. “Understanding Public Owns options for public- and Operates Public Private Private Sector Owns Assets Partnership and Operates Assets private partnerships in infrastructure : sorting out the forest from the Utility Joint trees : BOT, DBFO, Management Concessions Restructuring Leases Venture DCMF, concession, Service Contracts Full BOT Corporatization Contracts Divestiture lease . . . (English)”. Outsourcing Affermages Partial DBOs Divestiture Policy Research working Decentralization paper no. WPS 5173. Washington, DC: World Low High Bank, 2010. Extent of Private Sector Participation http://documents. worldbank.org/curated/ Source: PPP Legal Resource Center, World Bank. en/999661468323693 635/Understanding- options-for-public- private-partnerships-in- infrastructure-sorting- out-the-forest-from-the- trees-BOT-DBFO-DCMF- concession-lease. Guidance Note Overview 10 A PPP combines the strengths of the municipality The exact definition of PPP can vary significantly with its private sector partner (PSP). Just as between different countries. Where a PPP policy municipalities differ in their relative capacity or legal framework is in place, users should and sophistication, so too do private entities. take note of exactly how a PPP is defined by Any partnership is only as good as the law. This is important since the definition of PPP partners themselves and their commitment often determines responsibilities, requirements, to the partnership.8 procedures, stakeholder expectations, and so on • The municipality will want to examine its own when PPP projects are prepared and implemented. 8  ee this blog series S context first, to improve its institutions, regulations, Another key driver of the PPP structure to be comparing PPPs to and capacity, to become the best partner it can adopted is the allocation of risks associated with a marriage, and the be, given time and resource constraints. project among the parties to the PPP. Infrastructure importance of the partnership in the World • Well-implemented, open, competitive projects are long-term undertakings, during which Bank’s Infrastructure procurement will help the municipality select the any number of events might occur that could and Public-Private best available private investor on the best terms. adversely affect the project. These risks range from Partnerships blog, https://blogs. • A PPP must be carefully prepared to put the catastrophic weather events and changes in law worldbank.org/ppps/ municipality in a strong position when negotiating that affect the project to delays and cost overruns what-do-mothers- with a private partner. during construction. (See Module 3: Sample Project law-and-national- ppp-structures-have- • The municipality should learn from and apply Concept Note for a more thorough discussion of common#comments. global lessons learned.9 project risks.) Case Example The Dehradun Interstate Bus Terminal (Uttarakhand, India) The Dehradun Interstate Bus Terminal (ISBT) was developed by the local development authority on a PPP basis. The PSP was responsible for development of a modern bus terminal, catering to long distance routes, with a capacity to accommodate 750 buses per day and operate the facility for 20 years. The concessionaire had the right to develop a commercial complex within the terminal complex and earn rents from the commercial space for the contract tenure of 20 years. The sources of revenues for the concessionaire included the rent from the commercial complex, terminal fee charged to the bus operators, advertising in the terminal complex, and parking charges for the vehicles in the complex. The successful bidder committed to share an annual premium of INR 8.1 million (escalated annually at the inflation rate). The local development authority leveraged private investment for a public facility and unlocked value from commercial utilization.  ompendium on Public Private Partnerships in Urban Infrastructure Case Studies, Ministry of Urban Development- Source: C Government of India and Confederation of Indian Industry (CII). ArmouredCyborg (https://commons.wikimedia.org/wiki/File:UTC_bus.jpg), https://creativecommons.org/licenses/ Photo Credit:  by-sa/4.0/legalcode See Project Summary No. 8 thegpsc.org thegpsc.org | The World Bank Guidance Note Overview 11 While the kind and consequence of the risks arising The private partner will need to be compensated from a project will vary, how the risks are allocated for risk borne. The more the risk assumed by the among the parties has significant implications for the private partner, the higher the cost of capital.10 Thus, success of a PPP. Risk allocation affects the ability to shifting too much risk to the private partner can attract private investment, the quality of competition reduce a project’s value for money (VFM) and, in the among bidders, and the cost of capital. A sound extreme, lead to failure during procurement where understanding of the risks inherent to infrastructure potential investors or their financiers are not willing projects, risk allocation principles and measures, the to bear the levels of risk required. Even if bids are profile of likely bidders and their perceptions of key received and the project awarded, the level of risk risks, and the available risk mitigation instruments is may be too much for the private sector to manage, essential when pursuing a PPP. which can lead to project failure. The general impact of risk sharing on VFM is depicted in Figure 2. In general, the more risk is borne by the private partner, the more control the private sector will need to manage those risks. Thus, referring to Figure 1, as the ‘Extent of Private Sector Participation’ increases from low to high, so too does the amount of risk transferred to the private partner. Figure 2: Relationship between Risk Transfer and VFM VFM Optimal Risk / Max VFM De-risked approach VFM Max. No Bids Optimal RISK TRANSFER Better develop DB 9  orld Bank. n.d. “Public- W Private Partnerships Legal Resource Center.” Source: Public-Private Partnerships Certification Program, PPP Program Certification Guide. PPPLRC. Accessed July Note: DB = Design build. 19, 2019. https://ppp. worldbank.org/public- private-partnership/; Delmon, Jeffrey. The risk premium charged by investors will reflect example, foreign investors will be more sensitive 2017. Public-Private the context of the municipality, for example, to country risk while local investors may have Partnership Projects the reputation of the municipality for interfering less experience with PPP and therefore price in Infrastructure: An Essential Guide for Policy in commercial activities and for paying its bills commercial and financial risks differently. Makers. Second Edition. on time, the perceived creditworthiness of the New York: Cambridge municipality and the government, potential It is important for municipalities to begin University Press; Delmon, Jeffrey. 2016. macroeconomic and political volatility, instability in identifying key risks and considering their potential Private Sector Investment inflation and foreign exchange rates, concerns over allocation as early as possible; see for example in Infrastructure: Project access to impartial and reliable mechanisms for the provisional risk matrix included as part of the Finance, PPP Projects and PPP Frameworks. dispute resolution, the health and depth of the local Sample Project Concept Note in Module 3. But, Third Edition. Wolters financial system, transparency and accountability, clearly, it is not possible to identify every risk in Kluwer. or any combination of these and other factors. Each advance; the project structure will need to include 10  This is commonly referred to as a ‘risk potential investor will have a different perception mechanisms that provide flexible and responsive premium’ of risk and will value risks slightly differently, for means for adapting to the unexpected. Guidance Note Overview 12 Note Risk Sharing in PPPs11 Risk transfer and risk sharing are essential elements of a PPP—an appropriate allocation of risks between •  the parties is key to a successful PPP project. If the municipality retains too much risk, the project loses value but transferring too much risk to the •  private partner can unduly increase the cost of capital and even result in project failure. Practitioners need to understand investors’ perceived project and country risks, as well as basic risk •  sharing principles and risk mitigation strategies, when pursuing a PPP. 11 For more information on risk allocation in PPPs: OECD. 2017. Selected 1.3 Why PPPs? Good Practices for Risk more profit if it meets or exceeds performance Allocation and Mitigation in Infrastructure in APEC Municipalities have several tools available to them requirements. It is more immediately penalized Economies. PARIS: to help deliver infrastructure services in a more by its customers if its performance falls short OECD. Accessed efficient and fiscally effective manner, including, of expectations. A PPP can use output and July 19, 2019. http:// www.oecd.org/ daf/ long-term debt issuances (loans and bonds), asset outcome-based performance requirements fin/private-pensions/ sale or lease, and partnering with private investors. to achieve even better service delivery. The Selected-Good- The relative pros and cons of each should be payment and penalty regime will reinforce this Practices-for-Risk- allocation-and- considered, in particular through the lens of efficient service orientation. This focus on the customer Mitigation-in- service delivery, public investment management,12 can help public services achieve better levels of Infrastructure-in-APEC- fiscal risk management,13 and capital planning.14 operation, and a happier electorate. Economies.pdf; World Bank. 2017c. Guidance Maintenance is a perennial challenge for •  on PPP Contractual PPPs seek to help municipalities deliver better and infrastructure, as the impact of poor maintenance Provisions, 2017 more reliable quality of service at a better cost may not be perceived for years (during future Edition. Washington D.C.: World Bank; to the municipality when compared to what can political cycles). Where budgets are insufficient for Global Infrastructure be achieved by public sector delivery alone. The requirements, public entities often find it preferable Hub. 2016f. Allocating PSP has different incentives and accountability to reduce maintenance expenditure than any other Risks in Public-Private Partnership Contracts. for managing design, procurement, construction, financial obligation they may have. The impact of https://ppp-risk. inspection, operation, maintenance, and poor maintenance on profitability is more direct, gihub.org/content/ ultimately delivery of services, which in the right including specific penalties imposed on the PSP uploads/2016/07/1606 10-GIHub-Allocating- circumstances and under a properly structured for such failure. Therefore, private entities generally Risks-in-PPP-Contracts- and procured PPP contract can achieve improved do a better job maintaining equipment, facilities, 2016-Edition.pdf ; performance and services as compared to publicly and assets to ensure they work properly, and Irwin, Timothy C. 2007. Government guarantees managed services. managing unscheduled outages effectively. - allocating and valuing Through a PPP, the municipality can have a better •  risk in privately financed When a PPP project is well structured, it motivates understanding of the financial obligations and infrastructure projects. Washington, DC: World the private operator to apply its full capabilities liabilities associated with maintenance of the Bank. http://documents. to deliver infrastructure services as required by project over time. The PPP does not, however, worldbank.org/curated/ the contract. The private sector’s capacity differs resolve the budget shortfall for maintenance; it en/2876114683399007 24/ Government- fundamentally from the public sector, and it is these only ensures that the budget constraints do not guarantees-allocating- differences that provide new opportunities to deliver undermine proper asset maintenance. and-valuing-risk-in- services for the municipality more efficiently. Some The private sector is generally focused on •  privately-financed- infrastructure-projects. examples are the following: profitability, which includes a focus on revenues. For further discussion, 12  • To remain competitive, and to continue improving They tend to be better at making sure that any thegpsc.org see: www.pefa.org profitability, private entities often deliver more end user tariffs or fees are collected when due and International Monetary Fund’s Public innovative approaches to problem solving, and that the project generates any commercial Investment Management managing costs, and delays more effectively than revenues available, such as retail rents from Assessment tool (2018). | would a public entity. vendors at municipal market places, transport See Irwin, Timothy C, The World Bank 13 Samah Mazraani, and • Public entities deliver against performance terminals, and other municipal facilities. Billing, Sandeep Saxena. 2018. standards to satisfy political or legal collection, and profitability generally improve, How to Control the requirements, but the private sector often earns often significantly, under private management. Fiscal Costs of Public- Guidance Note Overview 13 Case Example Redevelopment of Library and Fire Station in Washington, D.C., United States Washington, D.C. (the District) needed to refurbish the West End Library and West End Fire Station, and develop additional, centrally located low cost housing. The library and fire station were almost functionally obsolete; their renovations would be extremely costly. The District was able to acquire new, modern facilities while also providing affordable housing by leveraging the air rights above the library and fire station. The high-end condominiums provided additional tax revenue to the District, while the affordable housing element added much-needed affordable housing to the city. The District awarded, through a competitive bid process, a concession to EastBanc WDC Partners. The proposal included US$149 million of investment in a new fire station and library, approximately 150 condominiums, 52 low-cost rental units, and retail space. Financial assistance was provided by the District to build affordable units.  ww.dmped.dc.gov; Committee on Government Operations and the Environment. Committee Report on West End Source: w Parcels Surplus Declaration and Approval Resolution. All Council Members. Washington, DC: Council of the District of Columbia, 2010. Accessed June 13, 2019; http://dcclims1.dccouncil.us/images/00001/20100910152405.pdf; Office of the Deputy Mayor for Planning and Economic Development. West End Executed Land Disposition Agreement. DMPED. Washington, DC: DMPED, 2015. Accessed June 13, 2019. ParentingPatch (https://commons.wikimedia.org/wiki/File:Shelves_of_Language_Books_in_Library.JPG), „Shelves Photo Credit:  of Language Books in Library“, https://creativecommons.org/licenses/by-sa/3.0/legalcode (left); Tony Hisgett from Birmingham, UK (https://commons.wikimedia.org/wiki/File:DC_Fire_and_EMS_unit_(27610832282).jpg), „DC Fire and EMS unit (27610832282)“, https://creativecommons.org/licenses/by/2.0/legalcode (right). See Project Summary No. 73 • Financiers of infrastructure tend to treat public due diligence on the project and ensuring that Private Partnerships. Washington DC: and private borrowers as distinct markets; the project revenues are robust. International therefore, private partnerships make available Even more than with publicly procured •  Monetary Fund. new sources of capital for infrastructure. Private infrastructure, the use of transparent and open 14  For instance, the Government of South investors will bring more equity investment, to competition is key to obtaining VFM from PPP. Africa established capitalize the project and provide a cushion to It can also stimulate new local private sector guidelines on capital lenders. Private partnerships therefore allow market development, and open investment and planning that provide advice to departments infrastructure to access significant new sources contracting opportunities for the private sector, on how to appraise of financing. including small and medium enterprises (SMEs) capital projects and Private financing often involves the experienced •  and local entrepreneurs. New entrants should be proposals that will be submitted to the monitoring and risk management expertise welcomed, in particular, from local businesses National Treasury for of lenders and investors. Private investors where they have the skills and financial capacity. evaluation and funding need clear and predictable revenues to repay Open competition helps foster new entrants. consideration. (National Treasury of Republic of financing. Where private financiers rely on project South Africa 2017). revenues, they will spend more effort performing Guidance Note Overview 14 However, implementing PPPs also presents unique The project must be properly structured to ensure •  challenges for the municipality: that the improved efficiency of private sector risk PPP projects require more careful preparation •  management more than offsets any additional than public projects, to select only those projects costs of private involvement, which requires likely to be attractive to private investors, to investment of time and money to use best quality structure the relationship between public advice and support. and private. This means that PPP preparation The municipality must perform contract •  requires more money and more time compared management and performance monitoring to preparing public projects; this may also functions throughout the entire duration of the mean delayed project execution, which may be PPP contract, which requires allocation of staff politically challenging. Publicly financed projects and budgeting during the life of the project. It is should invest in an equally robust preparation often tempting to declare success after signing process, but generally do not. the contract, but at that moment the work has PPPs are usually long-term contracts that •  just begun. commit a municipality to future liabilities which the municipality must clearly understand, The municipality remains fundamentally analyze, value, and manage.15 They also often responsible to ensure that essential municipal include guarantees of liabilities that must be infrastructure and local services are available to analyzed and valued over time. It is important end-users in the local economy. When PPPs are to consider such fiscal liabilities, both real successful, they are ‘win-win’ arrangements with and contingent, and not use PPP to hide both partners benefiting; the key to getting there is such liabilities. However, PPP highlights these clear and detailed preparation. liabilities, while public financing is generally even more opaque, as contingencies are budgeted as and when they arise. Figure 3: Institutional Limitations of Municipalities in Implementing PPPs Inadequate Inadequate staff with understanding of technical and financial risk allocation and skills for project management development Challenges for PPPs at Inadequate capacity to Weak Financials draft project contracts Municipal Level Absence of systems / Limited experience capacity for managing with multi-staged multi-year financial procurement and commitments financial bid evaluation 15 For further information on how to assess potential fiscal costs and risks arising from a PPP project, see World Bank and thegpsc.org International Monetary Fund. 2016. “Public- Private Partnership Fiscal Risk Assessment Model”. http://www. | worldbank.org/en/topic/ The World Bank publicprivatepart nerships/brief/ppp- tools#T2. Guidance Note Overview 15 When considering whether to implement a project as a PPP, the municipality must consider a number 16  orld Bank. 2013. W Value-for-Money of criteria associated with the project and its Analysis Practices context, that is, whether the project represents VFM. and Challenges: The definition of VFM will differ by municipality, How Governments Choose When to depending on priorities and needs. VFM is not a Use PPP to Deliver strict, mathematical assessment, but rather a set of Public Infrastructure criteria to help understand whether the municipality and Services. http://documents. gets a better deal from a PPP solution than other worldbank.org/curated/ uses of public resources and opportunities.16 en/724231468331 050325/pdf/8408 00WP0Box380ey0 PPPs are part of a fundamental, global shift in the Analysis00PUBLIC0. role of the municipal government—from being pdf; and the reference the direct provider of all local public services to to Assessing Value for Money in the World becoming the planner, facilitator, contract manager, Bank’s PPP certification and/or regulator—who ensures that all key local program https://ppp- services are available, reliable, meet key quality certification.com/ppp- certification-guide/162- standards, and are affordable for users and the assessing-value-money. local economy. See Irwin, Timothy C, 17  Samah Mazraani, and Sandeep Saxena. 2018. This paradigm shift, along with the unique How to Control the challenges that PPPs present, can in turn have Fiscal Costs of Public- consequences on the size, structure, nature of Private Partnerships. Washington DC: work, and skill requirements of the municipality, International Monetary and expose its inherent limitations as illustrated in Fund. Figure 3. Remark Mythbusters PPPs are not ‘free money’. PPP always includes a source of revenue sufficient to cover all operating costs and bank loans, and a reasonable return on the investor’s equity is repaid. This revenue will come from some combination of payments from (a) users of the service, (b) commercial revenues generated by the project, and (c) public sector. Understanding who will pay, and how much they must pay, is an essential step for the municipality before undertaking a PPP. Therefore, municipalities must always account for the fiscal risks arising from PPP.17 PPPs are not ‘easy’. PPP projects require time and money to prepare well. This investment will reap benefits in terms of likelihood of success of the project, lower cost of private investment due to reduced project risk and attracting better, more effective private partners. PPPs are not anti-labor. A PPP will provide more opportunities, better training, and a performance-based employment regime. For those with vested interests in avoiding change, a PPP can be designed to provide a special regime for these staff and their representatives. PPP is not privatization. The project assets either remain under government ownership or will revert to government ownership at the end of the project period. The World Bank | thegpsc.org Making it Work Municipal Context Funding PPP Private Context Success Factors PPP Project Cycle Guidance Note Making Municipal Public-Private Partnerships Work 18 2.0 Making Municipal Public-Private Partnerships Work This section explains how to implement municipal PPPs, and the key challenges in their implementation. 2.1 Municipal Context Before considering the potential to implement a project preparation, and in the PPP agreement PPP, it is important to first clearly understand the to ensure that they are managed during project context of the municipality, the legal framework implementation. that determines authority and responsibility related to PPPs, the capacity of its institutions, the teams Even well-staffed municipalities will likely need to available to it, and the funding it provides for project hire outside advisers to complete feasibility studies development and implementation. and other technical, project preparatory work. Accordingly, the municipality needs to consider its Module 1: Municipal Readiness provides a ability to procure qualified, project-level advisory framework to assess a municipality’s readiness to services. This may include support from regional implement PPP. This assessment begins with the or national PPP units or similar institutions, project municipality’s systems for planning and budgeting, development facilities, and regional or international which impact the ability to identify and select development partners, all of which may offer projects with good PPP potential as well as the technical assistance or funding for PPPs. These municipality’s capacity to meet its obligations under options should be considered in addition to, or a PPP agreement. The municipality needs sufficient for assistance with, the municipality directly hiring internal resources, in terms of qualified staff and outside advisers on its own. available funds, to oversee a PPP project on a day-to-day basis, from selection and development Finally, investors will be concerned to understand through procurement and implementation (see the financial stability of the municipality—whether Section 2.3 on the PPP Project Cycle). This may it can deliver on its obligations under the PPP involve establishing a standing PPP unit within the agreement. To this end, the municipality needs to municipal administration and/or assigning staff to consider the extent to which it can demonstrate manage individual projects on an ad hoc basis. its creditworthiness. This is not limited to the municipality’s history of timely debt repayment, The municipality also needs to have a clear though a good record in this regard is an asset, but understanding of the applicable legal framework to also encompasses the municipality’s credibility as a make sure it has the necessary authority to contract contractual partner. Even where a PPP project does with a private partner for delivery of a PPP project not depend on payments from the municipality, and that all relevant legal requirements are fulfilled. the private partner needs to be confident that the Key legal issues include the municipality’s mandate municipality will honor its commitments under the for infrastructure service delivery (the municipality PPP agreement and is prepared to handle any cannot give a PSP rights and responsibilities that it contingent liabilities that might arise, for example, does not itself have), capacity to enter into long-term making payments due in the case of early contract contracts that may extend past the time in office of termination. thegpsc.org the current administration, and rules or restrictions on private participation, including those related to charging user fees. It is likely that a municipal | PPP will involve various provincial or national The World Bank government stakeholders and possibly approvals. These will need to be mapped out as part of Guidance Note Making Municipal Public-Private Partnerships Work 19 Tool City Creditworthiness Self-Assessment & Planning Tool •  A World Bank initiative to help local and municipal governments to access financing. http://www.citycred.org/?locale=en Remark Examples of Constitutional, Legal, and Regulatory Frameworks for Municipalities In India, the legal framework for municipalities is defined by the federal constitution of India, which •  defines the devolution of powers to municipal governments. The constitution mandates each of the state governments to legislate on functions and activities of municipal governments. As a result, every state has its own municipal laws, differing from others in specific areas. PPPs in India are not governed by a single legal framework either at a country or state level. Most states have, however, developed a similar guidance and administrative framework to support municipal PPPs.  • In the Philippines, the legal framework for municipalities is defined both by the 1987 Philippine Constitution and the national law on local governments. The national law on local governments defines the function and activities of local governments (that is, provinces, cities, and municipalities). While the constitution and the national law grant local governments the autonomy to enact their own laws, such local legislation must not contradict existing national laws and regulations. In the case of PPPs, the national BOT Law governs PPPs implemented at the national and local level, although local governments are allowed to issue implementing rules to complement the national law. The municipal PPP framework in South Africa is equally robust, based on the 1994 constitution’s three •  independent ‘spheres’ of government: national, provincial, and local. Local governments are free to borrow funds on their own and to enter into long-term PPP contracts, without guarantees of these new local liabilities by the National Treasury. The Constitution and the Public Financial Management Act are complemented by PPP Guidance Notes developed by South Africa’s National PPP Unit. As such, while municipalities are empowered to undertake PPP projects, such activities must comply with the standards and requirements of national-level laws and policies. 2.2 Private Context When a PSP considers a municipal PPP, it will address these issues. Municipalities should review perform due diligence and test whether the risks their projects from the perspective of the PSP to and investment potential merit investment of time understand better the PSP perspective and priorities and money for due diligence. The following sets out in advance of the bidding process, and to prepare a few of these questions to help the municipality for the kind of questions/concerns that the PSP will understand the kind of issues that are important for raise. These issues are discussed in more detail in the PSP and the due diligence it will perform. The Module 19: Private Sector Context. feasibility study and the PPP agreement should Guidance Note Making Municipal Public-Private Partnerships Work 20 Is this project important? PSPs know that projects •  Will municipality fulfill its obligations? Does it •  that are important to the municipality and to the usually do so? The investor will feel vulnerable in people have a better chance of succeeding. the face of a municipality that has so much power Projects that are only important to a particular over the project and its context. A municipality municipal official or political party are probably may not be creditworthy; it may not be sufficiently less likely to succeed. Investors will want to financially stable to fulfill its financial obligations. see an economic assessment, such as a cost- A municipality may decide not to comply with benefit analysis, to evidence the importance of its obligations, may change rules or regulations, the project (and therefore the likelihood of its may impose new permits or licenses, or create resilience to change). other constraints, in particular in the event of a • How much preparation has been done? If the change in government or after an election. The municipality has prepared the project well (with PSP will have little power to resist such changes, appropriate studies), the investor will be reassured even where they are fundamental to the success that the project is more likely to be viable and is a of the project. Potential investors will review the priority for the municipality. municipality’s history of paying its bills on time, of Is demand real, or just hopeful? There is a •  respecting contracts, of using its power to deprive tendency for a municipality to suffer from investors of assets or opportunities, and of the optimism bias and assume a much higher level frequency and transparency of the regulatory and of demand for a project than is realistic. Studies permitting authority wielded by the municipality. of traffic forecasts and similar demand forecasts Can the courts be trusted to be fair? To enforce •  show a consistent overestimation of demand. arbitral or other awards? Even if the project Potential investors will discount demand forecast provides protection to the private investor, those by the municipality (even if provided by an expert) protections are legal and contractual in nature. to protect themselves from the impact of this bias. Local courts may not be perceived as trustworthy. • Are revenues real or just hopeful? Just as In some countries, the courts are viewed as demand forecasts are often optimistic, so too likely to take the side of the government over the are revenue forecasts. The potential investor will private sector, or of local investors over foreign assess carefully revenue forecasts, question all investors. Arbitration can be perceived as a more assumptions, and discount forecasts provided by independent way to resolve disputes. Once the the municipality. dispute is resolved, that award must be enforced. • What can cause costs to go up or revenues to go Local court decisions or local arbitration will need down? How likely are those things? How much to be enforced based on local laws. International impact would they have? Once costs, revenues, arbitration in many countries is enforced in and demand are forecast, the potential investor accordance with international treaties, and is will assess what might happen to cause costs therefore preferred by most investors. to go up, revenues to go down or otherwise undermine financial viability. The investors will assess the likelihood of such events and potential impact. They will apply sensitivity analysis to the project financials to assess the impact on the project if the event or series of events occurs. One example might be a national regulator, with the power to set tariffs and impose performance standards. An experienced, independent regulator will understand the financial implications of such decisions. • How will foreign exchange risk be managed? Revenues from municipal services are generally denominated in local currency. Financing available for PPP is more often foreign sourced. In many cases, foreign financing brings longer tenors and lower interest rates. But, if the exchange rate between the local currency and the thegpsc.org currency of financing changes, this may limit the ability of the project to repay debt. Local currency debt mitigates the foreign exchange risk, but is | generally with shorter tenors, higher interest rates, The World Bank and lower amounts available. Guidance Note Making Municipal Public-Private Partnerships Work 21 2.3 PPP Project Cycle The full life cycle of a PPP consists of four phases: includes an option analysis and a recommended (a) selection, (b) development, (c) procurement and PPP structure. The municipality then decides award, and (d) implementation. These phases are whether to proceed to the procurement of the not necessarily linear, a project may move back and project. (See Module 4: Feasibility Study.) forth between these phases as needed to ensure that it is well prepared. During the Procurement and Award phase, the municipality conducts an open, competitive, In the Selection phase, the municipality identifies procurement process to select a PSP for and selects a project for development as a PPP. the realization of the project. (See Module 7: Projects that are more ‘ready’ and more attractive Procurement.) candidates for PPP will move on to the next phase. (See Module 2: Project Concept Assessment Tool.) During the Implementation phase, the project is constructed, the PSP begins operations, and During the Development phase, the municipality services are delivered. The role of the municipality undertakes a comprehensive feasibility study in this phase consists of contract management and to assess the viability of the project: technical, the monitoring of the performance of the PSP. (See economic, financial, fiscal, environmental, social, Module 12: Contract Management.) legal, risk allocation, and so on. The feasibility study 2.4 Funding PPP Municipal PPPs need a robust revenue stream to unpopular and even dangerous. The user-pay fund capital and operating expenses, including model is typically used for metered water supply, debt service and equity return. There are a few main local transit services, electricity distribution, sources of revenues for municipal projects: parking facilities, primary collection of municipal User payments. The PSP directly collects •  solid waste, and similar services. charges from the users of the infrastructure or Land value. The development of assets will often •  service. The level of user charges allowed is result in an increase in land values adjacent to the generally defined in the PPP agreement and/or by project site, for example, the construction of a new the sector regulator. Charges must be affordable public market will result in an increase in the value to all potential users, and demand for the services of the land around the market significantly. The must be sufficient to ensure the anticipated municipality has a number of methods available revenues. Users may need to be disconnected for to capture part of this land value increase to help failure to pay, which may not be legal or practical fund its investment. (See Module 16 for further for core services. Disconnecting poor users from discussion of land value capture.) water, solid waste or sewerage services can be Note Land value capture is primarily an issue for the municipality. The PSP is unlikely to be involved or to bear any risk of land value capture implementation. Guidance Note Making Municipal Public-Private Partnerships Work 22 • Commercial revenues. The project generates partner for providing a municipal building or commercial revenues from part of, or in some facility), where the municipality is itself collecting way related to, the public infrastructure or service charges from users (for example, where the it delivers. The municipality can use the public municipality collects solid waste charges from assets or rights that it provides to the PSP as part households and pays the private partner for of the project—for example, concession rights, services),or where users cannot be charged land and access rights—to specifically enable (for example, where a municipality pays the the PSP to leverage more additional commercial PSP to provide street lighting). The municipality revenues from commercial activities such as may prefer to retain responsibility for collecting advertising, parking, office space, residential charges, where placing collection risk on the space, and retail facilities. For example, a PPP PSP is not efficient or practical (for example, for provision of a municipal bus terminal could where people are less likely to pay charges to a allow the PSP to build and rent out shops as part private entity, where collection risk is too high for of the project, charge for advertising, charge for the PSP to manage or where it is illegal for the parking, and so on in addition to providing the PSP to collect user charges). Some projects may well-organized bus terminal for the municipality. receive additional support in the form of grants • Municipal payments. The PSP is paid a fee from national government and/or external donors (an ‘availability payment’) by the municipality or agencies and in the form of capital grants to (or some other public source) to make specified reduce initial construction costs. The purpose infrastructure or services available for use. This of such support is usually to plug gaps in the approach is used where the municipality itself is projects’ finances, and/or to reduce the cost of the main user (for example, paying the private services to users. Case Example Public Schools in Belo Horizonte (Minas Gerais, Brazil) In the early 2010s, education became one of the top priorities of the Belo Horizonte Municipality, capital of the State of Minas Gerais. However, due to technical and financial constraints, the municipality had the capacity to provide the infrastructure and services needed to meet only 35 percent of the demand. The municipality decided to award, with the support of the International Finance Corporation, PPP contracts for construction, operation, maintenance, and management of 32 new preschools and 5 primary schools during a 20-year period, benefiting 18,000 children for total costs of US$95 million. The PPP was structured on an availability-based model, meaning that the private partner was paid a regular fee for each month that the schools were verified as being ‘available’ for use by the municipality. Importantly, this meant the private partner did not bear the risk or uncertainty of changes in the actual number of students that used each school facility. The payment mechanism was designed based on a weighted average of 60 performance indicators that measure quality of service, users’ satisfactions, security, and timely delivery. nternational Finance Corporation. 2012. Public-Private Partnership Stories – Brazil: Belo Horizonte Schools. Washington, Source: I thegpsc.org D.C: World Bank Group. Accessed November 27, 2019. https://www.ifc.org/wps/wcm/connect/a80594c1-e030-4f2a- 8d26-4cd03aa2cd29/PPPStories_Brazil_BeloHorizonteSchools.pdf?MOD=AJPERES&CVID=lHoysFd Photo in public domain published by Prefeitura de Belo Horizonte. https://www.flickr.com/photos/ Photo Credit:  | portalpbh/5249699584/in/album-72157625444894549/ The World Bank See Project Summary No. 90 Guidance Note Making Municipal Public-Private Partnerships Work 23 A municipal project should maximize sustainable benefits are captured above, and the project can revenues from all potential beneficiaries, and include scope to exploit some of these higher value therefore the municipality should use the following services so that the public market capex can be hierarchy of revenue sources when designing a cross-subsidized by these additional revenues. project: An affordable housing project can include higher priced residential and mixed-use facilities to attract First, PPP should maximize sustainable revenues more revenues (and create more opportunities for from service beneficiaries. Those who receive the residents of the affordable housing). A public a service, or a better service, should pay for it. parking structure can include office or residential Sustainable means that the project is affordable for space above it. (See Module 16: Harnessing users and the municipality and that the users are Land Value Capture and Module 17: Capturing willing to pay proposed tariffs. Commercial Value.) Second, PPP should capture part of the land Finally, only then should public money be used as value increase resulting from the infrastructure.18 project revenue or public guarantees to enhance This can be achieved through taxation, property project viability, and only where that public support development levies, contributions, and a number represents VFM for the government, the community, of other mechanisms. (See Module 16: Harnessing and the economy. Land Value Capture.) The project will be vulnerable if the PSP makes Third, PPP should maximize sustainable commercial too little or makes too much. The PPP agreement revenues. Infrastructure should be used to create needs to address payment risk, demand risk, additional economic opportunities and improve and sharing of superprofits (when the project existing economic activities. When the government performs significantly better than forecast at the funds a new public market, stalls are rented at low time of bidding). 18 A  mirtahmasebi et al., cost, but the private land around the public market 2016. sees its rental rates soar—existing land owner Note The risks associated with the mobilization of revenues, collection, and so on, will be allocated through the PPP agreement. For example, risks associated with land value capture is generally an issue for the municipality to manage. Tool Module 16 (Harnessing Land Value Capture) provides guidance on how a PPP project can leverage •  additional value from land value capture and Module 17 (Capturing Commercial Value) from additional commercial revenues. City Resilience Program – Track 2: Capital Mobilization •  This program from the Global Facility for Disaster Reduction and Recovery aims to help cities build capacity on how to raise capital for infrastructure projects and support transaction negotiations. https://www.gfdrr.org/sites/default/files/publication/CapitalMobilizationToolkit.pdf and https://www.gfdrr.org/en/city-resilience-program/capital-mobilization Guidance Note Making Municipal Public-Private Partnerships Work 24 Case Example Modern Bus Terminal and Municipal Market in Danli, Honduras The new Danlí-El Paraíso bus terminal and municipal market will include 418 commercial stalls, warehousing, meeting rooms, space for 34 buses, waiting rooms, and ticket stalls— an investment of approximately US$4 million. The entire project was designed to be energy saving and easily accessible by people with physical limitations. The project resulted from an unsolicited proposal (iniciativa privada). The market stall spaces were transferred to the private party for the construction of the upgrades at a price agreed on in the transfer agreement. The private company will sell the commercial space and bus terminal stalls to SMEs at a price preset by the municipality or rent them to those who are not able to purchase them. The public entity will operate and maintain the common areas.  oalianza. n.d. “Proyecto “Terminal de buses y plaza comercial municipal, Danlí – El Paraíso””. Accessed November 27, Source: C 2019. http://app.sisocs.org/index.php?r=ciudadano/FichaTecnica&control=Contratacion&id=13 Jaetguz (https://commons.wikimedia.org/wiki/File:AnilloPerifericoTegucigalpa.jpg), „AnilloPerifericoTegucigalpa“, Photo Credit:  https://creativecommons.org/licenses/by-sa/3.0/legalcode See Project Summary No. 5 Caution! A PPP contract or model cannot be simply copied ‘off the shelf’ and applied to a project. Care must be taken through good project preparation to develop a practical PPP structure that fits the needs of the project and its stakeholders. thegpsc.org | The World Bank Guidance Note Making Municipal Public-Private Partnerships Work 25 2.5 Success Factors The following are some of the key factors that are Are municipality and PSP liabilities affordable and •  likely to make for a successful PPP. These questions manageable? will be answered at different stages of project Has the municipality allocated staff and •  selection and preparation, based on available data resources sufficient to deliver a quality project? and the gradual development of the project strategy and structure. There are also a series of common mistakes that • Is the project a good deal for the municipality— the municipality or the PSP might make. does it provide better services, VFM, economic The project might be selected based on political •  growth, jobs, benefits to the community? Is priorities, rather than economic or commercial. It there broad-based support and consensus might be a project that could not be financed in among local, provincial, and national authorities any other way and was allocated to PPP as a last for the project? resort. A poor selection process is likely to lead • Does the public believe that the project is a good to failure. deal for the community/users? Is the project The municipality may succumb to time pressures •  information made transparent to the community? that do not allow for careful selection, good Has the community been engaged in project preparation, or thorough market engagement. selection and development? Has the community By trying to be too quick to take the project to ‘bought-in’ to the project? market, the municipality will often undermine the • Is the municipality committed to the success of entire project and ensure its failure. the project? PPP is expensive to prepare. If the municipality •  • Is PPP approach important for the municipality, does not set aside sufficient budget to prepare for example, was PPP selected as a strategic the project well, it is more likely to fail. method for implementation or was it chosen PSPs tend to become overly competitive. A •  for lack of another way to get financing for the well-run tender process can be used to get project? the best possible bid and the best deal for • Has a thorough assessment been done of the the municipality. But an overly competitive project? Does the assessment identify any critical process can result in an unrealistic bid and a risks or concerns that have not been mitigated or project vulnerable to changing circumstances. resolved? More generally, private bidders make mistakes • Does the municipality have the capacity to prepare and may submit unrealistic bids. While the and implement the project? Is the municipality’s risk of an overly optimistic bid is generally project team well-staffed? Are the municipal borne by the PSP, a failed project will cause institutions organized in a manner likely to make significant challenges and possibly costs for the project a success? Is the municipality well the municipality. The municipality should do advised (does it have good advisers in place)? its own analysis on reasonable bids (these are • Are the project site and necessary rights of way sometimes called shadow bids) to understand available and free of encumbrances? If not, what better the kind of bids it is likely to receive and is the time frame to do so and the likelihood of also to identify any overly aggressive bids. The success? municipality may want to exclude any such overly • Is the private market interested in the project? optimistic bids. Are there enough good, experienced potential bidders showing sufficient interest in the project See Module 1: Municipal Readiness and Module 20: Summary Practical Advice for Decision Makers.. to suggest that the tender process will be competitive? Is the project likely to earn a reasonable profit for •  the PSP? Are the revenues sufficiently certain, the costs manageable, and demand robust? • Is the partnership solid—are risks shared in a reasonable manner, and the parties mutually incentivized to make the project a success. If the project is too good to be true (for the •  municipality or the PSP), then it is probably too good to be true. Guidance Note Making Municipal Public-Private Partnerships Work 26 2.6 Implementing Small Projects Whether a project is considered small will depend A growing practice in small PPP has led to the on the size and wealth of the municipality, the development of mechanisms to mitigate some of capacity of the PPP team, and the size of other these challenges. These mechanisms may need investment projects in the country, but generally to be implemented at the national level, by the ‘small’ is project costs of less than US$5 million municipality or by the PPP team as they equivalent. Small projects have the following develop projects. challenges: Small PPP projects may merit a simplified •  • Expensive to prepare, despite their size, because approval process, sufficient to ensure quality small PPP projects require disproportionate levels and compliance, without the complexity 19 Procurement of due diligence and specialist support for the and high-level participation of large-scale frameworks are widely contracting authority and for investors compared processes. Simplification may include fewer used in Europe, see the OECD’s work on to larger projects. approvals and/or approvals at a more familiar Framework Agreements • Less attractive to experienced investors; in (and more accessible) level of bureaucracy, - Brief 19 Public particular, investors coming from other countries less documentation (for example, less extensive Procurement (2011) https://www.oecd- generally prefer larger projects to absorb risk and studies, reports, consultations or fewer of them), ilibrary.org/docserver/ bid costs. and fewer procedural steps (for example, no 5js4vmnmnhf7-en.pdf? Small PPP may be financed most efficiently in •  approval at pre-feasibility is required). expires=1557218412 &id=id&accname= local currency. Local bankers and financiers may • A team of PPP specialists can be formed guest&checksum= not be familiar with PPP and may need help to centrally, with a mandate to provide advice and 369FF38EAF7F11B010 understand PPP projects, their dynamics, the support to small PPP. This team may be part of 72E9026FADFDBC. For instance, England’s opportunities they provide, and how to address the central PPP unit, or may be a separate unit. NHS Shared Business the challenges they raise. • Small projects can be made simpler to Services (joint venture More difficult to get approved, where approval •  understand, implement, and manage for between the Department of Health and Sopra processes are designed for larger projects contracting authorities and investors alike. Steria) reported that and where approval power lies at levels of Standard processes and documents can make in 2017 procurement government that may not be familiar with or the project easier and cheaper to develop, frameworks save £16 million for the public interested in small projects. easier for investors and lenders to understand, sector. https://www.sbs. and in the end easier to fund. A procurement nhs.uk/transforming- ‘framework’ can use a single process for multiple success-stories- procurement-framework projects.19 Caution! Small Projects, Small Liabilities? Consideration should be given to the fiscal liabilities created by a project. Even where a PPP is small in project value, it may create significant fiscal liabilities (for example, where project activities may cause environmental or social impact for which the municipality is liable), in which case the more comprehensive approval process should be used. This is not an easy formulation. Any project creates some form of liability. Quantifying those liabilities (actual and contingent) in an objective manner is difficult. Another approach is to limit the types of government support that a small PPP might receive and still be considered ‘small’. For example, a small PPP might be one that does not receive: An indemnity or guarantee from the public sector for lost revenues, lost profit, loan repayment (other than •  as a basis for calculating termination compensation), or other indirect damages; or Any grant, loan, investment, or other direct financial support from the public sector (possibly above a •  thegpsc.org specified cap). thegpsc.org | The World Bank Guidance Note Making Municipal Public-Private Partnerships Work 27 Under a large PPP, a consortium of advisers •  project should be lower than the cost of several provides transaction advice for a single project. smaller projects, including by making the process The size of the project and complexity often simpler and less burdensome for due diligence demands one consortium to ensure focus and documentation of the project. Economies and sufficiency of staffing. Small projects may of scale reduce total cost and may speed be aggregated, pooled (or bundled) into one development, cross-fertilize lessons learned more single project or portfolio of projects, making effectively, and ensure continuity of commercial the investment larger and more attractive for terms and therefore make it easier and cheaper larger, more experienced investors and lenders. for bidders. The cost of advisory services is reduced by Small projects often do not need limited •  combining multiple processes into one and using recourse financing. Allowing investors to finance one set of advisers to develop feasibility studies the project on-balance sheet will simplify the and/or provide transaction advice for more than procurement process and keep costs down. one project. The cost of funding for one large Case Example 14. Bundled Bridge Replacement, Pennsylvania, USA The State of Pennsylvania needed to replace a series of small bridges spread throughout the state. The Pennsylvania Department of Transportation (PennDOT) selected bridges based on the need for replacement and a series of deliverability considerations, including minimizing disruption to the public, minimizing changes to existing alignment, maintaining existing profiles. Through this process, more than 2,000 bridges were screened and 558 were selected. PennDOT then aggregated the repair and maintenance of these bridges into a single PPP project under its old bridges’ rehabilitation program. While the average investment cost for each individual bridge was estimated to be as low as US$2 million, the aggregated project was large enough to attract serious investors and significant competition, which would probably not have been the case with multiple small projects.  IH. 2017. “Pennsylvania Rapid Bridge Replacement Project.” GiHub. https://gihub-webtools.s3.amazonaws.com/local- Source: G umbraco/media/1455/gih_showcaseprojects_penn-bridges_art_web.pdf; Photo Credit: Photo in public domain published by Nyttend https://commons.wikimedia.org/wiki/File:Arroyo_Bridge_replacement.jpg See Project Summary No. 15 The World Bank | thegpsc.org Selection Project Screening Prioritization Preparation Funding Guidance Note Phase 1: Selection 30 3.0 Phase I: Selection This section describes the process of developing A key risk factor for municipal PPP is the readiness concept notes, applying a screening framework, of the municipality. and prioritizing proposed projects. 3.1 Project Screening Planning processes identify new investments, Planning needs to reflect economic justification including improvement or expansion of existing benefit to the government, through cost-benefit services. Municipalities are sometimes confronted or VFM assessments. Such assessments tend with new project demands on a more ad hoc to involve incentives for those performing them basis, for example, responding to natural disasters, to emphasize benefits and de-emphasize costs, unanticipated demand, and USPs. The municipality whether consciously or not. For example, where should identify and select which of these projects there is competition for resources between would be better delivered through PPP. government authorities, there may be an incentive to overstate the benefits of the project in order to access budget resources. The assessment function therefore needs to adjust for incentives to achieve a more objective assessment is possible. Note There tends to be a bias toward new build rather than refurbishing what exists and maintaining it properly. Maintaining an asset properly is more than three times less expensive than maintaining it poorly and rebuilding later. But the socio-political incentive is to build something big and new that can carry the name or be identified with a politician or political party. The U.S. national highway system has failed to maintain roads properly due in part to the tendency for federal monies to be allocated to new build projects rather than maintenance or refurbishment.20 Examples of institutional mechanisms designed to manage such biases include the Private Infrastructure Investment Management Center in Republic of Korea, which routinely rejects 46 percent of proposed projects (compared with 3 percent before its creation) at a savings of 35 percent to the government on poorly planned or selected projects. Similarly, Chile’s national Public Investment System rejects 25–35 percent of projects proposed.  cKinsey Global institute. 2013. “Infrastructure productivity: How to Save $1 Trillion a Year.”; Delmon. 2016. “Private Source: M thegpsc.org Sector Investment in Infrastructure: Project Finance, PPP Projects, and PPP Programs.” | The World Bank Guidance Note Phase 1: Selection 31 Common planning processes focus on the efficient for every project that asks for public funding, the allocation of public funding, and therefore the most project team must elaborate why the project cannot feasible projects are generally allocated for public be implemented through a PPP structure to ensure funding and financing. Those remaining projects that scarce public funding is used only to the extent that are not allocated public funding, generally necessary. more risky or complicated projects, tend to be relegated to private development, including PPP. As part of the analysis of proposed new However, private financing is risk based—private investments, the municipality should prepare a financing for more risky projects attracts a higher concept note to capture key summary information financing cost, less risky projects can be financed (that is project description, project rationale, at a lower interest rate. Therefore, the usual identified sources of revenue/financing). The allocation dynamic should be reversed—the least concept note can also be used for the scoring risky, most feasible projects should be developed exercise, discussed below.21 with PPP. For example, there are countries where Tool • Module 3: Sample Project Concept Note provides a template that serves as a guide in preparing project concept notes. Public-Private-Partnership Legal Resource Center – Toolkits for PPPs •  This web site provides sample material for the development of PPP projects, in particular this section focuses on checklists, guidelines and resources for different project sectors. https://ppp.worldbank.org/public-private-partnership/overview/practical-tools There are certain fundamental characteristics institutional arrangements, level of internal that a good project should exhibit. These include consultation, approvals), and resources (for the following: example, manpower, advisers, and funding) to Strong rationale. The project is a priority •  implement the project. This criterion also takes for the municipality from an economic and into consideration the municipality’s access to 20 Khan, Matthew E., and developmental perspective, backed by a clear external experts (national/state-level PPP unit, David M. Levinson. vision of the intended benefits and outputs of advisers/transaction advisers) and funding 2011. “Fix It First, the projects. sources. Expand It Second, Reward It Third: A Institutional readiness. The legal and •  Project readiness. The project appears feasible •  New Strategy for institutional framework of the sector to which in terms of its economic, technical, commercial, America’s Highways,” the project belongs is supportive of PPPs and financial, and environmental/social aspects, The Hamilton Project’s Project Discussion the municipality is equipped to deliver a PPP. based on adequate preparatory work, the data Paper 2011-2013. This includes looking at the existing PPP laws available and its quality, and confirmation that a Brookings. https:// or policies (if any) as well as sector laws and PPP would be a more effective solution than a www.brookings. edu/wp-content/ institutions to determine whether the project public solution. uploads/2016/07/ is a public infrastructure or service within the PPP suitability. There is private (both domestic •  02_highway_ municipality’s legal mandate and is eligible for and foreign) market appetite for the country, the infrastructure_kahn_ levinson_paper.pdf. delivery as a PPP. It also includes municipal sector and the project, access to finance, public 21 If prior studies have  readiness, as discussed in more detail in Section partner creditworthiness, potential for private been undertaken on 2.1 on Municipal Context, as it concerns the sector innovation or efficiency gains, and suitable the project, such study may be attached to the municipality’s capacity (for example, experience risk sharing. project concept note. and expertise), preparedness (for example, Guidance Note Phase 1: Selection 32 Tool Module 2: Project Concept Assessment Tool provides guidance on how to conduct the initial project concept screening process. This same set of criteria applies to the project throughout its life. At the selection phase, the level and quality of data is likely to be very poor. Definitive decisions should not be taken based on such preliminary data but rather indicative to help guide the municipality and identify additional data required and further analysis to be done. Remark Project Inception Support Municipalities usually need the assistance of external experts during PPP project appraisal to provide guidance in (a) assigning criteria weights and scoring, (b) applying threshold parameters and scoring criteria, and (c) preparing project concept notes, among others. If available, external experts may come from national-/state-level PPP units that can provide hands-on support to the municipality or advisers hired by such PPP units or by the municipality directly from various funding sources (for example, technical assistance from development partners or special funds created for such purpose at the national or state level). In countries such as Republic of Korea, South Africa, the United Kingdom, and the Philippines, national- level PPP units/centers provide technical support in policy guidance, review of proposed PPP projects, feasibility studies, VFM tests, and project tender. These entities may provide assistance free of charge, or may charge a fee. In India, Australia, Canada, Brazil, and Mexico, state-level PPP units provide policy guidance and project- specific technical assistance to various municipalities within the state’s jurisdiction. 3.2 Prioritization The private finance and investment markets can The debt, equity, and sponsor markets are likely to only absorb so much project risk for PPP. This be different and may see variant changes in market market demand shifts over time based on market appetite. The level of appetite will indicate the realities (for example, as market risk perception amount of private investment that can be mobilized thegpsc.org changes, other projects succeed or fail), the in a given period of time and how many projects position of individual firms (for example, where firms can be implemented (based on the capacity of have more or less money to invest in the sector investors, for example, size of teams, number of | or in the municipality), and market shifts in other investors). The municipality should consider the The World Bank countries or municipalities (for example, where a market appetite, how that appetite is likely to evolve competing market becomes more attractive, the over the short to medium term, and therefore how relative attractiveness of the project may diminish). many and which projects should be prepared as Guidance Note Phase 1: Selection 33 a priority to fit with the market appetite and avoid to assess on its own. It may need the support of exceeding market appetite, which results in few expert advisers to do so. bidders, higher cost of private finance, and possibly lack of bidders, despite a well-prepared project. Market appetite may be difficult for the municipality Caution! Given the limited availability of project data at this point, the municipal managers should bear in mind that selection and prioritization is necessarily accompanied by a fair amount of subjectivity and therefore advice from experts may be essential at this stage. As such, the assessment should be updated and repeated as appropriate where new data is accessible. This process is not definitive and should be interpreted accordingly. Prioritization should also reflect resource only provided to the most viable projects. Where constraints of the municipality, for example, where the municipality is providing availability payments, the municipal PPP team is small, they should only guarantees, or other forms of support, it may have take on a limited number of projects at a time. limits on the amount of such support it can provide Stretching the capacity of the PPP team across over a given period, and therefore projects that more projects that they are able undermines project fit the profile of the available funding should be preparation and likely success. Municipal budgets prioritized. for project preparation may be limited, and therefore Tool Prioritizing Infrastructure Investment – A Framework for Government Decision Making •  A World Bank multi-criteria decision support tool that considers project outcomes along two dimensions, social-environmental and financial-economic. When large sets of small- to medium-sized projects are proposed, resources are limited, and basic project appraisal data (but not full social cost-benefit analysis) are available, the Infrastructure Prioritization Framework can inform project selection by combining selection criteria. https://library.pppknowledgelab.org/attached_files/doc_formats/1101/original/  InfraPrioritizationFramework_Summary.pdf?1480714297 PPP Qualitative Value-for-Money Toolkit •  The United Nations Economic and Social Commission for Asia and the Pacific toolkit to help governments  in early stage of identification and selection of projects suitable to be delivered as PPPs. The tool contains a set of criteria to assess whether a project is likely to achieve Value-for-Money if delivered as a PPP and is based on international best practice and experiences. The toolkit is designed for screening PPP projects across developing countries in Asia and the Pacific. https://ppp.unescap.org/ Guidance Note Phase 1: Selection 34 3.3 Preparation Funding The decision to select and prioritize a potential municipal PPP should include a decision to provide funding for project preparation. The concept note should include an assessment of the scope and cost of the project feasibility study and to bring the project to tender and award. The cost of project preparation can vary significantly based on the size and complexity of the project, and the capacity of the municipality. The municipality might access support from national or international bodies, for example many countries provide access to PPP expertise through PPP units and extra-budgetary funding for PPP project preparation (see Remark, below). National development banks or investment funds may be available to provide finance for municipal or private entities on more attractive terms or pricing to implement the project. Such support may also be available from bilateral or multi-lateral entities (for example the World Bank or the IFC). Remark Project Development Fund (PDF) Municipalities access funds for project preparation from municipal budgets, national/state government grants, or support from development agencies.22 In some countries, a project development fund (PDF) is established as an alternative means of financing the development of PPPs. A PDF can provide greater flexibility, for example, where the fund allocation needs to bridge government budget years and would otherwise require a separate budget allocation approval process. A PDF can also provide for some revolving, for example, where a fee is collected from successful projects to reimburse the PDF and fund future projects. PDFs are often established at the national/state level, and sometimes supplemented by loans/grants from multilateral development agencies and/or other sources allowable by applicable laws. A number of facilities 22  and trust funds have been created by development partners and donors, for example, the World Bank managed Private Participation thegpsc.org in Infrastructure Advisory Facility (www. ppiaf.org), the Global Infrastructure Facility (www.gif.org), and the | Private Infrastructure The World Bank Development Group Technical Assistance Facility (www.pidg.org). Guidance Note 35 The World Bank | thegpsc.org Development and Approval Appointing a Project Manager Market Consultation Feasibility Study Approval for Tender Hiring an Adviser Guidance Note Phase II: Development and Approval 38 4.0 Phase II: Development and Approval Once a project is selected for preparation as a PPP, the engagement of the municipality accelerates with the development of a feasibility study. 4.1 Appointing a Project Manager To ensure smooth and efficient development of the The project manager must have good project PPP project, the municipality must appoint a project management skills and a good knowledge of manager at least as soon as the project is selected the sector. Knowledge and expertise in PPP are for development as a PPP. The municipality may obviously a strong plus, but in practice often not want to appoint the project manager earlier to help available. The required in-depth PPP expertise will develop the concept note. in any case be supplied by the adviser. In countries having a PPP unit or a PPP knowledge center, these The project manager will supervise and manage the can also support the project manager with PPP- PPP project on a daily basis. The project manager specific, technical matters. carries out, or causes to be carried out, every practical task that is required for the development In most cases, the project manager is selected and procurement of the PPP project, including: from the staff of the municipal administration. She • Acting as the key point of contact for the project; or he may, for instance, come from the public • Engaging consultants to undertake the feasibility works department or the procurement department. study and assist in the procurement of the PPP Sometimes the municipality appoints an external project; expert as project manager, if it cannot find a suitable • Managing and supervising the work of the person within its own staff. No matter the source of consultants; the project manager, they should be appointed for a • Conducting the procurement procedure, with minimum of three to five years to ensure continuity. assistance of the consultants; • Reporting about the progress of the project For larger projects, and if the resources of the development to municipal executive and decision- municipality permit this, the project manager is making bodies; assisted by several other municipal staff members, Briefing and advising municipal decision makers •  jointly constituting a project management team. on project decisions to be taken; and For instance, the project management team may • Any other task that must be performed to enable consist of one or more technical experts (one the project to succeed. of them usually acting as project manager), a procurement/legal expert, and a budget/financial It is essential for the successful development of expert. Depending on the size of the project and the project that the project manager receives a the scope of their duties the members of the project clear mandate and full management authority from management team are assigned full time or part the municipal government to exercise his or her time to the project. duties. The project manager must be recognized by all stakeholders as the key point of contact for all matters related to the project. The project manager thegpsc.org must be authorized to take all decisions within his or her scope of duties or to elevate decisions to a higher level when needed. | The World Bank Guidance Note Phase II: Development and Approval 39 4.2 Feasibility Study The feasibility study provides a full, multidisciplinary In brief, in the feasibility study the project is not only assessment of the project’s viability and analyzed and assessed but also further developed recommends a PPP structure (please refer to and elaborated in view of the subsequent selection Module 4: Feasibility Study). of a PSP for its implementation. This study: Investigates the feasibility (in all aspects, •  The feasibility study findings constitute the basis 23  he reserve price helps T including, technical, financial, economic, legal, for the decision by the municipality to proceed or the municipality identify environmental and social) and desirability of not with the procurement and implementation of excessively unattractive undertaking the project as a PPP; the project. The feasibility study report informs the bids, which if they are to be contemplated should • Determines the best technical option for decision-making body in the municipality about the require additional implementing the project, resulting in the definition feasibility and desirability of undertaking the project verification and approval of project output specifications; as a PPP, and about the readiness of the project to by the municipality. This way the pressure of a • Determines the most suitable PPP arrangement proceed to procurement. procurement process for implementing the project, resulting in the does not result in the heads of terms of the PPP agreement; The feasibility study should cover the following acceptance of an excessively unattractive • Provides a forecast of likely project costs and areas of analysis. bid. However, reserve a range of probable bid prices, to help the • Demand study bid prices can be municipality identify the likely bids and set a • Technical study dangerous, for example, where the Municipality reserve bid price, if any;23 and • Legal, environmental, and social due diligence is overoptimistic about • Provides an implementation plan, describing • Economic analysis the value of the project the tasks to be undertaken, in particular by the • Financial analysis and the level of bids they expect to receive. municipality, to realize the project. • PPP structuring options • Procurement and implementation plan Tool Module 4: Feasibility Study provides more detailed discussion of the contents of the feasibility study. •  • World Bank PPP Screening Tool  Tool for screening of projects to determine their potential suitability for PPP procurement, against qualitative and quantitative variables; based on data available from feasibility studies, site checks, fiscal and budget evaluations, political and economic evaluations, initial market checks, preliminary risk analysis, qualitative value-for-money check, etc. https://library.pppknowledgelab.org/documents/5421/download pdf?1480714297 PPP Project Preparation Status Tool •  Created by the European PPP Expertise Centre, this tool helps assess the preparation status of a given PPP project by reference to a typical good-practice PPP project development process up to the point of determining if the project is ready for launch of the public procurement process. It serves as a self-check to help the Authority spot potential areas of weaknesses in the preparation of the project and develop a structured approach to managing the PPP project preparation process. https://www.eib.org/epec/EPEC-PPPprep-EN.xlsm • City Resilience Program – Track 1: Resilience Enhancement  Created by the Global Facility for Disaster Reduction and Recovery, it aims to provide technical expertise to help cities design resilient projects. https://www.gfdrr.org/en/city-resilience-program/technical-assistance Guidance Note Phase II: Development and Approval 40 An important part of the feasibility study involves Is there opportunity to develop underground •  asking the right questions and getting the right space, for example for parking, where the information. The team delivering the feasibility study revenues that can be earned merit the cost needs to be rigorous, careful, and strict while also of building below ground level? (see Project being creative and open-minded. A series of project Summary 46) summaries are provided as part of this Guidance Note to help inspire municipalities with approaches Environmental and social considerations will form an taken by other projects. In an effort to encourage important part of the feasibility study. Commercial some creative thinking, the following are some lenders, in particular those with a global business examples from the project summaries: (see below box on Equator Principles), will be • Consider the users of the facility, what services concerned to manage environmental and social might they want in addition to the project issues well. International financial institutions, such services? For example, users of a public park as IFC, apply a strict set of standards (the IFC might want public parking space or retail services Environmental and Social Performance Standards).24 (see Project Summary No. 45 and 78). The municipality will be best served by applying • Consider the local community, what services these standards to the project and in the feasibility might they want? For example, a bus station study to ensure that such financing might be located in a poor neighborhood might provide available to the extent eventually needed, even public toilets and washing facilities or other retail possibly for refinancing. facilities (see Project Summary No. 5 and 38). • Is there space in and around the facility that might In a similar vein, the feasibility study should be used to provide commercial services, without assess opportunities for the project to satisfy impeding the project services? (see Project green financing criteria. This can give the Summary No. 73, 76, and 98) municipality access to additional pools of green • Is there space above the project that can be financing dedicated to green projects, including developed and where revenues merit the cost of green bonds.25 building up? (see Project Summary No.73, 74, and 75) Note Equator Principles The Equator Principles26 constitute a voluntary code of conduct originally developed by IFC and a core group of commercial banks, but now recognized by most of the international commercial banks active in project finance. These banks have agreed not to lend to projects that do not comply with the Equator Principles, which follow the IFC system of categorizing projects, identifying those that are more sensitive to environmental or social impact and requiring specialist assessment where appropriate. During project implementation, the borrower must prepare and comply with an environmental management plan (EMP). 24 F  or more information, Issues must be explored relevant to all stakeholders, asset to the PSP, it may deprive the municipality of please see www.ifc.org/ performancestandards. government entities, businesses, the local the revenues previously earned from that asset. 25 For more information  community, the poor, women, and disenfranchised about green financing, groups. (See Module 18: Community Engagement.) Undertaking a feasibility study requires see the Global Environment Facility’s The better and more complete the feasibility substantial efforts and a broad range of expertise. Introduction to Green study, the more sustainable the project will be; Municipalities, even large ones, in general do not Finance https://www. it will be tempting to cut corners, to save money have the required human resources to carry out thegef.org/sites/default/ on this analysis, when time is scarce and when a full feasibility study by themselves. Therefore, thegpsc.org files/events/Intro%20 to%20Green%20 expectations are unrealistic. feasibility studies are prepared by an external Finance.pdf; and Asian adviser or firm hired by the municipality. Development Bank’s Why Green Finance Projects must be affordable to users and to the | is Important? (2019) municipality. It can be easy to focus so much on The role of the municipality in the feasibility study is: The World Bank https://www.adb.org/ closing the deal that the municipality commits to Drafting and issuing the terms of reference for the •  publications/why-green- finance-important. liabilities that are beyond its ability to afford. Equally, preparation of the feasibility study; www.equator-principles. 26  where the project involves transfer of an existing Selection and appointment of the consultants; •  com Guidance Note Phase II: Development and Approval 41 • Management and supervision of the consultants It must be emphasized that the outsourcing of the during the preparation of the feasibility study; feasibility study to an adviser does not imply that the • Helping to make data available, and providing municipality is not actively involved in the feasibility access to various stakeholders, study. On the contrary, as the initiator and developer Deciding on, based on the findings of the •  of the PPP project the municipality throughout the feasibility study, which model of PPP to use feasibility study determines the direction of the study and whether the project should proceed to the through interaction with the consultants. procurement phase. Tool Module 4: Feasibility Study contains detailed discussion of the contents of the feasibility study, and the •  criteria used to review the work of the consultants. • SOURCE A digital project preparation tool that helps governments to improve their preparation, procurement and implementation practices in infrastructure projects. https://public.sif-source.org/source/ 4.3 Hiring a Transaction Adviser The adviser hired to develop the feasibility study may be a multidisciplinary consulting firm or, more often, a consortium consisting of several specialized firms each contributing its own expertise (for example technical, legal, economic, environmental, financial, PPP transactions). Tool Module 6 contains the Sample Terms of References for Procurement of Advisers. It should •  be noted that these terms are generic and will need to be customized according to the specific characteristics of the project and specific requirements of applicable local procurement rules. Public-Private Partnership Legal Resource Center - Sample Terms of Reference for PPP Advisors •   This web site contains sample material in diverse aspects of PPP projects and their project cycle. This section provides sample terms of reference for PPP advisors for different sectors, as well as checklists and other resources that offer guidance on seeking assistance from external advisors https://ppp.worldbank.org/public-private-partnership/overview/practical-tools/terms-of- reference-ppp-advisors Guidance Note Phase II: Development and Approval 42 The municipality manages and supervises the Discussing interim findings of the study with the •  adviser, including: adviser to take decisions on the technical and • Managing and following up the work of the contractual structuring of the PPP project; adviser (including holding regular progress and • Approving deliverables and, if approved, discussion meetings); arranging the payment of the contractually • Providing assistance to the adviser within its arranged fee of the adviser. ability (such as providing available data and using its authority and contacts to facilitate consultation Module 5: Managing Consultants provides with other government entities and stakeholders); guidance on the management of advisers; this is Reviewing draft and final versions of the •  not a simple process (see box below). PPP advisers feasibility study report to verify that it meets the can be sophisticated and are subject to a complex requirements set out in the terms of reference; and set of incentives. Remark Bundling of Feasibility Study and Transaction Advice Generally, best practice is to assign the feasibility study to one adviser, and to use entirely different advisers for transaction advice, who will assist the municipality in the procurement of the PPP project after the completion of the feasibility study. Using two different sets of advisers allows the transaction advisers to review the feasibility study and test its recommendations. In some cases, the assignment of the feasibility study is bundled with that of the transaction adviser. The bundling of both assignments allows the municipality to save procurement costs and shorten the project preparation process. However, bundling the mandates of the feasibility study adviser and transaction adviser also has drawbacks, such as the possibility of a conflict of interest. The single feasibility study adviser/transaction adviser will be incentivized to find the project to be viable and appropriate for approval to enable the consultant to advance to the more lucrative transaction phase. To avoid the drawbacks of bundling indicated earlier, the municipality must check the work of the adviser and challenge its recommendations. Tool Module 5: Managing Consultants contains advice on how municipalities should oversee, review, and manage external consultants hired to help prepare and implement PPP projects. 4.4 Market Consultation The municipality will want to consult the market to right investors. The market consultation may need to understand project structures that meet market be held in foreign locations to facilitate engagement requirements and market appetite for certain with potential foreign investors. Consultations with thegpsc.org projects, sectors, and municipalities. Market potential lenders would also be useful to gain an consultations should be performed at various times understanding of issues related to financing. The during project selection and preparation. The larger advisers will help with market consultations, based | and more complex the project, the more extensive on a thorough analysis of potential investors. The World Bank the market consultation needs to be to attract the Guidance Note Phase II: Development and Approval 43 4.5 Approval for Tender The findings of the feasibility study are submitted to If the project requires financial support by the the body within the municipality that is authorized to municipality, the amount of this support must also decide whether the project proceeds to procurement. be approved by the body authorized to create The detail of the submission and review process is municipal liabilities and/or commit funding from provided in Module 7: Procurement. the municipal budget. (Note: The actual support required may well be determined by the financial For this decision, the municipality considers the bid of the winning bidder.) Provincial or national same criteria used to select PPP projects, as set out government may have approval rights over the in Section 2.1 and Module 4: Feasibility Study. project at various stages, in particular before tender and at approval. The approval stages should be If the project fails to satisfy those criteria, the mapped out to manage appropriately. municipality should take appropriate measures or reconsider the implementation of the project as a PPP. Caution! The decision to launch a procurement process for the project involves a strong commitment by the municipality (and possibly the national government). While it is still possible to stop the project, the reputation of the municipality will be damaged if a project is aborted once the procurement process has started and the bid documents have been issued. This may hurt the credibility of the municipality in future procurement procedures. It is better to halt the project as early as possible in the process. This highlights the importance of due diligence during project preparation and of open, competitive assessment. The World Bank | thegpsc.org Procurement and Award Preparing the Tender Documents Procurement Options Approval of Award and Financial Close Unsolicited Proposals and Direct Negotiations Guidance Note Phase III : Procurement and Award 46 5.0 Phase III : Procurement and Award Once the project is approved, the municipality 5. P rovide any site visit or access to the site for will proceed with the tender of the project in line bidders to conduct engineering and demand with its procurement regulations. Specifically, the assessments; municipality will: 6. Facilitate the opening of submissions; Review and approve tender documents before 1.  7. C onduct detailed evaluation of the submissions; issuance; and  inalize timelines of the entire procurement 2. F 8. Decide process; a. The short-list of qualified bidders;  onduct investors’ conference and respond to 3. C Scoring of technical and financial proposals; b.  queries submitted by bidders; and  stablish a data room; 4. E c. Award of the project to the preferred bidder. 5.1 Preparing the Tender Documents The following comprise the documents that need to to limit the field to only those bidders most likely be prepared by the adviser before tender: to be able to implement the project. The RFQ contains instructions to interested bidders to Request for Qualification (RFQ). The municipality 1.  submit qualification documents showcasing may want to select a short list of potential bidders technical and financial capacity. Tool Module 8 contains the Sample Request for Qualification Document, which provides a template for qualifying bidders in case of a two-stage bidding process. This model may need to be adjusted to conform to a municipality’s applicable procurement regulations. Request for Proposal (RFP). The municipality 2.  stage bidding process (where there is no RFQ will communicate to all potential bidders the shortlist), the RFP will also include instructions instructions on the submission of technical and for the submission of qualification documents financial proposals. In the case of a single- showcasing technical and financial capacity. Tool thegpsc.org Module 9: Sample Request for Proposal for Single-Stage Bid Process and Module 10: Sample Request for Proposal for Two-Stage Bid Process provide RFP templates depending on the selected procurement mode and may need to be adjusted depending on the municipality’s applicable procurement | regulations. e World Bank The Guidance Note Phase III : Procurement and Award 47  PP agreement. This is the document to be 3. P Pricing of services. Establish the tariffs that the •  executed between the municipality and the PSP, PSP can charge for project services to ensure which specifies the roles, responsibilities, and affordability and adjust for inflation. liabilities of all parties to the PPP project. It also Government support. Where the municipality •  specifies the timelines, deliverables, output/ will provide capital grants, operating payments, performance-based specifications (including or guarantees, this support needs to be part of key performance indicators), and payment the bid package to ensure that bids consider the mechanism for the project, among others. government support in their pricing. The nature and terms of the government support (if any) will Key terms of the PPP agreement include 27 be set out in the PPP agreement. the following: Termination. If one of the parties fails to deliver •  Duration. The contract length should be •  on their promises, the other party will want the sufficient to enable the PSP to recover its costs right to terminate the PPP agreement, with an and earn a reasonable return. agreed regime for termination compensation. Performance criteria and penalties. Clear, •  Dispute management and resolution. Like •  measurable criteria establish the PSP’s delivery any partnership, conflict and disputes are requirements. A monitoring regime is essential likely. Conflicts should be managed proactively and a penalty regime to ensure that performance and quickly to avoid becoming disputes. failures are addressed as soon as possible. Mechanisms in the PPP agreement will help open World Bank 2017c; 27  Establish revenue sources. Identify the kind of •  communications and identify conflicts as early as World Bank, n.d.; activities that the PSP is allowed to pursue and possible. Delmon 2017; Delmon any assurances by the government linked to 2016. such activities. Tool Module 11: Sample Municipal Public-Private Partnership Agreement provides guidance on key •  provisions that need to be included in a PPP contract. The draft document will have to be adjusted to take into consideration applicable legal and regulatory provisions in the country and the municipality, and the requirements of the specific project. •  Allocating Risks in Public-Private Partnership Contracts Tool created by the Global Infrastructure Hub to help PPP practitioners understand risks in PPP agreements and to best allocate them among the parties in different sectors, such as transport, energy, and water and waste, and by risk types. https://ppp-risk.gihub.org/ •  Guidance on Standard PPP Contractual Provisions A set of contractual provisions for PPP projects that can be used across different sectors, regions and types of project. It helps contracting authorities understand common, boilerplate contractual clauses and the rationale behind them. https://ppp.worldbank.org/public-private-partnership/library/guidance-ppp-contractual- provisions 5.2 Procurement Options The PPP procurement process will generally In terms of procurement mode, the municipality may involve three submissions: qualifications, technical opt to adopt either a single-stage or a two-stage proposal, and financial proposal. bidding process. Guidance Note Phase III : Procurement and Award 48 Note There are various innovations in procurement methods, including framework procurement. Procurement frameworks are widely used in Europe, see the OECD’s work on Framework Agreements.28 For example, England’s NHS Shared Business Services (joint venture between the Department of Health and Sopra Steria) reported that in 2017 procurement frameworks saved £16 million for the public sector.29 Under a single-stage process, bidders will submit Only those who pass will proceed to the opening three envelopes, including the required bid security and evaluation of the financial proposal (that is, third usually in the form of a bid bond: envelope). • Envelope 1: Qualifications • Envelope 2: Technical Proposal Under a two-stage process, the qualification stage • Envelope 3: Financial Proposal. involves the shortlisting of interested consortia through submission of an application. The second The municipality will open and evaluate the stage involves the opening and evaluation of qualification documents (that is, first envelope), technical proposals and financial proposals, and determine which among the bidders fulfill the sequentially. minimum qualification requirements. Those who satisfy the requirements will advance to the opening 28  OECD 2011. 29 NHS, n.d. and evaluation of technical proposals (that is, second envelope). Remark Which Procurement Mode to Adopt? The decision on which procurement mode to follow largely depends on the nature of the project and applicable laws/regulations. Single-stage bidding would be more appropriate for less complex projects, with easily definable qualification requirements, where the cost of bidding is low for bidders. In a single stage, every bidder must prepare a full bid. In two-stage bidding only the pre-qualified bidders need to prepare full bids. Two-stage bidding is preferable for complicated projects (that is, with a complex profile for determining, quantifying, mitigating, and sharing project risks), where only a small number of bidders should be asked to prepare full bids for the sake of efficiency and to attract more bidders. At defined times during the bidding process, The municipality should also set up a (virtual) data clarificatory conferences may be held to allow room to provide access to project data in a format bidders (whether in the first or second stage that is easy to manage and access. The virtual data of bidding) to seek clarifications and provide room can also be used to facilitate the posting of suggestions for consideration by the municipality. questions/clarifications from bidders, as well as its thegpsc.org The municipality will provide clarifications and responses thereto (including amendments to any such further information as it may, in its discretion, of the bidding documents, if any). The municipality consider appropriate for facilitating a fair, may also consider holding one-on-one discussions | transparent, and competitive qualification process. with bidders. Questions lodged by, and answers The World Bank Clarifications should be provided to all bidders, obtained from, the bidders as well as any relevant though the identity of the bidder seeking clarification responses from the municipality pursuant to these is often not shared. discussions should be made available to all bidders Guidance Note Phase III : Procurement and Award 49 to ensure transparency and equality. However, the Technical and financial proposals will be evaluated identity of the party who submitted the question against criteria outlined for parameters indicated in should be anonymous. the RFP. (See Module 9: Model Request for Proposal for Single-Stage Bid Process and Module 10: Model In addition, the municipality should provide access Request for Proposal for Two-Stage Bid Process.) to the project site as well as facilitate bidders to undertake any technical or other investigations, at bidders own time and cost, if requested. Note For some projects, the technical proposal may simply involve the acceptance of the technical solution set out in the RFP. For example, for some rooftop solar projects, where the PSP cannot reasonably propose technical innovations. Case Example Bhubaneswar Street Lighting (Odisha, India) Bhubaneswar’s street lighting fell far below national standards, leading to constant complaints from the public. Also, owing to poor quality equipment, energy consumption for street lighting was extremely high, straining the city’s finances. The ESCO Shared Savings model recommended by IFC provided efficient street lighting upgrades, paid for and maintained by an ESCO, which in turn would receive payment through energy savings realized by the municipality. The bid variable for the project was the energy savings achieved by ESCO, subject to a 30 percent minimum. The winning ESCO would undertake a joint survey to establish the baseline energy consumption. A total of 16 companies expressed interest in the project, of which 4 submitted bids. The ESCO contract was signed on October 5, 2013.  orld Bank Group. 2013. “Public-Private Partnership Stories, India: Bhubaneswar Street Lighting.” PPP World Bank. Source: W Sabyasachi Baldev (https://commons.wikimedia.org/wiki/File:Bhubaneswar.jpg), “Bhubaneswar“, https:// Photo Credit:  creativecommons.org/licenses/by-sa/2.0/legalcode See Project Summary No. 68 After the evaluation of technical proposals, the The opening of financial proposals should municipality will announce the bidders whose be scheduled as soon as possible after the financial proposals will be opened, as well as notify announcement of qualified technical proposals. the other bidders who failed to meet the minimum The preferred bidder will be issued a letter of award technical criteria. and will thereafter be required to comply with Guidance Note Phase III : Procurement and Award 50 post-award requirements before signing the PPP The municipality will enter into final negotiations agreement, which may include the following: with the preferred bidder only for finalizing the PPP agreement in accordance with changes Submission of the performance guarantee or 1.  proposed in the latter’s bid. Any change in the conversion of the bid bond into a performance draft PPP agreement sought by the preferred bond, and incorporating a special-purpose bidder can have significant impact on the value of vehicle (SPV) solely for undertaking the project; the project to the municipality and therefore must and have been explained specifically in its bid and Payment of a bid development fee (to reimburse 2.  scored accordingly. Allowing bidders to propose project development and tender expenses changes in the PPP agreement can also have legal incurred by the municipality). consequences, for example, where disgruntled bidders argue that the arrangements in the winning The use of an SPV is not common in normal public bid were different than the tender documents and procurement practices, and therefore can be therefore provided an unfair advantage to the surprising for municipal procurement teams. This is winning bidder. General advice is that bidders done to allow investors to keep project debt off of should not be allowed to propose material changes their parent company balance sheet, to sell down to the PPP agreement in their bid. part or all of the project as and when permitted, and to move the project to another set of investors in the Once finalized, the PSP executes the PPP event of failure (and therefore also means that the agreement with the municipality. The date of signing municipality will not benefit from joint and several of the PPP agreement is called ‘commercial close’. liability among the SPV shareholders). Using an ‘Financial close’ is the moment when the lending SPV also protects the project, as the SPV will remain agreements become binding on the lenders separate from the parent company’s other liabilities, and the PSP may make a first draw-down of and allows the municipality to require specific funds. Commercial close and financial close may governance arrangements in the SPV that could not happen at the same time, where all the lenders’ be required within the parent company (for example, preconditions are already satisfied. In some cases, assigning the project to another set of investors in particular where limited recourse financing is if the initial investors do not deliver). However, an used, the lenders perform additional due diligence SPV may not be practical for small projects given after project award and before financial close. In associated costs and complexity. such cases, either the PPP agreement is signed first but is subject to preconditions to effectiveness The municipality will need to address some of the (a set of conditions must be satisfied before the disadvantages of SPVs, in particular access to PPP agreement is binding on the parties) or the information about what is happening in the SPV, PPP agreement is signed at financial close (so that changes in shareholding and control, liabilities the municipality and the PSP are not bound by the created, and so on. This can be done through PPP agreement until the lenders’ preconditions municipal consents required under the PPP are satisfied). The municipality as part of the bid agreement and as part of the municipality’s due process will need to be clear to what extent it is diligence process. In some cases, the SPV must willing to reopen negotiations as part of financial obtain a credit rating to help the parties assess its closure, and should specifically exclude any financial position. In others, the SPV is managed material changes. This can be a difficult situation to on an open book basis. These mechanisms help manage, and the municipality will need the advice the parties review and agree the financial position and support from the adviser to address these of the SPV and any changes thereto, for example, issues. The municipality will want to pay the final where compensation needs to be calculated for payment of the adviser’s fee only after financial refinancing or risk events. close to ensure it has advisory support throughout the process. 5.3 Approval of Award and Financial Close The findings of the tender evaluation committee the amount of this support must also be approved thegpsc.org will be submitted to the municipal authority that will by the body authorized to commit funding from the decide whether to implement the recommended municipal budget. award. The municipality will need to confirm that | the preferred bid will provide VFM. If the preferred Provincial or national government may have The World Bank bid involves financial support from the municipality, approval rights over the project at various stages, Guidance Note Phase III : Procurement and Award 51 in particular where government financial support is to be provided. The approval stages should be mapped out to manage appropriately. 5.4 Unsolicited Proposals and Direct Negotiations A USP is submitted by a private party to the municipality to undertake a PPP project at the Where USPs are to be allowed, the following should private firm’s initiative rather than as a response to be required: a request from the government. There are different USPs should only be allowed for new ideas, •  approaches to USPs, as discussed below. innovative ideas, projects that are not on the municipality’s plans and have a technology or Generally speaking, USPs are difficult for process requirement that is uniquely available to municipalities to manage and are best avoided. the proposing PSP. An open, competitive process with no particular The municipality should deliver the feasibility •  advantage to any bidder is the best way to study for the proposed project and should implement a successful PPP. Global experience otherwise drive the due diligence process shows that if the proponent is given some designed to structure the project and verify that it advantage in the tender process (for example, represents VFM for the municipality. bonus points or the right to match the winning The USP proponent’s sole advantage from the •  bid), the tender process will attract few if any process should be compensation in an amount competing bids, putting the municipality in a difficult that reflects the actual benefit provided to the negotiating position.30 municipality, calculated by an independent assessor, to avoid conflicts of interest and any The municipality may ask the proponent of a USP perception of corruption. to provide project information, to save money, for If the municipality offers to compensate the •  For a more detailed 30  example, in delivering the feasibility study. However, proponent for its costs in developing a USP, discussion of USPs and this creates a significant information asymmetry then the municipality creates an incentive for different approaches taken, see PPIAF. 2017. between the USP proponent and the municipality— USPs with limited value (in effect, subsidizing the Unsolicited Proposals – the proponent knows the detail of the project but proponent’s bidding costs). Any compensation An Exception to Public the municipality does not. The project may therefore should reflect the actual benefit received by the Initiation of Infrastructure PPPs: An Analysis of be designed in a manner that disadvantages municipality and nothing more. Global Trends and the municipality and/or any competitors to the Lessons Learned. proponent. Direct negotiations are sometime permitted for https://ppp.worldbank. org/public-private- limited purposes, for example, in a national state partnership/library/ppiaf- Many countries do not allow USPs at all. Where of emergency or for small changes to existing unsolicited-proposals- USPs are not allowed, private companies may still projects (where there is no real prospect of %E2%80%93- exception-public- suggest innovative infrastructure projects, but the competition). Legislation will generally regulate initiation-infrastructure- project must go through the normal PPP process. direct negotiations. Municipalities should obtain ppps-analysis-global- It is advisable for municipalities to exclude USPs expert advice when approaching such negotiations, trends-and-lessons- learned entirely, until they have a significant depth of which can be complex. experience in PPPs. Tool Policy Guidelines for Managing Unsolicited Proposals These guidelines provide key policy recommendations to public authorities to manage appropriately and effectively the challenges that unsolicited proposals represent. https://ppp.worldbank.org/public-private-partnership/library/policy-guidelines-managing- unsolicited-proposals-infrastructure-projects The World Bank | thegpsc.org Implementation PPP Contract Manager Contract Management Plan Contract Management Guidance Note Phase IV: Implementation 54 6.0 Phase IV: Implementation In general, the municipality’s role during the project assets to the municipality at the end of implementation phase 31 has four subphases: the PPP agreement. 1. Pre-construction: land acquisition, design review, and application for permits. Managing a PPP agreement requires a different 2. Construction: review of progress reports, approach from managing a conventional public verification of equipment/materials delivered, procurement contract. A conventional public completion tests, performance tests, procurement contract is short term (usually at most commissioning, payment of any capital grants or two or three years) and pertains to the execution other construction period subsidies. of precisely defined activities. A PPP agreement, 3. O perations: performance standards, periodic on the other hand, is long term and output based. reporting, spot checks, tariff reviews, payment The key success factor of effective contract of availability payments (if any), renegotiations, management is a good relationship between the refinancing, conflict management, and dispute municipality and the PSP. The essence of PPP resolution. is that both parties proactively work together to 4. H andback: test condition of assets, maintenance manage conflict, avoid defaults, and deliver public See also www. 31  and refurbishment plan, select SPV assets to services. managingPPP.gihub.org purchase and agree price, handover of the Remark Hiring an Independent Engineer Depending on the size and complexity of the PPP project, an independent engineer may be engaged to assist both the municipality and the PSP with contract management tasks. The independent engineer is jointly appointed by both parties after signing the PPP agreement, and may intervene at various stages during project implementation to verify its conformity with the PPP agreement: During construction stage a.  • Review the detailed engineering design; • Inspect and monitor construction works; • Review modification requests and claims for compensation; • Conduct commissioning tests; and • Issue the construction completion certificate. During operations stage b.  •  Monitor the compliance with maintenance and performance standards and submit periodic reports; and • Review modification requests and claims for compensation. During handback c.  thegpsc.org • Conduct handback tests; and • Issue the handback certificate. The costs of the independent engineer are generally shared equally between the municipality and the PSP. | This cost sharing arrangement is defined in the PPP agreement. The World Bank Guidance Note Phase IV: Implementation 55 6.1 PPP Contract Manager During project development, the municipality Depending on the complexity of the project and the is represented by a project manager. During resources of the municipality, the contract manager implementation, the project manager is replaced by may be assisted by a contract management unit that a contract manager to act as the primary point of combines the various disciplines that are needed contact of the municipality with the PSP, focused on: to monitor the performance of the PSP and manage • Monitoring the performance of the PSP and the PPP contract. A typical contract management checking it against the contract requirements; unit may be composed of (on a part-time or full-time • Budgeting and settlement of payments due under basis depending on needs): the PPP contract to the PSP (if any); A technical (engineering) expert, specialized in •  • Handling of contract events according to the the services that are provided in the PPP project; provisions of the PPP contract (for instance, • An administrative/legal expert with expertise in tariff adjustments, non-compliance of PSP with public administration and public procurement performance requirements, changes in law, contracts; and contract amendments, force majeure, refinancing, • An accountant/budgeting expert. disputes, and early termination); and • Reporting on the performance of the PPP contract to the municipal government and to stakeholders. 6.2 Contract Management Plan The contract management plan (CMP) describes Procedures for reporting and disclosure of PPP •  The composition and responsibilities of the •  performance to the municipal government and contract management unit; stakeholders. Procedures for dealing with contractual events in •  the various stages of the implementation of the The CMP is prepared (usually by the transaction PPP project; adviser) even before the award and signing of the The performance criteria, monitoring system, •  PPP agreement, and is updated after the signing of and other deliverables/liabilities under the PPP the PPP agreement. agreement; and 6.3 Contract Management This section sets out some of the key issues to be These changes may also be needed to addressed by the contract manager.32 address errors in project development, where preparation fell short. 6.3.1 Performance Monitoring  Performance monitoring is the most important The contract will provide for mechanisms to daily task of the contract management unit. address such needed changes, in particular a The contract management unit receives variations procedure (also known as a change and reviews periodic (monthly or quarterly) procedure) for minor changes to be made and performance reports submitted by the PSP agreed by the parties. and the independent engineer. In addition, it conducts scheduled and random inspections Changes that do not fall within the variations to identify performance shortfalls. The procedure or which require more fundamental contract management unit could also seek changes to the contract will require feedback from end users, as a part of its renegotiation, which will also often have a monitoring responsibility. special regime specified in the PPP agreement. The contract manager assesses the variation 6.3.2 C  hanges, Variations and Amendments or renegotiation proposal and undertakes the  Due to the long duration of PPP agreements, required steps to obtain approval. For further information 32  changes may be needed to address a on contract change in circumstances, for example, new Renegotiations, in particular, need to be management, see United Nations Public technologies may emerge that justify changes managed in a strategic and transparent Private Partnership of service specifications or data on which the manner to prevent abuses and ensure buy-in Contract Management project is designed may prove inaccurate. from key stakeholders and avoid disputes. Manual (2019). Guidance Note Phase IV: Implementation 56 6.3.3 Payment Adjustments Conflict Management and Dispute 6.3.6   The PPP agreement will establish a regime for Resolution availability payment or tariff increases  Because PPPs are complex, it is natural over time, and may provide for some to expect that at some point during the compensation or other remedy where the contract there will be disagreements about tariffs do not meet expectations. The contract performance levels and about payment manager will secure internal approvals amounts, payment deductions, or other for time-based availability payment or important issues. As there are usually tariff increases and assess requests for several stakeholders involved in any of these adjustments or compensation. disagreements (investors, banks, municipal departments, municipal finance offices, and 6.3.4 Compensation and Relief Events so on), all parties to a PPP need a clear,  PPP agreements will often provide for a regime fair, and cost-effective way of resolving any to protect the PSP from the impact or risks disagreement so that the project can continue borne by the municipality, for example, where to operate and the partnership continue to the municipality is late in providing land to the benefit all partners and the users continue to PSP. The event, compensation, extension of get uninterrupted services. time and procedure for handling requests are defined in the PPP agreement. Relief requests Conflict management and resolution should  are assessed by the contract manager. be implemented as soon as possible after a conflict arises, before it becomes a dispute 6.3.5 Refinancing or impedes the project. Conflict management  The debt financing of a municipal PPP project often involves formal review processes, is priced against the risk borne by the PSP, elevation of issues to different levels of which includes construction of the facility management, and most importantly— and the mobilization of operations. Once communication. The contract manager will the construction is complete and operations play a central role in conflict management and are successfully launched, the project risk will be responsible for keeping open lines of is significantly lower. The PSP may want to communication and proactively addressing refinance the project to take advantage of conflicts where they arise. the lower debt costs, and therefore improve equity return. The municipality should share  If conflict management fails, disputes are the refinancing gain and therefore provide for submitted in the first instance to mediation a mechanism in the PPP agreement. and/or some form of expert resolution (for example, under the independent engineer  In other cases, the original project financing is if one is appointed), to provide additional based on short-term debt (usually where long- data to the parties and provide a more term financing is not available). The project structured platform of communication. If will need to go back to the financial markets at this fails, the matter is generally escalated the end of the term of the original project debt, to senior executive level (for instance, the to refinance project debt. Someone will need head of the municipal administration and to take the risk that this refinancing will be the managing director of the SPV). Where costlier or might not be available at all. this too fails, the dispute is submitted to final adjudication, usually through domestic or international arbitration. Tool thegpsc.org Module 12: Contract Management provides more detailed guidance on contract management • Bank | | thegpsc.org procedures. • PPP Contract Management Tool This tool is a G20 initiative that aims to help governments to manage PPP contracts, from financial close WorldBank through contract implementation, with a range of practical advice and case studies. The World https://content.gihub.org/live/media/1495/gih_managingppp_summary.pdf Guidance Note Phase IV: Implementation 57 6.3.7  Expiry of PPP Agreement and Handback T  he contractual regime will identify which assets of Assets transfer to the municipality and the conditions  A defined period before the end date of those assets must be in at transfer. The parties the PPP agreement (generally three to five will review together the condition of those assets years), the contract management unit starts to some 12-18 months before handback. Based on prepare the handover of the project’s residual this coordinated review, the parties will agree the assets from the PSP to the municipality. The remediation effort required before the assets can handover regime is generally set out in the be transferred back. PPP agreement. Well before the end date of the PPP agreement, the municipality must decide on how the project services will be provided after the termination of the PPP agreement. This decision must be taken sufficiently before the end date of the PPP agreement so that there is enough time to prepare and conduct the procurement procedures for the appointment of new contractors or train its own staff on the project operations and maintenance. Case Example Yongin Everline Light Rail Transit (Seoul, Republic of Korea) Yongin City has granted a 30-year concession to a private company, YongIn Rapid Transit Co. Ltd, with the aim to address the increase of travel demands of the city. In 2001, when the project was structured and approved, the estimated daily passenger demand was expected to be 140,000. However, by the time construction was completed in 2009, the updated estimate of passenger volume was only 32,000 passengers per day. The municipality delayed opening of the line as it would have had to pay substantial compensation as part of the minimum revenue guarantee it had provided to the concessionaire. The concessionaire initiated an arbitration process to receive compensation, and eventually the arbitration court ruled that the concessionaire is eligible for a compensation for loss of business due to delays in opening. Park, Jin Young, and Jinsu Mun. Korea’s Railway PPP (Public-Private Partnership) Projects. Gyeonggi-do: The Korean Source:  Transport Institute, 2014; Shin, Tom. 2007. “Light Rail Transit Projects in Korea: Case Study of Two International Projects.” World Services Group. Accessed February 17, 2019. https://m.worldservicesgroup.com/article.aspx?id=2097; Sang-soo, Kwon. 2013. “Yongin Everline: New Train, Few Passengers.” Korea Joongang Daily, June 1, 2013. Accessed February 17, 2019. http://koreajoongangdaily.joins.com/news/article/article.aspx?aid=2972459. 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Washington, D.C.: World Bank Group. ppp.worldbank.org/public-private-partnership/ http://documents.worldbank.org/curated/ sites/ppp.worldbank.org/files/documents/ en/647351490648306084/Transforming-the-urban- UnsolicitedProposals_PPIAF.pdf space-through-transit-oriented-development-the- 3V-approach PPIAF. 2017. Railway reform: Toolkit for improving rail sector performance (English). Washington, D.C.: SALGA. n.d. MUNICIPALITIES: Municipal Focus - World Bank Group. http://documents.worldbank. Municipal Guidelines on Social & Rental Housing. org/curated/en/529921469672181559/Railway- https://www.salga.org.za/Municipalities%20F%20 reform-Toolkit-for-improving-rail-sector-performance MGOSARH.html Public-Private Infrastructure Advisory Facility SIF. n.d. “Source since 2016”. Sustainable (PPIAF). 2018. Policy Guidelines for Managing Infrastructure Foundation. 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The Role and Impact of Public- Private Partnerships in Education The Ford Foundation. 2003. Public Markets as a Vehicle to Upward Mobility and Social Integration. World Bank. 2012. Developing Successful https://s3.amazonaws.com/aws-website- Public-Private Partnerships to Foster Investment ppsimages-na05y/pdf/Ford_Report.pdf” in Universal Broadband Networks. https://ppp. worldbank.org/public-private-partnership/library/ ULI Development Case Studies. 2015. James F. developing-successful-public-private-partnerships- Oyster Bilingual Elementary School and Henry foster-investment-universal-broadband-netw Adams House. World Bank. 2014a. A Checklist for Public- Um, Paul Noumba. Laurent Gille, Lucile Private Partnership Projects. Washington D.C.: Simon, Christophe Rudelle. 2004. A Model World Bank. https://ppp.worldbank.org/public- for Calculating Interconnection Costs in private-partnership/sites/ppp.worldbank.org/ Telecommunications. Washington, DC: World Bank files/documents/global_checklist_ppp_g20_ and the Public–Private Infrastructure Advisory investmentinfrastructure_en_2014.pdf” Facility. https://openknowledge.worldbank.org/ handle/10986/15040 World Bank. 2014b. Project Appraisal Document on a Proposed Loan in the Amount UNECE, WHO, ADB. 2012. “A Preliminary of US$500 Million to the Socialist Republic of Reflection on the Best Practice in PPP in Healthcare Vietnam for a Transmission Efficiency Project Sector: A Review of Different PPP Case Studies and (TEP). http://documents.banquemondiale. Experiences”. Paper prepared for the conference org/curated/fr/566821468177570152/pdf/ PPPs in Health Manila 2012: Developing Models, PAD7660PAD0P1300OUO0900R20140017101.pdf Ensuring Sustainability: Perspectives from Asia and Europe. https://www.unece.org/fileadmin/DAM/ceci/ World Bank. 2014c. Rooftop Solar Public-Private images/ICoE/PPPHealthcareSector_DiscPaper.pdf Partnerships: Lessons from Gujarat Solar. https:// library.pppknowledgelab.org/attached_files/ United Nations ESCAP. 2009. Community Toilets in documents/2408/original/PIQ_RooftopSolar_ Tangerang, Indonesia. https://www.unescap.org/ INTERACTIVE.pdf?1438367268 sites/default/files/Tangerang_ES.pdf World Bank. 2014d. Success Stories and Lessons United Nations ESCAP. n.d. Public-Private Learned: Country, Sector and Project Examples Partnership Qualitative Value-for-Money Toolkit. of Overcoming Constraints to the Financing of https://ppp.unescap.org/ Infrastructure. United Nations Habitat. 2011. Public-Private http://www.g20.utoronto.ca/2014/WBG_IIWG_ Partnership in Housing and Urban Development. 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Performance World Bank. 2016c. “PPPs for Public Markets, Improvement Planning: Developing Effective Malls and Slaughter Houses / Abattoirs”. Public- Billing and Collection Practices. http://documents. Private Partnership Legal Resource Center. https:// Guidance Note List of References 64 ppp.worldbank.org/public-private-partnership/ World Bank. 2019b. “Energy and Power PPPs”. ppps-public-markets-malls-and-slaughter-houses- Public-Private Partnership Legal Resource abattoirs Center. https://ppp.worldbank.org/public-private- partnership/sector/energy World Bank. 2016d. “Private Participation in Infrastructure Advisory Facility”. https://ppiaf.org World Bank. 2019c. “Health”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/health World Bank. 2016e. Country Readiness Diagnostic for Public-Private Partnerships. Washington World Bank. 2019d. “ICT”. PPP Knowledge Lab. D.G.: World Bank. http://pubdocs.worldbank.org/ https://pppknowledgelab.org/sectors/ict en/943711467733900102/Country-PPP-Readiness- Diagnostic-Tool.pdf World Bank. 2019e. “Municipal Parking”. Public-Private Partnerships Legal Resource World Bank. 2016f. Port Reform Toolkit PPIAF, Center. https://ppp.worldbank.org/public-private- World Bank, 2nd Edition. https://ppp.worldbank. partnership/municipal-parking org/public-private-partnership/library/port-reform- toolkit-ppiaf-world-bank-2nd-edition World Bank. 2019f. “Municipal Solid Waste (MSW) PPPs”. Public-Private Partnership Legal Resource World Bank. 2017a. “PPP Screening Tool”. Center. https://ppp.worldbank.org/public-private- Washington D.C.: World Bank. https:// partnership/sector/transportation pppknowledgelab.org/tools/tools-assess-whether- implement-project-ppp#ppp-screening-tool World Bank. 2019g. “Power”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/power World Bank. 2017b. 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Project Appraisal Document %28Information%20and%20 on a Proposed Loan in the Amount of US$425 Communications%20Technology%29&site_ Million to the Islamic Republic of Pakistan source%5B%5D=Handshake%20Journal&site_ for the National Transmission Modernization source%5B%5D=Knowledge%20Lab I Project. http://documents.worldbank.org/ curated/en/345091513911668260/pdf/Pakistan- World Bank. 2019j. “Sub-national and Municipal Transmission-PAD2036-PAD-updated2-11302017. PPPs”. Public-Private Partnerships Legal Resource pdf Center. https://ppp.worldbank.org/public- private-partnership/ppp-sector/sub-national-and- World Bank. 2017e. Results of Collaboration for municipal-ppps/sub-national-and-municipal-ppps Social Inclusion in the Trung Son Hydro Power Project, Vietnam. Washington, D.C.: World Bank World Bank. 2019k. “Toolkits”. Public-Private Group. http://documents.worldbank.org/curated/ Partnerships Legal Resource Center. https://ppp. en/903511496219887678/Results-of-collaboration- worldbank.org/public-private-partnership/overview/ for-social-inclusion-in-the-Trung-Son-Hydro-Power- practical-tools Project-Vietnam World Bank. 2019l. “Urban Revitalization”. PPP World Bank. 2018. Procuring Infrastructure Public- Knowledge Lab. https://pppknowledgelab.org/ Private Partnerships Report 2018. Washington D.C.: sectors/urban-revitalization World Bank. https://ppp.worldbank.org/public- thegpsc.org private-partnership/library/procuring-infrastructure- World Bank. 2019m. “Waste”. PPP Knowledge Lab. ppps-2018 https://pppknowledgelab.org/sectors/waste | World Bank. 2019a. “Education”. PPP Knowledge World Bank. 2019n. “Water and Sanitation PPPs”. The World Bank Lab. https://pppknowledgelab.org/sectors/ Public-Private Partnership Legal Resource education Center. https://ppp.worldbank.org/public-private- partnership/sector/water-sanitation. Guidance Note List of References 65 World Bank. 2019o. “Water and Sanitation”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/water-sanitation World Bank and International Monetary Fund. 2016. “Public-Private Partnership Fiscal Risk Assessment Model”. http://www.worldbank.org/en/topic/ publicprivatepartnerships/brief/ppp-tools#T2 World Bank. n.d. “”Decision Tool””. Urban Regeneration Decision Tool. Accessed October 03, 2019. https://urban-regeneration.worldbank.org/ survey World Bank. n.d. “PPP Knowledge Lab”. Accessed October 03, 2019. https://pppknowledgelab.org/ World Bank. n.d. “Private Sector Participation in Infrastructure (PPI) Database”. Accessed July 19, 2019. https://ppi.worldbank.org/en/ppi World Bank. n.d. “Public-Private Partnerships Legal Resource Center.” PPPLRC. 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Accessed July 19, 2019. https:// library.pppknowledgelab.org/documents/4699 Guidance Note Glossary 66 Glossary Adviser means the expert/experts that will be Contract manager is the primary point of contact procured by the municipality to provide technical of the municipality with the PSP during the assistance in the development of the feasibility implementation of the PPP project (see study and/or the competitive tender of the Section 6.1). proposed PPP project. Data room makes reference to either a virtual Application means the qualification documents records archive (that is, a virtual data room) submitted by the private bidder in response to the or a physical storage room where relevant issuance of an RFQ (see Section 5.1). project background records, plans, and tender documents are made available to bidders during Bid means the technical proposal and financial the tender process (see Section 5.2). proposal submitted by the bidder in response to the issuance of a RFP. In the case of single- Due diligence means the analysis of a project to stage bidding, the bid also contains the bidder’s assess the viability of the project. qualification documents (see Section 5.2). EIRR means the economic internal rate of return of Bidder means a private sector entity or consortium the project. who has participated or intends to participate in the tender of the PPP project. Feasibility study is the document that provides the basis of whether or not a project is feasible and Capital planning means an entity’s budgeting suitable to be structured as a PPP (see process carried out to ensure it has the resources Section 4.2). to commit to long-term investments and whether those investments are sustainable and accord to Financial closure occurs when the PSP secures all the entity’s long-term plans. its required financing from its equity investors and lenders. This typically requires detailed analysis CBO means community-based organization and ‘due diligence’ by lenders, reviewing PPP agreements and analyzing project risks in detail CMP means the contract management plan (see to ensure the project is ‘bankable’ and financially Section 6.2). sustainable in the face of all commonly expected risk events (see Section 5.2 and 5.3). CMU means contract management unit (see Section 6.1) Financial proposal means the documents submitted by a private bidder to the municipality Commercial closure occurs when the PPP containing its bid value and other supporting agreement is signed. This occurs after a typically requirements as required by the RFP (see Section short period of contract negotiations between 5.2). the municipality and the PSP. However, after commercial closure, if the PSP mobilizes external FIRR means the financial internal rate of return of financing, it must reach financial closure before the the project. PPP project’s implementation (see Section 5.2). Independent engineer means the person or entity thegpsc.org Consultancy agreement means the contract jointly engaged by the municipality and the PSP to entered between the municipality and the adviser assist reviewing technical and engineering-related for the provision of technical assistance to the contract management tasks (see Remark under municipality in the development of the feasibility Section 6.1). | The World Bank study and/or the competitive tender of the proposed PPP project (see Section 4.3). Municipality means the municipal government or local government authority. Guidance Note Glossary 67 NGO means non-governmental organization. Success fee means the payment made to a PPP transaction adviser once the PPP has reach either, O&M means operations and maintenance. or both, commercial closure and financial closure. A success fee motivates PPP transaction advisers PDF means project development fund to complete the project as quickly as possible. (see Section 3.3). Technical proposal means the documents PMU means project management unit submitted by a private bidder to the municipality to (see Section 4.1). satisfy the technical requirements of the project as indicated in the RFP (see Section 5.1 and 5.2). PPP means public-private partnership (see Section 1.1). USP means unsolicited proposal (see Section 5.4). PPP agreement is the contract signed between the VFM means value for money (see Section 1.2 municipality and the PSP to implement the PPP and 1.3). project (see Section 5.1 and 5.2). Preferred bidder means the bidder identified as providing the most advantageous bid, but before commercial close and/or financial close (see Section 5.2). Project means the subject PPP/potential PPP project. Project company means the incorporated entity of the PSP for the PPP project. Often this is also referred to as the special-purpose vehicle or ‘SPV’. Project manager means the person appointed by the municipality for the daily management of the PPP project. PSP means the private sector partner. Public investment management means an approach to managing government expenditures for public infrastructure strategically and efficiently. RFP means request for proposal (see Section 5.1). RFQ means request for qualification (see Section 5.1). Special purpose vehicle (SPV) means a corporate vehicle (also known as a project company) created to implement the project, whose sole purpose is the project, and therefore does not undertake obligations or liabilities outside of the project. Sponsor means the strategic investor, with technical and commercial skills needed to deliver the project, which often also provides some combination of equity and debt investment. The World Bank | thegpsc.org Guidance Note 68 MUNICIPAL READINESS Municipal 01 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Introduction to and Instructions 02 2.0 The Municipal Readiness Tool 03 for the Municipal Readiness Tool Module 1 : Introduction to and Instructions for the Municipal Readiness Tool 2 Municipal Readiness 1.0 Introduction to and Instructions for the Municipal Readiness Tool This module presents municipal practitioners with • The World Bank Group, A Checklist for Public- a series of fundamental questions concerning Private Partnership Projects (prepared by the the municipality’s institutional capacity and World Bank Group for the G20 Investment and the applicable legal and regulatory framework Infrastructure Working Group August 22, 2014), to provide a basic assessment of whether the available at: https://ppp.worldbank.org/public- municipality is ready to pursue a PPP project or private-partnership/library/checklist-public- program. It is not essential that a jurisdiction or private-partnership-projects-submitted-world- municipality demonstrates all the characteristics bank-g20-investment-and-infras. outlined in this module before attempting to • The World Bank Group, Country Readiness implement a PPP. However, the following tool can Diagnostic for Public-Private Partnerships help a municipality better assess its institutional (The World Bank Group June 2016), strengths and weaknesses in terms of capacity to available at: http://pubdocs.worldbank.org/ implement a PPP and identify reforms that may be en/943711467733900102/Country-PPP- needed to obtain sufficient expertise, capacity, and Readiness-Diagnostic-Tool.pdf. legal authority to use PPPs. • The World Bank Group, Urban Regeneration Decision Tool, available at: https://urban- This tool is organized around six general statements regeneration.worldbank.org/survey. that, if true, tend to indicate the municipality is • The World Bank Group’s City Resilience Program, well positioned to pursue a PPP. Each statement Rapid Capital Assessment (sample assessment). is accompanied by a brief explanation of its For additional information and resources, refer to: relevance and followed by a non-exhaustive https://www.gfdrr.org/en/crp. series of illustrative questions designed to walk •Public-Private-Partnership Legal Resource Center practitioners through a set of more specific topics (PPPLRC), https://ppp.worldbank.org/public that are generally relevant to the accuracy of the private-partnership/. statement. After reviewing these questions—and with due consideration to any additional, relevant information that may not be directly addressed by these questions—practitioners should indicate the extent to which they agree or disagree with each general statement. This readiness tool has been influenced by the following sources, which will also be helpful for any municipality looking to identify ways to improve its investment climate for PPP: • The World Bank, Procuring Infrastructure Public- Private Partnerships Report 2018 (The World Bank 2018), available at: https://ppp.worldbank. org/public-private-partnership/library/procuring- infrastructure-ppps-2018. • The City Creditworthiness Initiative, City thegpsc.org Creditworthiness Self-Assessment and Planning Toolkit, available at: http://www.citycred.org/. | The World Bank Module 1 : The Municipal Readiness Tool 3 Municipal Readiness 2.0 The Municipal Readiness Tool Statement 1 - Creditworthiness Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality The municipality’s creditworthiness is a creditworthy, affects the likelihood that private reliable investors will be interested in counterparty contracting with the municipality, for prospective as well as the cost of financing such infrastructure projects. Even where the municipality PPPs, with a assumes no regular payment history of timely obligations under a PPP, a history of debt repayment timely debt repayment will bolster its and honoring credibility as a contractual counterparty contractual and provide assurance that it will honor commitments. any payment obligations that might arise in the event of project termination. In addition, some basic provisions related to municipal debt management are also directly applicable to implementing, monitoring, and evaluating a PPP project. PPPs entail long-term, contractual commitments such that potential PSPs must have confidence that the municipality will respect its contractual obligations for the duration of the project, which is best evidenced by the municipality’s experience in this regard. The assessment of municipal creditworthiness involves a number of different characteristics. This section captures a few of these characteristics. Further reference should be made to www.citycred.org for a simple assessment tool. The more the municipality’s financial management systems are adapted to address issues relevant to PPP, the better. Module 1 : The Municipal Readiness Tool 4 Municipal Readiness Question on Creditworthiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 1.1 A first-level assessment is of the Are financial municipality’s internal systems, for statements example, whether it issues account prepared and and are those accounts audited. audited annually? These mechanisms help investors and financiers understand the financial 1.2 standing of the municipality. Any lack Are accounts of transparency or accountability will managed on an make investors and financiers nervous. accrual basis? Equally, they will want to understand the municipality’s exposure to other investments, including PPP, to be sure 1.3 that the municipality is monitoring and Are regular audits managing that exposure proactively. conducted? By a third-party, independent auditor? 1.4 Is there any system for fixed and movable asset management and accounting? 1.5 Are municipal PPP liabilities monitored under its accounting system? 1.6 Is there a designated entity and/or separately staffed office responsible for debt planning and management? 1.7 Has the municipality obtained a domestic credit rating? 1.8 Has the municipality obtained an international credit rating? thegpsc.org | The World Bank Module 1 : The Municipal Readiness Tool 5 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 1.9 Investors and financiers will want Has the municipality to know how much experience the borrowed money municipality has in borrowing money from banks in the commercially, from banks and from last three years? bond markets, domestically and •If so, has it timely internationally; each involves commercial satisfied (that is, know-how and discipline that will has not defaulted give investors and lenders comfort that and is not in the municipality will manage its PPP breach of any projects well. of) those debt obligations? 1.10 Does the municipality have an existing lending relationship with one or more commercial banks for long-term borrowing of one year or more? 1.11 Has the municipality issued bonds domestically in the last three years? •If so, has it timely satisfied (that is, has not defaulted and is not in breach of any of) those debt obligations? 1.12 Has the municipality issued bonds internationally in the last three years? •If so, has it timely satisfied (that is, has not defaulted and is not in breach of any of) those debt obligations? Module 1 : The Municipal Readiness Tool 6 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 1.13 Does the municipality have any other recent experience with any kind of borrowing (concessional or commercial, short term or long term)? •Does the municipality use any short-term borrowing (for example, overdraft facilities, loans, lines of credit) to maintain liquidity? •Has it timely satisfied (that is, has not defaulted and is not in breach of any of) those debt obligations? 1.14 Oversight on municipal borrowing Are there clear and PPP projects, for example, from regulations or central government, can provide rules on municipal comfort to investors and financiers, borrowing? but may also represent additional delay, cost, and complexity. 1.15 Is there national or state/provincial government authority monitoring the municipality’s financial condition on an annual (or more frequent) basis? 1.16 Are there any caps or other restrictions on the amount or type of debt the municipality can accrue? 1.17 Are there any written policies or procedures on debt service? thegpsc.org 1.18 Are there any safeguards against | late or missed The World Bank payments? Module 1 : The Municipal Readiness Tool 7 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 1.19 PPP is generally a contract-based Does the relationship. If the PSP cannot trust the municipality have a municipality to respect its contractual history of respecting obligations, additional protections its contractual such as guarantees will be needed, obligations and adding to the cost and complexity of paying amounts due the project. Ideally the municipality on time? can show that it plans to be a credible • For example, is partner to the PSP by showing how there any recent well it has treated its private partners history of delays in the past. in payments to suppliers or contractors over 60 days? Statement 2 - Internal Capacity Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality Successfully preparing, procuring, has sufficient and implementing a PPP can require internal capacity significant costs, in terms of labor to carry out a time, financial commitments, and PPP, including the procuring expert advice. Ultimately, ability and funding these investments are likely to pay to obtain outside large dividends, both economic and technical assistance social, by ensuring that the resulting if needed. project provides the most VFM for the municipality, limiting the risks involved (including environmental and social risks) and reducing the burden on the municipality over the course of the PPP agreement. Nonetheless, many municipalities will not have the needed internal capacity, especially when undertaking their first PPP project(s) or program. Internal human resource capacity can and should be developed over time through appropriate hiring, formal trainings, and direct, on-the-job experience with PPPs. In many respects, expertise is best acquired by actually working on a PPP (that is, learn-by- doing), provided that emphasis is placed on knowledge sharing to ensure that lessons learned are shared among staff and preserved within institutions despite staffing changes. In the interim, gaps in internal capacity can be overcome by mobilizing capable, third-party consultants, as well as by leveraging expertise from other government departments and entities at the local and national levels. Note that accessing additional sources of funding for the development of PPP projects, including hiring high-quality consultants, is addressed in Statement 3. Module 1 : The Municipal Readiness Tool 8 Municipal Readiness Question on Internal Capacity Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 2.1 The best way to develop PPP capacity Has the municipality is by doing PPPs. The more experience previously attempted the municipality has, the more a PPP? If so comfortable potential investors and •W ere past financiers will be. attempts deemed successful? •H as there been continuity among key staff involved? •W ere formal lessons learned or other knowledge transfer mechanisms deployed to retain institutional knowledge? 2.2 Capable and experienced staff need Are there enough to be allocated to PPPs generally, available and and dedicated to specific projects as sufficiently qualified and when needed. Clearly, the more (by training and/or developed the PPP program, the more experience) staff to projects are in the pipeline, the more oversee the day-to- staff can be dedicated to PPP. Such day supervision of dedicated, experienced individuals, PPPs? ideally led by someone with sufficient •D oes the seniority to make decisions and municipality have commit to deliver on promises, will be its own, internal key to attracting good investors and PPP team, whether financiers. Note that, in appraising the as a permanent available staff, the municipality should or ad hoc office, consider the extent to which it may be committee, unit, able to borrow expertise from other and so on? government departments or entities, at •If so, does that unit the local or national level. have dedicated staff? 2.3 Does the municipality have a designated team with commercial and financial skills who would be available to oversee PPP project, possibly drawing from relevant departments or offices as appropriate? thegpsc.org •D o the foreseeable members of such a team have experience with or | exposure to PPP The World Bank in their functional areas of expertise? Module 1 : The Municipal Readiness Tool 9 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 2.4 If the municipal government does Does the not have PPP-specific expertise, municipality have then the next best thing is to have internal expertise staff experienced in commercial on issues related transactions, with appropriate to accounting, finance, accounting, and legal skills. financial The municipality should also consider management, and if it has staff who may have other related commercial legal and transferrable skillsets, such as staff issues? who have previously worked on and delivered large or complex projects, including projects not directly related to infrastructure provision. 2.5 Does the municipality have identified staff who specialize in complex projects or have other, related skillsets and could be assigned to a PPP project team? 2.6 In addition to a standing team focused Are there processes on PPP, the municipality will need or policies for processes to assign the right staff to selecting a deliver each project. The key members • Project manager; of this team should commit to the • Contract manager; project over the long term, even where •Project team; the municipal government changes. and/or •C onsultant(s) to provide technical assistance? 2.7 Is there likely to be continuity of key personnel (for example, across administrations, when the municipal government changes after elections)? 2.8 Gaps in expertise and capacity With respect to should be filled with consultants. hiring consultants The municipality will need the ability for technical to hire the best consultants for the assistance, is there job. In PPP, this can mean expensive or will there be funds consultants, possibly exceeding available to pay for ceilings placed on public procurement. such services? The municipality will need some •F or example, is mechanism to hire these high-quality there a project consultants. preparation fund that could be used to hire consultants to complete feasibility studies and other preparatory work? Module 1 : The Municipal Readiness Tool 10 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 2.9 Are there any regulations or policies that affect the municipality’s ability to hire outside technical advisers? •F or example, local hiring preferences, procurement rules that require competitive tender of consultancy services, and/ or limit the remuneration payable for such services? Statement 3 - External Assistance Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality Some countries have established is aware of and specialized PPP teams at the national has access to or regional level to facilitate, monitor, external sources and/or regulate the use of PPPs. These for funding and institutions can be an important source additional capacity, of information and support, and may as needed, to help have review or approval authority oversee, coordinate, with respect to PPPs. Regional or and support PPPs. international organizations may also offer support to help a municipality deliver PPP, for example, the World Bank Group and the regional development banks (for example, the Asian Development Bank) can make funding and teams of experts available to help ensure that projects are well implemented, and that the municipality’s investment framework is conducive to PPP. Question on External Assistance Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree thegpsc.org 3.1 The providers of support must have If there is a national more experience/capacity than the or state/provincial municipality to make a positive impact. PPP institution, does In some cases, the municipality may | it have experience be more experienced in PPP than the The World Bank delivering national or international institutions. PPP projects successfully? Module 1 : The Municipal Readiness Tool 11 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 3.2 The nature of engagement will be If there is a national critical. The municipality must be or state/provincial a willing, and ideally enthusiastic, PPP institution, recipient of support from the national does it provide, or international institutions. The nature or manage the and extent of support is also critical. provision of, any If national or international institutions type of support for provide capacity in an area where the municipal PPPs, municipality is weak, the impact will be such as : more significant. • Technical assistance for project preparation, or funding to procure such assistance from outside consultants (for example, a PDF); • Credit enhancement instruments for PPPs (for example, guarantees); • Grant funding for a portion of a project’s capital expenditure to improve commercial viability; • Assistance with land acquisition; • Providing model or standard project documents (for example, concession agreements and tender documents); • Showcasing prospective PPP projects to attract investors or conducting market soundings; and/or • Assistance with or a streamlined permitting process for PPPs? Module 1 : The Municipal Readiness Tool 12 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 3.3 If there is a national or state/provincial PPP institution, does its mandate include the following: • Coordinating different stakeholders involved? •R  eview and approval of PPP projects in some or all cases? •M  onitoring and evaluating PPPs in the implementation stage? 3.4 In some jurisdictions, government Does the entities or funds may provide an municipality additional source of equity, financing, have access to a and/or credit enhancements to mobilize government-led private capital for infrastructure projects. infrastructure co- Such facilities include sovereign financing facility wealth funds, national and subnational that could be used development banks, state-run lending to leverage private and grant programs, and guarantee financing? funds, among others. These state-run facilities may focus on a particular sector (for example, public transport) or infrastructure in general. Access to these public sources of development assistance and the ability to blend them with private capital in the same project can de-risk the project, making it more attractive to private investors and reducing the cost of capital. This can also help compensate for any perceived lack of creditworthiness on the part of the municipality, as well as investors’ perceptions regarding the risk of investing in a particular region or country. Statement 4 - Planning and Budgeting Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality’s Effective budgeting and planning planning and processes are critical to both identifying budgeting policies projects that are best suited to delivery thegpsc.org are conducive as PPPs and to effectively managing to long-term and accounting for liabilities created infrastructure by PPPs. The municipality should be financing confident that it has sufficiently effective | commitments and and long-term budgeting and planning The World Bank PPPs. mechanisms to properly pursue and implement infrastructure PPP projects. Module 1 : The Municipal Readiness Tool 13 Municipal Readiness Question on Planning and Budgeting Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 4.1 A successful PPP program begins Is there a formal, with good planning, namely a approved reliable process for identifying public development infrastructure investment needs and plan or strategy then assessing which projects may be that identifies suited for delivery through PPPs. infrastructure needs and priorities for the municipality? •Are development plans available to stakeholders in the government, private sector, and civil society? 4.2 Are PPPs explicitly included in the development plan or strategy as a mechanism for infrastructure delivery and service provision? 4.3 Short-term budgeting rarely appreciates Is there a budgetary the long-term context of PPP. system that does or would support multi-year fiscal commitments to infrastructure and PPPs, including government support to PPPs where needed? 4.4 Is the expenditure plan updated annually and well- synchronized with the development plans? 4.5 Any PPP might create contingent Are there clear liabilities for the municipality. A system regulations or is needed to monitor and manage such rules on managing liabilities. contingent liabilities arising from PPP? Module 1 : The Municipal Readiness Tool 14 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 4.6 A PSP will need to know that the Is there a formal, project site may lawfully be used for the approved spatial intended purpose, now and through plan that identifies the duration of the PPP agreement, land use purposes and that the lawful owner of the site and restrictions and any other entities with claims to the within the territory of land (for example, leases, easements, the municipality? rights of way) are readily identifiable. Any uncertainty over ownership, 4.7 development rights, or usage rights Are there formal, with regard to the project site presents transparent, and a substantial risk and will need to be enforced regulations resolved before pursuing a PPP. or ordinances related to land use, covering topics such as building density and height and functional uses (for example, zoning framework)? 4.8 Is there a centralized and updated property cadastral database, registry for land parcel information, or other record system that provides reliable property records (for example, title registry and transfer, development and usage rights)? thegpsc.org | The World Bank Module 1 : The Municipal Readiness Tool 15 Municipal Readiness Statement 5 - Institutional Mandate Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality A PSP will want to make sure that has clearly defined the municipality is the right contract institutional counterparty, and that the municipality mandates for has the authority and power to make infrastructure and keep the promises set out in delivery and service the PPP agreement. To this end, the provision municipality must clearly understand its legal mandate for infrastructure delivery and service provision, including whether service provision in any given sector is a shared responsibility (for example, where a municipal authority and a publicly owned utility both have roles in ensuring the provision of piped water to households). If responsibility is shared, the municipality will need to review the other entity’s mandate and may need to involve it in any potential PPP. If institutional responsibility is not clearly defined, any uncertainty will need to be resolved before pursuing a PPP. Question on Institutional Mandate Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 5.1 A PPP agreement may extend past Does the the term in office of the public officials municipality have involved in negotiating and closing the the explicit authority deal. The parties to the PPP agreement to enter into long- need to be sure that the contract term contracts? remains legally binding throughout its •For example, ones duration, irrespective of any change in that last longer municipal leadership. than the term of the municipality’s chief officer? 5.2 If there are any prerequisites that must be met or approvals that must be obtained before the municipality can enter into such an agreement, are they known and manageable? Module 1 : The Municipal Readiness Tool 16 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 5.3 The mandate of the municipality Are there sectors will influence the scope of the PPP for which the program and help the municipality municipality focus on key sectors. In addition, the has exclusive municipality’s mandate needs to be responsibility clear. If the mandate is shared, the for delivering other responsible parties need to be infrastructure engaged in the relevant PPP project projects and from the earliest stages. service delivery (for example, piped water supply, building and maintaining bus stops, collecting solid waste)? •Is this responsibility clearly defined by law? 5.4 Are there any sectors in which service delivery is a shared responsibility? •If so, what is the municipality’s relationship with the other entity or entities, and is there a clear delineation in roles? 5.5 If the PSP will be involved in service delivery (for example, clean water supply), does the municipality have explicit authority to delegate responsibility for providing the service in question to a private entity? thegpsc.org | The World Bank Module 1 : The Municipal Readiness Tool 17 Municipal Readiness Statement 6 - Governing Law Response Statement Explanation Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The municipality is Whether or not the jurisdiction has clearly empowered established a specific legal or regulatory by law to prepare framework for PPP delivery, the and implement municipality must have the mandate at PPP projects, law to prepare and implement PPPs, under specific including the processes for project laws, regulations, selection, preparation, and procurement, or policies at the as well as access to institutions or national, state/ funding sources that can facilitate PPP provincial, or projects. municipal levels that are conducive to PPPs. Questions on Governing Law Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree 6.1 The legal regime should address each Do applicable laws, of these issues to provide a clear regulations, and framework for a PPP program. Any gap policies address the in the legal system will cause concern following: among potential investors and add • Respect for to project risk and would need to be contractual addressed contractually. obligations? • Enforcement of government obligations, in particular contractual ones? • The municipality’s mandate to sign a PPP agreement; for what kind of projects/sectors? • Review and approval processes that would be applicable to PPP projects? • Delineation of institutional roles in identifying, screening, preparing, approving, and procuring projects that would be applicable to PPPs? Module 1 : The Municipal Readiness Tool 18 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree •D  elineation of the sectors (for example, water supply, electrical power distribution, and public transit) in which PPPs would, or would not, be allowed? • Establishment of a framework for government support, including for PPPs? •R  ules for public payments, which would be applicable to PPPs (for example, availability payments)? • Description of what types of PPP project structures (for example, BOT, DBFO, ROT) are, or are not, allowed? • Establishment of a clear and consistent process for preparing and procuring projects, including PPP? •D  efining requirements, processes, and exceptions for competitive selection of the PSP, including for PPP? •P  rovision of standard terms and conditions for investments in infrastructure, including standard PPP agreements? •D  efining requirements for transparency and disclosure before and/or after an investment project award or closing, including a PPP agreement? •P  rovision of processes thegpsc.org for contract management, monitoring, and renegotiation? | •P  ermitting or The World Bank prohibiting unilateral contract modification and/or termination? Module 1 : The Municipal Readiness Tool 19 Municipal Readiness Response Statement Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree  bility to change the •A ownership structure of a PPP and assign rights under a PPP contract?  llowing the •A municipality to commit to compensation payments in the event of contract termination? Protection for PSPs • from expropriation?  llowing for •A alternative forms of dispute resolution, such as international arbitration?  rovision of •P a process or otherwise indicate how to address a USP?  stablishment of •E clear processes and systems for obtaining any required licenses and permits, including by a PSP? 6.2 PPP structures may be new in the Is it clear how a country or jurisdiction, in particular PPP project would financing that is based on project be taxed (including revenues rather than asset value. withholding taxes, The tax regime may need to be transfer taxes, reformed to provide for such structures. and income taxes applied to any public contribution to the project)? 6.3 Land is often a challenge for PPPs. Is the regime for the The PSP will ideally want to see all municipality acquiring land acquired before bidding, or at any land needed for a least a system by which the PSP can PPP project clear and see a clear line to accessing land and efficient? protecting any rights over land needed for the project. Refer to Questions 4.6 through 4.8, regarding land use planning, regulation, and property registration. Recall that the PSP will need to be confident in the status of the property interests and permissible uses with respect to the project site. 6.4 Foreign investment can be a delicate Are there significant political issue, but may be important to restrictions on access foreign know-how and financing. foreign participation, ownership, investment, or repatriation of profits? Module 1 : 20 Municipal Readiness thegpsc.org | The World Bank ASSESSMENT TOOL PROJECT CONCEPT Municipal 02 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Introduction to and Instructions 02 2.0 The Project Concept 03 for the Project Concept Assessment Tool Assessment Tool Module 2 : Introduction to and Instructions for the Project Concept Assessment Tool 2 Project Concept Assessment Tool 1.0 Introduction to and Instructions for the Project Concept Assessment Tool Project selection is critical to ensuring that limited Global Infrastructure Hub, Reference Tool •  municipal government resources are invested to on Governmental Processes Facilitating their maximum effect. This entails obtaining and Infrastructure Project Preparation (Global evaluating data on a project’s technical, financial, Infrastructure Hub January 2019), available and legal viability. At the same time, completing at: https://www.gihub.org/project-preparation. a full feasibility study can be costly, such that it is Infrastructure Working Group, G20 Principles beneficial to undertake a preliminary assessment for the Infrastructure Project Preparation Phase of a project’s potential based on more limited (July 2018), available at: http://www.g20.utoronto. information before conducting such a study. ca/2018/principles_for_infrastructure_project_ preparation.pdf. This module is intended to help practitioners make an initial assessment of project feasibility as a PPP, Infrastructure and Projects Authority, Project •  based on core project characteristics set forth Initiation Routemap (HM Government June in Module 3: Project Concept Note. Within each 15, 2016), available at: https://www.gov.uk/ section, there are a series of positive statements government/publications/improving-infrastructure- that, if true, indicate that the project may be suited delivery-project-initiation-routemap. for delivery as a PPP. Linked to each of these statements are a series of questions designed to The World Bank Group, Success Stories and •  help practitioners identify key pieces of information Lessons Learned: Country, Sector and Project about the project that need to be known and, Examples of Overcoming Constraints to Financing depending on the response, determine if it is Infrastructure (prepared by the World Bank Group realistic and desirable to proceed with the project. for the G20 Investment and Infrastructure Working It is not expected that detailed information on Group January 2014), available at: http://www. all of the topics covered will be available at this g20.utoronto.ca/2014/WBG_IIWG_Success_ early stage but rather that considering the type Stories_Overcoming_Constrain ts_to_the_ of information a feasibility study would need to Financing_of_Infrastructure.pdf. produce, and the foreseeable or likely results will help practitioners determine if it is reasonable to undertake a feasibility study. This project assessment tool has been influenced by the following sources, which will also be helpful for any municipality in evaluating projects for PPP viability and preparing PPP projects: The World Bank Group, A Checklist for Public- •  Private Partnership Projects (prepared by the World Bank Group for the G20 Investment and Infrastructure Working Group August 22, 2014), available at: https://ppp.worldbank.org/public- private-partnership/library/checklist-public- thegpsc.org private-partnership-projects-submitted-world- bank-g20-investment-and-infras. | The World Bank Module 2 : The Project Concept Assessment Tool 3 Project Concept Assessment Tool 2.0 The Project Concept Assessment Tool Section 1. Preliminary Considerations This section addresses threshold issues designed to screen projects for fundamental viability as a PPP. Negative responses indicate that the project is not a good candidate for a PPP, or that further information needs to be obtained before considering delivery as a PPP. Preliminary Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The development 1.   as a project concept note and/ • H rationale for the or a study been completed for the project is clear. project?  oes the project have direct social, • D economic, and/or environmental benefits that are likely to greatly exceed the project cost? s the project included in, or clearly • I in line with, an official development plan or strategy? Delivery of the 2.   o the applicable laws clearly • D project as a define the institution or institutions PPP is within the responsible for this type of municipality’s infrastructure or service? legal mandate. s provision of this type of • I infrastructure or service the exclusive responsibility of the municipality, or the shared responsibility of the municipality and one or more other readily identifiable entities?  o applicable laws permit private • D participation in this type of infrastructure or service? The estimated 3.  s the approximate investment cost • I investment known or reasonably estimable? cost (capital o For example, there are comparable expenditure) is projects in this or similar known, or can jurisdictions, a technical study has be reasonably estimated the cost approximated, and is suitable for a PPP. Module 2 : The Project Concept Assessment Tool 4 Project Concept Assessment Tool Preliminary Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree s the investment cost reasonably • I resistant to change, meaning is it unlikely to increase significantly as engineering designs are completed and construction is under way? o Consider the likelihood of cost overruns, for example resulting from changes in the project scope and design, latent defects in the project site, and variability in the supply and cost of construction labor and materials - including any foreign exchange risk where machinery, technology or materials will need to be imported  oes the estimated investment cost • D exceed US$1 million?  he proposed 4. T  oes the project entail delivery of • D duration of the public infrastructure and continuous project (for service, and so involvement by the example, PPP PSP (PPP), for at least five years? agreement term) is suitable for a PPP. Funding is or 5.   as the municipality or other • H will be available government authority budgeted funds, for project or does it have access to funds, to preparation. complete project preparation? o F or example, preparing feasibility studies, acquiring land, environmental and social impact cost mitigation Section 2. Financial Considerations This section addresses fundamental aspects of a project’s financial viability, that is, whether project revenues are sufficient to cover costs and provide a reasonable rate of return. Positive responses, or reasonable expectations that a feasibility study will provide positive responses, generally indicate that a project may have sufficient commercial appeal for delivery as a PPP. Note: For one question about foreign financing, a negative response (e.g., “Strongly Disagree”) indicates agreement with the positive statement. That is, for this question, a negative response reflects favorably on the project’s potential viability for delivery as a PPP. This should be clear from context and this question has been identified with underlined font. Financial Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree There is clear 1.   oes the project deliver public • D demand for the infrastructure or service for which thegpsc.org project. there is an obvious need? o That is, have end users expressed a demand for the infrastructure or service to be provided? | The World Bank Module 2 : The Project Concept Assessment Tool 5 Project Concept Assessment Tool Financial Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree s there a clear and measurable • I demand for the infrastructure or service? o For example, location, target population, and offtaker  an the demand for the infrastructure • C service be reasonably and credibly forecast over the proposed term of the project? The project 2.   ill direct beneficiaries of the project • W will generate asset, output or service pay for the predictable and infrastructure or service provided? sustainable o Payments may include, among revenues. others, end-user fees or tariffs (e.g., utility charges, ticket fares, tolls, parking fees), leasing or purchasing real property (e.g., housing, commercial, or office space), or bulk purchase of outputs for distribution (e.g., offtake purchase payments for supplying clean water to a distributor for resale to consumers) o Note that direct beneficiaries may be businesses (e.g., offtake purchasers of bulk water) and/ or individual consumers (e.g., households receiving utility services, mass transit passengers) f direct beneficiaries will pay, • I are projected prices likely to be reasonably within the target demographic groups’ ability and willingness to pay?  re there additional market-based • A revenue streams? o For example, advertising and lease of commercial space o See Module 16 on Harnessing Land Value Capture and Module 17 on Capturing Commercial Value  an revenues from direct beneficiaries • C and other market-based sources be reasonably estimated and reliably forecasted? o F or example, offtake charge or user charge and volume assumptions backed by surveys or forecasting from historical data, market value of lease space  re government (national, state/ • A provincial, and/or municipal) funds, payments, or subsidies available to help pay for the project? Module 2 : The Project Concept Assessment Tool 6 Project Concept Assessment Tool Financial Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The approximate 3.  s the approximate cost of operation • I cost of operation and maintenance/service delivery and maintenance/ over the term of the project known or service delivery reasonably estimable? is known, or can o For example, there are comparable reasonably be projects in this or similar approximated, jurisdictions; a technical study has and might be estimated the cost reduced by the PSP. s the estimated cost of operation • I and maintenance/service delivery predictable? o For example, unlikely to vary significantly as the project develops and over the term of the PPP agreement s there potential for the PSP to • I operate and manage the project more efficiently than the public sector?  he cost of 4. T  ave comparable projects reached • H financing can financial close in the region or be reasonably country? approximated and is likely to be s long-term, non-recourse financing • I affordable. for infrastructure likely to be accessible for the project? s there an indicative or preferred • I type of financing? o For example, private equity, commercial bank loan, multilateral, bilateral or national development bank loan, or bond issuance  an financing assumptions be made • C based on similar projects, prevailing rates, or general practices of indicative or preferred lenders? o For example, debt-to-equity ratio, interest rate and tenure of debt, and cost of equity f foreign financing may be sought, • I are there any constraints on foreign exchange or capital movements that may limit the project’s access to finance?1 o F  or example, restrictions on repatriating profits and lack of As discussed in the 1 foreign exchange risk hedging tools instructions for this section, underlined text signifies a question thegpsc.org for which a negative response (e.g., “Strongly Disagree”) indicates agreement with the positive statement and | thus reflects favorably The World Bank on the project’s potential viability for delivery as a PPP. Module 2 : The Project Concept Assessment Tool 7 Project Concept Assessment Tool Section 3. Technical Considerations This section addresses core technical aspects of the project, such as those related to land acquisition, engineering design, construction, and operation. Positive responses, or reasonable expectations that a feasibility study will provide positive responses, generally indicate that the project may be technologically feasible as a PPP or otherwise. Note: For certain questions about environmental and social aspects of the project, a negative response (e.g., “Strongly Disagree”) indicates agreement with the positive statement. That is, for these questions, a negative response reflects favorably on the project’s potential technical feasibility. This should be clear from context and these questions have been identified with underlined font. Technical Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree There is a clear 1.   as an intended site for the project • H idea of the been identified? project’s location, scope, design, Is there a clear conceptual vision for • and outcomes. the project? For example, facilities to be o  constructed or services to be delivered  re project outcomes identifiable, • A definable, and measurable? o For example, number of people/ households served, amount of clean water supplied, and size of facility constructed  oes the project include a • D mechanism to involve poor communities near to or affected by the project?  oes the project include a strategy • D that allows women to receive information and share their views and concerns about the project? The project 2.  s the intended project site readily • I concept is available and likely to be suitable for realistic and the the project? preferred solution o For example, necessary land to the identified has been obtained, is easily or deficiency. reasonably accessible, can be used for the intended purpose, and is free of all encumbrances (for example, liens, easements, rights-of-way) that could impede the project f the land for the project site has not • I been obtained, can it be realistically obtained, free of all encumbrances that could impede the project, before tendering bids for the PPP?  as this type of project been • H done before, in this or comparable jurisdictions? s the project likely to rely on • I available, proven, and tested technology? Module 2 : The Project Concept Assessment Tool 8 Project Concept Assessment Tool Technical Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree As discussed in the 2  as there or will there be an • H instructions for this section, underlined text assessment of all reasonable signifies a question technical solutions to address the for which a negative need fulfilled by the project? response (e.g., “Strongly Disagree”) indicates s the proposed technical solution • I agreement with the likely to address the need in a cost- positive statement and thus reflects favorably effective and affordable manner? on the project’s potential technical feasibility. There are no 3.   oes the project present a significant • D As discussed in the 3 substantial risk to any natural resources or instructions for this environmental protected lands?2 section, underlined text risks, or any such signifies a question risks are likely to s the project operation likely to be • I for which a negative response (e.g., “Strongly be manageable net carbon negative or neutral, in Disagree”) indicates in an effective terms of greenhouse gas emissions? agreement with the and cost-efficient positive statement and manner. thus reflects favorably on the project’s potential  an the project design suitably • C technical feasibility. As discussed in the 4 address the impact of potential instructions for this natural or human-induced hazards in section, underlined text the region? signifies a question for which a negative s the project design likely to be • I response (e.g., “Strongly resilient and adaptive to evolving Disagree”) indicates agreement with the conditions resulting from climate positive statement and change or other significant long- thus reflects favorably term changes in operational or on the project’s potential environmental conditions? technical feasibility. As discussed in the 5 Is the preparation of an environmental •  instructions for this section, underlined text management strategy, or obtaining signifies a question related approvals, likely to result in for which a negative uncertainties or delays that could response (e.g., “Strongly impede the project?3 Disagree”) indicates agreement with the  here are no 4. T  oes the project present any • D positive statement and substantial social significant risk to the health or quality thus reflects favorably on the project’s potential risks, or any such of life of users, workers, or the local technical feasibility. risks are likely to population?4 As discussed in the 6 be manageable instructions for this in an effective  oes the project require • D section, underlined text and cost-efficient resettlement?5 signifies a question manner. for which a negative response (e.g., “Strongly s there or will there be a plan for • I Disagree”) indicates communicating with and involving agreement with the affected communities and key positive statement and stakeholders during preparation of thus reflects favorably the project? on the project’s potential technical feasibility. As discussed in the 7 s there known, or likely to be, • I instructions for this opposition to the project from section, underlined text affected communities and/or key thegpsc.org signifies a question stakeholders?6 for which a negative response (e.g., “Strongly Disagree”) indicates s addressing community or • I | agreement with the stakeholder opposition likely to result The World Bank positive statement and in uncertainties or delays that could thus reflects favorably impede the project?7 on the project’s potential technical feasibility. Module 2 : The Project Concept Assessment Tool 9 Project Concept Assessment Tool Section 4. Legal Considerations This section addresses some of the key legal issues for delivering the project as a PPP, such as the municipality’s authority to execute the PPP agreement, prerequisites and approvals, and legal restrictions on the PSP’s participation in the sector. Positive responses generally indicate that there are likely no significant legal barriers to implementing the project as a PPP. Legal Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree The existing 1.  s there a generally applicable PPP • I legal/regulatory law/regulation that applies to this framework for the sector? project’s sector is supportive of s there an infrastructure- or sector- • I PPPs. specific law/regulation that addresses private participation in this sector? s there a procurement law/regulation • I that applies to PPPs? The municipality 2.   oes the municipality have a clear • D has clear legal legal basis for entering into long-term authority to enter contracts? into a long-term o For example, contracts that extend PPP agreement past the term of office of the for the project. municipality’s chief officer s it clear which officials need to sign • I the actual PPP agreement on behalf of the municipality to create a legally binding contract? f the PSP will be involved in service • I delivery (for example, clean water supply), does the municipality have explicit authority to delegate responsibility for providing this service to the PSP? 3. Legal s the municipality aware of the legal • I prerequisites requirements, if any, that need to be are known or met or fulfilled in preparing, procuring, identifiable and/or implementing the project? and unlikely o F or example, required contents to present a of feasibility studies, competitive significant barrier procurement, review and approval to the project. by a national or state/provincial authority  an the project proceed without • C approval from any legislative body? s the municipality aware of the • I requirements and processes for obtaining all necessary licenses, approvals, and permits for the project? Module 2 : The Project Concept Assessment Tool 10 Project Concept Assessment Tool Legal Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree  he municipality 4. T s there a legal and institutional • I has clear legal framework for charging tariffs, authority over with transparent and well-defined tariffs paid by methodologies for tariff adjustment? end users, if any, consistent with the project concept.  oes the municipality or offtaker • D have clear and exclusive authority to collect, keep, and adjust the price of fees charged to end users? f appropriate in view of the project • I concept, can the municipality delegate the collection of fees paid by end users to the PSP? f appropriate in view of the project • I concept, can the municipality delegate to the PSP some repricing authority? o  For example, in case of delays in demand growth, can the PSP be given some flexibility in repricing to offset demand shortfalls  an the municipality lawfully promise • C to share all or a portion of revenues collected from end users with a third party in the future? 5.Applicable laws  oes the municipality have clear • D confer rights authority to enter into a direct that enable a agreement with the lender that lender to recover includes rights of substitution, step-in outstanding loan rights, or other applicable remedies? amounts in case of default. Section 5. Miscellaneous Considerations This section addresses topics that do not directly fall within the financial, legal, or technical assessment of the project but nonetheless bear on whether the project is suitable for delivery as a PPP. Positive responses generally indicate that the project may have promise for implementation as a PPP. Note: For two questions in this section, a negative response (e.g., “Strongly Disagree”) indicates agreement with the positive statement. That is, for these questions, a negative response reflects favorably on the project’s potential viability for delivery as a PPP. This should be clear from context and these questions have been identified with underlined font. Miscellaneous Considerations thegpsc.org Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree It is reasonable 1.   ave similar PPP projects achieved • H | to expect that financial close locally, regionally, The World Bank private investors or nationally? will be interested in the project. Module 2 : The Project Concept Assessment Tool 11 Project Concept Assessment Tool Miscellaneous Considerations Strongly Somewhat Somewhat Strongly Agree Agree Disagree Disagree s there reason to expect a favorable • I response from the private sector toward the project? o That is, have private investors expressed an interest in the project and does the municipality expect that there will be multiple bids for the project submitted by credible bidders? o For example, based on known market actors, preliminary market consultations or similar investor interactions  ave there been any discussions or • H other interactions involving parties with an interest in implementing the project, whether within the government or between government officials and private parties, that might discourage bidders from participating in the tender process or otherwise undermine an open and competitive bidding process?8 s the proposed public partner (that • I is, the municipality, publicly owned utility or other offtaker) creditworthy?  re credit enhancements available • A to compensate for any poor creditworthiness? o F or example, insurance, guarantees The fiscal and 2.   re any payments required by • A contingent the municipality as envisioned in implications for the project concept able to be the municipality adequately planned, budgeted, and are understood, accounted for in advance? limited and manageable.  re there other significant projects • A As discussed in the 8 or activities that will depend on this instructions for this project, or on which this project will section, underlined text signifies a question depend? 9 for which a negative response (e.g., “Strongly f this is a brownfield project, does • I Disagree”) indicates the municipality anticipate how it will agreement with the compensate for any foregone revenue, positive statement and if any? thus reflects favorably on the project’s potential for delivery as a PPP.  re the contingent liabilities created • A As discussed in the 9 by the project understood and likely instructions for this to be manageable? section, underlined text signifies a question for which a negative response (e.g., “Strongly Disagree”) indicates agreement with the positive statement and thus reflects favorably on the project’s potential for delivery as a PPP. Module 2 : 12 Project Concept Assessment Tool thegpsc.org | The World Bank CONCEPT NOTE SAMPLE PROJECT Municipal 03 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 Project Concept Note Template 03 3.0 Sample Project Concept Note 07 Module 3 : Purpose of this Module 2 Sample Project Concept Note 1.0 Purpose of this Module This module serves as an accompanying document Rather, this document is intended to help to the Municipal PPP Framework Guidance Note practitioners think strategically about what as well as Module 2: Project Concept Assessment is and needs to be known about a project to Tool (‘PCAT’). It provides a template form, as well evaluate its potential as a PPP and whether there as a completed example of the Project Concept is a reasonable basis for undertaking a more Note, which should be completed before assessing comprehensive feasibility study. Each section of the the project’s potential for delivery as a PPP. It is Concept Note template includes cross-references not expected that detailed information on all the to relevant questions in the PCAT, which may be topics covered by the Project Concept Note will be instructive for completing the Concept Note. available at the time it is completed. thegpsc.org | The World Bank Module 3 : Project Concept Note Template 3 Sample Project Concept Note 2.0 Project Concept Note Template  ROJECT SUMMARY 1. P Project Name: Project Description: Briefly describe the public infrastructure and/or service to be delivered by the project, the intended location, scope and structure of the project, key stakeholders, and so on. Project Rationale: Describe the purpose and necessity of the project, that is, why the project should be delivered, including which development plan the project originated from and the expected social, economic, and/ or environmental benefits of the project. Indicate if any studies have been done that relate to the project and, if so, describe the study/ies undertaken (for example, what was the scope of the study, how long ago was it done, what were the key findings). See PCAT Questions: 1.1-1.3 Project Outputs: Identify the quantifiable outputs of the project, in terms of facilities built, services provided, and so on. (for example, size of facility constructed, number of people or households served, amount of clean water or electrical power supplied, and kilometres of road built). As applicable, describe any performance parameters that need to be followed by the PSP during operation (for example, 24/7 availability of water supply for all households within a defined jurisdiction, public accessibility of facilities [bus terminals, parking areas]). See PCAT Questions: 3.1-3.4 Project Cost Estimate: Try to estimate the project’s whole-life costs, for example, cost of design, construction, operation and maintenance, and service delivery, as applicable, over the entire duration of the project. See PCAT Questions: 2.3, 2.4 and 5.2 Indicative Contract Period: See PCAT Questions: 1.4 and 3.1 1  or more information on F Source(s) of Revenue/Funding: additional sources of revenue, see Module 16: Indicate how the project cost is expected to be paid for/recovered (for example, payments or subsidies Harnessing Land Value from the government [national, state/provincial, municipal], fees paid by end users, payments from an Capture and Module 17: offtaker, additional revenue sources such as sale of advertising space, commercial leases, and land Capturing Commercial Value. value capture1). Do not include financing options here. See PCAT Questions: 2.1, 2.2, and 1.5 Module 3 : Project Concept Note Template 4 Sample Project Concept Note NSTITUTIONAL READINESS 2. I 2.1. Legal and Institutional Framework Briefly describe the legal and institutional framework that governs delivery of the project. This should include identification of: The municipality’s legal mandate to deliver this type of public infrastructure and/or service, •  including whether this responsibility is exclusive or shared; The legal basis for delivering the project as a PPP, including reference to any laws or regulations •  that provide for, govern, or restrict private participation/PPPs in the sector (for example, national or local PPP law, applicable procurement rules, or sector-specific laws on private involvement); The officials that can ultimately sign the PPP agreement on behalf of the public partner •  (municipality, subdivision, locally owned corporation, and so on) and the legal basis to do so, as well as any prerequisites that must be met to create a legally binding contract (for example, legislative approval); Laws and regulations concerning the organization and administration of the sector, that is, rules •  on the setting of operation or service delivery standards, licensing and permitting, and tariffs; • Key institutions and their respective roles; and If relevant, potential limits on the municipality’s ability to enter into a direct agreement with the •  lender that includes rights of substitution, step-in rights, or other applicable remedies. See PCAT Questions: 1.2, 4.1-4.5 Internal Capacity to Deliver the Project 2.2.  Describe the extent of the municipality’s capacity (for example, experience and expertise) and resources (for example, manpower and funding) to implement the project2, including the existing institutional/organizational (for example, staffing) capacity of the municipality to implement a PPP, as well as access to resources and outside experts (for example, external PPP units, knowledge centers, transaction advisers/consultants). Indicate whether there is any funding available for developing the project (for example, completing a feasibility study, preparing tender documents, acquiring land), including from external sources such as development partners or a PDF. Identify any known challenges/weaknesses that may constrain the municipality in implementing the proposed PPP project. See PCAT Questions: 5.1  3. INDICATIVE PROJECT FEASIBILITY AND READINESS 3.1. Project Site Indicate whether a project site has already been identified. If so, describe the status of the project site, for example, whether it is known to be suitable for the intended use, whether the land is readily available, or if it will be possible to make preliminary arrangements for its acquisition— preparation of a land acquisition plan, arranging for right-of-way acquisition, and so on—without much issue or difficulty. Identify any difficulties foreseen in identifying, planning for, and acquiring a suitable project site. See PCAT Questions: 1.5, 2.3, and 3.3 3.2. Technical and Operational Feasibility Describe the major technical and operational characteristics of the project, including whether this type of project has been done before and whether it relies on available, proven, and tested technology, and so on. Identify any significant, potential risks related to the design, engineering, construction, and operation of the project. See PCAT Questions: 3.1-3.4 thegpsc.org 3.3. Technical Desirability 2 F  or a more thorough Indicate if there are any alternative technical solutions to the problem addressed by this project assessment of internal and, if so, whether there has been or will be an assessment of the relative strengths and capacity, refer to Module weaknesses of the available solutions, and the results of such assessment. | 1: Municipal Readiness. The World Bank See PCAT Questions: 3.2 and 5.1 Module 3 : Project Concept Note Template 5 Sample Project Concept Note 3.4. Preliminary Environmental Risk Assessment Identify any existing or foreseeable environmental issues, including whether the project presents a significant risk to any natural resources or protected lands, the project’s operational contribution to greenhouse gas emissions, and resiliency to potential natural or human-induced hazards and the adverse impacts of climate change. Indicate whether any such issues are complex, likely to require costly solutions, and/or likely to result in uncertainties or delays that could impede the project. See PCAT Questions: 3.3 3.5. Preliminary Social Risk Assessment Identify existing foreseeable concerns that may affect the project’s social acceptability, including whether the project will entail any resettlement/displacement, organizational restructuring, or other risks to the health or quality of life of end users, workers, or the local population. Indicate whether there will be a formal plan for communicating with and involving affected communities, including whether such plans include a mechanism for involving poor communities near to or affected by the project, and/or a strategy for gender-inclusive design and implementation. Identify any known or likely opposition to the project and indicate whether any social risks are likely to require costly solutions and/or result in uncertainties or delays that could impede the project. See PCAT Questions: 3.4 3.6. Demand and Revenue Forecasts Indicate whether the project has an identified user base that will likely use the service provided. Describe the anticipated demand for the project (for example, target population and offtaker) and the extent of information that is or is likely to be available regarding the sufficiency and predictability of this demand. Identify the basis for forecasting the revenue sources identified in the Project Summary section. See PCAT Questions: 2.1, 2.2 3.7. Affordability (End Users and Government) Assessment If end users will pay for services, describe the basis for determining user fees that take into account ability and willingness to pay, including any studies or surveys that have been or will be conducted. If the project involves government payments or subsidies, indicate whether the indicative payor has the resources and planning/budgeting capacity to meet its payment obligations. See PCAT Questions: 2,2 3.8. Financing Assumptions Identify the anticipated or desired sources of financing, if any, with as much specificity as possible (for example, private equity, commercial or concessional loans [indicate if non-recourse lending is available], or bond issuance). For each form of financing, indicate any assumptions that can be made, including with respect to loan tenor, cost of financing (for example, interest rate), ratio of different forms of financing if multiple sources are anticipated (for example, debt-to-equity ratio), and any issues that might increase the cost of, or limit access to, financing (for example, lack of domestic financiers and foreign exchange risk). See PCAT Questions: 1.5, 2.2, and 2.4  PP SUITABILITY 4. P 4.1. Private Sector Appetite Describe the basis for expecting that private investors will be interested in the project, including whether any similar PPP projects have reached financial close (locally, regionally, or national) and whether there has been any effort to engage with potential investors (for example, market consultations or soundings). See PCAT Questions: 5.1 Module 3 : Project Concept Note Template 6 Sample Project Concept Note Public Partner Creditworthiness 4.2.  Indicate whether the municipality or other public partner (for example, publicly owned utility or other offtaker) is creditworthy3. If not, identify any credit enhancements that may be available to compensate for poor creditworthiness (for example, insurance, guarantees, escrow arrangements). See PCAT Questions: 5.1 4.3. Private Sector Innovation Indicate whether the project design and structure offers the PSP opportunity to innovate with respect to improved designs, technology, materials, construction management, operational efficiency, and so on. See PCAT Questions: 3.1-3.4 4.4. Project Risks and Contingent Liabilities 3 F  or more information Provide a preliminary risk allocation table/matrix for the project and indicate how risks may be on assessing allocated between the municipality and the PSP. Identify contingent liabilities arising from the creditworthiness, refer to Module project and describe any internal units, processes, or procedures that exist to manage 1: Municipal Readiness. contingent liabilities. See PCAT Questions: 5.2 thegpsc.org | The World Bank Module 3 : Sample Project Concept Note 7 Sample Project Concept Note 3.0 Sample Project Concept Note  ROJECT SUMMARY 1. P Project Name: Municipal Water Supply Project Project Description: The project seeks to engage a PSP to design, build, finance, operate, maintain, and transfer water supply and distribution infrastructure sufficient for an estimated total population of 200,000, in the municipality of X, with possible expansion of the scope. The project will include the construction of the following: water intake structure, water treatment facility, and pipeline network system. Project Rationale: To date, the populace to be served by the project remains unconnected to Level III (individual house connection) water supply systems and rely on drawing water from public wells (Level I), natural springs, private wells, and/or water vendors. In many of these sources, water is intermittently provided and is of doubtful quality; this contributes to incidence of water-related diseases. At the same time, total water demand in the area is expected to increase due to the growth of commercial and industrial enterprises (especially tourism) in the area. The project is part of the five-year development plan of the municipality and has been identified as a priority project. The economic and social benefits brought by the project are expected to be high, considering that majority of the identified villages only have access to Level I water systems. A study was conducted three years ago but involved a slightly different scope (that is, supply covered different villages). The study indicated that (1) based on a hydrological study, the water resource is deemed to be sustainable; and (2) the project would be affordable, considering that villagers are currently paying a high fee for their daily supply of water. Project Outputs: The project aims to provide 24/7 piped water supply (Level III) to all households in the area. Based on population size and statistics on typical consumption habits, the amount of bulk water supply needed (litres per second) should be estimable. The water is expected to have been treated for human consumption, in accordance with water quality standards set by law. Project Cost Estimate: US$85 million of capital cost. The operating cost for the project should amount to US$8.5 million per year, including fixed and variable costs. Major maintenance costs in the amount of US$ 1.2 million per year will be invested every seven years. Attached is a more detailed breakdown of project costs. Indicative Contract Period: 15–20 years Source(s) of Revenue/Funding: Payment from offtakers. It is not certain if the municipality can provide subsidies if required. Module 3 : Sample Project Concept Note 8 Sample Project Concept Note NSTITUTIONAL READINESS 2. I 2.1. Legal and Institutional Framework The national Water Code governs water abstraction, treatment, and distribution, including institutional roles, establishment of an entity tasked with regulating water tariffs and permitting, and setting performance standards for operators. The Water Code also provides that private participation is allowed in the development and operation of water supply and sanitation facilities at the municipal level. In addition, the national PPP law provides for its application to municipal governments, thereby providing a basis for the latter to engage private concessionaires on a PPP basis. The municipal chief executive is authorized to sign the PPP agreement, but it is unclear whether approval needs to be obtained from the municipal council (that is, legislative body), either before or after signing. There is no express statutory basis for the municipality to execute a direct agreement with lenders but given general authority to contract and municipal ownership of the project, it is believed the municipality may enter such an agreement. Internal Capacity to Deliver the Project 2.2.  This will be the first time the municipality will undertake a PPP project; it may be surmised that it has limited capacity and understanding on how to package the project as a PPP as well as the process that the project will undergo to bring the project to tender. These challenges notwithstanding, the project enjoys support both from the head of the executive of the municipal government and key decision makers from the municipal council, and hence prospects for obtaining funding for the development of the project are positive.  3. INDICATIVE PROJECT FEASIBILITY AND READINESS 3.1. Project Site The site where the project facilities will be built has already been identified, but its allocation for the project will require the approval of the village council where the site is located. 3.2. Technical and Operational Feasibility The technology for the extraction of water from the source, its treatment, and distribution to various offtakers have been well documented, proven, and tested. No unusual technical issues have been identified at this point. 3.3. Technical Desirability No alternative technical solutions are available to deliver clean, piped water to the villages. Currently deployed alternatives to piped water have been shown to be more expensive and less safe. 3.4. Preliminary Environmental Risk Assessment No substantial environmental safeguard issues have yet been identified. Completion of an environmental impact assessment is required by law. 3.5. Preliminary Social Risk Assessment There could be potential backlash from affected stakeholders, especially because the project may require the resettlement of some residents in the area. Close coordination with the village council of the affected village is crucial and a coordination strategy is being prepared. 3.6. Demand and Revenue Forecasts thegpsc.org Based on preliminary consultations, residents covered by the project will avail the piped water service. Using the number of households and demographic trends, residential demand can be forecasted with some reliability. Industrial demand is contingent on more uncertain development of commercial and industrial enterprises (especially related to tourism) in the area. | The World Bank Module 3 : Sample Project Concept Note 9 Sample Project Concept Note 3.7. Affordability (End Users and Government) Assessment Based on the earlier study (although caution must be taken due to the slight variance in scope), the project is affordable and will likely result in a water tariff that is lower compared to how much residents are paying for their current supply of water. It is still uncertain whether and to what extent the municipality can provide subsidies if needed. 3.8. Financing Assumptions The PSP is expected to contribute equity and obtain financing at commercial rates for the project, with a debt-to-equity ratio of approximately 70:30. The domestic market for long-term, non-recourse financing is limited, but project revenues will be in domestic currency so access to international finance may be constrained by foreign exchange risk.  PP SUITABILITY 4. P 4.1. Private Sector Appetite There have been prior water PPPs implemented at the municipal level across various countries (documented in various literatures published by international development partners such as World Bank and the International Water Association), which is indicative that private investors are active in the sector. Public Partner Creditworthiness 4.2.  The municipality has no meaningful credit history and has not obtained a credit rating. If payments from the municipality are required by the project (for example, availability payments or subsidies), the municipality will seek a national government guarantee of its obligations. 4.3. Private Sector Innovation The private partner will be responsible for designing the facilities to be constructed, within certain parameters and investment amounts, and so will have the opportunity to produce innovative or cost-saving designs. In addition, other cases involving private operators in water distribution have seen more efficient operation and management as compared to public water utilities 4.4. Project Risks and Contingent Liabilities Type of Risk Public Private Shared Land acquisition Design risk (for example, faulty design) Construction risk (for example, construction delay, increase in cost) Demand risk (for example, demand is less than anticipated) Environmental and social risk (for example, environmental impact, resettlement, social unrest) Operation and management risk (for example, labor actions, performance risk, cost overruns, asset ownership risk) Insurance risk (for example, availability and scope of insurance) Political and regulatory risk (for example, discriminatory change in law, change in government) Material adverse government action (for example, nationalizing projects assets, discriminatory change in law) Force majeure/natural disasters (for example, extreme weather, floods, and war) Risks and contingent liabilities identified thus far can be optimally allocated and/or managed. Module 3 : The Municipal Readiness Tool 10 Sample Project Concept Note thegpsc.org | The World Bank STUDY FEASIBILITY Municipal 04 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Introduction 02 2.0 Feasibility Study Requirements 03 1.1 Purpose of this Module 02 2.1 Demand Study 03  etermination of Scope and Depth of the 1.2 D 02 2.2 Technical Study 04 Feasibility Study 2.3 Compliance Assessment 06 1.3 Components of Feasibility Study 02 2.4 Financial Analysis 08 2.5 Economic Assessment 09 2.6 VFM Assessment 10 2.7 Risk Analysis 12 2.8 Key Commercial Terms of PPP Agreement 13 2.9 Market Sounding 14 2.10 Procurement and Implementation Plan 15 3.0 List of References 16 Module 4 : Introduction 2 Feasibility Study 1.0 Introduction Purpose of this Module 1.1  The feasibility study constitutes the basis for the studies are generally implemented by a qualified decision by the municipality for the project to external consultant hired by the municipality. The proceed to procurement and implementation. requirements described in this module can serve as a checklist for the verification by the municipality of Given the importance of the assessment and the quality of the feasibility study report submitted detailed technical analysis required, feasibility by the consultant. Determination of Scope and Depth of the Feasibility Study 1.2  The requirements described in this module are than a project consisting of the construction generic as they apply to all types and sizes of and maintenance of a standard school building. projects that may be implemented by a The scope of the feasibility study must allow the municipality. For each individual project, the municipality to assess the project and meet relevant municipality must adapt these requirements legal and regulatory requirements (including those to the specific characteristics and context of of any potential financiers, such as international the project being studied. financial institutions). The required scope and depth of the feasibility A balance must be achieved between the study depends on the size and complexity of complexity of the project and the cost of the the project. For instance, the realization and feasibility study to achieve VFM. subsequent operation of an urban tramway requires a much more extensive feasibility study  omponents of Feasibility Study 1.3 C Feasibility studies typically address the 4. Project legal due diligence following issues: 5. Economic analysis 1. Demand study 6. Financial analysis 2. P roject configuration, that is, description of 7. PPP assessment the various elements of the project and their 8. Environment impact assessment respective sizes 9. Social safeguards assessment 3. T echnical/engineering studies including Procurement and implementation plan. 10.  conceptual engineering design and estimated capital expense and operations and These issues are discussed in the thegpsc.com maintenance cost following sections. | The World Bank Module 4 : Feasibility Study Requirements 3 Feasibility Study 2.0 Feasibility Study Requirements  emand Study 2.1 D The demand study is one of the most critical provide a reasonable estimation (neither elements of the feasibility assessment. The demand too optimistic nor too pessimistic) because study forecasts: project assets and consequently service • User requirements and consequent service levels to be provided would be determined levels to be provided over the tenure of the based on this demand assessment (current project, for example, desired average speeds on and projected for the entire agreement roads or number of buses that a bus terminal can period). Depending on the available efficiently handle; information, the demand forecasts may be • Demand for project services, in numbers based on the following: (volume); and • Extrapolation of existing demand • Tariffs to be charged and the ability and volume and growth: If the objective willingness to pay by users. of the project is to provide additional capacity to serve existing demand, then The different elements of the demand study are the demand forecast can be based on an interdependent, for example, the type and volume extrapolation of the observed growth of of services that can be delivered will depend on the the existing demand. amount that users are being charged (subject to •  Population size and growth rate: If the affordability and willingness to pay). service is targeted at a specific group or geographical area, then the demand 2.1.1 User Requirements forecast can be deduced from the size  The study needs to assess user needs in and growth rate of the population within terms of: that group or geographical area. Type of services required (including •  •  Reference projects: If similar projects options for different levels and type of have recently been carried out or if similar services), for example, quantum of water services are offered in the country, then required per household or commercial these may be used as a reference for establishment or the number of hours of estimating the demand volume and the supply of piped water; price for the project. In that case, the Type of assets that are needed to deliver •  demand study must explain how the the services required; demand data on the reference projects Service area that can/should be covered; •  and services have been adjusted to and account for the differences between the Required quality of services, for example, •  specific conditions and characteristics of frequency and speed of bus service, the project and the reference projects quality of potable water supply, and or services. reliability of service. •  User surveys: If the project concerns a new service and no suitable 2.1.2 Demand Forecasts (Volume and Price) reference projects can be found, then a  The demand forecasts refer to the demand representative survey of potential users volume (initial volume and growth rate) must be conducted to estimate the and the price that users are willing to pay. demand volume and the price users are The estimation of initial demand/volume of willing to pay. services is critical and the methodology • Quantitative demand models: For large used to estimate this needs to be robust and projects, quantitative demand models can Module 4 : Feasibility Study Requirements 4 Feasibility Study be used (for instance, traffic models or sensible for projects of sufficiently high value (to water demand models). The development preserve a balance between project value and of demand models requires substantial feasibility study costs). time and resources, and is therefore only  echnical Study 2.2 T The technical study consists of: • Development of project configuration, based For each service, a service level agreement on the demand forecast; (SLA) is established, specifying: • Definition of project specifications • Availability and quality requirements; and service levels; Performance indicators to measure •  • Assessment of suitability of project site; compliance with availability and quality • Analysis of technical options to meet user requirements; and needs; and Monitoring systems for measuring the •  • Estimation of the capital, maintenance, and performance indicators. operating costs during the lifetime of the project. 2.2.2 Site Assessment 2.2.1 D  efinition of Project Output The project site/alignment is defined Performance Specifications and is shown on maps. and Service Levels Project configuration needs to be Compliance of the site with relevant developed based on the demand national, provincial, and district spatial assessment discussed earlier. plans is assessed. Output specifications for each element Geotechnical surveys are undertaken •  of the project need to be developed. The to determine the suitability of the output specifications comprise minimum underground characteristics of the land performance standards of the project for the proposed project. services, for example, for a parking lot, a The need for land preparation and •  performance standard could specify that a improvement (for example, levelling, car should be able to be parked within three demolition of existing structures, and minutes of entering the parking lot or a car move of utility lines) is determined. The should be able to exit a parking lot within connections to transport (road, rail, two minutes of starting the car engine. In airport, seaport, and so on) and utility some specific cases, the municipality may networks (electricity, water, gas, and want to specify certain project assets. so on) are assessed and improvement Minimum specifications of project assets needs are determined. The need for are developed for specific assets, for coordination with other government example, if a particular architectural entities for approvals and the execution characteristic is desired, for that specific of such complementary works is part of the facility an input specification determined. The requirements for the is required. The municipality may want use of existing government assets (for to specify life cycle of particular assets example, land, existing infrastructure, and (to manage the cost of replacement government equipment) are identified as parts and maintenance over time), the well as any legal limitations on their use. use of particular materials where this is necessary for climactic or similar reasons, The outputs of the above assessments are or specific technology where the project used to determine the land development will need to interface with other municipal component of the total project cost. facilities (for example, if the project involves telecommunications equipment that must 2.2.3 Analysis of Technical Options thegpsc.com interface with the municipality’s network). Technical options are developed for meeting the identified user needs, the The specifications should be expressed in output specification and are based measurable terms, so that their compliance on the characteristics of the project site. | The World Bank can be verified. This is critical to determine A technical option is defined by a if the PSP is delivering on the project description of technologies, methodologies, specifications or not. and construction practices to be Module 4 : Feasibility Study Requirements 5 Feasibility Study implemented. The set of considered • Non-asset option: Option to improve technical options spans the range of the service delivery that does not require possible choices with respect to project investments in assets. site, capacity, quality, technology, and • Improvement option: Option to improve implementation schedule. Where relevant, the service delivery by improving the following types of options should existing assets. be explored: • New asset option: Option that involves  o nothing option: Consequences of a •  D investments in new assets to meet the continuation of business as usual. identified service needs. Common Pitfall in Project Definition A common pitfall in project definition is premature focus on a single technical solution; this is reflected in a project-oriented instead of a user-oriented problem definition. In other words, the project need is defined in terms of an assumed technical input (for instance, there is a need for a new two-lane bypass) instead of in terms of providing an output solution to resolve the deficiencies of the existing infrastructure to meet current and expected user demand (for instance, the existing road experiences substantial congestion, and the traffic volume is expected to increase further). Only after defining the project need can possible options to address the problem be explored. The solution in this case might not be a new bypass but rather a different management scheme for intersections, better road maintenance to improve availability or widening of feeder roads to address the underlying causes of congestion. The options are assessed on a cost-benefit recently in the country or elsewhere in basis to identify the option that provides similar circumstances as the project, then the best VFM for the municipality. These these reference projects may be used options are assessed by the municipality, as evidence of the technical feasibility of with the assistance of the consultant, the project. The technical analysis should and a preferred option is chosen. demonstrate the relevance of the chosen Based on the preferred technical option, a reference projects, and account for any preliminary technical design of the project (limited) differences between the reference is developed. projects and the present project (that is, must demonstrate that these differences In general, the technical design and do not have a significant impact on the analysis in the feasibility study must be as technical assessment). If no suitable detailed (but not more) as is necessary for: reference projects exist, then the technical •  Demonstrating the technical feasibility of feasibility must be demonstrated by project- the project; specific analysis. Estimating the project costs (so at least •  preliminary designs to estimate the bill 2.2.4 Cost Estimates of quantities is required to enable an Cost estimates of all relevant technical estimation of construction costs); options should be provided, and should •  Providing the required information for the include all relevant project costs: project due diligence (see below); and • Design and construction; Providing bidders enough detail to deliver •  • Land acquisition and improvement; consistent and comparable bids. • Measures to mitigate social and environmental impacts; As a result, the required level of detail of • Operation, maintenance, and the technical analysis depends on the replacement during the lifetime complexity of the project. For instance of the project; a large-scale transport infrastructure • Taxes; project will require a more extensive • Overheads; technical study than a straightforward • Project development costs or costs building project. incurred before commencement If similar projects have been carried out of construction; Module 4 : Feasibility Study Requirements 6 Feasibility Study Interest during construction (which is •  The cost estimates should consider  typically capitalized and added on to specific characteristics of the project, the total project cost); such as remote location, difficult site Contingencies based on project risks •  conditions, and local availability of inputs and uncertainties; (human resources, raw materials, support • Inflation during the construction period. services, and so on). Assumptions should be documented (with reference to The costs are based on market prices for sources) and motivated, with calculations inputs (materials, labor, services, and so clearly explained. Also, if a similar project on) at the time of the preparation of the has been implemented in the region, a feasibility study and according to good comparative cost analysis should be done industry practice. and then the differences, if any, should be explained. Common Pitfalls in Cost Estimation • Costing methods are not explained or are not based on a reliable methodology. • Unit prices are undocumented so their relevance and correctness cannot be ascertained. • Cost margins for contingencies are excluded or their basis is unclear. • Assessment and quantification of construction cost risks are not provided or are not sufficiently specific to the project, possibly resulting in a large underestimation of costs. 2.3 Compliance Assessment Compliance comprises assessment of and the legal basis for the transfer of Compliance of the project with all relevant laws •  the usage rights of public assets to the and regulations; private partner); Identification of regulatory approvals and permits •  Corporate law (including structuring of •  that must be obtained to implement the project project vehicles and governance issues (either by the municipality, or by the prospective associated with asset and land ownership private partner); and any transfer of Government Any required environmental impact assessment •  ownership in corporate vehicles); (EIA) and establishment of an EMP to address Investment law (including mechanisms •  any environmental impacts (prevention, available for investors to fund project mitigation, and compensation); assets and recuperate returns on Any required social impact assessment and •  such investments); establishment of a plan to address social impacts Competition law (including competitive •  (resettlement, compensation for loss of livelihood, processes associated with the allocation and so on). of project opportunities and the transfer of public assets to private investors); 2.3.1 Compliance with Laws and Regulations Environmental law; •  Legal due diligence must establish that Spatial plans and zoning regulations; •  1 For further discussion of legal issues arising the municipal government has the legal Land acquisition and resettlement •  from PPP projects, see: authority to conclude a PPP agreement regulations; Delmon, Jeffrey. 2016. for the project, and that the proposed • Safety regulations; Private Sector Investment in Infrastructure: Project project complies with all relevant laws and Sector regulations (including allocation of •  Finance, PPP Projects regulations (general laws and applicable operating licenses and compliance with and PPP Frameworks. sector laws). The legal analysis identifies tariff policies). thegpsc.com Third Edition. Wolters Kluwer. Delmon, potential legal and regulatory obstacles Jeffrey, and Victoria to the project, and proposes measures to 2.3.2 Environmental Impact Assessment Rigby Delmon. 2013. address these obstacles. Legal compliance Potentially significant environmental impacts International Project | Finance And PPPs. A includes the following1: of the project are identified and described, The World Bank Legal Guide To Key Administrative law (in particular the legal •  in particular through the lens of local Growth Markets 2013. authority of the private partner in the PPP environmental regulations, requirements Kluwer Law International to perform the required public services, of potential investors and financiers Module 4 : Feasibility Study Requirements 7 Feasibility Study (including international financial institution Any consequences for the technical environmental safeguards2), and global design of the project should be included good practices 3 in PPP and the sector. The in the technical study. A plan and time environmental requirements are determined, schedule for obtaining any required permits and compliance is assessed. Often the should be provided. The feasibility study feasibility study will include environmental should include an outline environmental assessments and mitigation plans in impact mitigation and compensation plan, accordance with these requirements. including the likely cost of implementing such plan. Environmental Impact Assessment and Environmental Management and Monitoring Plan The feasibility study may have to include a full EIA and an Environmental Management and Monitoring Plan (EMMP), both prepared in compliance with relevant legal or institutional requirements. If a screening of environmental impacts and an outline environmental management plan are sufficient in the feasibility study stage, then the full EIA and EMMP (if required) must be prepared by the private partner after the award of the PPP contract. Of course, the private partner may price this risk of incremental costs to address any environmental issues or at the extreme, inability to implement the project due to environmental impact issues. 2.3.3 Social Impact Assessment the community engagement will be The social impacts of the project should be implemented during project procurement identified and assessed, including: and implementation to ensure robust •  Identification of affected communities and feedback loops (to ensure the project parties; benefits from close collaboration with •  Engagement with the communities the community, information sharing, and to share project information and early conflict management). The plan will obtain feedback/guidance from the include any compensation and mitigation of communities, including project services, negative social impact of the project. The affordability of user fees, technology to costs for the implementation of this plan be used, and site location; and should be estimated over time. Identification of communities affected •  by any land acquisition and population An outline land acquisition and resettlement resettlement and the parties that will be plan (LARP) should be included in 2  ee, for example, the S eligible for compensation. the study. The land acquisition costs International Finance  (preparation of land acquisition plan and Corporation Performance The feasibility study should include a price paid to current owners) and the Standards, www.ifc.org. 3  See, for example, the description of the community engagement resettlement costs (cost of compensations Equator Principles, www. process implemented, the information and resettlement measures) should equatorprinciples.org. gathered during the process, and how be estimated. Land Acquisition and Resettlement Plan (LARP) In the feasibility study, an outline land acquisition and resettlement plan is usually sufficient (and also necessary for assessing the feasibility of the project). However, in most cases the municipality will have to prepare and implement a full LARP complying with relevant regulations before the award of the contract, or at the latest before the commencement of works. PPP projects in which the municipality has not resolved land acquisition and resettlement issues before the commencement of the project often run into problems (delays, resulting in compensation claims by the private contractor). Module 4 : Feasibility Study Requirements 8 Feasibility Study 2.4 Financial Analysis The financial analysis comprises assessment of the facilities or for office space (of course financial health of the project from the viewpoint of when such revenue-generating activities the prospective PSP, the user, and the municipality. are examined, the municipality needs to ensure that the commercial activities 2.4.1 Costs and Revenues do not take away from project services,  Project cash flows (over the duration of for example, investing in additional car the PPP agreement) include the revenues parking to support the additional retail earned from different aspects of the space created). The feasibility should also project (from users, the municipality, and consider reducing the scope of investment, commercial activities). These revenues if there are dispensable investments that are matched to project costs— such as might make the project more feasible (for debt service, maintenance and operating example, smaller capacity or less expensive expenses—taxes, insurance, handback technology). Finally, the feasibility study value at the end of the PPP agreement (if should explore different opportunities for any), and return on investment. These cash public contributions (for example, capital flows will be mapped out in a financial contributions from the municipality during model for the project. the construction phase to offset the cost of construction or during the operations phase The estimates and forecasts of expenses to augment the project revenues stream). and revenues must be clearly documented and explained. The sources of data must A sensitivity analysis should be carried out be indicated, assumptions and calculations to assess the effect of certain project risks must be explained. Assumptions on on the financial feasibility of the project. macroeconomic variables (exchange rates The usual sensitivity tests include: and inflation) should be based on data and Increase of construction costs (usually •  forecasts of authoritative institutions. around 20 percent); Increase of operating costs (usually •  The financial internal rate of return (FIRR) around 10%); is the stream of net project cash flows of Lower demand (typically decreasing •  the project (revenues less expenses). The revenues by say 10 percent); and weighted average cost of capital (WACC) • Delay of project completion or operation. measures the cost of capital (debt and equity), weighted by their proportion Assessing sensitivities will help the and cost. The assumptions are clearly municipality identify key project risks documented and based on published that may need to be mitigated. Potential market data (return of listed firms in the investors will run similar assessments, appropriate sector) or findings from market and so the municipality will want to know consultations. The project is financially what issues potential investors are likely feasible if the FIRR exceeds the WACC. to identify. The municipality will want to address those key risks in advance to make If the FIRR is less than the WACC (for the project more attractive to potential example, if the affordable user fee is too bidders. For some risks, the municipality low), the project in its current form is unlikely may be willing to provide a guarantee to to generate any significant interest from protect the PSP from the risk, or some PSP investors. Therefore, the municipality part thereof. For example, if the sensitivity needs to look for other sources of revenue assessment identifies the availability such as land value capture (see Module 16: of cement as a key project risk, the Harnessing Land Value Capture) or other municipality may want to identify a ready sources of commercial revenues linked source of cement before going to bid or it to the project (see Module 17: Capturing may be willing to provide a guarantee to thegpsc.com Commercial Value ). For example, where compensate the PSP if the price of cement a public car parking facility cannot charge exceeds a maximum price at the critical sufficiently high parking fees to make it time during construction. ‘financially feasible’, the feasibility study | The World Bank should explore using excess space in 2.4.2 Affordability for the End-User the facility for commercial activities,  The demand analysis necessarily includes for example, renting space for retail an assessment of the affordability of project Module 4 : Feasibility Study Requirements 9 Feasibility Study services for users (households, drivers, entity). These contributions or commitments passengers, and so on). This is typically by the municipality may be required done through direct surveys with potential in case the project on its own is not users of the service to be provided or financially attractive to potential PSPs or the estimated by looking at what potential users perception of specific risks, for example are spending on alternative services, and demand of users for the service, may so on. However, the municipality may be be too high and therefore may require a concerned with ensuring services to certain guarantee (a contingent liability) from the parts of the population are particularly municipality or other mitigation measures. affordable, or even less expensive, for This affordability measure must include example, the municipality may want to contingent liabilities, for example, the provide relatively less expensive services affordability of guarantees provided by for the poorest, for certain businesses or the municipality over project revenues industry that are important to economic or payments to be made in the event of growth, or other key constituencies. Such termination. The municipality needs to be cross-subsidization is possible through certain that such costs will be affordable if the tariff regime that the municipality will and when they arise. determine before bidding out the project. With the help of the financial model, a 2.4.3 Affordability for the Government projection is made of the fiscal impact of  The feasibility study will also need to the PPP project over its lifetime. The fiscal assess the affordability of any contributions, impact is compared with the municipality’s liabilities, or commitments to be imposed current and future budget constraints. on the municipality (or other government 2.5 Economic Assessment The economic assessment comprises estimation indemnities for project risks); of the full costs and benefits (financial as well as Loss of the present function of the land •  non-financial) of the project to society as a whole. that will be occupied by the project (this This helps the municipality determine whether the may include lost municipal revenues that project is desirable or not from the viewpoint of the are now captured by the project or land society as a whole. acquisition costs); Maintenance and operating costs (for •  The economic assessment can be carried out by example, where the municipality pays an means of a Social Cost Benefit Analysis (SCBA).4 availability fee for part or all of the cost of SCBA is a methodology developed for evaluating project operation); and the costs and benefits of investment projects Other costs that are caused by •  from the viewpoint of the society as a whole. The the project. preparation of a SCBA is a technical, data- and Important costs for which no reliable time-intensive exercise. For small projects, the quantitative estimates can be made cost of undertaking a SCBA would often be (for lack of data or calculation models) disproportional to the value of the project. In those should be described in qualitative terms, cases a more simple economic assessment so that they can be considered by the is recommended. decision maker. 2.5.1 Economic Costs 2.5.2 Benefits  The feasibility study will provide an  Calculation of the benefits of assessment of the economic costs of the the project include: project, including public contributions to the The cost savings realized by the •  project in the form of: municipality, the users of the project, and/ Construction or acquisition of the assets •  or the community; (for example, where the municipality pays New economic opportunities created by •  for part of the construction cost, including the project; value of land contributed or licensed to Improved quality of life achieved through •  4  or a complete F discussion of an SCBA, the project); the additionality of the project; and please see www. Mitigating and compensating measures •  New revenues, including taxes and fees, •  worldbank.org. (for example, government guarantees or generated by or because of the project. Module 4 : Feasibility Study Requirements 10 Feasibility Study These benefits are assessed compared to the ‘do been quantified (because the required data nothing’ alternative. and calculation methods are not available), then these should be considered in addition The estimates should be clearly documented and to the ENPV in the judgement on the explained. The sources of data should be indicated, preferred alternative. assumptions motivated, and calculations explained. Important benefits for which no reliable quantitative A sensitivity analysis is carried out to estimates can be made (for lack of data) are assess the effect of (a) uncertainty about described in qualitative terms, so they can be important assumptions in the calculation of considered by the decision maker. costs and benefits and (b) project risks on the economic feasibility of the project. The 2.5.3 Assessment of Economic Feasibility usual sensitivity tests include  The net present value of the stream of Increase of costs (usually by around •  costs and benefits during the lifetime of the 20 percent); project is calculated (economic net present Low demand scenario; and •  value or ENPV). Future costs and benefits Any important project risks that have •  are converted into their present value been identified in the feasibility study using the social discount rate.5 If there are (for instance, delay of the project important costs and benefits that have not implementation due to permit problems). 2.6 VFM Assessment The feasibility study should assess whether including public procurement by the municipality. the proposed PPP model offers a better price/ The assessment is performed with a structured list performance than other methods for implementation of questions (see table 1). (Note: This assessment of the project. This is done based on the above is difficult to achieve as relevant data on the analysis, compared against an honest and realistic relative efficiency of public procurement and other assessment of the relative merits of other solutions, processes may not be available.) Table 1: Qualitative VFM Assessment Driver Questions Low Medium High A Benefits of PPP Output-based Is there scope for innovation in either the design of the A1 contracting solution or in the provision of the services? A2 Efficient risk allocation Is there scope for significant risk transfer to the private partner (in accordance with the principle of efficient risk allocation)? 5 See Fay, Marianne, Can the payment mechanism and contract Stephane Hallegate, terms incentivize good risk management by Aart Kraay, and Adrien the private contractor? Vogt-Schilb. 2016. Discounting Costs and Benefits in Economic A3 Private outsourcing Does the private sector have significant cost Analysis of World Bank advantages in comparison with the municipality in Projects, which suggests the delivery of the project services (owing to greater that the determination of efficiency, economies of scale, greater experience/ the social discount rate expertise, and so on)? should be grounded in welfare theory: future Could the private sector achieve better commercial benefits and costs utilization of the assets underpinning the project, should be valued at their resulting in higher revenues? thegpsc.com marginal contribution to welfare, which will A4 Life cycle optimization Does the project offer the potential to achieve efficiency be lower the higher is gains from life cycle optimization? growth and the wealthier are future project Is it possible to integrate the design, build, and | beneficiaries. operation elements of the project? The World Bank Module 4 : Feasibility Study Requirements 11 Feasibility Study Driver Questions Low Medium High A5 Performance-based Can the outcomes or outputs of the investment payments program be described in contractual terms, which would be objective and measurable? Would incentives for service delivery be enhanced through a performance payment mechanism as proposed in the PPP? A6 Private financing Is financing by the private sector necessary to undertake the project? Are sufficient public funds available, such that the project cannot be undertaken unless private financing steps in? D Feasibility of PPP D1 Output specifications Is it possible to describe the services in clear, objective output- and result-based terms (and not in terms of inputs), which can be objectively measured and included in a long-term contract? Can the quality of the service be objectively measured and assessed? D2 Operational flexibility What is the likelihood of large changes in service needs of contracting during the life of the PPP contract that would require a authority change of the contract? Will the PPP arrangement give the municipality sufficient operational flexibility to respond to future needs? If the services performed under the PPP arrangement interfere with other services or other projects not covered by the PPP contract, are these interfaces manageable? If the PPP arrangement necessitates the transfer of public sector staff to the private partner, will it be possible to accomplish this transfer without major problems or resistance? D3 Contracting authority Does the municipal government have sufficient human capacity and financial resources to prepare and tender the PPP project? D4 Absence of policy and There are no legal or regulatory obstacles to the PPP. regulatory barriers The provision of services under a PPP arrangement is compatible with the safeguarding of public interests (for instance, with respect to legal requirements for environmental sustainability, workers’ safety, fair competition, and so on). The provision of the services under a PPP arrangement is compatible with other policy goals (for instance, with respect to land use, income distribution, economic development, and so on)? D5 Absence of large and There are no significant risks that are largely outside uncontrollable risks the control of the private partner and that may make private finance unfeasible or expensive. Examples are traffic risk (especially for greenfield projects and if macroeconomic conditions are highly uncertain), large uncertainties about the costs of meeting requirements imposed by environmental regulations, the use of unproven technology, and difficult terrain conditions. Module 4 : Feasibility Study Requirements 12 Feasibility Study Driver Questions Low Medium High Is there evidence that the private sector is technically and financially capable of implementing the project? Is there likely to be a sufficiently large number of Private sector bidders interested in the project to ensure effective D6 capacity and interest competition? Is there evidence that financiers are willing to provide funds for investing in this type of project? Given the answers to the questions above, are there VFM Overall assessment enough indications that the proposed PPP arrangement yields VFM? 2.7 Risk Analysis The feasibility study should provide a risk matrix, The risk matrix would identify the probability of this which identifies all key risks relevant to the project risk occurring, and also if such an event actually and contains the following information about takes place, what would be the impact of that risk each risk: on the project and finally who bears the adverse • Name of risk; impact of this event. • Description of risk; Consequence in case the risk occurs •  The information for the risk matrix is collected from (qualitative description); the other parts of the feasibility study (in particular Indication of the probability of occurrence •  the technical analysis, the analysis of user demand, (low/moderate/high); and the project due diligence). To complete the Indication of the likely impact on costs or •  information, a risk workshop may be held with revenues (low/moderate/high); key experts of the municipal government and the Grade of risk (scored 1–10): product of •  consultants preparing the feasibility study. The risk probability and consequence; workshop brings together parties with different Proposed allocation: explains how the risk will be •  skill sets and expertise to debate risks and their allocated among public, private, or shared; management. The workshop reviews the risks and Proposed management and mitigation •  their characterization described earlier. measures (at least for the high-grade risks): describes what mitigation might be available, Data permitting, the high-grade risks should be for example, additional investment, technology, quantified. A minimal quantification includes: methodologies, and insurance; • Probability of occurrence of risk; and • Additional remarks (if any). Damage, costs, or revenue loss in case •  a risk occurs. For instance, demand risk would mean the risk that the projected numbers of users do not use This quantifies the expected loss and the maximum the service, for example, the actual users are 10 loss due to the risk. percent lower than the projected numbers. Common Pitfall in Risk Assessment Often no sensitivity analysis is carried out to acquire a more complete picture of the plausible range of •  cost and revenue forecasts. Risks are often allocated according to a generic, standardized allocation matrix not considering the •  thegpsc.com project-specific characteristics of the risk factors. Insufficient attention is given to risk experiences in real projects, and to the perception of investors •  and lenders about risks and guarantees and their impact on the willingness of lenders to finance | the project. The World Bank Module 4 : Feasibility Study Requirements 13 Feasibility Study 2.8 Key Commercial Terms of PPP Agreement The feasibility study defines the key commercial key commercial terms will constitute the basis for principles of the PPP agreement, as a preparation the drafting of the PPP agreement between the for the procurement and contracting stage. The municipal government and the contractor. Table 2: Key Commercial Terms Section of PPP Agreement6 Description Parties to the agreement Identifying the parties to the contract, including the municipality and the PSP, and any (front page) other relevant party (for instance, if the central government is providing guarantees or fiscal support, it may also be a party to the contract). The municipality may want the PSP to establish an SPV for the project, in which case the SPV will sign the PPP agreement. Duration of the contract The period for which the contract would be in force. This period should be only as long as (Section 3.1) necessary, but long enough to allow the PSP to cover all project costs, debt repayment, and a reasonable return on equity. Responsibilities The responsibilities of both the parties must be defined in detail, and preferably divided into of the parties the following phases of the contract: (Section 3.2) After contract is signed, but before financial closure is achieved and the contract •  (Sections 4 and 5) construction has started (conditions precedent); (Sections 9 and 10) • During construction; (Section 12) • During operations; • At expiry/termination. Rights of the PSP The rights of the PSP in terms of access to the site, use of existing assets, making structural (Section 4.2) changes in existing assets, and so on, depending on the nature and content of the project. Project assets and Who owns the existing assets? ownerships Who owns the new assets being created? How will the decision to enhance capacity and add assets within the contract period be made? Who is responsible for this decision? How is the required investment to be determined and who will make this incremental investment? When will the ownership of the project assets transfer? Payment terms Who will pay to whom? (Section 6) How much shall be paid? When will the payments be made? Who is responsible for determining the tariff? How often and when would tariffs be increased and by how much? Performance management Output standards. framework Framework for measuring actual performance against output standards. (Schedules 2, 3, and 6) Consequence of actual performance falling short of output standards. Dispute management What happens when there is a dispute? framework (Section 26) How will the dispute get resolved? Force majeure events What are force majeure events for the project? and consequences (Section 19) Compensation/relief in case of force majeure? Material government action What are material government actions (MAGA) for the project? 6 T  he section numbers (Section 20) Compensation/relief in case of MAGA? refer to the Sample Municipal PPP Agreement (Module 8). Module 4 : Feasibility Study Requirements 14 Feasibility Study Change in law What are changes in law for the project? (Section 21) Compensation/relief in case of change in law? Other municipality risks Which other risks are assumed by the municipality? What is the compensation in case of a contracting authority risk occurring? Termination and Who can terminate the contract and why? consequences (Section 18) What happens when one of the parties terminates the contract? Jurisdictional issues Entity that will have jurisdiction on matters related to the contract (expert, (Section 25) mediation, arbitration, or courts) Liabilities Liabilities of each party, including liabilities to third parties (Section 15) 2.9 Market Sounding The market sounding assesses the degree of In the market consultations, the views of interest in the project from potential investors and prospective investors on the feasibility and the lenders by means of interviews and surveys. A risks of the project and on the need for government market sounding is essential to ensure a successful support or guarantees are collected and assessed, competitive tendering of the project. If similar as well as the views of financial institutions on projects have recently been carried out in a PPP their willingness to finance the project and on the in the country or elsewhere, these may be used potential amount of loans that may be granted as evidence of the market interest. It may be to the project. The feedback from the market assumed that the proposed project will attract the sounding is used in several parts of the feasibility same types of and similar number of bidders. The study, especially in the financial analysis (market market analysis must demonstrate that any (limited) conditions for the financing, such as required rates differences in circumstances between the reference of return and other financial ratios) and in the VFM projects and the proposed PPP project will not have analysis (optimal structuring of PPP arrangement, a major impact on market interest. If no suitable without deal breakers that would discourage reference projects exist, then the market interest bidders or result in high bid prices). The evidence must be ascertained by conducting project-specific collected in the above assessments must show market consultations of prospective bidders and a sufficient degree of market interest to ensure a of financial institutions (national and international competitive bidding process. If not, strategies where relevant, that is, in the case of large projects must be developed to ensure market interest for with sufficiently high-funding requirements to be the project. attractive for foreign lenders, or projects in sectors that are known to be of interest to foreign bidders). Common Pitfall in Market Sounding • The market consultation is too superficial and often does not go much beyond the observation of a few indications that the market is interested to invest in the project. • Lack of preparation (collection of background information) and lack of detail in the formulation of questions, so that the data collection has a low payoff. • Lack of assessment of the market’s view on the revenue potential of the project and on the proposed thegpsc.com business model. • Lack of assessment of the market’s confidence in the capability and reliability of the municipality, and of the market’s willingness to conclude contracts with the municipality. • Lack of an assessment of the market’s risk perception and preferred risk allocation. | The World Bank Module 4 : Feasibility Study Requirements 15 Feasibility Study 2.10 Procurement and Implementation Plan The implementation and procurement plan sets o Acquiring the required right of way; out the main actions (with indicative timing) that o A uditing existing assets in which rights will be need to be undertaken by the municipality and by transferred to the PSP; other relevant government agencies to procure and o Preparing applications for government implement the project. The plan must demonstrate support; and that the municipality has the required human and o Obtaining required permits and approvals. budgetary resources to procure the project and to Identification of actions that need to be taken •  fulfill its obligations under the PPP agreement (or by other government entities to enable the has a plan to secure these resources). implementation and exploitation of the project, including a plan of actions to obtain the required The procurement and implementation plan must at cooperation from these government entities. least include the following: Outline of procurement strategy: •  Indicative schedule of all actions that •  o Selection of procurement method (open or the municipality must perform before the restricted, competitive dialogue, and so on); commissioning date, such as: o Preferred profile of prospective bidder; o Advertising the project to potential bidders o Initial view on selection and award criteria—the (such as the organization of an investor’s financial bid parameter to be used in the bid is conference); a critical output that the feasibility study should o Implementing the various phases of the determine based on the financial model. procurement procedure (pre-qualification, submission and evaluation of bids, negotiation with preferred bidder, contract close, financial close, and so on); Module 4 : List of References 16 Feasibility Study 3.0 List of References Delmon, Jeffrey, and Victoria Rigby Delmon. 2013. International Project Finance And PPPs. A Legal Guide To Key Growth Markets 2013. Kluwer Law International. Delmon, Jeffrey. 2016. Private Sector Investment in Infrastructure: Project Finance, PPP Projects and PPP Frameworks. Third Edition. Wolters Kluwer. Equator Principles . n.d. “Equator Principles”. Accessed October 03, 2019. https://equator- principles.com/. Fay, Marianne, Stephane Hallegate, Aart Kraay, and Adrien Vogt-Schilb. 2016. Discounting Costs and Benefits in Economic Analysis of World Bank Projects. International Finance Corporation. n.d. “Finance Corporation Performance Standards”. Accessed October 03, 2019. www.ifc.org. thegpsc.com | The World Bank Module 4 : 18 Feasibility Study thegpsc.com | The World Bank CONSULTANTS MANAGING Municipal 05 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 The Role of PPP Consultants 03 2.1 Selection 03 2.2 Feasibility Assesment 03 2.3 Transaction Advice 04 2.4 Implementation 05 2.5 Adviser 05 3.0 Managing PPP Consultants 06 4.0 List of References 08 Module 5 : Purpose of this Module: 2 Managing Consultants 1.0 Purpose of this Module This module provides practical guidance on how PPP projects, bringing in their knowledge and municipalities should oversee, review, and manage experience on project design and implementation. consultants during each of the specific stages in Municipalities need to be able to comfortably the PPP project management cycle. Municipalities review the analyses, project documents, and the should rely on the support of experienced, external recommendations prepared by these consultants to help prepare and implement specialist advisers. thegpsc.org | The World Bank Module 5 : The Role of PPP Consultants 3 Managing Consultants 2.0 The Role of PPP Consultants PPP projects are complex, requiring detailed when assessing feasibility of the project, as analysis and preparation. The workload of compared to public projects. analyzing and preparing PPP projects is heavily front-loaded meaning that detailed technical, The consultant can play five key roles: project financial, legal, and other analysis and structuring selection, feasibility assessment, transaction advice, work must be done during project development, implementation support and adviser. 2.1 Selection The early work of selecting projects likely to of the difficult decisions a municipality needs to succeed as a PPP requires a preliminary review of make about the use of public money to support many projects in an effort to identify a short list of project proposals. However, project selection is good candidate projects. The consultant can help often motivated by factors that go beyond pure the municipality identify the form of concept note to rational analyses and some municipal staff may be used, establish criteria for selection, gather data try to influence consultants to select specific on potential projects, review data provided, and projects. Senior management needs to ensure that make assessments of projects. Most importantly, consultants are able to provide advice based on the consultant will inform project selection based their expertise. on his/her experiences and learnings from other similar or not-so-similar projects to identify issues The consultant is generally paid a fixed fee per and challenges that projects need to address. task to be performed, at this stage of project Advice from a consultant can help justify some development. See Module 2: Project Concept Notes There is often political pressure to develop projects with PPP that achieve political priorities, but do not meet basic criteria of good PPP projects. A failed project, even if politically well intentioned, can set back the entire PPP program significantly. Assessment Tool and Module 3: Project Concept Note.  easibility Assessment 2.2 F Consultants are generally used to develop During the feasibility stage, the consultant feasibility studies in an effort to obtain an objective, objectively analyzes the selected project to independent assessment of the project, and to determine if it is feasible and what combination ensure sufficient detail and technical expertise is of risk allocation, risk sharing, and financial used to develop the study. See Module 4: structures are needed for the PPP to be bankable Feasibility Study. and deliver important long-term VFM benefits. Module 5 : The Role of PPP Consultants 4 Managing Consultants The municipality must review the recommended Feasibility studies tend to suffer from optimism option, and also bring to bear its local bias—those developing the study are invested in understanding and knowledge, and decide if its development and therefore tend to perceive the it is affordable and meets its long-term sector project in a more positive light than it might merit. goals. Municipalities should not treat a feasibility A feasibility study developed by an independent assessment study undertaken by the consultant consultant can help manage this bias (though as a contentious process, as a ‘municipality the municipality needs to be aware that most versus consultant’ scenario. The municipality consultants also come with their own biases from and consultant should work together, using their work on similar projects in other countries). The respective skills and expertise in a collaborative municipality will need to challenge consultant manner. This would imply that the municipality assumptions and consider options carefully, with shares its knowledge, experience, and so on, of the this potential for bias firmly in mind. Consultants local environment with the consultant so that the also try and gauge their client’s bias toward consultant can analyze the project’s feasibility in projects and ‘structure’ their feasibility reports the relevant context. This close collaboration also accordingly. Municipalities need to guard against allows municipal staff to improve their PPP capacity, this and display their desire to undertake feasibility by learning while doing. studies as objectively as possible. Optimism Bias or Bad Incentives - How Planning Goes Wrong Planning and forecasting need to reflect benefit to the government (as a proxy for the broader society), through cost-benefit or VFM assessments. But such assessments tend to involve incentives for those performing them to emphasize benefits and deemphasize costs, whether consciously or not.1 There is a similar bias toward new build rather than refurbishing what exists and maintaining it properly. Maintaining an asset properly is three to seven times less expensive than maintaining it poorly and rebuilding later. However, the socio-political incentive is to build something big and new that can carry the name or be identified with a politician or political party. Khan and Levinson (2011) highlight the failure of the U.S. national highway system to maintain roads properly due in part to the tendency for federal monies to be allocated to new build projects rather than maintenance or refurbishment.2 Proper planning and monitoring can help. The Private Infrastructure Investment Management Center in Republic of Korea routinely rejects 46 percent of proposed projects (compared with 3 percent before its creation) at a savings of 35 percent to the government on poorly planned or selected projects. Similarly, Chile’s national Public Investment System rejects 25–35 percent of projects proposed.3 Source: McKinsey Global institute. 2013. “Infrastructure Productivity: How to Save $1 Trillion a Year.” 1  ee Flyvbjerg, B. S The consultant is generally paid a fixed fee for ‘success’ related fee for the feasibility study. Where 2009. “Survival of The different elements of the feasibility study, and for the municipality has procured services of the Unfittest: Why The Worst Infrastructure Gets Built the delivery of the final feasibility study, including consultant with an integrated terms of reference of – And What We Can consultation processes and workshops with the feasibility study assessment as well as transaction Do About It”. Oxford municipality. The consultant’s economic bias also advice, the consultants have a significant economic Review of Economic Policy 25 (3): 344-367. comes into play if the municipality has built in any incentive to declare a project to be feasible. doi:10.1093/oxrep/ grp024; and McKinsey Global Institute. 2013. “Infrastructure Transaction Advice 2.3  productivity: How to thegpsc.org save $1 trillion a year”. McKinsey & Company. Once the municipality has decided to proceed to private bidders, package and promote the PPP Accessed September tender, a consultant will support the completion of transaction, and ensure that it reaches commercial 2019. https://www. mckinsey.com/industries/ a transaction, such as the award of a PPP tender or closure (the signing of a PPP contract) and financial | reaching financial closure for the PPP (often known closure (securing all debt and equity financing for The World Bank capital-projects-and- infrastructure/our- as a ‘transaction adviser’). The consultant helps the the project so that construction can begin). See insights/infrastructure- productivity. municipality attract investor interest from potential Module 7: Procurement. Module 5 : The Role of PPP Consultants 5 Managing Consultants Sometimes the same consultant is used to deliver The municipality should nominate its own team to the feasibility study and the transaction advice. work closely with the consultants at this stage of the This can save time and money as the same PPP process, particularly in determining the pre- consortium will perform both tasks, with no qualification and qualification criteria (to ensure that need to educate a new set of consultants. The they are not too stringent to discourage competitive difficulty with this approach is that the consultant bidding or are not being designed for one or a will be incentivized to find the project feasible, select few potential bidders) and also at the stage as the consultant will want to earn fees from the of technical bid evaluation. transaction advice stage. The municipality will need to manage this risk possibly through a second The consultant is generally paid a fee for each opinion on the study from another consultant or phase of the transaction advice, with an important need to have two different consultants for feasibility part of the fee paid only after commercial close and study and for transaction advice. after financial close. In light of the large quantum of the ‘success fee’, municipalities need to ensure The consultant’s reputation should be a critical that there is adequate thoroughness of evaluation factor while selecting a transaction adviser. and that closure is not being pursued at the cost Municipalities need to ensure that the consultant of diligence. In an effort to reach closure as early does not have any biases toward some bidders for as possible, the consultant may propose a level of the project and also that the consultant is ‘strong’ government support and risk allocation inconsistent enough to resist influence from potential bidders with government interests. or from decision makers within the municipality. 2.4 Implementation After financial close, the real work starts. The independent engineer of independence, objectivity, municipality may want to hire a consultant to help and not being ‘influenced’ is critical. See Module during implementation and ensure the project 12: Contract Management. is built, operated, and delivered in accordance with the PPP agreement. One of the most critical Consultant fees during implementation are often consultants at this stage of the PPP process is the on a per task basis, but may also be on a daily or independent engineer, who oversees and certifies monthly rate for longer-term engagement. the quality of the construction. The reputation of the 2.5 Adviser The municipality will need general support in under USPs; implementing the PPP program from external  dvice on project procurement, including review • A advisers or from advisers embedded in the of transaction adviser deliverables and support of 2  han, Matthew E., and K municipal team (or PPP Unit), including: the municipality during the procurement process; David M. Levinson. 2011. Advice on PPP policy development (municipal •  • Support during implementation; “Fix It First, Expand and national); • Capacity building and training; and It Second, Reward It Third: A New Strategy The design and implementation of the institutional •  Analysis of data on the PPP program, identifying •  for America’s Highways,” framework, processes, and procedures lessons learned, and opportunities to improve The Hamilton Project’s applicable to the PPP program, including the program. Project Discussion Paper 2011-2013. Brookings. PPP guidelines; https://www.brookings. Identification of potential PPP projects as and •  Consultant fees for this adviser role tends to be on edu/wp-content/ when they are submitted to the municipality; a daily, weekly, or monthly basis, which requires the uploads/2016/07/02_ highway_infrastructure_ The terms of reference for the feasibility or •  municipality to manage the consultant carefully to kahn_levinson_paper. transaction advisers, the process of hiring them, ensure VFM. Some tasks may be paid on a fixed pdf; and McKinsey the process of managing them, and reviewing fee basis. Global Institute 2013. 3 McKinsey Global  their deliverables; Institute 2013. Review of feasibility studies produced by •  advisers, in particular where they are developed Module 5 : Managing PPP Consultants 6 Managing Consultants 3.0 Managing PPP Consultants The following provides practical, real-world advice of each of the different specialist teams. lessons learned on selecting and hiring PPP Where there are different solutions proposed by advisers. For further guidance, Module 6 provides technical and legal advisers, the municipality will terms of references for hiring advisers, including want to understand these options. A consortium for project selection, feasibility assessment, and is often incentivized to keep such differences out transaction advice. of view of the client. The individual consultants •  Incentives. Think through the incentives of the should have the freedom and independence to consultant, including where the consultant may candidly advise the municipality. be incentivized to be overly optimistic about the • Invest in preparation. It requires more time,  project (as mentioned earlier) or to avoid raising human resources, and money to analyze and issues that are difficult for the municipality. A PPP prepare a PPP compared to a traditional publicly is a long-term commitment that requires careful financed, managed, and operated infrastructure analysis. Incorrect incentives can undermine the project. Time and money spent early results in value of the consultant’s advice. more easily implemented projects and greater • Coordination. Different specialist firms or likelihood of success, and must be budgeted individuals (engineering, financial, technical, accordingly. It is important that work plans are management consulting firms, and so on) regularly updated and actively managed to should be encouraged to team up into consortia minimize delays. to provide the services. The consortium must • Gather data early. Without quick and full access  appoint a leader for all communications and to available data, consultant costs will increase speak with one voice when presenting findings and delays ensue. Gathering data on such and recommendations. There are important projects can be challenging, in particular where interdependencies between the different some municipal staff are resistant to the use components of a consultant’s advice, where of PPP. Early data gathering and gap the inputs of one piece of analysis must come identification can provide an important indication from the outputs of another piece of analysis. of the cost and time needed for selection and For example, the assessment of demand will feasibility studies. influence design choices which will again affect • Stakeholder consultation. One of the demand. Therefore, municipal PPP managers most challenging parts about making a PPP and decision makers should be aware of this project feasible is that of managing the roles, recurring need to update and to harmonize contributions, and concerns of all stakeholders, feasibility study findings and recommendations including existing municipal staff, labor unions, when monitoring and overseeing the PPP regulatory bodies, local communities, and consultants’ progress. Municipalities that so on. Managing such stakeholders requires appoint separate consultants to work on political leadership, and cannot simply be separate components (for example, technical, ‘outsourced’ to consultants. Consultants can financial, and legal) find it difficult to reconcile assist in the process, by helping identify two or more contradictory sets of analysis or stakeholders, design the consultation process, recommendations. and organize consultations, but the municipality • Quality. Ensure that the specific consultants should undertake this important policy and (individuals) whose CVs were included in political function. the proposals are the individuals who are • Challenging the results. The PMU/CMU must  undertaking the work and that they are investing feel comfortable questioning the consultant’s the time that they had committed to invest on the advice/results, and not take a passive role project. Consultants might use junior resources in simply accepting the deliverables of PPP to undertake the bulk of the work after they have consultants. Equally, the relationship between thegpsc.org ‘won’ the project. Municipalities need to guard the consultant, PMU/CMU, and municipality against this and ensure that the knowledge and should be collaborative, not antagonistic—not experience of consultants that the municipalities an ‘us against them’. The project belongs to | selected, and the project needs, are made the municipality; the consultant helps evaluate, The World Bank available to the project. design, and/or implement the municipality’s • Candid advice. While the well-managed project. The consultant should deliver to consortium is important, so too is the candid the municipality all background materials— Module 5 : Managing PPP Consultants 7 Managing Consultants including assumptions, analysis, and financial a clear understanding of the assumptions and models—to help the municipality understand the findings. consultant’s work. The financial model should be Interactive workshops. PPP consultants will •  modifiable and flexible so that it can be used to prefer to simply submit their deliverable reports. answer practical questions, such ‘What happens The terms of reference for PPP consultants if the level of demand or revenues is lower should require that PPP consultants present and than expected? What happens if construction explain all their assumptions, methodologies, costs are higher than anticipated? Is the findings, and recommendations (including project still financially viable?’ The municipality the financial model) in a workshop setting, should test the viability and flexibility of the to allow decision makers to understand and PPP financial model. The PMU/CMU may appropriately ‘challenge’ them. This is an want to hire a separate consultant to review all important part of building capacity in the deliverables. PPPs are long-term commitments municipality, making municipal staff part of the for a municipality; the decision to enter into process, and learning while doing. such important partnerships must be based on Case Example A municipality in eastern Europe was undertaking a feasibility study for a PPP to collect municipal solid waste, to sort and recycle. The private partner would receive the bulk of its revenues from the sale of recycled wastes to bulk purchasers. An important assumption in the PPP consultant’s financial model was the expected price per ton of each category of recycled products being within the existing regional market of bulk recycled products. The consultants’ financial model simply listed prices per ton for paper and cardboard, plastics, glass, and for organic compost—but it did not list a source for these important numbers. When questioned, the consultant revealed that these numbers were taken from a study undertaken by an international donor of the regional market for recycled wastes four years previously. The PPP consultants were requested to conduct a first-hand analysis of market prices for these recycled products rather than simply copying from an older report by another donor. Their revised financial model also showed the impacts on the financial sustainability of the PPP of different scenarios of changes in the prices of each of the bulk recycled products. • D  o not rush. Municipalities are often in a hurry procurement process. PPP tender evaluation to award their PPP projects, reasoning that the is different from tender evaluation for public sooner the PPP tender documents are released projects, in the criteria to be applied and the the sooner the contract can be awarded, and the structures to be assessed. private partner can start delivering the needed Help with financial close. During financial •  public services. As a result, municipalities can closure, the municipality should ask to be often issue PPP tender documents that are informed about progress. Municipalities should unclear or incomplete, with the expectation that make all relevant information readily available to these issues can be resolved later. However, lenders as needed and the consultant should such practices regularly create more delays and be ready to respond to requests from lenders problems during PPP tendering, with confused for additional information to facilitate their due bidders, financiers, and municipal staff. It is diligence. The consultant’s scope of work should much better to spend additional time early include financial closure of projects and there to resolve issues before releasing the tender should be a significant fee associated with the documents. Consultants may have the same project achieving financial close. ‘rushed’ approach to ensure that their work Prepare for dispute resolution. The •  is finished early and they get their fees early. relationship between the municipality and the However, usually such ‘rush’ ultimately either consultant is often intense, is frequently long results in inordinate delays or much higher costs term, and may involve conflict. The parties because bidders price in all the unknowns (or should identify conflict as soon as possible and the confusion). coordinate to resolve the same as amicably as •  Support for tender evaluation. Members of possible to strengthen the partnership through the PPP tender evaluation committee will need management of adversity. support to understand the dynamics of a PPP Module 5 : List of References 8 Managing Consultants 4.0 List of References Flyvbjerg, B. 2009. “Survival Of The Unfittest: Why The Worst Infrastructure Gets Built – And What We Can Do About It”. Oxford Review Of Economic Policy 25 (3): 344-367. doi:10.1093/oxrep/grp024. Khan, Matthew E., and David M. Levinson. 2011. “Fix It First, Expand It Second, Reward It Third: A New Strategy for America’s Highways,” The Hamilton Project’s Project Discussion Paper 2011-2013. Brookings. https://www.brookings. edu/wp-content/uploads/2016/07/02_highway_ infrastructure_kahn_levinson_paper.pdf. McKinsey Global Institute. 2013. “Infrastructure productivity: How to save $1 trillion a year”. McKinsey & Company. Accessed September 2019. https://www.mckinsey.com/industries/ capital-projects-and-infrastructure/our-insights/ infrastructure-productivity. thegpsc.org | The World Bank Module 5 : 9 Managing Consultants TERMS OF REFERENCE SAMPLE CONSULTANT Municipal 06 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Notes on Using this Module 02 2.0 Introduction 03 3.0 Project Background 04 4.0 Description & Scope of the Project 04 5.0 Objective & Key Outputs of the 05 6.0 Scope of Work 07 Consulting Assignment 6.1 Preliminary Feasibility Study 07 6.2 Market Sounding 08 6.3 Feasibility Study 09 Management of the PPP Bidding Process 6.4  11 and Transaction 7.0 Consultant Requirements 13 8.0 Outputs of the Assignment 16 9.0 Evaluation Criteria 17 Terms of Payment 10.0  18 Module 6 : Notes on Using this Module 2 Sample Consultant Terms of Reference 1.0 Notes on Using this Module te ria This Terms of Reference is provided only as Furthermore, the Municipality should be aware a sample document. It must be adapted to fit that contracting for the provision of all project rop the unique circumstances and needs of each preparatory services from only one vendor may particular Municipality and project for which its use a cause conflict of interest (see Guidance Note is intended. National and local laws, regulations, section 4.3 on Hiring an Adviser). pp policies and practices may prescribe a different approach to procuring project-level consulting Accordingly, this sample document will need services. to be adjusted to fit the particular needs of the A Municipality in relation to a specific project. To this The Terms of Reference used in a particular project end, the sample Terms of Reference has been as should clearly articulate all the requirements of the drafted to be modular, such that the Municipality consulting services to be provided and expectations may readily delete or amend the activities and of the contracting authority. deliverables, as required in the context of a t particular project. ap The consulting services covered in this sample Terms of Reference include the completion of a Ad pre-feasibility study, market sounding and feasibility study, as well as the provision of transaction advisory services from the project’s bidding preparation through financial close. nt , For any particular project, the Municipality me must consider what type of outside consulting services are needed, as well as the adequacy and convenience of contracting all the services from the cu same contractor. In some cases, the Municipality may not require all the services included in this sample document (e.g., where the Municipality Do chooses to proceed directly to a full feasibility without first completing a pre-feasibility study). In some jurisdictions, the type and content of le project preparatory work may be defined by law or regulation. mp Sa thegpsc.org | The World Bank Module 6 : Introduction 3 Sample Consultant Terms of Reference 2.0 Introduction te ria [Summarize the Municipality’s underlying rationale for procuring outside consulting services and any rop contextual information that helps explain the need for such services. Note that the precise headings and organization of the Terms of Reference should pp be adjusted to reflect the applicable procurement rules, standards and practices that prevail in the Municipality’s jurisdiction. For example, some A jurisdictions may combine all the information in the “Introduction,” “Background” and “Description & as Scope of the Project” sections into a single section of the Terms of Reference. Sample introductory language is provided below, for demonstration purposes.] t ap Priority PPP projects have been identified through Ad a project screening and prioritization process, to rank the PPP projects in the short-list for funding purposes, among which include [name of project], hence the issuance of this Terms of Reference. nt , me cu Do le mp Sa Module 6 : Project Background 4 Sample Consultant Terms of Reference 3.0 Project Background te ria [Describe the basis and rationale for the project, including identified need, intended location, rop social, economic and/or environmental benefits of the project, which development plan the project originated from, as well as considerations that pp explain why the project was considered as a potential PPP by the Municipality. Also indicate if any prior studies have been done that relate to A the project and, if so, describe the prior study/ ies undertaken (i.e., what was the scope of the as study, how long ago was it done, what were the key findings, etc.).] t ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 6 : Description & Scope of the Project 5 Sample Consultant Terms of Reference 4.0 Description & Scope of the Project te ria [To the extent known, which will vary depending on the stage of the project cycle at which the rop consultant is being procured and the type of the consulting services to be provided, summarize the main objective(s) that the project wants/aims pp to achieve, as well the planned scope of the PPP project and anticipated PPP contracting modality– i.e. design, build, finance, maintain operate a facility, A etc. Identify the quantifiable outputs of the project, in terms of facilities built, services provided, etc. as (e.g. size of facility constructed, number of people or households served, amount of clean water or electrical power supplied, kilometers of road built). As applicable, describe any performance t ap parameters that need to be followed by the private sector partner during operation (e.g., 24/7 Ad availability of water supply for all households within a defined jurisdiction, public accessibility of facilities (bus terminals, parking areas), etc.). Indicate the estimated project cost and anticipated revenue nt , sources for the project (e.g., payments or subsidies from the government (national, state/provincial, me municipal), fees paid by end-users, payments from an off-taker, additional revenue sources such as sale of advertising space, commercial leases).] cu Do le mp Sa Module 6 : Objective & Key Outputs of the Consulting Assignment 6 Sample Consultant Terms of Reference 5.0 Objective & Key Outputs of the Consulting Assignment te ria The objective of this assignment is to support •  [Bidding documents and draft contract: the delivery of a well-structured, bankable PPP Request for Qualification (RFQ) (if needed); rop that ensures value for money to [the contracting Request for Proposals (RFP); Draft PPP authority], is acceptable for the relevant Agreement.] stakeholders, and is affordable and manageable for [Transaction implementation assistance through •  pp [the contracting authority]. financial close: Facilitation of successful tender of the Project through provision of transaction The Consultant will be expected to develop and support services during the bid process and A present the following outputs in a well-defined through signing of the PPP Agreement (i.e. manner: contract close). Delivery of RFQ final evaluation as report- List of Pre-qualified bidders; RFP final [Note: Depending upon the requirements of each evaluation report to help identify successful project and contracting authority, the expected bidder(s); negotiations report (if any); final outcomes will vary. Please adapt to the particulars of t negotiated contract; and financial close report.] ap the project by deleting or adding required outputs, as applicable] Ad •  [Pre-feasibility study: The objective of the preliminary study is to assess the viability of the project(s) prior to conducting detailed feasibility studies.] nt , • [Marketing Sounding: The objective of this  exercise is to assess the market appetite for the me project as well as ensure that the PPP project is likely to attract quality bids by responding to the market needs.] cu • [Feasibility study: A comprehensive feasibility study is intended to assess the viability of the project as a PPP and its different modalities, Do demonstrate affordability for the full project cycle, propose an optimal value for money solution as well as the most appropriate le implementation strategy for [the contracting authority] to achieve the desired outcomes.] mp Sa thegpsc.org | The World Bank Module 6 : Scope of Work 7 Sample Consultant Terms of Reference 6.0 Scope of Work te ria [Describe in general terms the services the financial structuring (develop project term sheet), consultant is expected to provide (e.g., technical, managing the PPP bidding process, including bid rop financial and/or legal advisory services) and the document preparation, assisting in contract award stage(s) of the project cycle through which the and providing advisory services until the financial consultant is expected to provide assistance. For close of the project. pp demonstration purposes, sample language is provided below, assuming the procurement of a The Consultant is expected to work closely with [the single contractor for all project advisory services, contracting authority], [the local PPP unit / project A beginning with the completion of a pre-feasibility team, if any] and any other government agencies study and continuing through financial close. This as may be required during the assignment. [The as language should be adapted to fit the particular contracting authority] shall have an oversight role needs of the Municipality in relation to a specific during the project development and procurement project. More detailed descriptions of the different process. types of project advisory services a consultant may t ap be procured to provide are set forth in separate The Consultant shall be expected to carry out the sections, below. These sections must also be services described but will not be limited to them. Ad adjusted to suit the Municipality’s individual needs.] It shall also be responsible for other aspects of the project, as needed, to successfully develop Broadly, the services of the Consultant shall and bring to commercial close a well-structured, comprise technical (including social and bankable PPP project. nt , environmental aspects), financial, legal and procurement services, including management of The scope of the services is described below. me the bidding process and PPP contract negotiation through the project’s financial close. [Note: The following provides a summary description of the scope of work for a Consultant to cu The services shall cover the different stages of deliver the pre-feasibility study, market sounding, project preparation and implementation including: feasibility study and transaction advice for a project project due diligence, carrying out detailed project through to financial close. It will need to be adapted Do financial modeling to support the commercial and to the specific requirements of the project.] le A. Preliminary Feasibility Study mp [Note: The contents of the pre-feasibility study will The objective of the preliminary study is to assess vary by project and jurisdiction. In some countries, the viability of the project prior to conducting Sa for example, the applicable legal and regulatory detailed feasibility studies. The Consultant shall be framework may set out the required contents expected to: for this type of assessment. National or regional • Review and assess the Project Concept entities (e.g., national PPP office) may also provide Note (see Module 3: Project Concept Note) guidelines or toolkits on project preparation. Sample and determine the adequacy of available language regarding the scope and content of information in relation to the requirements of the pre-feasibility study is provided below. It will the study. If found inadequate, provide the need to be adjusted in view of the applicable PPP required data through research from other framework, if any, and the project type (e.g., sector, sources, preferably by reference to similar anticipated project structure, funding modality, projects in comparable jurisdictions. expected outputs, etc.).] • Conduct a review of global best practice on project management in the [insert relevant Module 6 : Scope of Work 8 Sample Consultant Terms of Reference sector, e.g.: transport, water, housing, school, Conduct initial environmental and social/ •  street lighting] sector and indicate how to apply resettlement/gender assessment and global best practice into the project. associated risk factors. Carry out a preliminary assessment of the •  Carry out a preliminary financial, political and •  current [insert relevant sector, e.g.: transport, legal risk analysis including institutional issues water, housing, school, street lighting] needs, that may impede the implementation of the practices and requirements of existing project and the required government support, facilities and related projects/business/ if any. services. Particular emphasis should be on the Preliminarily assess the different public •  te regulatory requirements for the construction procurement modalities for the project and and operation of [insert relevant sector, e.g.: determine the most adequate PPP options that ria transport, water, housing, school, street will provide the best value for money to [the lighting] facilities. contracting authority]. Carry out a legal review of the project based •  rop on the relevant and applicable international, If at the pre-feasibility stage it is determined that the national and local laws and regulation. The project is not viable or otherwise cannot or should Consultant shall identify legal processes and not be implemented as a PPP, [the contracting pp concerns as well as impediments/ requirements authority] shall determine the way forward in to undertake the implementation of the implementation of the project. proposed project under a PPP arrangement. A Develop the initial technical design of the •  If the pre-feasibility study shows that the project is project in consultation with [the contracting viable for PPP implementation, the Consultant will as authority] including technical parameters/ provide all necessary technical, legal and financial standards/ specifications based on best advisory support including all necessary approvals practices. in compliance with all elements of [the PPP Act (if •  Carry out a preliminary market research and t any)] and its implementing regulations, and all other ap demand estimation/ analysis with details on applicable laws and regulations. the methods and parameters to be used in the Ad projection and the need for the project. Carry out preliminary financial and economic •  analysis, including value for money (VFM)/ nt , value engineering, based on preliminary cost estimates and proposed cost-recovery mechanism. me cu B. Market Sounding Do [Note: The precise timing of the Market Sounding determine the market appetite for the project as well will vary. It may be done in parallel with or at or near as ensure that the PPP project will attract quality the conclusion of the pre-feasibility or feasibility bids by responding to the market needs. le study, depending on the circumstances of the individual project or program of projects, including To further, enable the preparation of a responsive mp the amount of detailed project information that is Feasibility Study Report, the market sounding needed to conduct a successful market sounding exercise shall include the following tasks: and the existence of any other evidence of strong • Prepare a Market Sounding document that will Sa market appetite for a particular project or type of include a Project Information Memorandum project. What is essential is evaluating the interest in (which will cover the objectives of the Project, the project from potential investors and identifying an overview of the Project structure, the the project structure that is most attractive to those process and timetable for procurement, outline investors before proceeding to procurement, to Risk Allocation), as well as a summary of the thegpsc.org ensure that a sufficient number of credible bids for key issues to be discussed with and questions the project are received.] to be asked of the market (i.e. equity investors, debt financiers, contractors and operators), the | The Consultant shall conduct a market sounding process of how the market sounding will be The World Bank in consultation with [the contracting authority] to conducted, and the proposed list of parties to assess the private sector interest for undertaking the be approached. project on PPP principles. This exercise will help to Module 6 : Scope of Work 9 Sample Consultant Terms of Reference Provide the project Information Memorandum •  List of reputable firms, financiers, PPP o  (indicated above) to the identified private arrangers etc. consulted both locally and parties and hold discussions with them (real or internationally with experience in undertaking virtual). PPP’s or major housing/infrastructure Organize and participate in workshops •  projects; with [the contracting authority] and other List of questions with answers from the one- o  stakeholders to review findings of the market on-one sessions; sounding and determine key areas that will Summary findings and matters to be o  need consideration in preparing the Feasibility considered in the detailed Feasibility stage. te Study and/or procurement documents; Prepare a Market Sounding Report (which will •  ria form an appendix to the Feasibility Study) that will summarize the findings from the exercise and will consist of, but is not limited to, the rop following information: o Market sounding objective; o Key issues that needed to be considered; pp C. Feasibility Study A [Note: The contents of the feasibility study will ii. Technical study: as vary by project and jurisdiction. In some countries, •  Develop/refine project design configuration for example, the applicable legal and regulatory and requirements, based on the demand framework may set out the required contents forecast; for this type of assessment. National or regional t •  Define output performance specifications and ap entities (e.g., national PPP office) may also provide required service levels (i.e., availability and guidelines or toolkits on project preparation. Sample quality requirements, performance indicators Ad language regarding the scope and content of the to measure compliance, monitoring system for feasibility study is provided below. It will need to be measuring the performance indicators); adjusted in view of the applicable PPP framework, •  Assess the project site, including compliance if any, and the project type (e.g., sector, anticipated with applicable spatial plans, completion of nt , project structure, funding modality, expected geotechnical survey(s) to determine sizing and outputs, etc.).] capacity, suitability of the land for the project, me environmental impact and identification of The Consultant is required to prepare a necessary land preparation and improvement comprehensive Feasibility Study for the project, works (e.g., levelling, connection to cu which needs to clearly demonstrate affordability for transportation and utilities); the full project cycle and propose the optimal value •  Analyse technical options (i.e., cost-benefit for money solution for [the contracting authority] to comparison of available technical options to Do achieve the desired outcomes. address user needs); •  For all relevant technical options, estimate The Feasibility Study should include but it is not the whole-life project costs (e.g., design, le limited to: construction, operation and maintenance, etc.); •  Identify ancillary revenues from commercial mp i. Demand study: development potential of the project, if any e.g. • Assess user requirements and service level to shopping centers and schools and any other be provided over the project tenure (i.e., kind of facility in the project; Sa service(s) required and comparison of different •  Conclude on the preferred configuration of the levels/types of service, service coverage area, Project from a technical and commercial point necessary assets to deliver required service, of view. standard/quality of service); • Forecast demand volume (initial and growth iii. Compliance assessment: rate) and price (willingness and ability of end- •  Assist with comprehensive legal due users to pay), with clearly stated methodology diligence, including the municipal and assumptions. government’s legal authority to execute the project and the proposed project’s compliance with all relevant laws and regulations; Module 6 : Scope of Work 10 Sample Consultant Terms of Reference Identify the regulatory approvals and permits •  Conduct a sensitivity analysis to assess the •  that must be obtained to implement the project effect of key project risks on the financial (whether by the municipal government or the feasibility of the project (e.g., increase prospect private partner); in construction or operating costs, lower Assess and recommend how to address •  demand, delay in implementation); outstanding institutional aspects and legal Assess the affordability of the municipal •  issues; government’s contributions, liabilities Assess and recommend how to address land •  (including contingent liabilities) and/or acquisition / right of way and other related commitments to the project by forecasting the te issues; potential fiscal impact of the project over its Identify and assess potentially significant •  lifetime; ria environmental impacts of the project, Develop cost recovery options and alternative •  permitting requirements and, as needed, revenue generation, to ensure that the project complete an environmental impact is sustainable. rop assessment and prepare an environmental management plan to address any v. Economic assessment: environmental impacts (prevention, mitigation, • Assess the full economic costs of the project, pp compensation); including identification and description of Identify and assess social impacts of the •  important costs for which no quantitative project, identify and consult with affected estimates can be made; A communities, and, as needed, complete a • Assess the full economic benefits of the social impact assessment and prepare a plan project, including identification and description as to address social impacts (e.g., resettlement, of important benefits for which no quantitative compensation for loss of livelihood, etc.); estimates can be made; Identify how to engage the community •  • Evaluate the economic feasibility of the project impacted by the project and develop a t under several (risk-based) scenarios; ap program/strategy/activities to effectively • Propose the financing plan and related integrate them in the project. (see Module 18: applications for government support; Ad Community Engagement); • Develop the project term sheet, summarizing Conduct gender analysis and identification •  the key output and performance requirements, of gender issues and gender gaps that can payment and tariff mechanism, risk allocation nt , come up in the project and recommend matrix, government support assumptions, etc. strategies on how to address them. (see Module 18: Community Engagement); vi. PPP Options & Value for Money: me Assess the impact of the project on the •  • Describe a range of credible alternative relevant poor communities and recommend procurement and PPP options including strategies/activities to integrate them in justification for their selection; cu the project. (see Module 18: Community • Evaluate various PPP options where funding Engagement); sources and mix, cost recovery mechanisms, Recommend changes to the Project’s Action •  among others, should be considered shall Do Plan, Implementation Schedule and the identify necessary risks (i.e. licensing, Municipality’s Project Management Plan; permitting and other legal risks etc.) that  need to be addressed and allocated for each le iv. Financial analysis and Project structuring: PPP option; • Develop the financial model for the project • Indicate whether the PPP project model offers mp based on forecasted project cash flows and a better price/performance (i.e. better value costs, clearly indicating the sources of data  for money) than other methods of used and assumptions made; implementing the project, including Sa • Develop the details of the payment mechanism public procurement, using clearly stated / tariff structure, taking into account methodology, data and assumptions; affordability to end-users; • Recommend which PPP option in his • Determine the commercial viability and professional judgment is the most viable and bankability of the project under several bankable, providing a detailed description of thegpsc.org scenarios; the preferred procurement option and PPP • Develop a financing plan including Structure, including: project financing and government support o Key Risk Allocation | assumptions; o Outline Payment Mechanism of the project The World Bank o  Indicative Financing Structure and sources Module 6 : Scope of Work 11 Sample Consultant Terms of Reference – private sector bank debt, multilateral debt, public sector debt, project bonds, grants (indicate source), developer equity, other (specify). vii. Risk analysis: •  Develop a risk matrix that identifies all key project risks during all project stages; •  For each risk, provide, in quantifiable terms te where appropriate and data permitting: o A description; ria o Consequences if the risk occurs; o  Probability of occurrence (low/moderate/ high); rop o Likely impact on costs/revenues; o  Relative grade of the risk based on probability of occurrence and impact; pp o  Proposed mitigation measures for high grade risks; o Proposed allocation between parties; A o  Review of the extent to which the risks of the project can be underwritten by as commercial insurance cover and the likely cost of such cover o Additional information, if any.  Based on the risk analysis, prepare a contingent t ap liability model for [the contracting authority] that quantifies the contingent liabilities and how the Ad same shall be managed. viii. PPP Agreement key terms: nt ,  Provide proposed key terms (e.g., material term sheet) for the PPP Agreement, including: a. Parties; me b. Duration; c. Responsibilities of the parties; d. Rights of the private partner; cu e. Project assets and ownership; f. Payment terms; g. Performance management framework; Do h. Dispute management framework; i. Force majeure events and consequences; j.  Material government actions and le consequences; k. Change in law; mp l. Termination and consequences; m. Jurisdictional issues; n. Liabilities. Sa Module 6 : Scope of Work 12 Sample Consultant Terms of Reference D. Management of the PPP Bidding Process and Transaction [Note: Generally, best practice is to assign the negotiation with preferred bidder, contract feasibility study to one adviser, and to use an close, financial close, etc.). entirely different adviser for transaction advice, o Acquisition of the required right of way. who will assist the Municipality in the procurement o  Audit of existing assets in which rights will be of the PPP project after the completion of the transferred to the winning bidder. feasibility study, if the municipality decides to bid o  Preparation of applications for government out the project. This allows the transaction advisers support; te to review the feasibility study and make sure its o Obtaining required permits and approvals; recommendations are not too optimistic. In some Identify actions that must be taken by other •  ria cases, the assignment of the feasibility study government entities to implement the project is bundled with that of the transaction advisor. and prepare a plan for obtaining cooperation The bundling of both assignments allows the from these entities; rop Municipality to save procurement costs and shorten Outline the proposed procurement strategy, •  the project preparation process. However, bundling including procurement method, preferred profile the mandates of the feasibility study adviser and of prospective bidder, and selection/award pp transaction advisor also has drawbacks, such as criteria; the possibility of a conflict of interest. The single Assist with implementing the chosen •  A feasibility study adviser/transaction advisor will procurement method, bidding process, be incentivized to find the project to be viable evaluation, and contract finalization through and appropriate for approval. In order to avoid financial close. as the drawbacks of bundling indicated above, the Municipality must check the work of the adviser and challenge its recommendations. t ap Furthermore, note that the consultant’s scope of work and deliverables will need to be adjusted to Ad reflect the applicable procurement process (e.g., single versus two-stage bidding).] nt , Develop detailed timeline to undertake an •  open, competitive, and transparent bidding process and its PPP agreement signing (i.e. me implementation and procurement plan), in accordance with applicable procurement rules and procedures and all licensing and permitting cu requirements, including but not limited to: o  Advice on mechanisms to maximize Do competition while avoiding unrealistic bids and project vulnerability from overly aggressive bidding. o  Prepare all necessary bid/tender documents, le including: Request for Qualification (RFQ), Request for Proposal (RFP), Draft Contract, mp bid bulletins, qualification and evaluation criteria, invitation to bid, including all appropriate bid forms such as bid letter, Sa statement of bid, technical bid proposal, financial bid proposal, PPP agreement and other related documents complying with applicable law and other relevant policies thegpsc.org and guidelines. o  Marketing the project to potential bidders (such as the organization of an investor’s conference). | The World Bank o  Implementing the various phases of the procurement procedure (pre-qualification, submission and evaluation of bids, Module 6 : Consultant Requirements 13 Sample Consultant Terms of Reference 7.0 Consultant Requirements te A. General Requirements ria A prospective Consultant should have required projects, with additional merit given to experience rop experience providing PPP legal advice, project with PPP projects in [insert local region name]. finance advice (financial modeling, analysis, Likewise, the international sector experts should structuring, risk assessment, and other relevant have 10 years and national sector experts should pp tasks) and sector-specific technical advice. have 5 years of demonstrated experience in the Generally, the international experts should have preparation, development (design & construction), 10 years and national experts should have 5 years and/or operations and maintenance of 3 projects in A of demonstrated project-relevant experience in the [name of sector]. the preparation and transaction of at least 3 PPP as B. Qualifications of Key Personnel t ap [Note: The number, type and expertise of the Liaise with Municipality and keep all •  consultants will vary depending on the project stakeholders apprised of any issues Ad and the activities and deliverables for which the or concerns that could impact project consultants will be responsible. The language performance and or completion of the provided below describes the various types of consulting assignment; consultants the Municipality might procure to assist Be responsible for drafting inception report, •  nt , with the delivery of a PPP project, as well as their progress reports, and updating the agreed respective qualifications and responsibilities.] work program, and provision of timely me information to Municipality on contract The team of transaction support Consultants will administration issues; include qualified experts from specific sectors, Manage the team of experts to ensure •  cu public-private partnerships, project preparation integrated monitoring of the agreed work and appraisal, project implementation, financial program; modeling/structuring, investment promotion, Coordinate the inputs of team members •  Do economic and financial analysis, risk analysis, as per the agreed work plan, advise team procurement, policy and legal issues. The members of changes to the work plan, Team shall be composed of Consultants, who and monitor team members’ other project le shall have extensive technical and country- commitments to ensure appropriate priority specific experience that would include extensive attention is given to the assigned task; mp knowledge of the sector, regulatory issues involved Ensure outputs of team members are in •  and government instruments to enhance the accordance with the contractual Terms development of bankable PPPs. of Reference and the client’s quality Sa expectations; The team composition and indicative scope of work Ensure smooth implementation of the internal •  and deliverables from each Consultant area are as quality assurance mechanism and be indicated below: ultimately responsible for output quality by reviewing, commenting upon and approving i. Team Leader all such outputs;  The Team Leader will generally be responsible for Ensure all contracted deliverables are •  coordinating all inputs of the team; submission of prepared in a timely manner and manage all reports; facilitating meetings and stakeholder project scheduling; and consultations, as required; and liaising with the Municipality, as required. Specific tasks would include, among others, the following: Module 6 : Consultant Requirements 14 Sample Consultant Terms of Reference Brief and supervise team members on •  monitoring frameworks in coordination with (a) quality management, and (b) integrity the legal Consultant; and professional conduct; and keep the Manage the bidding process, including •  team updated on changes in the operating marketing, pre-bid meetings, identification of environment or procedures. potential bidders, bidder query responses, bidder qualification and evaluation criteria ii. Project Finance Expert development; and  The Consultant shall have proven work Provide all required support until the financial •  experience in financial modeling and project close of the project; te structuring of PPP projects. It shall develop a Provide inputs related to taxes, tax •  financial model, incorporating an appropriate exemptions and tax incentives, financial ria structuring of the selected PPP modality with accounting systems. detailed capex, opex and revenue (payment mechanism and tariff scheme) assumptions and iii. Legal Expert rop manage the financial aspects of the transaction  The Consultants will develop a legal / regulatory preparation and bidding process according to the and institutional analysis to take into account provisions of the relevant PPP and government the requirements of the selected PPP modality, pp support regulations. In doing so, the Consultant and assist in the bidding process, project will, among others, carry out the following tasks: documentation, and evaluation procedures. •  Develop an appropriate project finance Specifically, this analysis will include, but not A model with suitable assumptions, resulting limited to: in a set of projected financial statements •  Conducting a policy and institutional as (balance sheet, cash flow, income statement, assessment to ascertain the validity and key ratio analysis) and sensitivity scenarios; viability of the proposed PPP structure for the •  Develop the financial / commercial and project; risk allocation terms of the envisaged PPP t •  Assessment of the Municipality’s capacity to ap modality after assessment of alternative manage the project once operational, and choices including the commercial, legal, and recommend required changes and capacity Ad institutional impacts; improvement measures as appropriate; •  Ascertain the potential acceptability of the •  Recommend institutional measures to recommended PPP structure by the investors improve the governance of the Municipality’s nt , and potential lenders; with the purpose of ensuring efficient •  Recommend a suitable, bankable financing management of project assets after PPP plan, including appropriate debt equity project completion; me ratios, loan tenures, rates and cash flow •  Develop “bankability” measures for the requirements for project viability and proposed PPP project structure, such as bankability, and required government payment and guarantee mechanisms, cu support; preconditions for a private operator to fulfill in •  Identify appropriate funding sources, meeting service obligations, default and risk including private sector funding, government clauses, and step-in rights; Do funding and government support. •  In accordance with relevant sector and PPP Identify their likely terms and conditions, legislation and associated regulation, assist incorporating them in the project financial in the bidding process management through le model; documentation preparation, including •  Develop all required due diligence Request for Prequalification, request for mp documents for potential lenders; proposal, contractual agreements between •  Test all key assumptions against financial project sponsor and winning bidder, as well model outputs, including the financial internal as in developing bidder instructions, bid Sa rate of return and debt service coverage qualification parameters and bid evaluation ratio, identifying any required policy revisions criteria, bidding process schedules, and for project sustainability, including on the undertake stakeholder consultations; revenue model; •  Providing advice on country-specific legal •  Provide project risk analysis with suitable experience of PPP projects in the sector, thegpsc.org mitigation strategies; judiciary-related, legal and regulatory issues •  Assess contingent liabilities arising from the pertaining to the project, legal perspective on project; special privileges and incentives available for | •  Assess project financial management PPP projects and other country-specific legal The World Bank capacity; knowledge; •  Produce and manage all project and bidding •  Provide all required support until the financial process documentation and post-bid close of the project. Module 6 : Consultant Requirements 15 Sample Consultant Terms of Reference iv. Social Impact Expert • Assist in the project financing modeling,  The Consultants will ensure adequate providing project costs (capital expenditures, management of project social impacts consistent operations, maintenance), required with the country’s social/gende/poverty and contingency levels, and any other information safeguard policies. To fulfill this, the Consultant as requested; will, among others, do the following: Provide all required support until the financial •  •  Assess the Municipality’s capacity and close of the project. commitment to undertake social impact due diligence, impact monitoring, and mitigation te measures implementation (e.g., Land Acquisition and Resettlement Action Plan ria (LARAP) implementation); •  Ensure proper implementation of LARAP and overall project compliance with the relevant rop social safeguard and regulatory framework. v. Environmental Expert1 pp  The expert shall support the Municipality with properly implementing the Environmental Management Plan in accordance with the [insert A name of relevant local environmental regulatory authority]. The support shall consist of: as •  Evaluate the Municipality’s capacities to implement mitigation measures, and where necessary recommend capacity improvement training programs and t ap measures; •  Seek government environmental clearance, Ad required permits, and approvals; and •  Include environmental management plan in the bidding documents, along with the nt , requirement to comply with mitigation measures therein. me vi. Sector Technical Expert  The Consultant will need to complete the sector- specific technical validation of project design cu and cost estimates through, but not limited to, implementation of the following tasks: •  Update the technical analysis in the feasibility Do study to confirm the technical validity/ viability of the project, including verifying assumptions such as [current and projected le demand levels for project outputs, design criteria and standards, capacity, prevailing mp topographical and other conditions,…] ; •  Produce the technical parts of the RFP / produce the projects output specifications; Sa •  Verify quantities and rates for major civil works, equipment, construction and supervision consulting, and other input items; •  Verify and develop projected operation and maintenance costs for the project on a whole 1 T  he role of the of life basis; environmental expert will be less extensive where •  Review and quantify costs and benefits the project is small and/ from the project, and confirm the project or the environmental design on a least-cost basis in financial and impacts are expected to be minor. economic terms; Module 6 : Outputs of the Assignment 16 Sample Consultant Terms of Reference 8.0 Outputs of the Assignment te ria [Note: The particular deliverables produced by the The general deliverables of the project are as consultant will need to be revised based on the represented in the table below. Bidders are rop Scope of Work, as adjusted by the Municipality to expected to include, as a part of their proposal, meet its needs in relation to a specific project.] anticipated dates of delivery. It is estimated that the above services would require a period of about pp [estimated time] from the date of commencement of the services until the financial close of the project or a period of [estimated time] from the effective A date of the contractual agreements signed with the private party, whichever is earlier. t as Date of completion (after No Deliverables ap contract signing) 1 Pre-feasibility Study ……………………. Ad 2 Market Sounding ……………………. nt , 3 Feasibility Study Report including PPP Implementation Plan ……………………. me Pre-qualification Document (RFQ) preparation, issuance and Evaluation 4 ……………………. Reports cu Bidding documents, including RFP, draft PPP Project agreements, Design 5 Criteria and Performance Specifications, evaluation criteria, including any other ……………………. relevant bid documents Do 6 Complete Tender Evaluation Reports ……………………. le 7 Negotiations and Financial close ……………………. mp 8 Close-out Report ……………………. Sa The Consultant, in close coordination with [the contracting authority], shall conduct quality reviews to obtain feedback on all draft versions of deliverables as appropriate. The Consultant shall thegpsc.org make presentations to [the contracting authority] on each deliverable (e.g. draft Feasibility Study), with the team’s key experts present. | The World Bank Module 6 : Evaluation Criteria 17 Sample Consultant Terms of Reference 9.0 Evaluation Criteria te ria [Note: Sample language for evaluating proposals The evaluation committee appointed by [the submitted by prospective consultants is provided, contracting authority] shall evaluate the proposal on rop below. The Municipality may need to revise the basis of their legal standing and responsiveness this section to suit its own requirements and to TOR’s as outlined in the table below: preferences, particularly in light of national and local pp procurement rules, policies and practices.] A No Evaluation Criteria for Technical Proposal Scoring Criteria as A Preliminary Screening (Mandatory requirements) Yes/No t Legal status of the lead consultant/consortium member and any firm engaged A1 ap including practicing licenses. If a consortium, signed joint consortium agreement by all consortium members Ad A2 to be provided. A bidder who scores NO in the mandatory criteria shall not proceed to the NB technical evaluation stage. nt , B Technical Evaluation Points me B1 Specific experience of the consultant/consortia related to the assignment. cu Adequacy of the proposed work plan and methodology in responding to the B2 terms of reference. Do Qualifications and competence of the key staff for the assignment (Relevant B3 education, training, experience in the sector/similar assignments). le Suitability to the transfer of Technology Program (Training)-Relevance of B4 approach and methodology. mp B5 Proof of involvement of local staff in the assignment. Sa TOTAL 100 A firm/consortium that attains a PASSMARK of St 70 Points and above shall NB proceed to the last stage of Financial evaluation. Module 6 : Terms of Payment 18 Sample Consultant Terms of Reference 10.0 Terms of Payment te ria The Consultant will be paid on a lump sum basis. The total fees shall be paid based on rop specific milestones achieved. The Municipality shall accord this approval after ensuring that the outputs delivered by the Consultant conform to the pp regulatory requirements. The indicative milestones for payment are A shown below. Submission of Pre-feasibility Study (10%) – 1.  as indicate due date; Submission of first draft of the Feasibility Study 2.  (10%) – indicate due date; 3.  t Submission of final draft of the Feasibility Study ap (15%) - indicate due date; Approval of implementation and procurement 4.  Ad plan (including RFQ documents, RFP documents and draft PPP agreement) (15%) – indicate due date; Pre-Qualification of applicants (10%) – indicate 5.  nt , due date; Completion of bid evaluation and determination 6.  me of winning bidder (20%) – indicate due date; Signing of PPP agreement with the prospective 7.  private partner and financial close (20%) – cu indicate due date. Do le mp Sa thegpsc.org | The World Bank PROCUREMENT Municipal 07 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 Preparing for Procurement 03 3.0 Evaluation Methods and 05 4.0 Marketing and Promotion 08 Procurement Modes 3.1 PPP Procurement Evaluation Methods 05 3.2 PPP Procurement Modes 06 5.0 Preparing the PPP Tender 09 6.0 Implementing the PPP 13 Documents Procurement Process 5.1 Invitation for Expressions of Interest (Eol) 09 6.1 Qualifications Assessment 13 5.2 Request for Qualifications 09 Maintaining the PPP Project ‘Data Room’ and 6.2  14 5.3 Request for Proposals 11 Conducting Bidder Site Inspections 5.4 Draft PPP Agreements 12 6.3 Technical Proposal Assessment 13 6.4 Financial Proposal Assessment 15 6.5 Award and Contract Signing 16 7.0 Managing Transaction Advisers 17 8.0 List of References 18 During Procurement 7.1 Don’t Rush 17 Provide Clear Instructions to the Tender 7.2  17 Evaluation Commitee 7.3 Contract Management Plan 17 Module 7 : Purpose of this Module 2 Procurement 1.0 Purpose of this Module This module provides more detailed, practical guidance on how municipalities, their PPP project managers, and their transaction advisers should oversee, review, and manage the tendering and procurement phase of municipal PPPs, including recommendations for addressing the more common real-world challenges and issues when implementing PPP procurement. thegpsc.org | The World Bank Module 7 : Preparing for Procurement 3 Procurement 2.0 Preparing for Procurement PPP procurement will commence once the feasibility transferred to private operation under the PPP study has been approved by the municipality, and contract might be co-owned by different public possibly by a national government authority, such authorities or other bodies. as a PPP unit. The procurement process should • In some cases where PPPs involve multiple integrate any recommendations and instructions client public authorities (such as neighboring from this reviewing and approval process. municipalities, regional/provincial governments and authorities, and national public contracting The feasibility study will identify a PPP procurement bodies or ministries), a single new joint public plan, including the different steps to be contracting body may need to be officially implemented and the specific financial and established and incorporated or some other human resources that the municipality will need to joint venture vehicle may need to be created to complete the PPP procurement, especially from act on behalf of the different authorities. outside PPP advisers. • Debts owed by a municipal public corporation may need to be fully paid or restructured, such The plan for PPP procurement should feature as long-standing accounts receivable owed to realistic deadlines, provide the PPP transaction it by other public authorities who have received support skills required, and support clear and timely services but not yet paid. PPP decision making by the municipality. Without • Consultation with the public sector’s current sufficient time and resources, PPP tenders are more workforce including confirmation of any likely to have flaws, to take longer to implement, and severance packages, quantification of pension to fail. liabilities, and the completion of any changes in staffing levels or reassignments of personnel, The feasibility study may identify recommended and so on. activities that need to be completed before • Changes in local ordinances, decrees, tendering, such as the following: regulations, or directives may be needed to • Retail tariffs or user fees for services may need allow the structure of the PPP. to be raised to a new baseline level that would Any other project-specific changes required for •  allow the PPP to be commercially viable and the tendering, award, and signing of the PPP financially sustainable. agreement to proceed. Land, buildings, office space, or other existing •  assets needed for the project may need to be The amount of time required to complete these officially acquired before the PPP tender. steps will depend on the issues identified in the • Resolution of the legal ownership of assets feasibility study and on the given sector, size, and equipment related to the PPP project. In complexity, and the perceived level of risk for the some cases, the existing assets, equipment, specific municipal PPP project. and public facilities that are expected to be Lessons Learned and Good Practices In practice, municipalities are often in a hurry to award PPP projects, reasoning that the sooner the PPP tender documents are released the sooner the contract can be awarded, and the private partner can start delivering the needed services. As a result, municipalities often issue PPP tender documents that are unclear or incomplete (especially about how risks will be allocated, what the output performance standards are, or how bids will be evaluated). Often municipal decision makers expect that these detailed issues can be resolved later, such as during or after the tendering process. However, such practices regularly create more delays and problems during PPP procurement. Private bidders will review PPP tender documents and draft contracts in detail. Any uncertainty or lack of clarity will increase perceptions of risk and reduce appetite to bid. Potential bidders will raise questions and seek clarifications, which requires time and effort. It is always more efficient to make the effort to achieve clarity before issuing the PPP tender documents, and this will attract more and better bids. Module 7 : Preparing for Procurement 4 Procurement The municipality should consider the long-term context of the project when establishing bid criteria. For example, the project may need to access financing, or refinancing, from bilateral or multi-lateral financiers (for example the International Finance Corporation (IFC) or the Asian Development Bank). The requirements of these entities should be built into the feasibility study and the bid criteria, in particular the environmental and social standards of such entities. The IFC’s environmental and social performance standards is an industry standard. thegpsc.org | The World Bank Module 7 : Evaluation Methods and Procurement Modes 5 Procurement 3.0 Evaluation Methods and Procurement Modes The municipality must select the appropriate one-time delivery of commodities or materials procurement method from the various options, in (that is, inputs), the procurement of PPPs is terms of (1) evaluation method and (2) procurement fundamentally different from the traditional public modes. Each has its own advantages and sector procurement practices. This is why many disadvantages, as discussed later. countries that have developed new PPP programs and strategies have included new PPP procurement Because PPPs are long-term contracts for the guidelines as a key part of their PPP framework. delivery of services (that is, outputs), and not 3.1 PPP Procurement Evaluation Methods In evaluating proposals, the municipality may choose in accordance with the financial bid parameter (that to adopt either a pass-fail method or a weighted is, highest concession fee paid to the municipality, composite score method. lowest subsidy required, or lowest tariff). A pass-fail method provides for a more straightforward and Under a pass-fail method, the municipality adopts transparent evaluation of bids and is recommended a set of minimum technical requirements that each for projects whose required minimum output bidder will have to satisfy in their respective technical performance standards are clearly understood, proposals. Only bidders who are able to satisfy the defined, and accepted by all private bidders. minimum technical requirements (that is, ‘pass’) This would mean limited variation in the technical will advance and have their financial proposals proposals of bidders, and therefore no incentive to considered. The municipality then selects the winning exceed the minimum output performance standards. bid based on the best financial proposal submitted Case Example Bhubaneswar Street Lighting (Odisha, India) Bhubaneswar’s street lighting fell far below national standards, leading to constant complaints from the public. Also, owing to poor quality equipment, energy consumption for street lighting was extremely high, straining the city’s finances. The ESCO Shared Savings model recommended by IFC provided efficient street lighting upgrades, paid for and maintained by an ESCO, which in turn would receive payment through energy savings realized by the municipality. The bid variable for the project was the energy savings achieved by ESCO, subject to a 30 percent minimum. The winning ESCO would undertake a joint survey to establish the baseline energy consumption. A total of 16 companies expressed interest in the project, of which 4 submitted bids. The ESCO contract was signed on October 5, 2013.  Source: International Finance Corporation. 2013. Public-Private Partnership Stories India: Bhubaneswar Street Lighting. https://www.ifc.org/wpswcmconnect/c97d4db6-4fd5-4483-9617-4793bd9e4ad7/PPPStories_India_ BhubaneswarStreetLighting.pdf?MOD=AJPERES&CVID=lKbKhV3 Sabyasachi Baldev (https://commons.wikimedia.org/wiki/File:Bhubaneswar.jpg), “Bhubaneswar“, https:// Photo Credit:  creativecommons.org/licenses/by-sa/2.0/legalcode See Project Summary No. 68 Module 7 : Evaluation Methods and Procurement Modes 6 Procurement By contrast, under a weighted composite score advantageous bid. This analysis can be more or method the municipality calculates a composite less complex, depending on the characteristics score using the weighted average of the technical of ‘advantageous’. A simple assessment proposal score and the financial proposal score. benchmarks all financial proposals against the best The technical proposal score is computed against a submitted financial proposal in accordance with the set of technical criteria adopted by the municipality. bid parameter. The financial proposal score is based on the most Remark Examples of Scoring of Financial Proposals Where the bid parameter is the amount of the grant required by the bidders: Financial score of Bidder X = (lowest grant requested among the all the bidders / grant requested by Bidder X) × 100 Where the bid parameter is the amount of the concession fee paid to the municipality: Financial score of Bidder X = (concession fee offered by Bidder X / highest concession fee offered among all the bidders) × 100 Where the bid parameter is the level of the user fee required by the bidders: Financial score of Bidder X = (lowest user fee quoted among all the bidders / user fee quoted by Bidder X) × 100 The weights to be used for calculating the the weight assigned to the technical proposal score. composite score depend on the nature of the PPP procurement should prioritize the best bid project. The more the project is technology-intensive that responds to municipal needs and should not and has substantial scope for innovation, the higher prioritize the ‘cheapest’ bid. 3.2 PPP Procurement Modes The municipality may choose between different PPP In evaluating the technical proposals, procurement modes, including either a single-stage, depending on the evaluation method, the three-envelope bidding process or a two-stage municipality may either score the technical bidding process. proposals based on a set of technical criteria (weighted composite score method) or subject 3.2.1 Single-Stage Three-Envelope Mode the technical proposals to a set of minimum  Under a three-envelope, single-stage process, technical requirements (pass-fail method), in bidders will be required to submit three which case only those who pass will proceed envelopes—which together, comprise their to the opening and evaluation of the financial bid—containing the following: proposal (that is, third envelope). In evaluating • Envelope 1: Qualification Documents the financial proposals, depending on the • Envelope 2: Technical Proposal evaluation method, the municipality may • Envelope 3: Financial Proposal either score the financial proposals and   The municipality will open and evaluate the determine the winning bid by obtaining the thegpsc.org qualification documents (that is, first envelope), weighted average of the technical proposal and determine which among the bidders fulfill score and the financial proposal score of the minimum qualification requirements. Those submitted bids or determine the winning bid by | who satisfy the requirements will advance identifying the best offer among the submitted The World Bank to the opening and evaluation of technical financial proposals. proposals (that is, second envelope). Module 7 : Evaluation Methods and Procurement Modes 7 Procurement 3.2.2 Two-Stage Procurement Mode a way similar to the evaluation of qualification  Under a two-envelope, two-stage process, documents under a single-stage bid process. the first stage—that is, the qualification The second stage of the process is the bid stage—involves the qualification/shortlisting and can proceed in a way similar to the of interested parties/consortia through their opening and evaluation of technical submission of an application in response  proposals and financial proposals under to the municipality’s issuance of an RFQ. a single-stage process, whichever is the Evaluation of applications will then proceed in selected evaluation method. Remark Which Procurement Mode to Adopt? The decision on which procurement mode to follow largely depends on the nature of the project. Single-stage bidding would be more appropriate for projects that are less complex and have easily definable qualification requirements (that is, does not require niche or highly technical qualifications). Pursuing a single-stage procurement method in this case would facilitate the review process and allow the municipality to complete the tender process more swiftly. Two-stage bidding on the other hand may be advisable for complex projects (that is, multiple and changing risk profile that could pose challenges in determining, quantifying, mitigating, and sharing project risks between the municipality and the PSP, and hence may require a more in-depth investigation and analysis from bidders before bid submission) or would require the qualification of highly technical experts. Single-stage bidding is also more appropriate where few bids are expected. Two-stage bidding thins out the field of bidders, asking only the most qualified bidders to submit technical and financial proposals. This is attractive for the most qualified bidders as their likelihood of success increases. These same qualified bidders may not be willing to spend significant money developing bids for processes where a number of other less qualified bidders will compete, reducing the likelihood of success. Bidding is expensive, and bidders will need to work out the likelihood of success. Module 7 : Marketing and Promotion 8 Procurement 4.0 Marketing and Promotion The information memorandum (or ‘info memo’) is size, scope, and performance; sector policies; a useful way to inform potential private investors sector investment plans and forecast demand about a municipal PPP bidding opportunity. The info levels; and institutional roles in the sector. memo provides a summary of the overall purpose, The specific PPP project - Description of •  objectives, key components, and major financial scope, size/capacity, output standards, risk requirements and return opportunities of the project. allocation, available public sector contributions, Unlike feasibility studies, which can go into detail and procurement timetable. describing and analyzing a PPP project, an info • Annexes - Further information on service memo provides a summarized version (usually delivery standards, other project requirements, 30–70 pages) to allow investors and financiers to and so on. decide whether and how to invest in the project. The investor conference must be designed to reach Investor conferences are meetings conducted by the target audience for PPP promotion. National municipalities to promote private investor interest in investment promotion agencies and boards can PPP investment projects opportunities. be an important source of assistance in preparing and implementing local and regional investors’ Based on all the available sources of information, conferences and promotional activities. the info memo usually includes the following: • Introduction - Brief description of the PPP For municipal PPP projects that seek foreign project. investment, in addition to locally held investor • Economy - Background information on the conferences, they may wish to consider investor national and local economy, the investment conferences held in locations closer to potential environment, foreign exchange issues, investors, sometimes called ‘road shows’. commercial lending markets, and other key economic issues important to the PPP project. A formal record should be kept of matters discussed • PPP program - Descriptions of the key and information provided during the road shows to elements of the PPP program including ensure open and transparent promotion. objectives, accomplishments, key elements, legal and regulatory framework, and so on. • The structure and description of the relevant infrastructure sector - Information on Sector thegpsc.org | The World Bank Module 7 : Preparing the PPP Tender Documents 9 Procurement 5.0 Preparing the PPP Tender Documents The following sections describe the documents that need to be prepared by the PPP advisers before tender. 5.1 Invitation for Expressions of Interest (Eol) The municipality may wish to issue an invitation for • Nature of the PPP being considered; EoI to potential investors, to assess market appetite • Services that the private sector is expected to for the project and potentially obtain early feedback deliver; on market concerns about the project. This is often • Proposed risk allocation; not a mandatory step in the process but may be • Expertise being sought from the private sector, useful strategically to engage with the market of including level of experience in the sector and potential investors and spread awareness of the region; upcoming PPP tender among private investors. • Required information about the private entity including the name, address, nature of Communications must be clear about the nature the organization, relevant experience, and and purpose of the invitation for EoI, which should comments on the project; generally contain the following information: • Any local participation requirements; • Name and brief description of the municipal • Outline of bid process, including expected authority’s functions; timetable with milestones; • Background with respect to the present state of • Any disclaimer of liability and reservation of the relevant service; rights. • Objectives and overview of the project; 5.2 Request for Qualifications Pre-qualification ensures that bidders are clearly While an RFQ does not contain all the detailed qualified to do the work, including technical specifications for the final PPP, it should contain experience, designing facilities, managing building enough information about the project to allow projects, raising long-term financing, and delivering potential bidders to make a judgement about the public services over the long term. Often these are fit between their experience and qualifications capabilities, skills, and experience that relatively and the project’s required output standards and few firms in the private sector have. Therefore, the risks. Generally, the preparation of RFQ responses pre-qualification evaluation criteria must differentiate should not require significant expense but should between general experience and proven long-term be enough to allow an informed evaluation by the PPP delivery. municipality. The request for qualification (Module 8), issued in the case of a two-stage bidding process, contains instructions to interested bidders to submit qualification documents showcasing their technical and financial capacity to undertake the PPP project. Module 7 : Preparing the PPP Tender Documents 10 Procurement Illustration: Contents of a PPP RFQ 1. Letter of invitation to submit qualifications. 2. Description of the purpose and requirements of the PPP project. a. Background, objectives, and overview of the project. b. Name and brief description of the municipal authority’s functions and the sources of any statutory powers. The specific services that the PSP is expected to deliver expressed as outputs and key c.  performance indicators. d. Proposed risk allocation (summary matrix) and description of PPP modality. e. Description of payment mechanisms, including amount and nature of any public support available. 3. Description of the PPP procurement technique and process. a.  Description of the procurement technique (that is, short-listing, competitive negotiations, and best and final offers). b. Description of the legal requirements of existing procurement laws and implementing regulations. c. Proposed timetable and key milestones for the tendering process. d.  Other procurement process requirements: language and translation requirements, if any; any disclaimer of liability, including the cost of preparing the response, and reservation of rights, such as the right to not proceed with the project; period of validity of the responders’ offer; grounds for disqualification, and so on. Invitation to interested firms to submit comments, questions, and recommendations on the proposed e.  output standards and PPP risk allocation structure. 4. Instructions to interested applicants in submitting qualifications. a. Format, time, date, place, and addressee name for submitting the response. b.  Selection criteria/minimum conditions to be met by the bidder and instructions for completing qualification forms. i.  Technical experience and capacity: Minimum technical capacity required and instructions for how to present technical experience using standard templates in forms (attached in annex). ii.  PPP-related experience: Minimum PPP risk management experience and capacity required, and instructions for how to present PPP management experience using standard templates in forms (attached in annex). Financial capacity: Minimum financial capacity/size of the firm/consortia, including experience iii.  with limited recourse project finance (if necessary) for funding large PPP projects. Instructions for how to present PPP financial capacity and project-backed financing experience using standard templates in forms (attached in annex). Bid bond requirements, including terms of the bond and any requirements on the bank issuing the bond. iv.  Legal structure: Legal requirements of consortium (such as incorporated locally), legal description  ower of attorney for of bidder (as a consortium or joint venture), ownership structure, proof of p lead firm, statement of no existing conflict of interest, and statement of litigation history. v.  Personnel: Minimum technical, management, and other requirements for key personnel to work on the project. 5. Annexes. a. Standard forms and templates for interested firms to use in submitting qualifications. Relevant specifications for the PPP project: Technical, economic, financial, commercial, b.  legal, and institutional. thegpsc.org | The World Bank Module 7 : Preparing the PPP Tender Documents 11 Procurement Some criteria to use when evaluating qualification Ability to meet the financial requirements of 3.  submissions from interested applicants include the the specific project following: Minimum required cash flow to meet the a.  project’s predicted working capital needs and 1. The general experience collection periods. a. General business experience Audited financial statements for last five years, b.  Require minimum of three to five years in the i.  or three years for smaller projects. relevant sector. If the project is foreseen to require long-term c.  ii. Specify, in the case of joint ventures, whether project-backed financing, require firms to show the experience of each member firm is the size, term, and structure of financings as counted equally. well as lenders.  Require that the firm/consortium has iii. experience in a similar environment. 4. Personnel capabilities b. General financial performance Require full CVs of key personnel a.  i.  Require annual revenues of at least twice with references. the projected revenues of the new PPP b. Clearly define what constitutes project. This will help ensure that the financial ‘relevant experience’. demands of the new PPP project do not Generally, require a minimum of five years of c.  overwhelm a smaller size company. relevant sector experience. 2. Sector specific/project relevant experience 5. Joint ventures Require firms to demonstrate the number, size, a.  Ask consortia to clearly define the management a.  and age of similar relevant PPP contracts they structure of any joint venture to clarify roles have implemented or are implementing. and responsibilities. Be clear on how to treat the project b.  While consortia with a large number of firms b.  experiences of different partners, for example (more than five) can appear impressive due is experience of sub-contractors sufficient. to the different technical specializations For specific sectors, ask for relevant c.  they provide, the risk of default of the overall technical information on the size of previous consortium (if one member withdraws) tends to projects, such as number of transactions, key be greater. performance indicators, size and nature of new Request for information on other projects in c.  investments required, and so on. which the consortia have successfully worked together. Tool Module 8: Sample Request for Qualifications (RFQ) provides a generic template for qualifying bidders in case of a two-stage bidding process and may need to be adjusted to conform to a municipality’s applicable procurement regulations. 5.3 Request for Proposals The preparation of the RFP documents represents bids, and the evaluation criteria against which those the culmination of the feasibility study and the bids will be reviewed. Any lack of quality in PPP bid competitive process by which the municipality documents generally results in numerous requests seeks to procure the PSP. The bid documents for clarification or protests from bidders, and need to be clear about the minimum performance possibly vastly different PPP bids each based upon requirements, the allocation of key risks, the rules differing assumptions, all of which will delay the bid by which bidders must present and submit their process significantly and may result in its failure. Module 7 : Preparing the PPP Tender Documents 12 Procurement In the case of a single-stage bidding process, the showcasing their technical and financial capacity to RFP will also include instructions for the submission undertake the PPP project. of qualification documents of prospective bidders Tool Module 9: Sample Request for Proposal Single-Stage Bid Process and Module 10: Sample Request for Proposal Two-Stage Bid Process provide RFP templates for both procurement modes. 5.4 Draft PPP Agreements The draft PPP agreement—the document to be project, as well as the time lines, deliverables, executed between the municipality and the PSP— output/performance-based specifications (including specifies the roles, responsibilities, and liabilities key performance indicators), and payment of both parties in the implementation of the PPP mechanism for the project, among others. Tool Module 11 (Sample Municipal PPP Agreement) provides guidance on key provisions that need to be present in a PPP agreement. The draft document will have to be adjusted to consider applicable legal and regulatory provisions in the country and the municipality. The municipality should constantly coordinate and monitor the progress of the consultant’s preparation of the above-mentioned documents, as well as review and provide comments on the documents in preparation for approval. thegpsc.org | The World Bank Module 7 : Implementing the PPP Procurement Process 13 Procurement 6.0 Implementing the PPP Procurement Process This section describes the core elements of the PPP procurement process: (1) qualifications assessment, (2) data room and site visits, (3) technical proposal assessment, (4) financial proposal assessment, and (5) award and contract signing. 6.1 Qualifications Assessment Interested bidders must furnish information that To determine technical capacity, the applicant demonstrates their technical and financial capacity is required to submit information on relevant to undertake the PPP project. A bidder is allowed to projects to showcase its experience (for example, submit only one application/qualification envelope design, engineering, construction, operation, and either individually or as a member of a consortium. maintenance), supported by certificates from clients specifying the completion of the contracts and the A clarificatory conference may be held to allow quality of the work undertaken. For determination of bidders to seek clarifications and provide financial capacity, the applicant will be required to suggestions for consideration by the municipality. specify its net worth, and other financial parameters, The municipality will provide clarifications and supported by audited financial statements that such further information as it may, in its discretion, reflect the financial capacity of the applicant. consider appropriate for facilitating a fair, transparent, and competitive qualification process. The evaluation will identify the short list of permitted bidders. The municipality may wish to establish The municipality will determine whether the a maximum number of applicants that may be application/qualification envelope is responsive shortlisted, to keep the number of bids manageable to the requirements stipulated in the RFQ/RFP, for the evaluation team and for bidders. that is, if it (1) contains all the documents required to be submitted; (2) is received on or before the After evaluation, the municipality will announce the submission due date and time; (3) is signed, sealed, qualified bidders and notify other applicants that and marked; and (4) does not contain any condition they have not been shortlisted. or qualification. If necessary, the municipality can request the applicant for clarification. If the bidder fails to respond to the request within a time period or does not provide the information or documentation requested, the municipality may consider the application non-responsive and reject it. Module 7 : Implementing the PPP Procurement Process 14 Procurement Maintaining the PPP Project ‘Data Room’ and Conducting Bidder 6.2  Site Inspections Bidders for PPP projects generally need access • Data on current staff, including salary, to background information about the PPP project. costs, contract terms, and so on subject to Data rooms are typically libraries of detailed confidentiality obligations. records, reports, and plans relevant to a specific Audited financial statements of the municipal •  infrastructure project that bidders may access while authority, if available. they are preparing their bids. The nature of the data • Information on other liabilities, such as debts, provided will depend on the project. held by the municipality. Other detailed technical, financial, and legal •  The data rooms may include the following: reports and records relevant to the specific PPP project. • Site maps and geological data. • Existing project designs, construction ‘Virtual’ data rooms are web based to make engineering reports, and as-built drawings. information available electronically and simplify • Updated infrastructure/utility network maps and bidder due diligence. Virtual data rooms are also expansion plans. easier for municipalities to manage. • Asset and equipment registries. • Inventory records, including spares. Bidders may also need ‘site inspections’ and ‘walk- • Equipment maintenance and other throughs’ to physically inspect the proposed right maintenance records. of way and key project facilities first hand (wearing • Customer databases and cadastral studies. appropriate safety equipment). The purpose is to • Existing service contracts and so on. allow them to see the proposed project site first • Demand, billing, collection, and hand and to prepare any new questions related to revenue records. design and construction issues. Any questions that • Operating and maintenance data, including emerge from these visits should be submitted to major maintenance plans. the municipality in writing, and both the full text of • Audited financial statements of any the question (though not attributed to the relevant existing company. bidder) as well as the full text of the answer or • Company registry, articles or association, response should be distributed to all shortlisted shareholder agreements, and other bidders to ensure a fair access to information for corporate documents. all bidders. 6.3 Technical Proposal Assessment Under a two-stage process, the municipality will documents required to be submitted as specified issue an RFP for bidders to submit their bids, by the RFP; (2) is received on or before the bid including technical proposals and financial date; (3) is signed, sealed, and marked; and (4) proposals in two separate envelopes (two-stage does not contain any condition or qualification. Only process). The RFP will include a draft PPP responsive bids will be evaluated. If necessary, the agreement and other key documents. municipality can seek further clarification from any bidder. A bidder conference is usually held to provide information and allow bidders to seek clarifications Technical proposals will be evaluated against the and provide suggestions to the municipality before criteria indicated in the RFP. A simplified set of the tender documents are finalized. criteria is provided in Table 1, as an example. After the bid date, the municipality will assess whether bids received are responsive. A submission will be considered responsive if it (1) contains all the thegpsc.org | The World Bank Module 7 : Implementing the PPP Procurement Process 15 Procurement Table 1. Sample Criteria Technical Parameter Evaluation Criteria Conceptual Engineering Design Architectural layout and how it conforms to the • •The conceptual engineering design must conform to the specifications and the local area output specifications prescribed in the bidding documents • Details of the design of the facility and technology The architectural solution must conform to the specifications •  selected that satisfy the specifications and fit with the local context Conceptual layout of the facility illustrating technical • •Technology chosen must be proven and consistent with specifications of essential components of the facility local requirements Technical Plan for Construction/Rehabilitation •  Construction methodology fitting with chosen technology, Construction methodology and planning are well defined and •  context of the site, and access to materials feasible, and are likely to succeed in timely delivery and fit •Implementation plan: Present a detailed activity schedule with local context/constraints along with milestones in line with the requirements set out In line with output specifications •  in the PPP agreement. This should also outline the time line envisaged for obtaining various permits and approvals Operation and Maintenance Plan •  Process flow chart setting out the activities and the System/methodology for operation and maintenance are well • outputs at each stage of operation defined, shown to be feasible, and practicable in context •Methodology for operations Key performance indicators are achievable by the proposed • •Time lines and frequency of operations, maintenance operation and maintenance plan activities, equipment replacement, major maintenance and other key activities •Resource utilization statement indicating the proposed organizational structure, employee deployment, equipment procurement and utilization, contracting activities, and utilization of office and other facilities. •Maintenance (regular and emergency) schedules, including major maintenance, and how operations will adjust to the constraints of the maintenance regime Organization and Staffing Staffing requirements for the project, proposed • Adequacy of proposed organizational arrangements organization structure, and composition of project and Well-defined roles and responsibilities of the proposed •  operational team, including staff deployment plan, technical, operation, and maintenance plans number of shifts per day of operations, and roles and Local staffing in line with performance requirements •  responsibilities. Bidders should indicate the number of staff to be sourced locally Under a pass-fail evaluation method, the technical After the evaluation of technical proposals, the evaluation criteria are minimum requirements. The municipality will announce the bidders whose technical proposal must ‘pass’ every parameter to financial proposals will be opened, as well as qualify for the opening of the financial proposal. notify the bidders who failed to meet the minimum technical criteria. Under a scored evaluation method, the municipality will assign a weight to each technical parameter and score technical proposals accordingly. The municipality should achieve a minimum score before the financial proposal can be opened. 6.4 Financial Proposal Assessment The opening of financial proposals should 1. Contain the following documents as attachments: be scheduled as soon as possible from the a. Supporting cost estimates for the announcement of qualified technical proposals.  design, construction, operation and To be considered, the submitted financial maintenance components. proposal must: b. A financial model consistent with the Module 7 : Implementing the PPP Procurement Process 16 Procurement  above cost estimates and the technical proposals, the best financial proposal will need to proposal, and which includes a short be selected. explanatory memorandum. c. A project financing plan compliant with In some cases, the best financial proposal is a  the bid requirements, setting out, for example, comparison of the figure set out in the financial timing and terms of equity to be infused, proposal, for example, the lowest government sources and terms of debt, and the security support requirements, the highest percentage of package to be developed. project revenue to be shared with the municipality, An indication of the extent to which lenders d.  the most low cost housing units to be delivered. have reviewed and approved the project on the terms indicated in the financial proposal and In other cases, the financial proposal requires a the draft PPP agreement. more nuanced assessment, for example, where multiple financial criteria are applied, where some Agree to the draft PPP agreement provided in the 2.  modifications to the risk allocation are allowed, bid documents; where the extent to which lenders have completed 3. Be signed, sealed, and marked; and their due diligence is to be assessed, where 4. Not contain any condition or qualification. government guarantees may be requested, where services can be delivered in different amounts and If necessary, the municipality may seek clarification timing. In this scenario, the bid evaluation criteria from any of the bidders. will need to apply a scoring regime, weighted to indicate the municipality’s preferences and The tender evaluation committee will assess priorities. whether each financial proposal satisfies the basic documentary and formal requirements set out in the bid documents. Of those compliant financial 6.5 Award and Contract Signing Based on the evaluation of the technical and PPP agreement during the consultation process. financial proposals, the best bid will be awarded The municipality must be careful to listen to bidders the project. The successful bidder will be issued a if they raise concerns about the PPP agreement to letter of award and will have to satisfy post-award avoid bidders proposing amendments in their bids requirements before signing the PPP agreement, (which would need to be rejected as noncompliant) which may include: and the failure of the bid process. a. Incorporating a special purpose company to undertake the project; and When planning the process for finalizing the PPP b. P ayment of a bid development fee (to agreement, the municipality should provide a reimburse project development and tender specific deadline. Generally, such negotiations expenses incurred by the municipality). should begin within two weeks of the announcement of the preferred bidder and should be completed The municipality will enter into final negotiations with within two to six weeks. The municipality should the successful bidder only for finalizing the PPP both be able to call the bid bond of the selected agreement in accordance with the latter’s bid. Once bidder if negotiations are not completed within that finalized, the PSP will execute the PPP agreement time frame and commence discussions with the with the municipality. On signing of the PPP second best bidder, or it may evaluate whether agreement, the PSP may be required to furnish the there are fundamental problems with the structure municipality with a performance security (or convert of the project and therefore the project needs to be the bid security into a performance security). restructured and re-tendered. In general, the finalization of the PPP agreement should be a relatively simple and quick process. As thegpsc.org noted previously, PPP bidding documents should include a draft PPP agreement to be signed without significant modification. The municipality will give the bidders the opportunity to comment on the draft | The World Bank Module 7 : Managing Transaction Advisers During Procurement 17 Procurement 7.0 Managing Transaction Advisers During Procurement The following sections provide a few additional lessons learned for municipalities to consider when managing PPP procurement. 7.1 Don’t Rush In practice, municipalities are often in a hurry to It is better for the municipality and its advisers to award a PPP project, reasoning that the sooner the complete the structuring of the PPP first, and to PPP tender documents are released the sooner the include a detailed description of the PPP project’s contract can be awarded, and the private partner risk allocation structure and performance output can start delivering the needed public services. standards in the RFQ. This sends an important As a result, municipalities often issue PPP tender signal to prospective bidders that they should documents that are unclear and incomplete, with be similarly prepared to invest in innovative, the expectation that these issues can be resolved competitive, and detailed bids. This also allows the later, such as after the tendering process. However, municipality to receive informed comments and such an approach regularly creates more delays questions about the proposed PPP deal structure and problems. Bidders will review PPP tender from interested bidders before the RFP is finalized documents and draft PPP agreements in detail to and released. identify and resolve issues with the PPP structure and terms before they become larger problems or even project failures. 7.2 Provide Clear Instructions to the Tender Evaluation Committee Tender evaluation committee members are unlikely inclined to give it a ‘failing’ score, simply because to be familiar with the context of PPP procurement, it differs from how the municipality has been and should be given clear instructions on how designing and building projects for many decades. to determine whether the technical approach proposed by the bidder is viable (using an output- Tender committees familiar with public based procedure). For example, a bidder should not procurements may also not understand the ‘fail’ simply because it proposes a new technology relevance of the SPV, the reason that PPP investors or a design that may be different from one that are not jointly and severally liable, the context of is preferred by the individual reviewer. Often lenders in a PPP project, the function of an output- designers, engineers, and technology specialists based performance specification, the context of from municipalities and the public sector have folding construction and operation into a single decades of sound experience with input-based counterparty, and so on. Capacity support for the projects, in which they themselves select the design tender committee should be started early to avoid and technology. When such individuals are asked to delaying the bid evaluation process. review a different design or technology, they may be 7.3 Contract Management Plan The transaction advisers should develop the next deal, and it is difficult to pull together a team contract management plan and help form the and a plan once those most familiar with the project contract management team, before the PPP have moved on. agreement is signed. Once the agreement is signed and financed, the transaction team will move to the Module 7 : List of Reference 18 Procurement 8.0 List of References International Finance Corporation. 2013. Public-Private Partnership Stories India: Bhubaneswar Street Lighting. https://www.ifc.org/wps/wcm/connect/ c97d4db6-4fd5-4483-9617-4793bd9e4ad7/ PPPStories_India_BhubaneswarStreetLighting. pdf?MOD=AJPERES&CVID=lKbKhV3 thegpsc.org | The World Bank Module 7 : The Municipal Readiness Tool 20 Procurement thegpsc.org | The World Bank FOR QUALIFICATION SAMPLE REQUEST Municipal 08 Public-Private Partnership Framework Module 8 : 2 Sample Request for Qualification Important Note: This Request for Qualifications is provided only as a sample document. It must be adapted to fit the unique circumstances and needs of each particular Municipality and project for which its use is intended. National and local laws, regulations, policies and practices may prescribe a different approach to procuring project- level consulting services. ADDITIONAL GUIDANCE MATERIAL te World Bank Group’s Public-Private Partnership Legal Resource Center, https://ppp.worldbank.org/public-private-partnership/ ria rop A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 8 : 3 Sample Request for Qualification [CONTRACTING AUTHORITY’S NAME] Request for Qualification for the [Title of PPP Project] te [DATE] ria   rop A pp t as ap Ad nt , me cu Do le mp Sa Module 8 : Table of Contents 4 Sample Request for Qualification TABLE OF CONTENTS DISCLAIMER 5 GLOSSARY 6 INTRODUCTION 1  8 A. Purpose of Issuing the RFQ 8 B. Project Background 8 C. Brief Description of the Bidding Process 8 te 2 INSTRUCTIONS TO APPLICANTS 9 A. General Requirements 9 ria B. Documents 10 C. Preparation and Submission of Application 12 D. Evaluation Process 14 rop E. Qualification and Bidding 14 F. Miscellaneous 15 3 EVALUATION CRITERIA 17 pp Schedule 1: Project Information 18 Schedule 2: Bidding Process Timelines 19 A Schedule 3: Letter of Application 20 Schedule 4: Applicant Information 22 Schedule 5: Consortium Member Information 23 as Schedule 6: Financial Capacity 24 Schedule 7: Technical Capacity 25 Schedule 8: Power of Attorney for Signing of Application and Bid 26 t ap Schedule 9: Power of Attorney for Lead Member of Consortium 27 Schedule 10: Consortium Agreement 28 Schedule 11: Declaration of Undertaking 31 Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 8 : Disclaimer 5 Sample Request for Qualification DISCLAIMER The information contained in this Request for Qualification (RFQ) or subsequently provided to Applicants, whether verbally or in documentary or any other form by or on behalf of the Contracting Authority or any of its employees or advisors, is provided to Applicants on the terms and conditions set out in this RFQ and such other terms and conditions subject to which such information is provided. This RFQ is not an agreement and is neither an offer nor invitation by the Contracting Authority to the prospective Applicants or any other person. The purpose of this RFQ is to provide interested parties with te information that may be useful to them in the formulation of their Application for qualification pursuant to this RFQ. This RFQ includes statements, which reflect various assumptions and assessments arrived at by the ria Contracting Authority in relation to the PPP Project. Such assumptions, assessments and statements do not purport to contain all the information that each Applicant may require. This RFQ may not be appropriate for all persons, and it is not possible for the Contracting Authority, its employees or advisors to consider the rop investment objectives, financial situation and particular needs of each party who reads or uses this RFQ. The assumptions, assessments, statements and information contained in this RFQ may not be complete, accurate, adequate or correct. Each Applicant should therefore conduct its own investigations and analysis pp and should check the accuracy, adequacy, correctness, reliability and completeness of the assumptions, assessments, statements and information contained in this RFQ and obtain independent advice from ap- A propriate sources. Information provided in this RFQ to the Applicant(s) is on a wide range of matters, some of which depends as upon interpretation of law. The information given is not intended to be an exhaustive account of statutory requirements and should not be regarded as a complete or authoritative statement of law. None of the Contracting Authority, its employees, or advisors accepts any responsibility for the accuracy or otherwise t ap for any interpretation or opinion on law expressed herein. The Contracting Authority, its employees and ad- visors make no representation or warranty and shall have no liability to any person, including any Applicant or Bidder under any law, statute, rules or regulations or tort, principles of restitution or unjust enrichment Ad or otherwise for any loss, damages, cost or expense which may arise from or be incurred or suffered on account of anything contained in this RFQ or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the RFQ and any assessment, assumption, statement or information contained nt , therein or deemed to form part of this RFQ or arising in any way by the participation in this prequalification process. me The Contracting Authority, its employees or advisors, likewise accept no liability of any nature whether resulting from negligence or otherwise howsoever caused arising from reliance of any Applicant upon the statements contained in this RFQ. The Contracting Authority may in its absolute discretion, but without cu being under any obligation to do so, update, amend or supplement the information, assessment or as- sumptions contained in this RFQ. The issuance of this RFQ does not imply that the Contracting Authority is Do bound to select and shortlist prequalified Applications for Bid Stage or to appoint the selected Bidder for the Project and the Contracting Authority reserves the right to reject all or any of the Applications or Bids or otherwise discontinue the process without assigning any reason whatsoever. le The Applicant shall bear all its costs associated with or relating to the preparation and submission of its Application including but not limited to preparation, copying, postage, delivery fees, expenses associated mp with any demonstrations or presentations which may be required by the Contracting Authority or any other costs incurred in connection with or relating to its Application. All such costs and expenses will remain with the Applicant and the Contracting Authority shall not be liable in any manner whatsoever for the same or for Sa any other costs or other expenses incurred by an Applicant in preparation or submission of the Application, regardless of the conduct or outcome of the Bidding Process. Module 8 : Glossary 6 Sample Request for Qualification GLOSSARY Addendum or Addenda means addendum or addenda to the RFQ. Applicant means an interested single entity or Consortium which submits an Application to the Contracting Authority in accordance with provisions of this RFQ. Application means the document/s submitted by an Applicant to qualify to submit a bid for the Project. te Application Due Date means the date specified in Schedule 2 as the last date for submission of Applications. ria Bid means a proposal submitted by a Bidder for the Project. rop Bidder means a single entity or Consortium qualified to submit a Bid to the Contracting Authority. Bidding Documents means the RFP, the draft PPP Agreement, any Addenda or clarification issued by the pp Contracting Authority in accordance with the RFP and the PPP Agreement, and any other documents to be provided by the Contracting Authority. A Bidding Process is the two-stage bidding process – comprising of the Qualification Stage and Bid Stage – being followed by the Contracting Authority to award the Project to the Selected Bidder, the terms of which as are set out in Clauses 2.4 to 2.7 of this RFQ. Bid Stage is the second stage of the bidding process which involves the submission of Bids by shortlisted t bidders. ap Consortium means any combination of entities that have formed a consortium or association by fulfilling Ad the requirements set out in this RFQ, for the purpose of submitting an Application, and if shortlisted, submit a Bid for the implementation of the Project. nt , Consortium Agreement means the binding consortium agreement to be executed between Consortium Members in the form set out in Schedule 10. me Contracting Authority means any local/municipal government authority public, statutory corporation or other subnational agency. cu Control means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 50% of the voting shares of such person, or the power to appoint majority of Do the directors on the board of directors of such company or corporation and/or the power to direct the management and policies of such person by operation of law, agreement or otherwise and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person by operation of law, agreement or otherwise. le Government means the Government of ****. mp Lead Member in the context of a Consortium, means the Consortium Member nominated by the Consortium Members as the lead member with the rights and obligations as set out in this RFQ. Sa PPP means public-private partnership. PPP Agreement means the agreement to be executed between the Contracting Authority and the Selected thegpsc.org Bidder to implement the PPP project. Project Company means the special purpose company specifically formed and incorporated in [LOCATION] for the purpose of undertaking the Project pursuant to the PPP Agreement. | The World Bank RFP means Request for Proposals. Module 8 : Glossary 7 Sample Request for Qualification RFQ means this Request for Qualification document dated **** along with its Schedules, and Addenda, if issued. Successful Bidder means the Bidder selected by the Contracting Authority to award the Project following the completion of the Bidding Process. Tender Committee means the working group established by the Contracting Authority to carry out the PPP procurement. te ria rop A pp t as ap Ad nt , me cu Do le mp Sa Module 8 : Introduction 8 Sample Request for Qualification 1. INTRODUCTION A. Purpose of Issuing the RFQ The purpose of issuing the RFQ is to enable the Contracting Authority to qualify interested Applicants 1.1.  who wish to be involved in the PPP, by assessing whether the interested Applicants fulfill the Contracting Authority’s requirements as set out Section 3 of this RFQ. It is intended that the Qualification Stage and subsequent processes be conducted in a transparent 1.2.  te and open manner in order to ensure that the Contracting Authority’s objectives for initiating the PPP are achieved, and value for money objectives met. The qualification process will identify a shortlist of ria qualified Applicants, who will be asked to submit detailed functional and price information in a later bid process. rop The objectives of the RFQ include ensuring that those interested Applicants who successfully qualify 1.3.  have: (a) the financial prerequisites; and (b) an established track record in the development and operation of a similar project so as to enable the interested applicant to successfully manage the PPP. pp B. Project Background A The Contracting Authority is seeking private sector participation to improve [SERVICE] in the 1.4.  [LOCATION] through [DESCRIPTION OF FACILITIES] on a PPP basis. as The Service Provider shall undertake: [indicate scope – i.e. design, construction and maintenance of 1.5.  new facilities / operation and maintenance of existing facilities, etc]. t ap 1.6. Further details on the PPP Project may be found in Schedule 1. Ad C. Brief Description of the Bidding Process The Contracting Authority has adopted a two-stage process (collectively referred to as the “Bidding 1.7.  nt , Process”) for selection of the Successful Bidder for award of the PPP Project. The first stage (the “Qualification Stage”) of the process is the qualification / shortlisting of interested 1.8.  me parties/consortia through their submission of an Application in accordance with the provisions of this RFQ (the “Applicant”). In this stage, Applicants are required to furnish the information specified in this RFQ. The Contracting Authority shall be entitled to disqualify an Applicant in accordance with the cu aforesaid documents at any stage of the Bidding Process. At the end of this stage, the Contracting Authority shall announce a short-list of prequalified Applicants who shall be eligible for participation Do in the second stage of the Bidding Process (the “Bid Stage”) comprising Request for Proposals (the “Request for Proposals” or “RFP”). The second stage of the process is the bid proper or the Bid Stage. The shortlisted Applicants 1.9.  le / Bidders will be called upon to submit their proposals (the “Bids”) in respect of the project, in accordance with the RFP and other documents to be provided by the Contracting Authority mp (collectively the “Bidding Documents”). Bidders will be required to deposit, along with its Bid, a refundable bid security which will be specified in the RFP. Sa Further and other details of the process to be followed at the Bid Stage and the terms thereof will be 1.10.  indicated in the RFP. thegpsc.org | The World Bank Module 8 : Instructions to Applicants 9 Sample Request for Qualification 2. INSTRUCTIONS TO APPLICANTS A. General Requirements 2.1 Eligibility of Applicants An Applicant shall submit only 1 (one) Application for shortlisting either individually or as a 2.1.1  Member of a Consortium. An Applicant applying individually or as a member of a Consortium shall not be entitled to submit another Qualification either individually or as a member of any te Consortium, as the case may be. ria An Applicant may be a natural person, private entity, or any combination of them with a formal 2.1.2  intent to enter into an agreement or under an existing agreement in the form of a Consortium. A Consortium shall be eligible for consideration subject to the conditions set out in this RFQ. rop The Application should be furnished in the formats specified in this RFQ and signed by the 2.1.3  Applicant’s authorized signatory. The Applicants should note that the formats specified in pp the RFQ have been provided for the convenience of the Applicants and may not exhaustively enumerate or describe various information required to be provided by the Applicants under this A RFQ. The Applicants should ensure that all the information required to be provided by them under this RFQ is included in their Application whether or not a particular format specified herein makes provision for submission of such information and/or whether or not a format for submission as of such information is incorporated in this RFQ. The Applicant should submit a power of attorney in accordance with Schedule 8, authorizing the 2.1.4  t ap signatory of the Bid to commit the Bidder. In case the Applicant is a Consortium, the Members thereof should furnish a power of attorney in 2.1.5  Ad favour of the Lead Member in accordance with Schedule 9. Any condition or qualification or any other stipulation contained in the Application which is 2.1.6  nt , inconsistent with the terms of this RFQ may render the Application liable to rejection as a non- responsive Application. me The Application and all communications in relation to or concerning this RFQ and the Application 2.1.7  shall be in the English language. Supporting documents and printed literature furnished by the Applicant with the Application may be in any other language provided that they are accompanied cu by appropriate translations of the pertinent passages in the English language, duly authenticated and certified by the Applicant. Supporting materials which are not translated into English may not Do be considered. For the purpose of interpretation and evaluation of the Application, the English language translation shall prevail. This RFQ and all attached or other documents, are and shall remain the property of the 2.1.8  le Contracting Authority and are made available to the Applicants solely for the purpose of preparation and submission of an Application. Applicants are to treat all information as strictly mp confidential and shall not use it for any purpose other than for preparing and submitting their Application. Sa Conflict of Interest: An Applicant shall not have a conflict of interest that affects the Bidding 2.1.9  Process. Any Applicant found to have a conflict of interest shall be disqualified. Determining the presence of Conflict of Interest shall be the prerogative of the Contracting Authority. An Applicant may be considered to have a conflict of interest that affects the Bidding Process, if: Such Applicant (or any constituent thereof) and any other Applicant (or any constituent (a)  thereof) have common controlling shareholders or other ownership interest; provided that this qualification shall not apply in cases where the direct or indirect shareholding of an Applicant (or any constituent thereof) is less than **** % of the paid up and subscribed capital of the other Applicant (or any constituent thereof) and it does not have Control of the Applicant; or (b) a consortium member or any constituent of such Applicant is also a consortium constituent of another Applicant; or Module 8 : Instructions to Applicants 10 Sample Request for Qualification such Applicant (or any constituent thereof) receives or has received any direct or indirect (c)  subsidy from any other Applicant (or any constituent thereof), or has provided any such subsidy to any other Applicant (or any constituent thereof); or such Applicant (or any constituent thereof) has the same legal representative for purposes of (d)  the Application as any other Applicant (or any constituent thereof); or such Applicant (or any constituent thereof) has a relationship with another Applicant (or any (e)  constituent thereof), directly or through common third parties, that puts them in a position to have access to each others’ information about, or to influence the Application of either or each other; or te such Applicant (or any constituent thereof) has participated as a consultant to the (f)  Contracting Authority in the preparation of any documents, design or technical specifications ria of the PPP Project, or Any legal, financial or technical adviser of the Contracting Authority in relation to the PPP (g)  Project is engaged by the Applicant (or any constituent thereof) in any manner for matters rop related to or incidental to the PPP Project. 2.2 Change in composition of the Consortium pp Change in the composition of a Consortium will not be permitted by the Contracting Authority 2.2.1  after the Submission of Application Due Date. A The Consortium shall submit a Power of Attorney and a Consortium Agreement following 2.2.2  as Schedule 9 and Schedule 10 respectively along with the Application on or before the Submission of Application Due Date. 2.2.3 The Consortium Agreement shall, inter alia: t ap (a) convey the intent to form a Project Company with shareholding/ownership equity commitments in accordance with this RFQ; Ad (b) clearly outline the proposed roles and responsibilities of each Member and the Lead Member; and (c) fulfil the minimum shareholding structure indicated in Clauses 2.2.4 and 2.2.5 below. nt , The Lead Member of the Consortium shall hold at least **** % of the subscribed and paid up 2.2.4  equity of the Project Company for **** years after the Completion Date, and at least **** % for the me following **** years. [Each member of the Consortium shall hold at least **** % of the subscribed and paid up equity 2.2.5  cu of the Project Company for **** years after the Completion Date, and at least **** % for the following **** years.] Do 2.3 Verification of Information by Applicants 2.3.1 It shall be deemed that by submitting the Application, the Applicant has: le (a) made a complete and careful examination of the RFQ; (b) agreed to be bound by the undertakings provided by it under and in terms hereof; and mp (c) acknowledged that it does not have a Conflict of Interest. The Contracting Authority, its employees, and consultants shall not be liable for any omission, 2.3.2  Sa mistake or error in respect of any of the above or on account of any matter or thing arising out of or concerning or relating to the RFQ or the Bidding Process, including any error or mistake therein or in any information or data given by or on behalf of the Contracting Authority. 2.4 Prequalification Conference thegpsc.org A prequalification conference of the Applicants shall be convened at the designated date, time 2.4.1  and place. Only duly authorized representatives of the Applicants shall be allowed to participate | in the pre- qualification conference. The World Bank During the course of the prequalification conference, the Applicants will be free to seek 2.4.2  clarifications and make suggestions for consideration of the Contracting Authority. The Module 8 : Instructions to Applicants 11 Sample Request for Qualification Contracting Authority shall endeavour to provide clarifications and such further information as it may, in its sole discretion, consider appropriate for facilitating a fair, transparent and competitive Qualification Process. 2.5 Verification and Disqualification The Contracting Authority reserves the right to verify all statements, information and documents 2.5.1  submitted by the Applicant in response to this RFQ and the Applicant shall, when so required by the Contracting Authority, make available all such information, evidence and documents as te may be necessary for such verification. Any such verification or lack of such verification by the Contracting Authority shall not relieve the Applicant of its obligations or liabilities hereunder nor ria will it affect any rights of the Contracting Authority thereunder. 2.5.2 The Contracting Authority reserves the right to reject any Application if: rop (a) at any time, a material misrepresentation is made or uncovered; or (b) the Applicant does not provide, within the time specified by the Contracting Authority, the supplemental information sought by the Contracting Authority for evaluation of the pp Application, or (c) a Conflict of Interest as discussed in Clause 2.1.9 persists. A Such misrepresentation / improper response shall lead to the disqualification of the Applicant. 2.5.3  If the Applicant is a Consortium, then the entire Consortium and each Member shall be as disqualified/ rejected. B. Documents t ap This RFQ comprises the disclaimer set forth hereinabove, the contents as listed below, and will 2.6  additionally include any addendum issued in accordance with Clause 3.9 and any clarifications and Ad interpretations issued in accordance with Clause 3.8. nt , Request for Qualification Schedules Section 1. Introduction Schedule 1. Project Information me Section 2. Instructions to Applicants Schedule 2. Bidding Process Timelines cu Section 3. Evaluation Criteria Schedule 3. Letter of Application Schedule 4. Applicant Information Do Schedule 5. Consortium Member Information le Schedule 6. Financial Capacity mp Schedule 7. Technical Capacity Schedule 8. Power of Attorney for Signing of Application and Bid Sa Schedule 9. Power of Attorney for Lead Member of Consortium Schedule 10. Consortium Agreement Schedule 11. Declaration of Undertaking Module 8 : Instructions to Applicants 12 Sample Request for Qualification 2.7 Clarifications Applicants requiring any clarification on the RFQ may notify the Contracting Authority by e-mail 2.7.1  at the following e-mail address: **** Queries must be received by the Contracting Authority on or before the last date for receipt of 2.7.2  queries indicated in Schedule 2. The Contracting Authority shall endeavour to respond to the questions raised or clarifications 2.7.3  te sought by the Applicants within fifteen (15) days of receipt of such questions or clarifications. The Contracting Authority will notify Applicants by e-mail that queries and its responses have been ria posted in the website. The Contracting Authority will organize the clarification response procedure. The queries and its 2.7.4  rop responses will be updated in the website of the Contracting Authority. The Contracting Authority may notify Applicants by e-mail that responses to queries have been posted at the Contracting Authority’s website. pp The Contracting Authority may also on its own initiative, if deemed necessary, issue 2.7.5  interpretations and clarifications. All clarifications and interpretations issued by the Contracting A Authority shall be deemed to be part of the RFQ. Verbal clarifications and information given by the Contracting Authority or its employees or representatives shall not be binding on the as Contracting Authority. Should the Contracting Authority deem it necessary to amend the RFQ as a result of a 2.7.6  t clarification, it shall do so following the procedure in Clause 2.8 below. ap 2.8 Amendment Ad At any time prior to the deadline for submission of Application, the Contracting Authority may, 2.8.1  for any reason, whether at its own initiative or in response to clarifications requested by an nt , Applicant, modify the RFQ by the issuance of addenda. Any Addendum thus issued will be uploaded in the website of the Contracting Authority. The 2.8.2  me Contracting Authority may notify Applicants about the issuance of an Addendum by e-mail. In order to afford the Applicants a reasonable time for taking an Addendum into account, or for 2.8.3  cu any other reason, the Contracting Authority may, at its own discretion, extend the deadline for submission of the Application. Do C. Preparation and Submission of Application 2.9 Format and Signing of Application le The Applicant shall provide in its Application all the information sought under this RFQ. The 2.9.1  mp Contracting Authority will evaluate only those Application that are received in the  required formats and complete in all respects. Incomplete and /or conditional Application shall be rejected. Sa The Applicant shall prepare one original set of its Application (together with originals/copies 2.9.2  of documents required to be submitted along therewith) and clearly marked “ORIGINAL”. In addition, the Applicant shall submit one copy of the Application marked “COPY”. In the event of thegpsc.org any discrepancy between the original and the copy, the original shall prevail. The Application shall be signed by the authorized signatory of the Applicant who shall also 2.9.3  initial each page, in blue ink. In case of printed and published documents, only the cover shall | The World Bank be initialed. All the alterations, omissions, additions or any other amendments made to the Application shall be initialed by the person signing the Application. The Application shall contain page numbers. Module 8 : Instructions to Applicants 13 Sample Request for Qualification 2.10 Contents of the Application 2.10.1 The Application shall be marked as follows: “APPLICATION FOR THE [NAME OF THE PROJECT]” and shall clearly indicate the name and address of the Applicant. The documents constituting the Application submission shall include the following 2.10.2  accomplished forms: (a) The Letter of Application (Schedule 3); te (b) The Applicant Information (Schedule 4) including attachments; (c) If a consortium, the Consortium Member Information to be accomplished by each ria member of the consortium (Schedule 5) including attachments; (d) The Applicant’s Financial Capacity (Schedule 6) including attachments; (e) The Applicant’s Technical Capacity (Schedule 7) including attachments; rop (f) The Power of Attorney for Signing of Application (Schedule 8); (g) If a consortium, the Power of Attorney for Lead Member of Consortium (Schedule 9); (h) If a consortium, the Consortium Agreement; and pp (i) The Declaration of Undertaking. 2.11 Sealing and Marking of Application A 2.11.1 The Application shall be sealed it in an envelope marked with the following: “APPLICATION as FOR QUALIFICATION FOR [NAME OF PPP PROJECT].” The Application shall be addressed to: 2.11.2  t ap ATTENTION: [Name of Head of Contracting Authority’s Tender Committee] ADDRESS: [Address of Contracting Authority] Ad If the envelopes are not sealed and marked as instructed above, the Contracting Authority 2.11.3  assumes no responsibility for the misplacement or premature opening of the contents of the nt , Application submitted. 2.12 Application Submission Deadline me 2.12.1 Applications must be received by the Contracting Authority at the address specified in Schedule 2 no later than the Application Due Date. cu The Application must be hand delivered as prescribed by the Contracting Authority. The 2.12.2  Contracting Authority shall, on request, provide the Applicant with a receipt showing the date Do and time when the Application was received. The Contracting Authority may, at its discretion, extend the Application Due Date by amending 2.12.3  le the RFQ in accordance with Clause 2.8, in which case all rights and obligations of the Contracting Authority and Applicants previously subject to the deadline shall thereafter be mp subject to the deadline as extended. Applications received by the Contracting Authority after the specified deadline for submission 2.12.4  Sa shall be declared late and shall not be eligible for consideration and shall be returned unopened to the Applicant. 2.13 Modifications / Substitution / Withdrawal of Applications 2.13.1 The Applicant may modify, substitute or withdraw its Application after submission, provided that written notice of the modification, substitution or withdrawal is received by the Contracting Authority prior to Application Due Date. No Application shall be modified, substituted or withdrawn by the Applicant on or after the Application Due Date. The modification, substitution or withdrawal notice shall be prepared, sealed, marked, and 2.13.2  Module 8 : Instructions to Applicants 14 Sample Request for Qualification delivered in accordance with this Clause 2.11, with the envelopes being additionally marked “MODIFICATION”, “SUBSTITUTION” or “WITHDRAWAL”, as appropriate. Any alteration/ modification in the Application or additional information supplied subsequent to 2.13.3  the Application Due Date, unless the same has been expressly sought for by the Contracting Authority, shall be disregarded. D. Evaluation Process te 2.14 Opening and Evaluation of Applications ria 2.14.1 The Tender Committee shall open the Applications exactly one hour after the deadline for submission, at the place specified in Schedule 2 and in the presence of the Applicants who choose to attend. rop 2.14.2 Applications for which a notice of withdrawal has been submitted shall not be opened. pp Upon the opening of Applications, the Tender Committee shall determine whether each 2.14.3  Application is responsive to the requirements of the RFQ. An Application shall be considered responsive only if it: A (a) contains all the documents required to be submitted by this RFQ; (b) is received on or before the Submission of Application Due Date, including any as extension thereof; (c) is signed, sealed and marked as stipulated in this RFQ; and (d) does not contain any condition or qualification. t ap 2.14.4 Only applications that are deemed to be responsive will be evaluated and shortlisted. Ad The Tender Committee reserves the right to reject any Application which is non-responsive and 2.14.5  no request for alteration, modification, substitution or withdrawal shall be entertained by the Tender Committee in respect of such Application. nt , Only responsive Applications that fulfil the following may be shortlisted: 2.14.6  (a) Contains all the required information stipulated in this RFQ; me (b) Submitted documents in the format prescribed by this RFQ; and (c) Hurdled the minimum qualification requirements stipulated in Section 3 of this RFQ. cu 2.15 Confidentiality 2.15.1 Information relating to the examination, clarification, evaluation, and recommendation for the Do short-listed Applicants shall not be disclosed to any person who is not officially concerned with the process or is not a retained professional advisor advising the Contracting Authority in relation to or matters arising out of, or concerning the Bidding Process. le The Contracting Authority will treat all information, submitted as part of the Application, in 2.15.2  mp confidence and will require all those who have access to such material to treat the same in confidence. Sa The Contracting Authority may not divulge any such information unless it is directed to do so by 2.15.3  any statutory body that has the power under law to require its disclosure or to enforce or assert any right or privilege of the statutory body and/or the Contracting Authority. thegpsc.org E. Qualification and Bidding After the evaluation of Applications, the Tender Committee will announce a shortlist of prequalified 2.16  Applicants (‘Bidders’) who will be eligible for participation in the Bid Stage. At the same time, the | Tender Committee will notify the other Applicants that they have not been shortlisted. The World Bank Module 8 : Instructions to Applicants 15 Sample Request for Qualification Only shortlisted Applicants shall be issued the RFP and allowed to submit their proposals for the 2.17  PPP Project. All documents and other information supplied by the Contracting Authority or submitted by an 2.18  Applicant to the Contracting Authority shall remain or become the property of the Contracting Authority. Applicants are to treat all information as strictly confidential and shall not use it for any purpose other than for preparation and submission of their Application. The Contracting Authority will not return any Application or any information provided along therewith. te 2.19 Fraudulent and Corrupt Practices ria 2.19.1 It is the Government’s policy to require that Contracting Authorities (including beneficiaries of public funds), as well as applicants/suppliers/contractors under PPP or publicly funded contracts, observe the highest standard of ethics during the procurement and execution of rop such contracts. In pursuit of this policy, the Government defines, for the purposes of this provision, the terms 2.19.2  pp set forth below as follows: (a)  “corrupt practice” means the offering, giving, receiving, or soliciting, of anything of value to influence the action of a public official in the Bidding Process (for the avoidance of A doubt, offering of employment to or employing or engaging in any manner whatsoever, directly or indirectly, any official of the Contracting Authority who is or has been as associated in any manner with the Bidding Process, at any time during the Bidding Process and within one year from the date of the conclusion of such process, shall be deemed to constitute influencing the actions of a person connected with the Bidding t Process), and includes inter alia, bribery, extortion or coercion, which involves threats of ap injury to person, property or reputation; (b)  “fraudulent practice” means a misrepresentation, omission, or suppression of facts, or Ad disclosure of incomplete facts, in order to influence the Bidding Process; (c)  “coercive practice” means impairing or harming or threatening to impair or harm, directly or indirectly, any person or property to influence any person’s participation or action in the nt , Bidding Process; and (d)  “undesirable practice” means (i) establishing contact with any person connected with or employed or engaged by the Contracting Authority or member of the Tender Committee me with the objective of canvassing, lobbying or in any manner influencing or attempting to influence the Bidding Process; or (ii) having a Conflict of Interest. cu 2.19.3 Should the Applicant commit any of the foregoing, the Tender Committee is mandated to: (a) Reject the recommendation for the shortlisting of the Applicant; and (b) Declare the Applicant ineligible, for a period of ten years, to be awarded a PPP contract. Do The Government reserves the right, where the Applicant has been found by a national or international 2.20  entity to have engaged in corrupt or fraudulent practices, to declare such Applicant ineligible, for a le period of ten years, to be awarded a PPP contract or any publicly funded contract. mp F. Miscellaneous The Bidding Process shall be governed by, and construed in accordance with, the laws of 2.21  Sa [LOCATION] and the Courts of [LOCATION] shall have exclusive jurisdiction over all disputes arising under, pursuant to and/or in connection with the RFQ and/or the Bidding Process. The Contracting Authority, in its sole discretion and without incurring any obligation or liability or 2.22  assigning any reason, reserves the right, at any time, to: (a) suspend, withdraw and/or cancel the Bidding Process and/or amend and/or supplement the Bidding Process or modify the dates or other terms and conditions relating thereto; (b) consult with any Applicant in order to receive clarification or further information; (c) retain any information and/or evidence submitted to the Contracting Authority by, on behalf of, and/or in relation to any Applicant; Module 8 : Instructions to Applicants 16 Sample Request for Qualification (d) independently verify, disqualify, reject and/or accept any and all submissions or other information and/or evidence submitted by or on behalf of any Applicant; (e) amend, modify or reissue the RFQ or any part thereof; and/or (f) accept or reject any or all of the Applications. An Applicant who claims to have suffered or that may suffer any loss or injury as a result of breach 2.23  of a duty imposed on a Contracting Authority or an approving authority in the course of the Bidding Process may seek a review by the appropriate authority in accordance with applicable law. te It shall be deemed that by submitting the Application, the Applicant agrees and releases the 2.24  Contracting Authority, its employees, agents and advisers, irrevocably, unconditionally, fully and finally ria from any and all liability for claims, losses, damages, costs, expenses or liabilities in any way related to or arising from the exercise of any rights and/or performance of any obligations hereunder, pursuant hereto and/or in connection herewith and waives any and all rights and/or claims it may have in this rop respect, whether actual or contingent, whether present or future. A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 8 : Evaluation Criteria 17 Sample Request for Qualification 3. EVALUATION CRITERIA 3.1 The following criteria will be used in the evaluation of the Applicant’s submission: (a) General requirements; (b) Financial capacity; and (c) Technical experience. 3.2  General Requirements  The general requirements are clearly stated in Clause 2.1. Whether the Applicant has met the general requirements will be decided upon a review of the following documents: (a) Copy of a registration document which certifies that the legal entity or consortium member is te duly incorporated; (b) Authorisation of Applicant’s representative; and ria (c)  If there is a case mentioned in Clause 2.1, the Applicant must notify the Contracting Authority’s Tender Committee and present the decision made by the court or competent authority. rop 3.3  Financial Capacity  The Applicant must demonstrate that it has a Net Worth of at least [AMOUNT] ([AMOUNT in words] only) at the close of the immediately preceding financial year. pp 3.4 Technical Capacity A The Applicant must demonstrate that it possesses the following experience:1 as Indicator Schedules E xperience in the Design of 1.  t Experience in the design of similar infrastructure projects demonstrated through at ap least two contracts undertaken in the last ten years for projects of a similar type, size Similar Infrastructure Projects and complexity [indicate examples and minimum project size]. Ad Experience in the construction of similar infrastructure projects demonstrated through  xperience in the Construction 2. E at least two contracts undertaken in the last ten years for projects of a similar type, size of Similar Infrastructure Projects and complexity [indicate examples and minimum project size]. nt , Experience in the operation & maintenance of similar infrastructure projects E xperience in the Operations 3.  demonstrated through at least two contracts undertaken in the last ten years for & Maintenance of Similar me projects of a similar type, size and complexity [indicate examples and minimum Infrastructure Projects project size]. cu Do le mp Sa 1 n the case of a I Consortium, the Applicant, through its Consortium members, must demonstrate that it collectively possesses all of the required technical experience. The Indicators may vary and may be further expanded based on the requirements of the PPP Project. Module 8 : Schedule 1: Project Information 18 Sample Request for Qualification Schedule 1: Project Information2 1.1. The Contracting Authority has, as part of its [insert development strategy] 3, identified the PPP opportunity at [insert location]. t is intended that by the Contracting Authority entering into the PPP with a private party, the 1.2. I Contracting Authority may be able to [insert the purpose for entering into PPP]. It is intended that the project will be implemented by the private party in compliance with any terms and conditions stipulated in the PPP Agreement. te  he Contracting Authority embarked on the project after conducting feasibility studies in order to 1.3. T ria determine whether it could proceed with the project and whether the project may be viable.  nder the project, the private partner will build an asset by using its own funds or funds it has raised, 1.4. U rop transfer the possession as specified in the PPP Agreement, and transfer it to local ownership upon the expiration of the PPP Agreement. The payment to the private partner will comprise of [user payments from users of the PPP project]; [and/or] [availability payments from the Contracting Authority]. pp 2  ll numbered footnotes A in Schedule 1 are 1.5. [DESCRIPTION OF THE ASSET]4 A for guidance of the Contracting Authority 1.6. [SITE REVIEW] 5 and should be omitted as prior to issue of the RFQ. 3 All project specific provisions have been enclosed in square parenthesis and may be t modified, as necessary, ap before issuing the RFQ for the project. The Ad square parenthesis should be removed after carrying out the required modifications. 4  The Contracting nt , Authority must provide relevant details regarding the asset and me the possible product or service categories which could be provided through the cu use of the asset. The Contracting Authority will be heavily guided by its feasibility study Do as to what information is relevant. The Contracting Authority must provide sufficient information so le as to allow interested parties to consider whether they would wish mp to be involved in the PPP. 5 The Contracting  Authority must provide a summary on the Sa site information and on issues that were identified during the feasibility phases, such as: legal, environmental, stakeholders, personnel thegpsc.org and human resources, infrastructure, equipment, performance standards, transfer of risk and other information | identified as being The World Bank relevant through the inception and feasibility phases. Module 8 : Schedule 2: Bidding Process Timelines 19 Sample Request for Qualification Schedule 2: Bidding Process Timelines The Contracting Authority shall endeavor to adhere to the following timelines: Estimated Date, Time, and Event Description Location (if applicable) QUALIFICATION STAGE te Last date for receipt of queries ria Prequalification conference rop Contracting Authority’s response to queries Submission of Application Due Date pp Opening of Applications Announcement of Short List A BID STAGE as Issuance of RFP to Qualified Bidders Last date for receiving queries t (to be finalized) ap Pre-bid conference (to be finalized) Ad Submission of bidders comments on draft PPP Agreement (to be finalized) Contracting Authority responses to queries by and, if necessary, (to be finalized) issue a revised and amended PPP Agreement nt , Bid Due Date (to be finalized) me Opening of Technical Proposals (to be finalized) Announcement of Qualified Technical Proposals (to be finalized) cu Opening of Financial Proposals (to be finalized) Do Selection and Announcement of Successful Bidder (to be finalized) Approval of Successful Bidder (to be finalized) le Finalisation of matters to permit signing of PPP Agreement (to be finalized) mp Sa Module 8 : Schedule 3: Letter of Application 20 Sample Request for Qualification Schedule 3: Letter of Application [On the letterhead of the Applicant / Lead Member] Original or Copy number: Date: To: [Contracting Authority’s Name] [Insert Contracting Authority’s Address] Re: Application for Qualification for the [name of project] te Dear Madam/Sir, ria With reference to your RFQ dated [DATE], I/we, having examined the document and understood its contents, hereby submit my/our Application for the aforesaid Project. We hereby confirm that we/our members in the Consortium satisfy the terms and conditions laid out in the RFQ document. We have agreed rop that _____________ [insert member’s name] will act as the Lead Member of our consortium, and that ______________ [insert individual’s name] will act as our representative/ will act as the representative of the consortium on its behalf* and has been duly authorized to submit the Application.6 pp The Application is being submitted for the express purpose of qualifying as a shortlisted Bidder for the A aforesaid Project. The Application is unconditional and unqualified. I/We hereby certify/declare that: as 1. All the required accompanying documents are complete and are all included in this Application; 2. All information provided in the Application are true and correct; t ap 3. Nothing has been omitted which renders such information misleading; 4. All documents accompanying such Application are true copies of their respective originals; 5.  I/we shall make available to the Contracting Authority any additional information it may find necessary Ad or require to supplement or authenticate the submissions; 6. I/we will abide by all the terms and conditions of the RFQ; 7.  I/We have examined and have no reservations to the RFQ, including any addendum issued by the nt , Contracting Authority; 8.  In the last 3 years, I/we/any of the Members have neither failed to perform on any contract, as evidenced by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or me arbitration award, nor been expelled from any project or contract by any public authority nor have had any contract terminated by any public authority for breach by [us/any of the Members]; 9.  I/we are not barred by the Government, or any public agencies from participating in similar projects as cu of [Submission of Application Due Date]; 10. I/We do not have any Conflict of Interest; Do 11. I/We have not directly or indirectly or through an agent engaged or indulged in any corrupt practice, fraudulent practice, coercive practice, undesirable practice or restrictive practice, as defined in this RFQ, in respect of any tender or request for proposal issued by or any agreement entered into with the Contracting Authority or any other public sector enterprise or any government, at central or state level; le 12. I/we have taken steps to ensure that in conformity with the provisions of this RFQ, no person acting for me/us or on my/our behalf has engaged or will engage in any corrupt practice, fraudulent practice, mp coercive practice, undesirable practice or restrictive practice; 13. You may cancel the Bidding Process at any time and that you are neither bound to accept any Bid that you may receive, without incurring any liability to the Applicants; Sa thegpsc.org | The World Bank 6  lease strike out if not P applicable. Module 8 : Schedule 3: Letter of Application 21 Sample Request for Qualification 14. I/we/any Member, am/are not a member of a/any other Consortium applying for the Project; 15. I/we or any Member of our consortium have not been convicted by a court of law or indicted or adverse orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community; 16. In regard to matters relating to security and integrity of the country, I/we have not been charged by any government agency or convicted by a court of law; 17. No investigation by a regulatory authority is pending either against me/us/any Member or against our chief executive officer or any of my/our directors/managers/employees; te I/We believe that I/we satisfy(ies) and meet(s) all the requirements as specified in this RFQ and are/is qualified to submit an Application. ria Respectfully, rop (Name, designation, and signature of the authorised representative) pp For and on behalf of: (name and seal of the Applicant / Lead Member of the Consortium)   A t as ap Ad nt , me cu Do le mp Sa Module 8 : Schedule 4: Application Information 22 Sample Request for Qualification Schedule 4: Applicant Information7 Application Information Applicant’s legal name: te In case of Consortium, legal name of each member: ria Applicant’s actual or intended rop country of constitution: Applicant’s actual or intended year pp of constitution: A Applicant’s legal address in country of constitution: as Applicant’s authorized representative information (name, designation, address, Telephone/ Fax numbers, E-mail): t ap Attached are copies of original documents of: Ad 1. Notarized documents of constitution of the legal entity named above 2. Letter of authorization to represent the applicant nt , 3. Letter of intent to form Consortium or Consortium agreement. me cu Do le mp Sa thegpsc.org 7 T  his section must be completed by the authorized consortium | representative, or if The World Bank the applicant is a sole organization, by that organization Module 8 : Schedule 5: Consortium Member Information 23 Sample Request for Qualification Schedule 5: Consortium Member Information8 Consortium Member Information Consortium member’s legal name: te Consortium member’s actual or intended country of constitution: ria Consortium member’s actual or rop intended year of constitution: Consortium member’s legal pp address in country of constitution: Consortium member’s authorized A representative information (name, designation, address, Telephone/ as Fax numbers, E-mail): Attached are copies of original documents of: t 1. Notarized documents of constitution of the legal entity named above ap 2. Letter of authorization to represent consortium member Ad 3. Letter of intent to form Consortium or Consortium agreement. nt , me cu Do le mp Sa 8  his section is to be T completed by each consortium member. Module 8 : Schedule 6: Financial Capacity 24 Sample Request for Qualification Schedule 6: Financial Capacity9 [On the letter head of the Applicant] (In [CURRENCY]) Applicant Type Member Code10 Net Worth te Year 1 ria Single entity Applicant rop Consortium A pp Name & address of Bidder’s Banks: as Instructions: The Applicant/Members of the Consortium will attach copies of the balance sheets, financial statements t ap and audited annual reports for 5 years preceding the Application Due Date. The financial statements will: 1. reflect the financial situation of the Applicant; 2. be audited by a statutory auditor; Ad 3. be complete, including all notes to the financial statements; and 4. correspond to accounting periods already completed and audited (no statements for partial periods will be requested or accepted, if no audited results are available for such partial periods). nt , “Net Worth” shall mean (Subscribed and Paid-up Equity + Reserves) less (Revaluation reserves + miscellaneous expenditure not written off + reserves not available for distribution to equity shareholders). me Year 1 will be the latest completed financial year, preceding the Application Date. The Applicant will provide an Auditor’s Certificate specifying the Net Worth of the Applicant and also cu specifying the methodology adopted for calculating such Net Worth. 9  his section must be T Do completed by the If the annual accounts for the latest financial year are not audited, the Applicant will provide the provisional authorized consortium annual accounts for the latest financial year. The provisional annual accounts will be accompanied by an representative, or if undertaking by the Applicant to the effect that: if it is chosen as a Bidder, the Bidder will submit the audited the applicant is a sole annual accounts for the latest financial year during the RFP process; and such audited annual accounts le organization, by that organization. shall not vary by more than 5% from the provisional accounts submitted by it with its Application. Member Code will 10    mp indicate NA for Not Applicable in case of a single entity Applicant. For other members, the Sa following abbreviations are suggested viz. LM means Lead Member, TM means Technical Member, FM means Financial Member, OMM thegpsc.org means Operation & Maintenance Member; and OM means Other Member. In case the project relates to | an Associate of the The World Bank Applicant or its Member, write “Associate” along with Member Code. Module 8 : Schedule 7: Technical Capacity 25 Sample Request for Qualification Schedule 7: Technical Capacity Name of Prospective Applicant: Name of entity fulfilling the requirement: [indicate whether Prospective Bidder / Consortium Member / Design & Relationship to Prospective Bidder: Engineering Contractor] te Project List ria rop Project Title: Location: pp Project Size: (provide indicative investment requirement) A Description of the Project: as Date of Contract: Date of Commissioning: t Scope of Work: ap Client/Project Owner: (indicate client’s Ad contact details) The above table should contain the summary details that need to be provided for the projects that the nt , Applicant wishes to showcase as relevant experience (i.e. design & engineering, construction, operation, maintenance, etc). me In case various aspects of the project are to be undertaken by different entities in a Consortium, separate forms need to be accomplished for each (i.e. one form for the entity nominated to fulfill design & engineering experience; separate form if a different entity is nominated by the Applicant to fulfill cu construction, etc). Do For each project showcased, a certification from the client should be enclosed. The certificate should at least state the following: (1) Name of project and scope of work; (2) date of award and commercial operations date; and (3) current status of the project.   le mp Sa Module 8 : Schedule 8: Power of Attorney for Signing of Application 26 Sample Request for Qualification Schedule 8: Power of Attorney for Signing of Application I, (name of the company) incorporated under applicable laws and having its registered office at [__] “Company”, do hereby irrevocably constitute, nominate, appoint and authorize Mr. /Ms (name), presently residing at [indicate business address], who is presently employed with us and holding the position of [designated position], as our true and lawful attorney (hereinafter referred to as the “Attorney”) to do in our name and on our behalf, all such acts, deeds, matters and things as are necessary or required in connection with or incidental to submission of our Application for prequalification for the [Title of Project] (the ‘Project’) proposed or being developed by the Contracting Authority including but not limited to signing te and submission of all applications and other documents and writings, participate in prequalification and other conferences and providing information/responses to the Contracting Authority, and generally dealing ria with the Contracting Authority in all matters in connection with or relating to or arising out of our Application for the said Project. rop We hereby agree to ratify and confirm all acts, deed, matters and things lawfully done or caused to be done by our said Attorney pursuant to and in exercise of the powers conferred by this Power of Attorney and that all acts, deeds and things done by our said Attorney in exercise of the powers hereby conferred shall and pp shall always be deemed to have been done by us. A Capitalised terms not defined herein shall have the meaning assigned to them under the RFQ. IN WITNESS WHEREOF, …………………………., THE ABOVE NAMED PRINCIPAL HAVE EXECUTED THIS as POWER OF ATTORNEY ON THIS ……… DAY OF …………., 20** For ………………………….. t (Signature) ap (Name, Title and Address) Witnesses: Ad (Notarised) Accepted …………………………… (Signature) nt , (Name, Title and Address of the Attorney)11 me cu Do 11  he mode of execution T of the Power of Attorney should be in accordance with the procedure, if le any, laid down by the applicable law and the charter documents of mp the executant(s) and when it is so required, the same should be under common seal Sa affixed in accordance with the required procedure. Wherever required, the Applicant should submit for verification the extract of thegpsc.org the charter documents and documents such as a resolution/ power of attorney in favour of the person executing this | Power of Attorney for The World Bank the delegation of power hereunder on behalf of the Applicant. Module 8 : Schedule 9: Power of Attorney for Lead Member of Consortium 27 Sample Request for Qualification Schedule 9: Power of Attorney for Lead Member of Consortium Whereas, the Members of the Consortium are interested in bidding for the Project and implementing the [Title of Project] (the ‘Project’) in accordance with the terms and conditions of the Request for Qualification (RFQ) and other connected documents in respect of the Project. Whereas, it is necessary for the Members of the Consortium to designate one of them as the Lead Member with all necessary power and authority to do for and on behalf of the Consortium, all acts, deeds and things as may be necessary in connection with the Consortium’s prequalification for the Project. te NOW THIS POWER OF ATTORNEY WITNESSES THAT; ria We, M/s. __________________________(Lead Member) and M/s __________________ (the respective names and addresses of the registered office) do hereby designate M/s. ______________________ rop ___________ being one of the Members of the Consortium, as the Lead Member of the Consortium, to do on behalf of the Consortium, all or any of the acts, deeds or things necessary or incidental to the prequalification of the Consortium and submission of its Application for the Project, including but not limited pp to signing and submission of relevant documents and writings, participating in prequalification and other conferences, responding to queries, and generally to represent the Consortium in all its dealings with the A Contracting Authority or any person in connection with the Consortium’s Application for the Project. We hereby agree to ratify all acts, deeds and things lawfully done by the Lead Member, our said attorney as pursuant to this Power of Attorney and that all acts deeds and things done by our aforesaid attorney shall and shall always be deemed to have been done by us/Consortium. t Dated this ____ day of _____, 20.. ap (Executors) 12 Ad nt , me cu 12 T  he mode of execution Do of the Power of Attorney should be in accordance with the procedure, if any, laid le down by the applicable Law and the charter documents of the mp executors and when it is so required the same should be under common seal affixed Sa in accordance with the required procedure. Wherever required, the Applicant should submit for verification the extract of the charter documents and documents such as a resolution/ power of attorney in favour of the person executing this Power of Attorney for the delegation of power hereunder on behalf of the Applicant. Module 8 : Schedule 10: Consortium Agreement 28 Sample Request for Qualification Schedule 10: Consortium Agreement THIS CONSORTIUM AGREEMENT is entered into on this [•] day of [•] 20[•] (the “Agreement”) AMONGST [Name of entity], a company incorporated under [legislation] and having its registered office at [business 1.  address] (hereinafter referred to as the “First Part” which expression shall, unless repugnant to the context include its successors and permitted assigns); AND te  Name of entity], a company incorporated under [legislation] and having its registered office at [business 2. [ ria address] (hereinafter referred to as the “Second Part” which expression shall, unless repugnant to the context include its successors and permitted assigns); rop AND  Name of entity], a company incorporated under [legislation] and having its registered office at [business 3. [ pp address] (hereinafter referred to as the “Third Part” which expression shall, unless repugnant to the context include its successors and permitted assigns). A The above mentioned parties of the FIRST, SECOND and, THIRD PART are collectively referred to as the “Parties” and each is individually referred to as a “Party”. as WHEREAS, t 1.  ap The Contracting Authority has invited Applications through its Request for Qualification No [•] dated [•] (the “RFQ”) for shortlisting of potential bidders for the [Title of the Project] through Public Private Partnership; Ad  he Parties are interested in jointly bidding for the Project as members of a Consortium (as defined 2. T below) and in accordance with the terms and conditions of the RFQ and other documents in respect of nt , the Project; and t is a necessary condition under the RFQ that the members of the Consortium shall enter into a 3. I me concession agreement and furnish a copy thereof with the Application. NOW IT IS HEREBY AGREED as follows: cu 1. Definitions and Interpretations Do In this Agreement, the capitalised terms shall, unless the context otherwise requires, have the meaning ascribed thereto under the RFQ. 2. Consortium le The Parties do hereby irrevocably constitute a consortium (the “Consortium”) for the purposes of 2.1  jointly participating in the Bidding Process for the Project. mp The Parties hereby undertake to participate in the Bidding Process only through this Consortium 2.2  and not individually and/or through any other consortium constituted for the Project, either directly or indirectly. Sa 3. Covenants The Parties hereby undertake that in the event the Consortium is shortlisted, and eventually declared the Successful Bidder and awarded the Project, it shall incorporate the Project Company under [legislation] as thegpsc.org required by and in accordance with the RFP and other Bidding Documents to be issued for performing all its obligations as the Concessionaire in terms of the PPP Agreement for the Project. | The World Bank Module 8 : Schedule 10: Consortium Agreement 29 Sample Request for Qualification 4. Role of the Parties The Parties hereby undertake to perform the roles and responsibilities as described below. Party of the First Part shall be the Lead Member of the Consortium and shall have the power of attorney from all Parties for conducting all business for and on behalf of the Consortium during the Bidding Process; {Party of the Second Part shall be [•]; and} {Party of the Third Part shall be [•} te 5. Joint and Several Liability The Parties do hereby undertake to be jointly and severally responsible for all obligations and liabilities ria relating to the Project in accordance with the terms of the RFQ, RFP and for the performance of the Project Company’s obligations under the PPP Agreement. rop 6. Shareholding in the Project Company The Parties agree that the proportion of shareholding among the Parties in the Project Company shall be as follows: pp First Party: Second Party: A Third Party: as Subject to the terms of the PPP Agreement, the Lead Member shall for [•] years hold equity share capital not less than **% (** per cent) of the subscribed, paid up and voting equity share capital of the Project Company; and t ap Each member of the Consortium shall hold at least ** % of the subscribed and paid up equity of the Project Company for •] years after the Completion Date, and at least ** % for the following [•] years. Ad The Parties undertake that they shall comply with all equity lock-in requirements set forth in the PPP Agreement. nt , 7. Representation of the Parties me Each Party represents to the other Parties as of the date of this Agreement that: 7.1 Such Party is duly organised, validly existing and in good standing under the laws of its incorporation and has all requisite power and authority to enter into this Agreement; cu 7.2 The execution, delivery and performance by such Party of this Agreement has been authorised by all necessary and appropriate corporate or governmental action and a copy of the extract of the charter documents and board resolution/power of attorney in favour of the person executing Do this Agreement for the delegation of power and authority to execute this Agreement on behalf of the Member of Consortium is annexed to this Agreement, and will not, to the best of its knowledge: le 7.3 Require any consent or approval not already obtained; 7.4 Violate any applicable law presently in effect and having applicability to it; mp 7.5 Violate the memorandum of association and articles of association, by-laws or other applicable organizational documents thereof; 7.6 Violate any clearance, permit, concession, grant, license or other governmental authorization, Sa approval, judgment, order or decree or any mortgage agreement, indenture or any other instrument to which such Party is a party or by which such Party or any of its properties or assets are bound or that is otherwise applicable to such Party; and 7.7 Create or impose any liens, mortgages, pledges, claims, security interests, charges or any other encumbrances or obligations to create a lien, charge, pledge, security interest, encumbrances or mortgage in or on the property of such Party, except for encumbrances that would not, individually or in the aggregate, have a material adverse effect on the financial condition or prospects or business of such Party so as to prevent such Party from fulfilling its obligations under this Agreement; 7.8 This Agreement is the legal and binding obligation of such Party, enforceable in accordance with its terms against it; and Module 8 : Schedule 10: Consortium Agreement 30 Sample Request for Qualification There is no litigation pending or, to the best of such Party’s knowledge, threatened to which it or 7.9  any of its affiliates is a party that presently affects or which would have a material adverse effect on the financial condition or prospects or business of such Party in the fulfilment of its obligations under this Agreement. 8. Termination This Agreement shall be effective from the date hereof and shall continue in full force and effect until the full and final satisfaction of all obligations under the PPP Agreement in accordance with the terms thereof, in case the Project is awarded to the Consortium. However, in case the Consortium is either not qualified for te the Project or does not get selected for award of the Project as the Successful Bidder, the Agreement will stand terminated, in accordance with the mutual agreement of the Parties. ria 9. Miscellaneous This Consortium Agreement shall be governed by the laws of ****. rop The Parties acknowledge and accept that this Agreement shall not be amended by the Parties without the prior written consent of the Contracting Authority. pp IN WITNESS WHEREOF THE PARTIES ABOVE NAMED HAVE EXECUTED AND DELIVERED THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN. A SIGNED, SEALED AND DELIVERED For and on behalf of LEAD MEMBER by: as (Signature) (Name) (Designation) (Address) t ap SIGNED, SEALED AND DELIVERED Ad For and on behalf of SECOND PART (Signature) (Name) nt , (Designation) (Address) me SIGNED, SEALED AND DELIVERED For and on behalf of THIRD PART (Signature) cu (Name) (Designation) (Address) Do le mp Sa thegpsc.org | The World Bank Module 8 : Schedule 11: Declaration of Undertaking 31 Sample Request for Qualification Schedule 11: Declaration of Undertaking We underscore the importance of a free, fair and competitive procurement process that precludes abusive practices. In this respect we have neither offered nor granted directly or indirectly any inadmissible advantages to any public servant or other person nor accepted such advantages in connection with our Application, nor will we offer or grant or accept any such incentives or conditions in this Bidding Process or, in the event that we are awarded the contract, in the subsequent execution of the contract. We also declare that our company/all members of the consortium has/have not been included in the list of te sanctions of the United Nations nor in any other list of sanctions and affirm that our company/all members of the consortium will immediately inform the client if this situation should occur at a later stage. ria We acknowledge that, in the event that our company (or a member of the consortium) is added to a list of sanctions that is legally binding for the client, the client is entitled to exclude our company/ the consortium rop from the Bidding Process and, if the contract is awarded to our company/ the consortium, to terminate the contract immediately if the statements made in the Declaration of Undertaking were objectively false or the reason for exclusion occurs after the Declaration of Undertaking has been issued. A pp t as Place, date ap Authorized Representative of the Bidder Ad nt , me cu Do le mp Sa Module 8 : T he Municipal Readiness Tool 32 Sample Request for Qualification thegpsc.org | The World Bank SAMPLE REQUEST FOR PROPOSAL 09 FOR SINGLE-STAGE BID PROCESS Public-Private Partnership Municipal Framework Module 9 : 2 Sample Request for Proposal for Single-Stage Bid Process Important Notes: This Request for Proposals is provided only as a sample document. It must be adapted to fit the unique circumstances and needs of each particular Municipality and project for which its use is intended. National and local laws, regulations, policies and practices may prescribe a different approach to procuring project- level consulting services. ADDITIONAL GUIDANCE MATERIAL te World Bank Group’s Public-Private Partnership Legal Resource Center, ria https://ppp.worldbank.org/public-private-partnership/ rop A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : 3 Sample Request for Proposal for Single-Stage Bid Process [CONTRACTING AUTHORITY’S NAME] Request for Proposal te for the ria rop A pp t as [Title of PPP Project] ap Ad nt , me cu Do le mp Sa [DATE] Module 9 : Table of Contents 4 Sample Request for Proposal for Single-Stage Bid Process TABLE OF CONTENTS TABLE OF CONTENTS 4 DISCLAIMER 5 GLOSSARY 6 INTRODUCTION 8 1  A. Purpose of Issuing the RFP 8 B. Project Background 8 te C. PPP Agreement 8 D. Financing assumptions 8 ria E. Brief Description of the Bidding Process 8 2 INSTRUCTIONS TO BIDDERS 10 A. General Requirements 10 rop B. Documents 14 C. Preparation and Submission of Bid 15 3 EVALUATION OF BIDS 20 pp A. Opening and Evaluation of First Envelopes (Qualification Documents) 20 B. Opening and Evaluation of Second Envelopes (Technical Proposal) 21 A C. Opening and Evaluation of Third Envelopes (Financial Proposal) 22 D. Award and Execution of the PPP Agreement 23 E. Miscellaneous 24 as Schedule 1: Project Information 25 Schedule 2: Bidding Process Timelines 26 Schedule 3: Bid Letter 27 t ap Schedule 4: Bidder Information 29 Schedule 5: Consortium Member Information 30 Schedule 6: Financial Capacity 31 Ad Schedule 7: Technical Capacity 33 Schedule 8: Bank Guarantee for Bid Security 34 Schedule 9: Power of Attorney for Signing of Bid 35 nt , Schedule 10: Power of Attorney for Lead Member of Consortium 36 Schedule 11: Consortium Agreement 37 Schedule 12: Anti-Collusion Certificate 40 me Schedule 13: Format of Technical Proposal 41 Schedule 14: Format of Financial Proposal 43 Schedule 15: Declaration of Undertaking 44 cu Schedule 16: Draft PPP Agreement 45 Do le mp Sa thegpsc.org | The World Bank Module 9 : Disclaimers 5 Sample Request for Proposal for Single-Stage Bid Process DISCLAIMERS The information contained in this Request for Proposal (RFP) or subsequently provided to Bidders, whether verbally or in documentary or any other form by or on behalf of the Contracting Authority or any of its employees or advisors, is provided to Bidders on the terms and conditions set out in this RFP and such other terms and conditions subject to which such information is provided. This RFP is not an agreement and is neither an offer nor invitation by the Contracting Authority to the te prospective Bidders or any other person. The purpose of this RFP is to provide Bidders with information that may be useful to them in preparing and submitting their Bid pursuant to the Bidding Documents including ria this RFP. This RFP includes statements, which reflect various assumptions and assessments arrived at by the Contracting Authority in relation to the PPP Project. Such assumptions, assessments and statements do not purport to contain all the information that each Bidder may require. The information contained in rop the Bidding Documents may not be appropriate for all persons, and it is not possible for the Contracting Authority, its employees or advisors to consider the investment objectives, financial situation and particular needs of each party who reads or uses this RFP. Each Bidder should conduct its own investigations and pp analysis and should check the accuracy, adequacy, correctness, reliability and completeness of the assumptions, assessments, statements and information contained in this RFP and obtain independent A advice from appropriate sources. Information provided in this RFP to the Bidders is on a wide range of matters, some of which depends as upon interpretation of law. The information given is not intended to be an exhaustive account of statutory requirements and should not be regarded as a complete or authoritative statement of law. None of the Contracting Authority, its employees, or advisors accepts any responsibility for the accuracy or otherwise t ap for any interpretation or opinion on law expressed herein. The Contracting Authority, its employees and advisors make no representation or warranty and shall have no liability to any person, including any Bidder under any law, statute, rules or regulations or tort, principles of restitution or unjust enrichment or otherwise Ad for any loss, damages, cost or expense which may arise from or be incurred or suffered on account of anything contained in this RFP or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the RFP and any assessment, assumption, statement or information contained therein or nt , deemed to form part of this RFP or arising in any way by participating in this Bidding Process. The Contracting Authority, its employees or advisors, likewise accepts no liability of any nature whether me resulting from negligence or otherwise howsoever caused arising from reliance of any Bidder upon the statements contained in this RFP. The Contracting Authority may in its absolute discretion, but without being under any obligation to do so, update, amend or supplement the information, assessment or assumptions cu contained in this RFP. The issuance of this RFP does not imply that the Contracting Authority is bound to select a Bidder or to appoint the Successful Bidder for the Project and the Contracting Authority reserves Do the right to reject all or any of the Bidders or Bids or otherwise discontinue the process without assigning any reason whatsoever. The Bidder shall bear all its costs associated with or relating to the preparation and submission of its Bid le including but not limited to preparation, copying, postage, delivery fees, expenses associated with any demonstrations or presentations which may be required by the Contracting Authority or any other costs mp incurred in connection with or relating to its Bid. All such costs and expenses will remain with the Bidder and the Contracting Authority shall not be liable in any manner whatsoever for the same or for any other costs or other expenses incurred by a Bidder in preparation or submission of the Bid, regardless of the Sa conduct or outcome of the Bidding Process. Module 9 : Glossary 6 Sample Request for Proposal for Single-Stage Bid Process GLOSSARY Addendum or Addenda means addendum or addenda to the RFP. Bid means a proposal submitted by a Bidder for the Project. Bidder means an interested single entity or Consortium which submits a Bid to the Contracting Authority in accordance with the provisions of this RFP. te Bidding Company means a single entity submitting a Bid pursuant to the RFP. ria Bidding Documents means the RFP, the draft PPP Agreement, any Addenda or clarification issued by the Contracting Authority in accordance with the terms of this RFP, and any other documents provided by the rop Contracting Authority pursuant to this RFP, as such documents may be modified, altered, amended and clarified from time to time by the Contracting Authority. pp Bidding Process means the single-stage bidding process being followed by the Contracting Authority to award the Project to the Selected Bidder, the terms of which are set out in this RFP. A Bid Parameter means the financial criterion which determines the best bid for the PPP Project. The bid parameter is not necessarily equivalent to “least-cost”, and may vary from one PPP project to another as (i.e. highest concession payment to government, lowest tariff to meet minimum output performance standards, etc). t ap Bid Security means an amount equivalent to [AMOUNT] to be provided by a Bidder as security for its Bid. Bid Submission Deadline means the date specified in Schedule 2 as the last date for submission of Bids. Ad Availability Payments means the payments, if any, to be paid to the Service Provider by the Contracting Authority (CA) for making the services or facility “available” for use by the CA provided under the nt , PPP Project. Conflict of Interest has the meaning ascribed to it in Clause 2.1.12. me Consortium means any combination of private entities that have formed an association by fulfilling the requirements set out in this RFP, for the purpose of submitting a Bid and for implementing the Project, if cu such consortium or association is declared as the Selected Bidder. Do Consortium Agreement means the binding consortium agreement to be executed between Consortium Members in the form set out in Schedule 11. Contracting Authority means any local/municipal government authority public, statutory corporation or le other subnational agency. mp Control means, with respect to a company or corporation, the ownership, directly or indirectly, of more than 50% of the voting shares of such company, or the power to appoint majority of the directors on the board of directors of such company or corporation and/or the power to direct the management and policies of such Sa person by operation of law, agreement or otherwise and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person by operation of law, agreement or otherwise. thegpsc.org Data Room means a virtual data room providing project information, records, and general background documents relevant to the PPP Project. Financial Proposal means the Financial Proposal to be submitted by a Bidder for the development and | The World Bank implementation of the PPP Project as prescribed in Clause 2.13.5. Government means the Government of ****. Module 9 : Glossary 7 Sample Request for Proposal for Single-Stage Bid Process Lead Member in the context of a Consortium, means the Consortium Member nominated by the Consortium Members as the lead member with the rights and obligations as set out in this RFP. Letter of Award means the letter of award that will be issued by the Contracting Authority to the Selected Bidder in accordance with Clause 3.20. Member means a member of a Consortium. Net Worth means the difference between the sum of subscribed and paid up equity, reserves and the sum te of revaluation reserves, miscellaneous expenditure not written off and reserves not available for distribution to equity shareholders. ria O&M means operation and maintenance. rop PPP means public-private partnership. PPP Agreement means the agreement to be executed between the Contracting Authority and the Selected pp Bidder to implement the PPP project, substantially in the format set out in Schedule 16. Pre-Bid Conference means a conference that will be held by the Contracting Authority to answer queries A or clarifications raised by Bidders and to provide information to Bidders on the Project. as Project Company means the special purpose company specifically formed and incorporated in [LOCATION] for the purpose of undertaking the Project pursuant to the PPP Agreement. t RFP or Request for Proposals means this request for proposal dated **** along with its Schedules, and ap Addenda, if issued. Ad Service Provider means the legal entity proposed by the Successful Bidder in its proposal to undertake the PPP Project in accordance with the PPP Agreement nt , Successful Bidder means the Bidder selected by the Contracting Authority to award the Project following the completion of the Bidding Process. me Technical Proposal has the meaning ascribed to it in Clause 2.13.4. Tender Committee means the working group established by the Contracting Authority to carry out cu the PPP procurement. Term means the period during which the Service Provider shall undertake the PPP Project in accordance Do with the PPP Agreement. User Payment means a payment to be paid to the Service Provider by a user of the PPP Project. le mp Sa Module 9 : Introduction 8 Sample Request for Proposal for Single-Stage Bid Process 1. INTRODUCTION A. Purpose of Issuing the RFP 1.1. The purpose of issuing the RFP is to enable the Contracting Authority to select the Successful Bidder for the PPP project, by evaluating which among the qualified Bidders presents the best Bid that offers the best value for money for the public in undertaking the PPP Project as set out in the te technical and financial criteria in this RFP. ria 1.2. It is intended that the Bidding Process be conducted in a competitive and transparent manner in order to ensure that the Contracting Authority’s objectives for initiating the PPP are achieved and value for money objectives met. rop B. Project Background pp 1.3. The Contracting Authority is seeking private sector participation to improve [SERVICE] in the [LOCATION] through [DESCRIPTION OF FACILITIES] on a PPP basis. A 1.4. The Service Provider shall undertake: [indicate scope – i.e. design, construction and maintenance as of new facilities / operation and maintenance of existing facilities, etc]. 1.5. Further details on the PPP Project may be found in Schedule 1. t ap C. PPP Agreement Ad 1.6. The Contracting Authority shall enter into the PPP Agreement with the Service Provider. nt , 1.7. The Term shall be **** years from [here insert start event or date]. 1.8. At the end of this period, the Service Provider shall release or otherwise transfer the assets to the me Contracting Authority free of charge and free of any liens or encumbrances. A draft of the PPP Agreement is set out in Schedule 16. cu D. Financing assumptions Do 1.9. The Service Provider shall be responsible for financing the PPP Project. le 1.10. [Describe any concessional financing or grant funding that was made available for the PPP Project] mp 1.11. [Indicate key financing assumptions] 1.12. In consideration, the Service Provider shall have access to the following types of revenue streams: Sa (a) User Payments from users of the PPP Project; or/and (b) Availability Payments from Contracting Authority. E. Brief Description of the Bidding Process thegpsc.org 1.13. The Contracting Authority has adopted a three-envelope, single-stage process (collectively referred to as the “Bidding Process”) for selection of the preferred bidder for award of the PPP | Project. Bidders will be required to submit three envelopes – which together, comprises their Bid – The World Bank containing the following: Envelope 1: Qualification Documents; Module 9 : Introduction 9 Sample Request for Proposal for Single-Stage Bid Process Envelope 2: Technical Proposal; and Envelope 3: Financial Proposal. 1.14. Bidders will be required to deposit, along with its Bid, a refundable bid security as specified in this RFP. 1.15. The first envelope, which contains the Bidder’s qualification documents, shall first be opened and evaluated. The Contracting Authority shall then announce the Bidders whose qualification documents meet its minimum requirements, as prescribed in this RFP. Only Bidders who satisfy te the Contracting Authority’s minimum qualification requirements shall advance to the opening of the second envelope. For those that do not qualify, their second and third envelopes shall be returned ria to them unopened. 1.16. The second envelope, which contains the Bidder’s Technical Proposal, shall next be opened rop and evaluated. The Contracting Authority shall then announce the Bidders whose Technical Proposals meet its minimum requirements, as prescribed in this RFP. Only Bidders who satisfy the Contracting Authority’s minimum technical specifications and requirements shall advance pp to the opening of the third envelope. For those that do not qualify, their third envelopes shall be returned to them unopened. A 1.17. Finally, the third envelope containing the Bidder’s Financial Proposal, shall be opened and evaluated. The Bidder who submits the best Financial Proposal based on the Contracting as Authority’s Bid Parameter shall be chosen as the Successful Bidder and shall be awarded the PPP Contract. 1.18.  t The timeline for this Bidding Process is included as Schedule 2 of this RFP. The Contracting ap Authority may, in its sole discretion and without prior notice to the Bidders, amend the timeline. Bidders shall not rely on this current, timeline and the Contracting Authority shall not incur any Ad liability whatsoever arising out of amendments to the timelines. The Contracting Authority shall give notice of changes to the timelines, if any, by addenda. nt , me cu Do le mp Sa Module 9 : Instructions to Bidders 10 Sample Request for Proposal for Single-Stage Bid Process 2. INSTRUCTIONS TO BIDDERS A. General Requirements 2.1. Eligibility of Bidders 2.1.1. A Bidder shall submit only 1 (one) Bid for the PPP Project either individually or as te a Member of a Consortium. A Bidder applying individually, or as a member of a Consortium, shall not be entitled to submit another Bid, either individually or as a ria member of any Consortium, as the case may be. 2.1.2. A Bidder may be a natural person, private entity, or any combination of them with a rop formal intent to enter into an agreement or under an existing agreement in the form of a Consortium. A Consortium shall be eligible for consideration subject to the conditions set out in this RFP. pp 2.1.3. The Bidders are expected to carry out their own surveys, investigations and other detailed examination of the Project before submitting their Bids. Nothing contained A in the Bidding Documents shall be binding on the Contracting Authority nor confer any right to the Bidders, and the Contracting Authority its employees and consultants shall as have no liability whatsoever in relation to or arising out of any or all contents of the Bidding Documents. 2.1.4.  t Notwithstanding anything to the contrary contained in this RFP, the detailed terms ap specified in the draft PPP Agreement shall have overriding effect; provided, however, that any conditions or obligations imposed on the Bidder hereunder shall continue to Ad have effect in addition to its obligations under the PPP Agreement. 2.1.5. The Bid should be furnished in the formats specified in this RFP and signed by the Bidder’s authorized signatory. The Bidders should note that the formats specified in the nt , RFP have been provided for the convenience of the Bidders and may not exhaustively enumerate or describe various information required to be provided by the Bidders me under the Bidding Documents. The Bidders should ensure that all the information required to be provided by them under the Bidding Documents is included in their Bid whether or not a particular format specified herein makes provision for submission of cu such information and/or whether or not a format for submission of such information is incorporated in the Bidding Documents. Do 2.1.6. The Bidder shall submit as part of its Bid, a Bid Security in accordance with the provisions of this RFP. The Bidder has the option to provide the Bid Security either as a demand draft or in the form of a bank guarantee, from a [*** rated] bank registered in le [LOCATION] acceptable to the Contracting Authority, as per the format at Schedule 8. mp 2.1.7. The Bidder should submit a power of attorney as per the format in Schedule 9, authorizing the signatory of the Bid to commit the Bidder. Sa 2.1.8. In case the Bidder is a Consortium, the Members thereof should furnish a power of attorney in favour of the Lead Member as per the format in Schedule 10. 2.1.9. Any condition or qualification or any other stipulation contained in the Bid which is inconsistent with the terms of the Bidding Documents may render the Bid liable to thegpsc.org rejection as a non-responsive Bid. 2.1.10. The Bid and all communications in relation to or concerning the Bidding Documents and | the Bid shall be in the English language. Supporting documents and printed literature The World Bank furnished by the Bidder with the Bid may be in any other language provided that they are accompanied by appropriate translations of the pertinent passages in the English language, duly authenticated and certified by the Bidder. Supporting materials which Module 9 : Instructions to Bidders 11 Sample Request for Proposal for Single-Stage Bid Process are not translated into English may not be considered. For the purpose of interpretation and evaluation of the Bid, the English language translation shall prevail. 2.1.11. The Bidding Documents, including this RFP and all attached or other documents, are and shall remain the property of the Contracting Authority and are transmitted to the Bidders solely for the purpose of preparation and submission of a Bid in accordance with the Bidding Documents. Bidders are to treat all information as strictly confidential and shall not use it for any purpose other than for preparing and submitting their Bid. te 2.1.12. Conflict of Interest: A Bidder shall not have a Conflict of Interest that affects the Bidding Process. Any Bidder found to have a Conflict of Interest shall be disqualified. In ria the event of disqualification, the Contracting Authority shall be entitled to forfeit and appropriate the Bid Security and/or Performance Security, as the case may be, without prejudice to any other right or remedy that may be available to the Contracting Authority rop under the Bidding Documents or otherwise. Determining the presence of Conflict of Interest shall be the prerogative of the Contracting Authority. A Bidder shall be deemed to have a Conflict of Interest affecting the Bidding Process, if: pp (a) the Bidder (or any constituent thereof) and any other Bidder (or any constituent thereof have common controlling shareholders or other ownership interest; provided that this qualification shall not apply in cases where the direct or indirect A shareholding of a Bidder (or any constituent thereof) is less than **** % of the paid up and subscribed capital of the other Bidder (or any constituent thereof) and it does as not have Control of the Bidder; or (b) a consortium member or any constituent of such Bidder is also a consortium member or constituent of another Bidder; or (c)  t such Bidder (or any constituent thereof) receives or has received any direct or ap indirect subsidy from any other Bidder (or any constituent thereof), or has provided any such subsidy to any other Bidder (or any constituent thereof); or Ad (d) such Bidder (or any constituent thereof) thereof has the same legal representative for purposes of this Bid as any other Bidder (or any constituent thereof); or (e) s uch Bidder (or any constituent thereof) has a relationship with another Bidder (or nt , any constituent thereof), directly or through common third parties, that puts either or both of them in a position to have access to each other’s’ information about, or to influence the Bid of either or each other; or me  uch Bidder (or any constituent thereof) has participated as a consultant to the (f) s Contracting Authority in the preparation of any documents, design or technical specifications of the PPP Project, or cu (g) Any legal, financial or technical adviser of the Contracting Authority in relation to the PPP Project is engaged by the Bidder (or any constituent thereof) in any manner for matters related to or incidental to the PPP Project. Do 2.1.13. This RFP is not transferable and can only be used by the person to whom it has been issued. le 2.1.14. Any award of the PPP Agreement pursuant to this RFP shall be subject to the terms of mp the Bidding Documents. 2.1.15. For a detailed list of documents and information to be provided with each envelop Sa constituting a Bid, please refer to Clause 2.9. 2.2. Change in composition of the Consortium 2.2.1. Change in the composition of a Consortium will not be permitted by the Contracting Authority after the Bid Submission Deadline. 2.2.2. The Consortium shall submit a Power of Attorney and a Consortium Agreement following Schedule 10 and Schedule 11 respectively along with the Bid on or before the Bid Submission Deadline. Module 9 : Instructions to Bidders 12 Sample Request for Proposal for Single-Stage Bid Process 2.2.3. The Consortium Agreement shall, inter alia: convey the intent to form a Project Company with shareholding/ownership equity (a)  commitments in accordance with this RFP; clearly outline the proposed roles and responsibilities of each Member and the Lead (b)  Member; and fulfil the minimum shareholding structure indicated in Clauses 2.2.4 and 2.2.5 below. (c)  2.2.4. The Lead Member of the Consortium shall hold at least **** % of the subscribed and paid up equity of the Project Company for **** years after the Completion Date, and at te least **** % for the following **** years. ria 2.2.5. [Each member of the Consortium shall hold at least **** % of the subscribed and paid up equity of the Project Company for **** years after the Completion Date, and at least **** % for the following **** years.] rop 2.3. Cost of bidding pp The Bidders shall be responsible for all of the costs associated with the preparation of their Bid and their participation in the Bidding Process. The Contracting Authority will not be responsible or in any way liable for such costs, regardless of the conduct or outcome of the Bidding Process. A 2.4. Data Room as 2.4.1. For the benefit of the prospective Bidders, the Contracting Authority has provided a virtual Data Room. The Bidding Documents can be downloaded from the Data Room. t ap 2.4.2. The Data Room can be accessed by any prospective Bidder by submitting the relevant details to be provided on the website on the following link. [Insert url] Ad 2.5. Site visit and Verification of Information by Bidders nt , 2.5.1. Bidders are encouraged to submit their respective Bids after visiting the Project Site[s] and ascertaining for themselves the sites’ conditions, traffic, location, surroundings, climate, availability of power, water and other utilities for construction, access to sites, me handling and storage of materials, weather data, applicable laws and regulations, and any other matter considered relevant by them. cu 2.5.2. A site visit shall be organized by the Contracting Authority prior to the pre-bid conference for all Bidders. Further details regarding this site visit shall be given by the Contracting Authority to all Bidders in due course. Do 2.5.3. It shall be deemed that by submitting a Bid, the Bidder has: le (a) made a complete and careful examination of the Bidding Documents; mp acknowledged accepted the risk of inadequacy, error or mistake in the information (b)  provided in the Bidding Documents or furnished by or on behalf of the Contracting Authority relating to any of the matters referred to in Clause 2.5.1; Sa satisfied itself about all matters, things and information including matters referred to (c)  in Clause 2.5.1 necessary and required for submitting an informed Bid, execution of the Project in accordance with the Bidding Documents and performance of all of its obligations thereunder; thegpsc.org  cknowledged and agreed that inadequacy, lack of completeness or incorrectness (d) a of information provided in the Bidding Documents or ignorance of any of the matters | referred to in Clause 2.5.1 shall not be a basis for any claim for compensation, The World Bank damages, extension of time for performance of its obligations, loss of profits, or a ground for termination of the PPP Agreement by the Service Provider; and Module 9 : Instructions to Bidders 13 Sample Request for Proposal for Single-Stage Bid Process (e) acknowledged that it does not have a Conflict of Interest. 2.5.4. The Contracting Authority, its employees, and consultants shall not be liable for any omission, mistake or error in respect of any of the above or on account of any matter or thing arising out of or concerning or relating to the RFP, the Bidding Documents or the Bidding Process, including any error or mistake therein or in any information or data given by or on behalf of the Contracting Authority. 2.6. Pre-Bid Conference te 2.6.1. A pre-bid conference of the Bidders shall be convened at the designated date, time and ria place. Only duly authorized representatives of the Bidders shall be allowed to participate in the pre-bid conference. rop 2.6.2. During the course of the pre-bid conference, the Bidders will be free to seek clarifications and make suggestions for consideration of the Contracting Authority. The Contracting Authority shall endeavour to provide clarifications and such further pp information as it may, in its sole discretion, consider appropriate for facilitating a fair, transparent and competitive Bidding Process. A 2.7. One-on-One Discussions as 2.7.1. The Contracting Authority may schedule one-on-one discussions with Bidders after the conduct of the Pre-Bid Conference, but prior to the Bid Submission Deadline. 2.7.2.  t Questions lodged by, and answers obtained from, the Bidders, as well as any relevant ap responses from the Contracting Authority pursuant to these discussions will be made available to all Bidders through the Data Room. However, the identity of each respective Ad Bidder who issued a question / provided a response, will be made anonymous. 2.8. Verification and Disqualification nt , 2.8.1. The Contracting Authority reserves the right to verify all statements, information and documents submitted by the Bidder in response to the RFP or the Bidding Documents me and the Bidder shall, when so required by the Contracting Authority, make available all such information, evidence and documents as may be necessary for such verification. Any such verification or lack of such verification by the Contracting Authority shall not cu relieve the Bidder of its obligations or liabilities hereunder nor will it affect any rights of the Contracting Authority thereunder. Do 2.8.2. The Contracting Authority reserves the right to reject any Bid and appropriate the Bid Security if: (a) at any time, a material misrepresentation is made or uncovered; or le the Bidder does not provide, within the time specified by the Contracting Authority, (b)  the supplemental information sought by the Contracting Authority for evaluation of mp the Bid, or (c) a Conflict of Interest as discussed in Clause 2.1.12 persists. Sa 2.8.3. Such misrepresentation/ improper response shall lead to the disqualification of the Bidder. If the Bidder is a Consortium, then the entire Consortium and each Member shall be disqualified/ rejected. If such disqualification/ rejection occurs after the Bids have been opened and the Successful Bidder gets disqualified/ rejected, then the Contracting Authority reserves the right to select the Bidder which proposed the second-best Bid as Successful Bidder or cancel the Bidding Process. Module 9 : Instructions to Bidders 14 Sample Request for Proposal for Single-Stage Bid Process B. Documents 2.9. This RFP comprises the Disclaimer, the contents as listed below, and will additionally include any addendum issued in accordance with Clause 2.11 and any clarifications and interpretations issued in accordance with Clause 2.10. Invitation for Bids Schedules Section 1. Introduction Schedule 1. Project Information te Section 2. Instructions to Bidders Schedule 2. Bidding Process Timelines ria Section 3. Evaluation of Bids Schedule 3. Bid Letter rop Schedule 4. Applicant Information Schedule 5. Consortium Member Information pp Schedule 6. Financial Capacity A Schedule 7. Technical Capacity as Schedule 8. Bank Guarantee for Bid Security Schedule 9. Power of Attorney for Signing of Bid t ap Schedule 10. Power of Attorney for Lead Member of Consortium Ad Schedule 11. Consortium Agreement Schedule 12. Anti-Collusion Certificate nt , Schedule 13. Format for the Technical Proposal me Schedule 14. Format for the Financial Proposal Schedule 15. Declaration of Undertaking cu Schedule 16. Draft PPP Agreement Do 2.10. Clarifications 2.10.1. Bidders requiring any clarification on the Bidding Documents may notify the Contracting le Authority by e-mail at the following e-mail address: **** mp 2.10.2. Queries must be received by the Contracting Authority on or before the last date for receipt of clarifications mentioned in Schedule 2. Sa 2.10.3. The Contracting Authority shall endeavour to respond to the questions raised or clarifications sought by the Bidders within fifteen (15) days of receipt of such questions or clarifications. The Contracting Authority will notify Bidders by e-mail that queries and its responses have been posted in the website / data room. thegpsc.org 2.10.4. The Contracting Authority will organize the clarification response procedure. The queries and its responses will be updated in the website of the Contracting Authority. The Contracting Authority may notify Bidders by e-mail that responses to queries have been | The World Bank posted at the Contracting Authority’s website. 2.10.5. The Contracting Authority may also on its own initiative, if deemed necessary, issue Module 9 : Instructions to Bidders 15 Sample Request for Proposal for Single-Stage Bid Process interpretations and clarifications to all Bidders. All clarifications and interpretations issued by the Contracting Authority shall be deemed to be part of the Bidding Documents. Verbal clarifications and information given by the Contracting Authority or its employees or representatives shall not be binding on the Contracting Authority. 2.10.6. Should the Contracting Authority deem it necessary to amend the RFP as a result of a clarification, it shall do so following the procedure in Clause 2.11 below. 2.11. Amendment te 2.11.1. At any time prior to the Bid Submission Deadline, the Contracting Authority may, for any ria reason, whether at its own initiative or in response to clarifications requested by a Bidder, modify the RFP by the issuance of addenda. rop 2.11.2. Any addendum issued hereunder will be uploaded in the website of the Contracting Authority. The Contracting Authority may notify Bidders about the issuance of an Addendum by e-mail. pp 2.11.3. In order to afford the Bidders a reasonable time for taking an addendum into account, or for any other reason, the Contracting Authority may, at its sole discretion, extend the Bid A Submission Deadline. as C. Preparation and Submission of Bid t 2.12. Format and Signing of Bid ap 2.12.1. The Bidder shall provide in its Bid all the information sought under the Bidding Ad Documents. The Contracting Authority will evaluate only those Bids that are received in the required formats and complete in all respects. Incomplete and /or conditional Application shall be rejected. nt , 2.12.2. The Bidder shall prepare one original set of its Bid (comprising of the three envelopes mentioned in Clause 2.13.1 together with originals/copies of documents required to be me submitted along therewith) clearly marked “ORIGINAL”. In addition, the Bidder shall submit one copy of its Bid clearly marked “COPY”. In the event of any discrepancy between the original and the copy, the original shall prevail. cu 2.12.3. The Bid shall be signed by the authorized signatory of the Bidder who shall also initial Do each page, in blue ink. In case of printed and published documents, only the cover shall be initialled. All the alterations, omissions, additions or any other amendments made to the Bid shall be initialled by the person signing the Bid. The Bid shall contain page numbers. le 2.13. Contents of the Bid mp 2.13.1. The “Bid” shall be comprised of 3 envelopes: Envelope 1: Qualification Sa Envelope 2: Technical Proposal Envelope 3: Financial Proposal 2.13.2. Each of these three envelopes shall be marked as follows: “BID FOR THE [NAME OF PROJECT] ENVELOPE [•of 3]”  and shall clearly indicate the number of the envelope and the name and address of the Bidder. Each envelope shall be individually sealed. Envelope 1: Qualification: This envelope should clearly be marked as “Envelope 1: 2.13.3.  Qualification” and the documents to be submitted in this envelope shall include the Module 9 : Instructions to Bidders 16 Sample Request for Proposal for Single-Stage Bid Process following accomplished: (a) The Bid Letter (Schedule 3); (b) The Bidder Information (Schedule 4) including attachments; (c) If a consortium, the Consortium Member Information to be accomplished by each member of the consortium (Schedule 5) including attachments; (d) The Bidder’s Financial Capacity (Schedule 6) including attachments; (e) The Bidder’s Technical Capacity (Schedule 7) including Attachments; (f) The Bank Guarantee for Bid Security (Schedule 8); (g) The Power of Attorney for Signing of Bid (Schedule 9); te (h) If a consortium, the Power of Attorney for Lead Member of Consortium (Schedule 10); ria (i) If a consortium, the Consortium Agreement (Schedule 11); (j) The Anti-Collusion Certificate (Schedule 12); and (k) The Declaration of Undertaking (Schedule 15). rop Envelope 2: Technical Proposal: This envelope should clearly be marked as 2.13.4.  “Envelope 2: Technical Proposal” and shall contain the following as part of the pp Technical Proposal (Schedule 13): (a) Conceptual Engineering Design; (b) Technical Plan for Construction/Rehabilitation; A (c) Operation and Maintenance Plan; and (d) Organization and Staffing. as 2.13.5. Envelope 3: Financial Proposal: This envelope should clearly be marked as “Envelope  3: Financial Proposal” and shall contain the Financial Proposal (Schedule 14), supported by the following documents: t ap Cost estimates for the design, construction, operation and maintenance components; (a)  A financial model consistent with the above cost estimates and the technical (b)  Ad proposal, and which includes a short explanatory memorandum; and A project financing plan showing positively showing that the same can adequately (c)  meet the cost requirements of the PPP Project, which may include the amount of nt , equity to be infused, debt to be obtained for the Project, and sources of financing. 2.14. Bid Security me 2.14.1. The Bidder shall furnish as part of its Bid a Bid Security. cu 2.14.2. The Bid Security may be in the form of an irrevocable, unconditional and first demand bank guarantee issued by a bank registered in [LOCATION] acceptable to the Contracting Authority in favour of the Contracting Authority in the format prescribed in Do Schedule 8; or an on-demand bond issued by a bank registered in [LOCATION], drawn in favour of the Contracting Authority and payable at [LOCATION]. le 2.14.3. The Bid Security shall have a validity period of not less than ** days1 from the Bid Submission Deadline. mp 2.14.4. Any Bid not accompanied by a Bid Security shall be summarily rejected by the Contracting Authority as non-responsive. Sa 2.14.5. The Bid Security of unsuccessful Bidders (which term shall exclude the first and second best bidders) will be returned by the Contracting Authority, without any interest, as promptly as possible after execution of the PPP Agreement with the Service Provider or when the Bidding Process is cancelled by the Contracting Authority. thegpsc.org 2.14.6. The Successful Bidder’s Bid Security will be returned, without any interest, upon the 1  eriod should be equal P to the period for the Service Provider signing the PPP Agreement and, if required, providing the Performance | bid to be extant plus Security in the form required by the PPP Agreement. The World Bank a margin to allow for delays in making a call where appropriate. 2.14.7. The Contracting Authority shall be entitled to forfeit and appropriate the Bid Security, without prejudice to any other right or remedy that may be available to the Contracting Module 9 : Instructions to Bidders 17 Sample Request for Proposal for Single-Stage Bid Process Authority under the RFP, under the following conditions: If a Bidder engages in a corrupt practice, fraudulent practice, coercive practice, (a)  undesirable practice or restrictive practice as specified in Clause 2.22 of this RFP; If a Bidder modifies or substitutes (without the prior written approval of the (b)  Contracting Authority) or withdraws its Bid during the period of Bid validity as specified in this RFP; (c) In the case of a Successful Bidder, if within the specified time: (i) it fails to incorporate a Project Company or such Project Company fails or refuses to sign the PPP Agreement; or te the Project Company fails to provide the Performance Security in accordance (ii)  with the Bidding Documents; or ria Successful Bidder fails to transmit the project development fee to (iii)  the Contracting Authority. rop 2.15. Sealing and Marking of Bid 2.15.1. Each of the three (3) aforementioned envelopes shall be placed in an outer envelope, pp which shall be sealed and shall be marked as follows: “BID FOR THE [NAME OF PROJECT]” A 2.15.2. The Bids shall be addressed to: ATTENTION: [Name of Head of Contracting Authority’s Tender Committee] as ADDRESS: [Address of Contracting Authority] 2.15.3. If the envelopes are not sealed and marked as instructed above, the Contracting t Authority assumes no responsibility for the misplacement or premature opening of the ap contents of the Bid submitted and consequent losses, if any, suffered by the Bidder. Ad 2.15.4. Bids submitted by fax, telex, telegram or e-mail shall not be entertained and shall be rejected2. nt , 2.16. Bid Submission 2.16.1. Bids must be received by the Contracting Authority at the address specified in Schedule me 2 no later than the Bid Submission Deadline. 2.16.2. The Bid must be hand-delivered as prescribed by the Contracting Authority. cu The Contracting Authority shall, on request, provide the Bidder with a receipt showing the date and time when the Bid was received. Do 2.16.3. The Contracting Authority may, at its discretion, extend the Bid Submission Deadline by issuing an addendum in accordance with Clause 2.11 uniformly for all Bidders. le 2.16.4. Bids received by the Contracting Authority after the specified Bid Submission Deadline shall be declared late and shall not be eligible for consideration and mp shall be summarily rejected. 2.17. Modifications / Substitution / Withdrawal of Bid Sa 2.17.1. The Bidder may modify, substitute or withdraw its Bid after submission, provided that the written notice of the modification, substitution or withdrawal is received by the Contracting Authority prior to the Bid Submission Deadline. No Bid shall be modified, 2  ption for online O substituted or withdrawn by the Bidder on or after the Bid Submission Deadline. submission of bids using secure software 2.17.2. The modification, substitution or withdrawal notice shall be prepared, sealed, marked, and procedures may be provided. and delivered in accordance with Clause 2.15, with the envelopes being additionally marked “MODIFICATION”, “SUBSTITUTION” or “WITHDRAWAL”, as appropriate. Module 9 : Instructions to Bidders 18 Sample Request for Proposal for Single-Stage Bid Process 2.18. Rejection of Bids 2.18.1. Notwithstanding anything contained in this RFP, the Contracting Authority reserves the right to reject any Bid and to annul the Bidding Process and reject all Bids at any time without any liability or any obligation for such acceptance, rejection or annulment, and without assigning any reasons therefore. 2.18.2. In the event that the Tender Committee rejects or annuls all the Bids, it may, in its discretion, invite all eligible Bidders to submit fresh Bids under this RFP. te 2.19. Validity of Bids ria 2.19.1. The Bids shall be valid for a period of not less than **** days from the Bid Submission Deadline. rop 2.19.2. The validity of Bids may be extended by mutual consent of the respective Bidders and the Tender Committee. pp 2.20. Confidentiality A 2.20.1. Information relating to the examination, clarification, evaluation and recommendation for the Bidders shall not be disclosed to any person who is not officially concerned with as the Bidding Process or is not a retained professional advisor advising the Contracting Authority in relation to or matters arising out of, or concerning the Bidding Process. 2.20.2.  t The Contracting Authority will treat all information, submitted as part of the Bid, ap in confidence and will require all those who have access to such material to treat the same in confidence. Ad 2.20.3. The Contracting Authority may not divulge any such information unless it is directed to do so by any statutory entity that has the power under law to require its disclosure nt , or is to enforce or assert any right or privilege of the statutory entity and/or the Contracting Authority. me 2.21. Correspondence with the Bidder Save and except as provided in this RFP, the Tender Committee shall not entertain any cu correspondence with any Bidder in relation to acceptance or rejection of any Bid. 2.22. Fraudulent and Corrupt Practices Do 2.22.1. The Bidders and their respective officers, employees, agents and advisers shall observe the highest standard of ethics during the Bidding Process and subsequent to the issue le of the Letter of Award and during the subsistence of the PPP Agreement. mp 2.22.2. The Tender Committee may reject a Bid, withdraw the Letter of Award, or terminate the PPP Agreement, as the case may be, without being liable in any manner whatsoever to the Bidder or the Service Provider, as the case may be, if it determines that the Bidder Sa or Service Provider, as the case may be, has, directly or indirectly or through an agent, engaged in corrupt practice, fraudulent practice, coercive practice, undesirable practice or restrictive practice in the Bidding Process. 2.22.3. In such an event, the Tender Committee shall be entitled to forfeit and appropriate the thegpsc.org Bid Security or Performance Security, as the case may be, without prejudice to any other right or remedy that may be available to the Contracting Authority under the Bidding Documents and/or the PPP Agreement or otherwise. | The World Bank 2.22.4. In pursuit of this policy, the Government defines, for the purposes of this provision, the terms set forth below as follows: Module 9 : Instructions to Bidders 19 Sample Request for Proposal for Single-Stage Bid Process  corrupt practice” means the offering, giving, receiving, or soliciting, of anything (a) “ of value to influence the action of a public official in the Bidding Process (for the avoidance of doubt, offering of employment to or employing or engaging in any manner whatsoever, directly or indirectly, any official of the Contracting Authority who is or has been associated in any manner with the Bidding Process, at any time during the Bidding Process and within one year from the date of the conclusion of such process, shall be deemed to constitute influencing the actions of a person connected with the Bidding Process), and includes inter alia, bribery, extortion or coercion, which involves threats of injury to person, property or reputation; te “ fraudulent practice” means a misrepresentation, omission, or suppression of facts, (b)  or disclosure of incomplete facts, in order to influence the Bidding Process; ria “coercive practice” means impairing or harming or threatening to impair or harm, (c)  directly or indirectly, any person or property to influence any person’s participation or action in the Bidding Process; and rop “undesirable practice” means (i) establishing contact with any person connected (d)  with or employed or engaged by the Contracting Authority or member of the Tender Committee with the objective of canvassing, lobbying or in any manner influencing or pp attempting to influence the Bidding Process; or (ii) having a Conflict of Interest. 2.22.5. Government reserves the right, where the Applicant has been found by a national or A international entity to have engaged in corrupt or fraudulent practices, to declare such Applicant ineligible, for a period of ten years, to be awarded a PPP contract or any as publicly funded contract. t ap Ad nt , me cu Do le mp Sa Module 9 : Evaluation of Bids 20 Sample Request for Proposal for Single-Stage Bid Process 3. EVALUATION OF BIDS A.Opening and Evaluation of First Envelopes (Qualification Documents) 3.1. The Tender Committee shall open Envelope 1 of the Bids exactly one hour after the Bid Submission Deadline, at the place specified in Schedule 2 and in the presence of the Bidders who choose te to attend. ria 3.2. Bids for which a notice of withdrawal has been submitted shall not be opened. 3.3. Upon the opening of first envelopes, the Tender Committee shall determine whether each envelope rop is responsive to the requirements of the RFP. A submission shall be considered responsive only if it: (a) contains all the documents required to be submitted by Clause 2.13.3 of this RFP; (b) is received on or before the Bid Submission Deadline, including any extension thereof; pp (c) is signed, sealed and marked as stipulated in this RFP; and (d) does not contain any condition or qualification. A 3.4. Only applications that are deemed to be responsive will be evaluated. as 3.5. The Tender Committee reserves the right to reject any Bid which is non-responsive and no request for alteration, modification, substitution or withdrawal shall be entertained by the Tender Committee in respect of such Bid. t ap 3.6. Only Bids with responsive Qualification Documents that fulfil the following may be considered for opening of the second envelope: Ad (a) Contains all the required qualification information stipulated in this RFP; (b) Submitted qualification documents (and the required attachments) prescribed by this RFP; and (c) Hurdled the minimum qualification requirements stipulated in Clause 3.8 of this RFP. nt , 3.7. The Contracting Authority reserves the right to reject any Bid which is non-responsive. If necessary, the Contracting Authority may ask the Bidders for clarifications. In this case, the Tender Committee me will make a request for supplementary information or documentation from the Bidder, provided that this request may only be made to clarify information already provided by a Bidder or to request a document that should have been included. Whenever a supplementary request is made, the Bidder cu must respond to the Tender Committee within the time period set by the Committee in its request. If the Bidder does not respond to a supplementary request within such time period or does not provide the information or documentation requested, the Tender Committee may consider the Bid Do non-responsive and reject it. 3.8. For purposes of evaluating the first envelope, the following criteria will be used: le 3.8.1. Technical Qualifications– the Bidder must demonstrate that it possesses mp the following experience:3 3 I n the case of a Indicator Evaluation Criteria Sa Consortium, the Applicant, through its E xperience in the Design 1.  Experience in the design of similar infrastructure projects Consortium members, of Similar Infrastructure demonstrated through at least two contracts undertaken in the last must demonstrate that it Projects ten years for projects of a similar type, size and complexity [indicate collectively possesses examples and minimum project size]. all of the required thegpsc.org technical experience. The Indicators may E xperience in the 2.  Experience in the construction of similar infrastructure projects vary and may be further Construction of Similar demonstrated through at least two contracts undertaken in the last expanded based Infrastructure Projects ten years for projects of a similar type, size and complexity [indicate on the requirements examples and minimum project size]. | The World Bank of the PPP Project. Module 9 : Evaluation of Bids 21 Sample Request for Proposal for Single-Stage Bid Process Indicator Evaluation Criteria E xperience in 3.  Experience in the operation & maintenance of similar infrastructure the Operations & projects demonstrated through at least two contracts undertaken Maintenance of Similar in the last ten years for projects of a similar type, size, duration and Infrastructure Projects complexity [indicate examples and minimum project size]. 3.8.2. Financial Capacity – The Applicant must demonstrate that it has a Net Worth of at least [AMOUNT] ([AMOUNT in words] only) at the close of the a.  te immediately preceding financial year. [experience in mobilizing financing for similar infrastructure projects demonstrated b.  ria through at least two projects financed in the last ten years for projects of a similar type, size, duration and complexity [indicate examples and minimum project size].] rop 3.9. After the evaluation of first envelopes, the Tender Committee will announce the qualified Bidders, and whose Technical Proposals (i.e. Envelope 2) will be evaluated. At the same time, the Tender Committee will notify the other Bidders who failed to qualify. pp B. Opening and Evaluation of Second Envelopes A (Technical Proposal) as 3.10. The Tender Committee shall schedule the opening of Technical Proposals, which shall be no later than five (5) days after the announcement of qualified Bidders from Clause 3.9. t 3.11.  ap Upon the opening of Technical Proposals, the Tender Committee shall determine whether such proposal is responsive to the requirements of the RFP. A Technical Proposal shall be considered Suggested threshold, 4 responsive only if it: Ad can be modified based on the technical intensity (a) contains all of the required content indicated in Schedule 13 of this RFP; of the project, capacity (b) is signed, sealed and marked as stipulated in this RFP; and of the market and the possible number of (c) does not contain any condition or qualification. nt , bidders. The Municipality will have 5 3.12. The Contracting Authority reserves the right to reject any Proposal which is non-responsive and no to select one of the two paragraphs above based request for alteration, modification, substitution or withdrawal shall be entertained by the Tender me on the approach used for Committee in respect of such Proposal. If necessary, the Tender Committee may ask the Bidders evaluation of bids. The for clarifications following the procedure stipulated in Clause 3.7 of this RFP. first paragraph will be used if the Municipality cu is using the pass-fail 3.13. Once considered responsive, the Technical Proposal must next demonstrate the feasibility of criteria for technical its proposed technical approach and methodology for implementing the PPP project, based on evaluation, to identify the Do bidders whose financial the criteria indicated in Schedule 13 of this RFP. Only Bids whose Technical Proposal fulfils the proposal would be minimum criteria may be considered for opening of the third envelope. opened. In such case the final selection of the 3.14. After the evaluation of second envelopes, the Tender Committee will announce the technical le best Bid would be based on the evaluation of the scores of all the bidders. Bidders who have received less than [70%]4 will not be eligible for financial proposal only. evaluation of their respective Financial Proposals. The Financial Proposals of such bidders mp The second paragraph will be selected if the would be returned unopened. Municipality intends OR to use the weighted Sa average of the scores from Technical and After the evaluation of Technical Proposals, the Tender Committee will announce the technical Financial Evaluations scores of all the bidders. The scores from evaluation of the Technical Proposals will be used for for the selection of the calculation of the combined score for Technical and Financial Proposals based on the weighted financial proposal. average of the respective scores.5 Module 9 : Evaluation of Bids 22 Sample Request for Proposal for Single-Stage Bid Process C. Opening and Evaluation of Third Envelopes (Financial Proposal) and Selection of Successful Bidder 3.15. The Tender Committee shall schedule the opening of Financial Proposals, which shall be no later than five (5) days after the announcement of qualified Bidders from Clause 3.14. 3.16. The best Financial Proposal is the one that offers the best value-for-money for Government, based on the Bid Parameter as follows: [DEFINITION OF BID PARAMETER] te ria Examples of Financial Bid Parameters for PPP projects and guidance on their use rop PPP projects (based on User Pays PPP models) where it is expected that the Municipality will have to 1.  provide capital grant, the financial bid parameter would be the least capital grant quoted. PPP projects (based on User Pays PPP models) where the maximum tariff for the service is not 2.  regulated and will be driven by market forces, will have the minimum tariff quoted as the financial bid pp parameter. PPP projects based on annuity/ availability payment model will have the least amount of periodic 3.  A annuity or per unit availability payment quoted as the financial bid parameter PPP projects that are expected to have reasonably high financial returns, without support from the 4.  as Municipality, may have the highest revenue share or profit share or lease premium as the financial bid parameter t ap 3.17. Financial Proposals will be evaluated using the following methodology6. Ad Score (in %) for Financial Proposal of Bidder ‘N’= (Financial Bid of Bidder N)/ (Highest Financial Bid among all Bidders) x 100 OR nt , Score (in %) for Financial Proposal of Bidder ‘N’= (Lowest Financial Bid among all Bidders)/ (Financial Bid of Bidder N) x 100. me 3.18. The best Bid will be identified based on the highest score from the evaluation of Financial Proposal. (from Clause 3.17). OR cu  The best Bid will be identified based on the highest weighted average combined score from the evaluation of the Financial Proposal (from Clause 3.17) and Technical Proposal (as described in Do Schedule 13), as indicated below: weighted average score of Bidder ‘N’ = (weight for technical score in % x aggregate technical score) le + (weight for financial score in % x financial score) mp where: 6 T  he first option is  technical score= score from the evaluation of the Technical Proposal; selected if a higher Sa Financial Bid would financial score= score from the evaluation of the Financial Proposal: deliver higher value for the Municipality (like revenue share or lease weight for technical score= weight assigned by Municipality premium), the second (can be in the range of 70%-80%); option is selected thegpsc.org if a lower Financial Bid would deliver weight for financial score= (1- weight for technical score). higher value for the Municipality (like viability 3.19. The best Bid, based on the Bid Value submitted, may only be considered indicative until the Tender | gap grant or annuity). Committee confirms that such Financial Bid fulfils the following: The World Bank It is supported by the documents/attachments required to be included in the Financial Proposal (a)  according to Schedule 14 of this RFP; Module 9 : Evaluation of Bids 23 Sample Request for Proposal for Single-Stage Bid Process (b) It is signed, sealed and marked as stipulated in this RFP; and (c) It does not contain any condition or qualification. 3.20. The Contracting Authority reserves the right to entertain the next best Bid if the indicative best Bid fails to fulfil the requirements indicated in Clause 3.19. If necessary, the Tender Committee may ask the Bidder/s for clarifications following the procedure stipulated in Clause 3.7 of this RFP. 3.21. The Bidder whose Bid is declared to be the best Bid and complies with the requirements of Clause 3.19, or if two or more Bidders have offered exactly the same Bid Value, then the Bidder that has te the better Financial Capacity based on Clause 3.8.2, shall be declared as the Successful Bidder. ria D. Award and Execution of the PPP Agreement rop 3.22. A letter of award (“Letter of Award”) shall be issued to the Successful Bidder by the Contracting Authority. Within seven (7) days from the date of issue of the Letter of Award, the Successful Bidder shall send an acknowledgement agreeing to comply with the conditions set out therein and to pp execute the PPP Agreement. 3.23. The Tender Committee will promptly notify other Bidders that they have been unsuccessful and their A Bid Security shall be returned within 30 days, without interest, of the signing of the PPP Agreement with the Service Provider. as 3.24. Special Purpose Company t 3.24.1.  ap The Successful Bidder shall incorporate a special purpose company specifically formed and incorporated in [LOCATION] solely for the purpose of undertaking the Project pursuant to the PPP Agreement (“Project Company”). The Successful Bidder Ad shall ensure that the Project Company is incorporated and capitalised within 30 days from the date of issue of the Letter of Award and promptly upon such incorporation and capitalisation provide evidence thereof to the Contracting Authority. nt , 3.24.2. The Successful Bidder shall ensure that the Project Company is incorporated and capitalised within 30 days from the date of issue of the Letter of Award and promptly me upon such incorporation and capitalisation provide evidence thereof to the Contracting Authority. cu 3.24.3. Subject to the terms of the PPP Agreement, in the event that the Successful Bidder is a single entity, the shareholding of the Project Company shall be fully owned by such Do entity. In the event that the Successful Bidder is a Consortium, the shareholding of the Project Company shall be owned by the Members in accordance with the terms of the Bidding Documents and the Consortium Agreement. le 3.24.4. The Project Company shall execute the PPP Agreement within 45 days from the date of issue of the Letter of Award. On the date of signing of the PPP Agreement, the Service mp Provider shall provide the Contracting Authority with a Performance Security as defined in the PPP Agreement. In the event the PPP Agreement is not signed within 45 days, the Contracting Authority may commence discussions with the next best Bidder and so on, Sa on the same terms. 3.25. Bid Development Fee 3.25.1. The Successful Bidder is required to pay, within ten (10) days from the issuance of the Letter of Award, the bid development fee, in consideration of the transaction costs and efforts expended in the tender of the PPP Project. 3.25.2. The payment of the Bid Development Fee shall be made in immediately available funds in an account to be specified for this purpose. Module 9 : Evaluation of Bids 24 Sample Request for Proposal for Single-Stage Bid Process E. Miscellaneous 3.26. The Bidding Process shall be governed by, and construed in accordance with, the laws of [LOCATION] and the Courts of [LOCATION] shall have exclusive jurisdiction over all disputes arising under, pursuant to and/or in connection with the Bidding Documents and/or the Bidding Process. 3.27. The Contracting Authority, in its sole discretion and without incurring any obligation or liability or assigning any reason, reserves the right, at any time, to: te suspend, withdraw and/or cancel the Bidding Process and/or amend and/or supplement the (a)  Bidding Process or modify the dates or other terms and conditions relating thereto; ria (b) consult with any Bidder in order to receive clarification or further information; retain any information and/or evidence submitted to the Contracting Authority by, on behalf of, (c)  and/or in relation to any Bidder; rop ndependently verify, disqualify, reject and/or accept any and all submissions or other (d) i information and/or evidence submitted by or on behalf of any Bidder; amend, modify or reissue the Bidding Documents or any part thereof; and/or (e)  pp (f) accept or reject any or all of the Bids. A 3.28. It shall be deemed that by submitting the Bid, the Bidder agrees and releases the Contracting Authority, its employees, agents and advisers, irrevocably, unconditionally, fully and finally from any and all liability for claims, losses, damages, costs, expenses or liabilities in any way related to or as arising from the exercise of any rights and/or performance of any obligations hereunder, pursuant hereto and/or in connection herewith and waives any and all rights and/or claims it may have in this respect, whether actual or contingent, whether present or future. t   ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 1: Project Information 25 Sample Request for Proposal for Single-Stage Bid Process Schedule 1: Project Information7 1.1. The Contracting Authority has, as part of its [insert development strategy] 8, identified the PPP opportunity at [insert location]. 1.2. t is intended that by the Contracting Authority entering into the PPP with a private party, the I Contracting Authority may be able to [insert the purpose for entering into PPP]. It is intended that the project will be implemented by the private party in compliance with any terms and conditions stipulated in the PPP Agreement. te 1.3.  he Contracting Authority embarked on the project after conducting feasibility studies in order to T ria determine whether it could proceed with the project and whether the project may be viable. 1.4.  nder the project, the private partner will build an asset by using its own funds or funds it U rop has raised, transfer the possession as specified in the PPP Agreement, and transfer it to local ownership upon the expiration of the PPP Agreement. The payment to the private partner will comprise of [user payments from users of the PPP project]; [and/or] [availability payments from the pp Contracting Authority]. A 1.5. [DESCRIPTION OF THE ASSET] 9 1.6. [SITE REVIEW]10 as All numbered footnotes in Schedule 1 are for guidance of the Contracting Authority and should be omitted prior to issue t 7 of the RFQ. ap All project specific provisions have been enclosed in square parenthesis and may be modified, as necessary, before issuing 8  the RFQ for the project. The square parenthesis should be removed after carrying out the required modifications. The Contracting Authority must provide relevant details regarding the asset and the possible product or service categories 9  Ad which could be provided through the use of the asset. The Contracting Authority will be heavily guided by its feasibility study as to what information is relevant. The Contracting Authority must provide sufficient information so as to allow interested parties to consider whether they would wish to be involved in the PPP. 10  The Contracting Authority must provide a summary on the site information and on issues that were identified during the nt , feasibility phases, such as: legal, environmental, stakeholders, personnel and human resources, infrastructure, equipment, performance standards, transfer of risk and other information identified as being relevant through the inception and feasibility phases. me cu Do le mp Sa Module 9 : Schedule 2: Bidding Process Timelines 26 Sample Request for Proposal for Single-Stage Bid Process Schedule 2: Bidding Process Timelines The Contracting Authority shall endeavor to adhere to the following timelines: Event Description Estimated Date, Time, and Location (if applicable) Last date for receipt of queries Pre-bid conference te Contracting Authority’s response to queries ria Bid Submission Deadline rop Opening of Envelope 1 (Qualification Documents) Announcement of Envelope 1 Short List pp Opening of Envelope 2 (Technical Proposal) A Announcement of Envelope 2 Short List as Opening of Envelope 3 (Financial Proposal) Selection and Announcement of Successful Bidder t Approval of Successful Bidder ap Finalization of matters to permit signing of PPP Agreement Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 3: Bid Letter 27 Sample Request for Proposal for Single-Stage Bid Process Schedule 3: Bid Letter [On the letterhead of the Bidder / Lead Member] Original or Copy number: Date: To: [Contracting Authority’s Name] [Insert Contracting Authority’ s Address] Re: Submission of Bid for the [name of project] Dear Madam/Sir, te With reference to your RFP dated [DATE], I/we, having examined the document and understood its ria contents, hereby submit my/our Bid for the aforesaid Project. We hereby confirm that we/our members in the Consortium satisfy the terms and conditions laid out in the Bidding Documents. We have agreed that _____________ [insert member’s name] will act as the Lead Member of our consortium, and that rop ______________ [insert individual’s name] will act as our representative/ will act as the representative of the consortium on its behalf* and has been duly authorized to submit the Bid.11 pp The Bid is being submitted for the express purpose of qualifying as a Successful Bidder for the aforesaid Project. The Bid is unconditional and unqualified. A I/We hereby certify/declare that: 1. all the required accompanying documents are complete and are all included in this Bid; as 2. all information provided in the Bid are true and correct; t ap 3. nothing has been omitted which renders such information misleading; 4. all documents accompanying such Bid are true copies of their respective originals; Ad /we shall make available to the Contracting Authority any additional information it may find necessary or 5. I require to supplement or authenticate the submissions; nt , 6. I/we will abide by all the terms and conditions of the RFP; me /We have examined and have no reservations to the Bidding Documents, including any addendum 7. I issued by the Contracting Authority; cu n the last 3 years, I/we/any of the Members have neither failed to perform on any contract, as evidenced 8. i by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or arbitration Do award, nor been expelled from any project or contract by any public authority nor have had any contract terminated by any public authority for breach by [us/any of the Members]; I/we are not barred by the Government, or any public agencies from participating in similar projects as of 9.  le [Bid Submission Deadline]; mp /We do not have any Conflict of Interest; 10. I I/We have not directly or indirectly or through an agent engaged or indulged in any corrupt practice, 11.  Sa fraudulent practice, coercive practice, undesirable practice or restrictive practice, as defined in this RFP, in respect of any tender or request for proposal issued by or any agreement entered into with the Contracting Authority or any other public sector enterprise or any government, at central or state level; Please strike out if not 11  applicable. /we have taken steps to ensure that in conformity with the provisions of this RFP, no person acting for 12. I me/us or on my/our behalf has engaged or will engage in any corrupt practice, fraudulent practice, coercive practice, undesirable practice or restrictive practice; you may cancel the Bidding Process at any time and that you are neither bound to accept any Bid that 13.  you may receive, without incurring any liability to the Bidders; Module 9 : Schedule 3: Bid Letter 28 Sample Request for Proposal for Single-Stage Bid Process /we/any Member, am/are not a member of a/any other Consortium applying for the Project; 14. I /we or any Member of our consortium have not been convicted by a court of law or indicted or adverse 15. I orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community; in regard to matters relating to security and integrity of the country, I/we have not been charged by any 16.  government agency or convicted by a court of law; te  o investigation by a regulatory authority is pending either against me/us/any Member or against our 17. n chief executive officer or any of my/our directors/managers/employees; ria I/We believe that I/we satisfy(s) and meet(s) all the requirements as specified in the RFP and are/is qualified to submit a Bid. rop I/We understand that the Successful Bidder shall be required to incorporate and capitalize a Project Company in accordance with the Bidding Documents prior to execution of the PPP Agreement. pp I/We agree and undertake to be jointly and severally liable for all our obligations under the PPP Agreement as per the provisions set out therein. A Yours faithfully, t as (Name, designation, and signature of the authorised representative) ap For and on behalf of: (name and seal of the Bidder / Lead Member of the Consortium) Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 4: Bidder Information 29 Sample Request for Proposal for Single-Stage Bid Process Schedule 4: Bidder Information12 Bidder Information Applicant’s legal name In case of Consortium, legal name of each member te Applicant’s actual or intended ria country of constitution Applicant’s actual or intended year rop of constitution Applicant’s legal address in country of constitution pp Applicant’s authorized representative information (name, A designation, address, Telephone/ Fax numbers, E-mail) This section must be 12  completed by the as authorized consortium Attached are copies of original documents of: representative, or if 1. Notarized documents of constitution of the legal entity named above the applicant is a sole 2. Letter of authorization to represent the applicant organization, by that 3. Letter of intent to form Consortium or Consortium agreement. organization. t ap Ad nt , me cu Do le mp Sa Module 9 : Schedule 5: Consortium Member Information 30 Sample Request for Proposal for Single-Stage Bid Process Schedule 5: Consortium Member Information13 Consortium Member Information Consortium member’s legal name Consortium member’s actual or intended country of constitution te Consortium member’s actual or ria intended year of constitution Consortium member’s legal address rop in country of constitution Consortium member’s authorized representative information (name, pp designation, address, Telephone/ Fax numbers, E-mail) A Attached are copies of original documents of: 1. Notarized documents of constitution of the legal entity named above This section is to be 13  2. Letter of authorization to represent the applicant as completed by each 3. Letter of intent to form Consortium or Consortium agreement. consortium member. t ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 6: Financial Capacity 31 Sample Request for Proposal for Single-Stage Bid Process Schedule 6: Financial Capacity14 [On the letter head of the Applicant] (In [CURRENCY]) Applicant type Member Code15 Net Worth te Year 1 Single entity Applicant ria Consortium rop Name & address of Bidder’s Banks: Instructions: pp The Applicant/Members of the Consortium will attach copies of the balance sheets, financial statements and audited annual reports for 5 years preceding the Application Due Date. The financial statements will: A 1. reflect the financial situation of the Applicant; 2. be audited by a statutory auditor; as 3. be complete, including all notes to the financial statements; and  orrespond to accounting periods already completed and audited (no statements for partial periods will 4. c be requested or accepted, if no audited results are available for such partial periods). t ap “Net Worth” shall mean (Subscribed and Paid-up Equity + Reserves) less (Revaluation reserves + miscellaneous expenditure not written off + reserves not available for distribution to equity shareholders). Ad Year 1 will be the latest completed financial year, preceding the Bid Date. The Bidder will provide an Auditor’s Certificate specifying the Net Worth of the Bidder and also specifying nt , the methodology adopted for calculating such Net Worth. If the annual accounts for the latest financial year are not audited, the Bidder will provide the provisional me annual accounts for the latest financial year. The provisional annual accounts will be accompanied by an undertaking by the Bidder to the effect that: if it is chosen as the Successful Bidder, the Bidder will submit the audited annual accounts for the latest financial year within 2 months of the signing of the cu This section must be 14  PPP Agreement; and such audited annual accounts shall not vary by more than 5% from the provisional completed by the accounts submitted by it with its Bid. authorized consortium Do representative, or if the applicant is a sole Project List organization, by that organization. Project Title: le Member Code will 15  indicate NA for Not Applicable in case of a Location: mp single entity Applicant. For other members, the Project Size: (provide indicative following abbreviations investment requirement) are suggested viz. LM Sa means Lead Member, TM means Technical Description of the Project: Member, FM means Financial Member, OMM Date of Contract: means Operation & Maintenance Member; and OM means Other Date of Commissioning: Member. In case the project relates to Scope of Work: an Associate of the Applicant or its Member, write “Associate” along Client/Project Owner: (indicate with Member Code. client’s contact details) Module 9 : Schedule 6: Financial Capacity 32 Sample Request for Proposal for Single-Stage Bid Process The above table should contain the summary details that need to be provided for the projects that the Bidder wishes to showcase as relevant experience in mobilizing finance. For each project showcased, a certification from the client should be enclosed. The certificate should at least state the following: (1) Name of project and scope of work; (2) date of award and commercial operations date; and (3) current status of the project. te ria rop A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 7: Technical Capacity 33 Sample Request for Proposal for Single-Stage Bid Process Schedule 7: Technical Capacity Name of Prospective Applicant: Name of entity fulfilling the requirement: Relationship to Prospective Bidder: [indicate whether Prospective Bidder / Consortium Member / Design te & Engineering Contractor] ria Project List rop Project Title: Location: pp Project Size: (provide indicative investment requirement) A Description of the Project: as Date of Contract: Date of Commissioning: t ap Scope of Work: Client/Project Owner: (indicate Ad client’s contact details) The above table should contain the summary details that need to be provided for the projects that the nt , Bidder wishes to showcase as relevant experience (i.e. design & engineering, construction, operation, maintenance, etc.) me In case various aspects of the project are to be undertaken by different entities within a Consortium, separate forms need to be accomplished for each (i.e. one form for the entity nominated to fulfill design & engineering experience; separate form if a different entity is nominated by the Bidder to fulfill cu construction, etc). Do For each project showcased, a certification from the client should be enclosed. The certificate should at least state the following: (1) Name of project and scope of work; (2) date of award and commercial operations date; and (3) current status of the project. le mp Sa Module 9 : Schedule 8: Bank Guarantee for Bid Security 34 Sample Request for Proposal for Single-Stage Bid Process Schedule 8: Bank Guarantee for Bid Security Address of the guarantor bank: [•] Address of the beneficiary: [•] We, the undersigned [•] (the “Guarantor”), in order to enable [Name of Bidder] to bid for the [Name of the Project], hereby irrevocably and independently guarantee to pay to you an amount up to a total of [•] waiving all objections and defences. te We shall effect payments under this guarantee on your first written demand, which must be accompanied ria by your confirmation that you have accepted the above-mentioned bid and that the firm [Name of Bidder] is no longer prepared to abide by this bid. rop This guarantee shall remain in full force for a period of 180 days from the Bid Submission Deadline (as defined in the RFP). pp By this date we must have received any claims for payment by letter or encoded telecommunication. A It is understood that you will return this guarantee to us on expiry or after payment of the total amount to be claimed hereunder. as This guarantee is governed by the laws of [LOCATION] and shall be subject to the exclusive jurisdiction of the Courts of [LOCATION]. t ap Ad ----------------------------------- --------------------------------- Date Guarantor nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 9: Power of Attorney for Signing of Bid 35 Sample Request for Proposal for Single-Stage Bid Process Schedule 9: Power of Attorney for Signing of Bid I (name of the company) incorporated under applicable laws and having its registered office at [__] “Company”, do hereby irrevocably constitute, nominate, appoint and authorize Mr. /Ms (name), presently residing at [indicate business address], who is presently employed with us and holding the position of [designated position], as our true and lawful attorney (hereinafter referred to as the “Attorney”) to do in our name and on our behalf, all such acts, deeds, matters and things as are necessary or required in connection with or incidental to submission of our Bid and for our selection as Successful Bidder for the [Title of Project] (the ‘Project’) proposed or being developed by the Contracting Authority including but te not limited to signing and submission of our Bid and other documents and writings, participate in pre-bid conferences and other conferences and providing information/responses to the Contracting Authority, ria representing us in all matters before the Contracting Authority, signing and execution of all contracts including the PPP Agreement and undertakings consequent to acceptance of our Bid, and generally dealing with the Contracting Authority in all matters in connection with or relating to or arising out of our Bid rop for the said Project and/or upon award thereof to us and/or till the entering into of the PPP Agreement with the Contracting Authority. pp We hereby agree to ratify and confirm all acts, deed, matters and things lawfully done or caused to be done by our said Attorney pursuant to and in exercise of the powers conferred by this Power of Attorney and that The mode of execution 16  A of the Power of Attorney all acts, deeds and things done by our said Attorney in exercise of the powers hereby conferred shall and should be in accordance shall always be deemed to have been done by us. with the procedure, if as any, laid down by the applicable law and the Capitalised terms not defined herein shall have the meaning assigned to them under the RFP. charter documents of the executant(s) and IN WITNESS WHEREOF, …………………………., THE ABOVE NAMED PRINCIPAL HAVE EXECUTED THIS when it is so required, t POWER OF ATTORNEY ON THIS ……… DAY OF …………., 20** ap the same should be under common seal affixed in accordance For ………………………….. Ad with the required procedure. Wherever (Signature) required, the Applicant (Name, Title and Address) should submit for Witnesses: verification the extract of nt , the charter documents (Notarised) and documents such Accepted as a resolution/ power me of attorney in favour of the person executing this Power of Attorney for the delegation of cu power hereunder on behalf of the Applicant. …………………………… (Signature) (Name, Title and Address of the Attorney)16 Do le mp Sa Module 9 : Schedule 10: Power of Attorney for Lead Member of Consortium 36 Sample Request for Proposal for Single-Stage Bid Process Schedule 10: Power of Attorney for Lead Member of Consortium Whereas, the members of the Consortium are interested in bidding for the Project and implementing the [Title of Project] (the ‘Project’) in accordance with the terms and conditions of the Bidding Documents and other connected documents in respect of the Project. Whereas, it is necessary for the members of the Consortium to designate the Lead Member with all necessary power and authority to do for and on behalf of the Consortium, all acts, deeds and things as may be necessary in connection with the Consortium’s bid for the Project and its execution. who, acting jointly, te would have all necessary power and authority to do all acts, deeds and things on behalf of the Consortium, as may be necessary in connection with the Consortium’s bid for the Project. ria NOW THIS POWER OF ATTORNEY WITNESSETH THAT; rop The mode of execution 17  of the Power of Attorney We, M/s. __________________________(Lead Member) and M/s __________________ (the respective should be in accordance names and addresses of the registered office) do hereby designate M/s. _________________________ with the procedure, if ________ being one of the members of the Consortium, as the Lead Member of the Consortium, to do on pp any, laid down by the applicable Law and the behalf of the Consortium, all or any of the acts, deeds or things necessary or incidental to the Consortium’s charter documents of bid and submission of its proposal for the Project, including but not limited to signing and submission of the executors and when A relevant documents and writings, participating in pre-bid and other conferences, responding to queries, it is so required the same should be under and generally to represent the Consortium in all its dealings with the Contracting Authority or any person in connection with the Project until the PPP Agreement is entered into between the Concessionaire and the as common seal affixed in accordance with the Contracting Authority. required procedure. Wherever required, We hereby agree to ratify all acts, deeds and things lawfully done by Lead Member, our said attorney the Applicant should t submit for verification ap pursuant to this Power of Attorney and that all acts deeds and things done by our aforesaid attorney shall the extract of the charter documents and shall always be deemed to have been done by us/Consortium. and documents such Dated this the _____day of _____, 20** Ad as a resolution/ power of attorney in favour of the person executing this Power of Attorney nt , for the delegation of power hereunder on behalf of the Bidder. (Executors)17 me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 11: Consortium Agreement 37 Sample Request for Proposal for Single-Stage Bid Process Schedule 11: Consortium Agreement THIS CONSORTIUM AGREEMENT is entered into on this [•] day of [•] 20[•] (the “Agreement”) AMONGST [Name of entity], a company incorporated under [legislation] and having its registered office at [business 1.  address] (hereinafter referred to as the “First Part” which expression shall, unless repugnant to the context include its successors and permitted assigns); AND  Name of entity], a company incorporated under [legislation] and having its registered office at [business 2. [ address] (hereinafter referred to as the “Second Part” which expression shall, unless repugnant to the te context include its successors and permitted assigns); AND ria  Name of entity], a company incorporated under [legislation] and having its registered office at [business 3. [ address] (hereinafter referred to as the “Third Part” which expression shall, unless repugnant to the context include its successors and permitted assigns). rop The above mentioned parties of the FIRST, SECOND and, THIRD PART are collectively referred to as the “Parties” and each is individually referred to as a “Party”. pp WHEREAS, A 1. The Contracting Authority has invited Bids by its Request for Proposal No. [•] dated [•] (the “RFP”) for selecting the Successful Bidder for the [Title of the Project] through Public Private Partnership; 2. T he Parties are interested in jointly bidding for the Project as members of a Consortium (as defined as below) and in accordance with the terms and conditions of the Bidding Documents including this RFP; and t is a necessary condition under the RFP that the members of the Consortium shall enter into a 3. I t ap concession agreement and furnish a copy thereof with the Bid. NOW IT IS HEREBY AGREED as follows: Ad  efinitions and Interpretations 1. D In this Agreement, the capitalised terms shall, unless the context otherwise requires, have the meaning nt , ascribed thereto under the RFP. 2. Consortium me 2.1 The Parties do hereby irrevocably constitute a consortium (the “Consortium”) for the purposes of jointly participating in the Bidding Process for the Project. 2.2 The Parties hereby undertake to participate in the Bidding Process only through this Consortium cu and not individually and/or through any other consortium constituted for the Project, either directly or indirectly. Do Covenants 3.  The Parties hereby undertake that in the event the Consortium is declared the Successful Bidder and awarded the Project, it shall incorporate the Project Company under [legislation] as required by and in le accordance with the Bidding Documents for performing all its obligations as the Concessionaire in terms of the PPP Agreement for the Project. mp  ole of the Parties 4. R The Parties hereby undertake to perform the roles and responsibilities as described below.  Sa Party of the First Part shall be the Lead Member of the Consortium and shall have the power of attorney from all Parties for conducting all business for and on behalf of the Consortium during the Bidding Process; {Party of the Second Part shall be [•]; and} {Party of the Third Part shall be [•]}  oint and Several Liability 5. J The Parties do hereby undertake to be jointly and severally responsible for all obligations and liabilities relating to the Project in accordance with the terms of the RFP, and for the performance of the Service Providers obligations under the PPP Agreement. Module 9 : Schedule 11: Consortium Agreement 38 Sample Request for Proposal for Single-Stage Bid Process  hareholding in the Project Company 6. S The Parties agree that the proportion of shareholding among the Parties in the Project Company shall be as follows: First Party: Second Party: Third Party: Subject to the terms of the PPP Agreement, the Lead Member shall for [•] years hold equity share capital not less than **% (** percent) of the subscribed, paid up and voting equity share capital of the Project te Company; and ria Each member of the Consortium shall hold at least ** % of the subscribed and paid up equity of the Project Company for [•] years after the Completion Date, and at least ** % for the following [•] years. rop The Parties undertake that they shall comply with all equity lock-in requirements set forth in the PPP Agreement. pp  epresentation of the Parties 7. R Each Party represents to the other Parties as of the date of this Agreement that: 7.1 such Party is duly organised, validly existing and in good standing under the laws of its A incorporation and has all requisite power and authority to enter into this Agreement; 7.2 the execution, delivery and performance by such Party of this Agreement has been authorised by as all necessary and appropriate corporate or governmental action and a copy of the extract of the charter documents and board resolution/power of attorney in favour of the person executing this Agreement for the delegation of power and authority to execute this Agreement on behalf of the t Member of Consortium is annexed to this Agreement, and will not, to the best of its knowledge: ap 7.3 require any consent or approval not already obtained; 7.4 violate any applicable law presently in effect and having applicability to it; Ad 7.5 violate the memorandum of association and articles of association, by-laws or other applicable organizational documents thereof; 7.6 violate any clearance, permit, concession, grant, license or other governmental authorization, nt , approval, judgment, order or decree or any mortgage agreement, indenture or any other instrument to which such Party is a party or by which such Party or any of its properties or assets are bound or that is otherwise applicable to such Party; and me 7.7 create or impose any liens, mortgages, pledges, claims, security interests, charges or any other encumbrances or obligations to create a lien, charge, pledge, security interest, encumbrances or mortgage in or on the property of such Party, except for encumbrances that would not, individually cu or in the aggregate, have a material adverse effect on the financial condition or prospects or business of such Party so as to prevent such Party from fulfilling its obligations under this Agreement; Do 7.8 this Agreement is the legal and binding obligation of such Party, enforceable in accordance with its terms against it; and 7.9 there is no litigation pending or, to the best of such Party’s knowledge, threatened to which it or any le of its affiliates is a party that presently affects or which would have a material adverse effect on the financial condition or prospects or business of such Party in the fulfilment of its obligations under mp this Agreement. Termination 8.  Sa This Agreement shall be effective from the date hereof and shall continue in full force and effect till the full and final satisfaction of all obligations under the PPP Agreement in accordance with the terms thereof, in case the Project is awarded to the Consortium. However, in case the Consortium is either not qualified for the Project or does not get selected for award of the Project as the Successful Bidder, the Agreement will stand terminated, in accordance with the mutual agreement of the Parties. thegpsc.org 9.  Miscellaneous This Consortium Agreement shall be governed by laws of ****. | The Parties acknowledge and accept that this Agreement shall not be amended by the Parties without The World Bank the prior written consent of the Contracting Authority. Module 9 : Schedule 11: Consortium Agreement 39 Sample Request for Proposal for Single-Stage Bid Process IN WITNESS WHEREOF THE PARTIES ABOVE NAMED HAVE EXECUTED AND DELIVERED THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN. SIGNED, SEALED AND DELIVERED For and on behalf of LEAD MEMBER by: (Signature) (Name) (Designation) (Address) te SIGNED, SEALED AND DELIVERED ria For and on behalf of SECOND PART (Signature) (Name) rop (Designation) (Address) pp SIGNED, SEALED AND DELIVERED For and on behalf of THIRD PART (Signature) A (Name) (Designation) as (Address) t ap Ad nt , me cu Do le mp Sa Module 9 : Schedule 12: Anti-Collusion Certificate 40 Sample Request for Proposal for Single-Stage Bid Process Schedule 12: Anti-Collusion Certificate18 We undertake that, in competing for (and, if the award is made to us, in executing) the Project, we will strictly observe the laws against fraud and corruption in force in [LOCATION]. We hereby certify and confirm that in the preparation and submission of our Bid, we have not acted in concert or in collusion with any other Bidder or other person(s) and also not done any act, deed or thing which is or could be regarded as anti-competitive. te We further confirm that we have not offered nor will offer any illegal gratification in cash or kind to any person or agency in connection with this Bid. ria rop Dated this ..........................day of ......................, 20** pp A .................................................... (Name of the Bidder) t as .................................................... ap (Signature of the Bidder / Authorised Person) Ad To be executed 18  on stamp paper of nt , appropriate value. .................................................... (Name of the Authorised Person) me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 13: Format and Evaluation of Technical Proposal 41 Sample Request for Proposal for Single-Stage Bid Process Schedule 13: Format and Evaluation of Technical Proposal The Bidders shall prepare a Technical Proposal based on the requirements given in the RFP, setting out the proposed plan for implementation of the PPP Project. The Technical Proposal shall comprise the technical approach and methodology for implementing the Project, implementation schedule and timelines, manpower deployment, etc. The Technical Proposal shall be in adherence to Laws and the requirements set out in the draft PPP Agreement. The Bidders shall submit their Technical Proposal in line with the contents provided in the table below. The te Technical Proposals shall be evaluated against the criteria outlined for each of the parameters in the table below, with Bidder getting either a “pass” of a “fail” for each of the parameter. A Bidder shall have to “pass” ria against each and every parameter in order to qualify for the opening of the Financial Proposal. rop Parameter19 Criteria for Evaluation Conceptual Engineering Design:  rchitectural analysis of the Project - A  he conceptual engineering - T To be defined based on the needs pp Location and its peripheral areas design must conform to the output and characteristics of each - Details key design/engineering specifications prescribed in the individual project concepts considered in the design of Bidding Documents A the facility The engineering surveys, plans, -  - Conceptual layout of the facility, and estimates should be doable illustrating technical specifications of within +/- **% of the final quantities as key components of the facility. Technical Plan for Construction/ Rehabilitation: -  Methodology statement outlining - T t  ime planning and procedures for To be defined based on the needs ap appreciation of the project the construction of the completed and characteristics of each individual Implementation Plan – present a -  facility must be well-defined, shown project detailed activity schedule along to be feasible at the municipal Ad with milestones in line with the context, allow a completion, requirements set out in the PPP commissioning, and handover of the Agreement. This should also outline PPP Project on time the timeline envisaged for obtaining Must be in line with output -  various Government/Local Government specifications nt , approvals Operation & Maintenance Plan: me Process Flow Chart and Material -   ystem/methodology for the O&M of - S To be defined based on the needs Balance Statement setting out the the completed facility must be well- and characteristics of each individual activities and the outputs at each stage defined, shown to be feasible and project - Methodology for operations. practicable at the municipal context, cu -  Timelines and frequency for carrying Must show that key performance -  out and completion of various activities. indicators are achievable by the -  Resource Utilization Statement proposed O&M system Do indicating the proposed organizational structure, employee deployment, equipment procurement and utilization, contracting activities, utilization of office and other facilities. le The maintenance (regular & -  emergency) schedules should also be mp indicated over the Term Organization & Staffing: Sa Bidders should present the calculations - Adequacy of proposed organization To be defined based on the needs for manpower requirement for the Well defined roles & responsibility -  and characteristics of each individual Project. Proposed organization structure that facilitates the implementation of project and composition of the project and the proposed Technical and O&M operational team to be presented, Plans including staff deployment plan, Local staffing in line with public -  number of shifts per day of operations sector expectations and roles and responsibilities Bidders May vary based on 19  should indicate the number of staff to be the requirements sourced locally. of the PPP Project. Module 9 : Schedule 13: Format and Evaluation of Technical Proposal 42 Sample Request for Proposal for Single-Stage Bid Process The marks would be summed up for all evaluation parameters for each individual bidder. The score for evaluation of the Technical Proposal will be calculated as follows: Score (in %) for evaluation of Technical Proposal of Bidder ‘N’’ = (total marks from evaluation for Bidder N/ highest total marks among all Bidders) x 100 Bidders receiving less than 70% score would not be eligible for the evaluation of their financial proposals. Financial proposals of all such bidders would be returned unopened.20 te OR ria The scores from evaluation of the Technical Proposal would be used for calculation of the weighted average score, along with the score from the evaluation of the Financial Proposal, as described in Section 3.8 of this document. rop The Municipality will have to select one of the two paragraphs above based on the approach used for evaluation of bids. 20   pp The first paragraph will be used if the Municipality is using the pass-fail criteria for technical evaluation, to identify the bidders whose financial proposal would be opened. In such case the final selection of the best Bid would be based on the evaluation of the financial proposal only. The second paragraph will be selected if the Municipality intends to use the weighted average of the scores from Technical and Financial Evaluations for the selection of the financial proposal. A t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 14: Format of Financial Proposal 43 Sample Request for Proposal for Single-Stage Bid Process Schedule 14: Format of Financial Proposal [On the letterhead of the Applicant / Lead Member] Original or Copy number: Date: To: [Contracting Authority’s Name] [Insert Contracting Authority’ s Address] Re: Financial Proposal for the [Title of the PPP Project] te Dear Madam/Sir, ria Please find below our Financial Proposal for the [Title of the Project] (the “Project”) in response to the Request for Proposal (“RFP”) issued by [the Name of the Contracting Authority] (“the Contracting Authority”) on [DATE]. rop We hereby confirm the following: This Financial Proposal is being submitted by [name of Bidder] in accordance with the conditions -  pp stipulated in the RFP; We have examined in detail and understand and agree to abide by all terms and conditions stipulated -  A in the Bidding Documents issued by the Contracting Authority, as amended, and in any subsequent communication sent by the Contracting Authority; Our Financial Proposal is consistent with all requirements of submission stated in the RFP and in any -  as subsequent communication sent by the Contracting Authority; It is adequately supported by the following documents as attachments: -  (a) Supporting cost estimates for the design, construction, operation and maintenance components; t (b) A ap  financial model consistent with the above cost estimates and the technical proposal, and which includes a short explanatory memorandum; and (c) A project financing plan showing positively showing that the same can adequately meet the cost Ad requirements of the PPP Project, which may include the amount of equity to be infused, debt to be obtained for the Project, and sources of financing. nt , Our Bid Value is as follows: [Grant/ Fee] [amount in [CURRENCY]/ percentage] me We are solely responsible for any errors or omissions in our Financial Proposal. cu Respectfully, Do le (Name, designation, and signature of the authorised representative) For and on behalf of: (name and seal of the Applicant / Lead Member of the Consortium) mp Sa Module 9 : Schedule 15: Declaration of Undertaking 44 Sample Request for Proposal for Single-Stage Bid Process Schedule 15: Declaration of Undertaking We underscore the importance of a free, fair and competitive procurement process that precludes abusive practices. In this respect we have neither offered nor granted directly or indirectly any inadmissible advantages to any public servant or other person nor accepted such advantages in connection with our Application, nor will we offer or grant or accept any such incentives or conditions in this Bidding Process or, in the event that we are awarded the contract, in the subsequent execution of the contract. We also declare that our company/all members of the consortium has/have not been included in the list of te sanctions of the United Nations nor in any other list of sanctions and affirm that our company/all members of the consortium will immediately inform the client if this situation should occur at a later stage. ria We acknowledge that, in the event that our company (or a member of the consortium) is added to a list of sanctions that is legally binding for the client, the client is entitled to exclude our company/ the consortium rop from the Bidding Process and, if the contract is awarded to our company/ the consortium, to terminate the contract immediately if the statements made in the Declaration of Undertaking were objectively false or the reason for exclusion occurs after the Declaration of Undertaking has been issued. A pp as .................................................... ......................................................................... t Place, date ap Authorized Representative of the Bidder Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 9 : Schedule 16: Draft PPP Agreement 45 Sample Request for Proposal for Single-Stage Bid Process Schedule 16: Draft PPP Agreement te ria rop A pp t as ap Ad nt , me cu Do le mp Sa Module 9 : Managing PPP Consultants 46 Sample Request for Proposals (Single Stage) thegpsc.org | The World Bank SAMPLE REQUEST FOR PROPOSAL 10 FOR TWO-STAGE BID PROCESS Public-Private Partnership Municipal Framework Module 10 : 2 Sample Request for Proposal for Two-Stage Bid Process Important Notes: This Request for Proposals – Two Stages is provided only as a sample document. It must be adapted to fit the unique circumstances and needs of each particular Municipality and project for which its use is intended. National and local laws, regulations, policies and practices may prescribe a different approach to procuring project-level consulting services. Notes te ria ADDITIONAL GUIDANCE MATERIAL World Bank Group’s Public-Private Partnership Legal Resource Center, rop https://ppp.worldbank.org/public-private-partnership/ A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : 3 Sample Request for Proposal for Two-Stage Bid Process [CONTRACTING AUTHORITY’S NAME] Request for Proposal te for the ria rop A pp t as [Title of PPP Project] ap Ad nt , me cu Do le mp Sa [DATE] Module 10 : Table of Contents 4 Sample Request for Proposal for Two-Stage Bid Process TABLE OF CONTENTS TABLE OF CONTENTS 4 DISCLAIMER 5 GLOSSARY 6 INTRODUCTION 1  8 A. Purpose of Issuing the RFP 8 B. Project Background 8 te C. PPP Agreement 8 D. Financing assumptions 8 ria E. Brief Description of the Bidding Process 8 2 INSTRUCTIONS TO BIDDERS 10 A. General Requirements 10 rop B. Documents 14 C. Preparation and Submission of Bid 15 3 EVALUATION OF BIDS 20 pp A. Opening and Evaluation of Technical Proposals 20 B. Opening and Evaluation of Financial Proposals 21 A C. Award and Execution of the PPP Agreement 22 D. Miscellaneous 23 Schedule 1: Updated Project Information 24 as Schedule 2: Updated Bidding Process Timelines 25 Schedule 3: Bid Letter 26 Schedule 4: Updated Bidder Information 28 t ap Schedule 5: Updated Consortium Member Information 29 Schedule 6: Bank Guarantee for Bid Security 30 Schedule 7: Power of Attorney for Signing of Bid 31 Ad Schedule 8: Power of Attorney for Lead Member of Consortium 32 Schedule 9: Updated Consortium Agreement 33 Schedule 10: Anti-Collusion Certificate 36 nt , Schedule 11: Format of Technical Proposal 37 Schedule 12: Format of Financial Proposal 39 Schedule 13: Declaration of Undertaking 40 me Schedule 14: Draft PPP Agreement 41 cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Disclaimers 5 Sample Request for Proposal for Two-Stage Bid Process DISCLAIMERS The information contained in this Request for Proposal (RFP) or subsequently provided to Bidders, whether verbally or in documentary or any other form by or on behalf of the Contracting Authority or any of its employees or advisors, is provided to Bidders on the terms and conditions set out in this RFP and such other terms and conditions subject to which such information is provided. This RFP is not an agreement and is neither an offer nor invitation by the Contracting Authority to the te prospective Bidders or any other person. The purpose of this RFP is to provide Bidders with information that may be useful to them in preparing and submitting their Bid pursuant to the Bidding Documents including ria this RFP. This RFP includes statements, which reflect various assumptions and assessments arrived at by the Contracting Authority in relation to the PPP Project. Such assumptions, assessments and statements do not purport to contain all the information that each Bidder may require. The information contained in rop the Bidding Documents may not be appropriate for all persons, and it is not possible for the Contracting Authority, its employees or advisors to consider the investment objectives, financial situation and particular needs of each party who reads or uses this RFP. Each Bidder should conduct its own investigations and pp analysis and should check the accuracy, adequacy, correctness, reliability and completeness of the assumptions, assessments, statements and information contained in this RFP and obtain independent A advice from appropriate sources. Information provided in this RFP to the Bidders covers a wide range of topics, some of which depends as upon interpretation of local laws & regulations. The information given is not intended to be an exhaustive account of statutory requirements and should not be regarded as a complete or authoritative statement of law. None of the Contracting Authority, its employees, nor advisors accept any responsibility for the t ap accuracy or otherwise for any interpretation or opinion on law expressed herein. The Contracting Authority, its employees and advisors make no representation or warranty and shall have no liability to any person, including any Bidder under any law, statute, rules or regulations or tort, principles of restitution or unjust Ad enrichment or otherwise for any loss, damages, cost or expense which may arise from or be incurred or suffered on account of anything contained in this RFP or otherwise, including the accuracy, adequacy, correctness, completeness or reliability of the RFP and any assessment, assumption, statement or nt , information contained therein or deemed to form part of this RFP or arising in any way by participating in this Bidding Process. me The Contracting Authority, its employees or advisors, likewise accepts no liability of any nature whether resulting from negligence or otherwise howsoever caused arising from reliance of any Bidder upon the statements contained in this RFP. The Contracting Authority may in its absolute discretion, but without being cu under any obligation to do so, update, amend or supplement the information, assessment or assumptions contained in this RFP. The issuance of this RFP does not imply that the Contracting Authority is bound to Do select a Bidder or to appoint the Successful Bidder for the Project and the Contracting Authority reserves the right to reject all or any of the Bidders or Bids or otherwise discontinue the process without assigning any reason whatsoever. le The Bidder shall bear all its costs associated with or relating to the preparation and submission of its Bid including but not limited to preparation, copying, postage, delivery fees, expenses associated with any mp demonstrations or presentations which may be required by the Contracting Authority or any other costs incurred in connection with or relating to its Bid. All such costs and expenses will remain with the Bidder and the Contracting Authority shall not be liable in any manner whatsoever for the same or for any other Sa costs or other expenses incurred by a Bidder in preparation or submission of the Bid, regardless of the conduct or outcome of the Bidding Process. Module 10 : Glossary 6 Sample Request for Proposal for Two-Stage Bid Process GLOSSARY Addendum or Addenda means addendum or addenda to the RFP. Bid means a proposal submitted by a Bidder for the Project. Bidder means an interested single entity or Consortium which submits a Bid to the Contracting Authority in accordance with the provisions of this RFP. te Bidding Company means a single entity submitting a Bid pursuant to the RFP. ria Bidding Documents means the RFP, the draft PPP Agreement, any Addenda or clarification issued by the Contracting Authority in accordance with the terms of this RFP, and any other documents provided by the rop Contracting Authority pursuant to this RFP, as such documents may be modified, altered, amended and clarified from time to time by the Contracting Authority. pp Bidding Process means the single-stage bidding process being followed by the Contracting Authority to award the Project to the Selected Bidder, the terms of which are set out in this RFP. A Bid Parameter means the criteria which determines the best bid for the PPP Project. as Bid Security means an amount equivalent to [AMOUNT] to be provided by a Bidder as security for its Bid,. Bid Submission Deadline means the date specified in Schedule 2 as the last date for submission of Bids. t ap Availability Payments means the payments, if any, to be paid to the Service Provider by the Contracting Authority (CA) for the services or facility “available” for use by the CA, as provided under the PPP Project. Ad Conflict of Interest has the meaning ascribed to it in Clause 2.1.12. nt , Consortium means any combination of entities that have formed a consortium or association by fulfilling the requirements set out in this RFP, for the purpose of submitting a Bid and for implementing the Project, if such consortium or association is declared as the Selected Bidder. me Consortium Agreement means the binding consortium agreement to be executed between Consortium Members in the form set out in Schedule 11. cu Contracting Authority means any local/municipal government authority public, statutory corporation or Do other subnational agency. Control means, with respect to a corporation, the ownership, directly or indirectly, of more than 50% of the voting shares of a company or corporation or the power to appoint majority of the directors on the board of le directors of such company or corporation and/or the power to direct the management and policies of such person by operation of law, agreement or otherwise and with respect to a person which is not a company mp or corporation, the power to direct the management and policies of such person by operation of law, agreement or otherwise. Sa Data Room means a virtual data room providing more detailed project information, records, and other background documents relevant to the PPP Project. Eligible Project means a project demonstrating that a Bidder has the requisite technical capacity to thegpsc.org implement the Project. Financial Proposal means the Financial Proposal to be submitted by a Bidder for the development and implementation of the PPP Project as prescribed in Clause 2.13.5. | The World Bank Government means the Government of ****. Module 10 : Glossary 7 Sample Request for Proposal for Two-Stage Bid Process Lead Member in the context of a Consortium, means the Consortium Member nominated by the Consortium Members as the lead member with the rights and obligations as set out in this RFP. Letter of Award means the letter of award that will be issued by the Contracting Authority to the Selected Bidder in accordance with Clause 3.20. Member means a member of a Consortium. Net Worth means the difference between the sum of subscribed and paid up equity, reserves and the sum te of revaluation reserves, miscellaneous expenditure not written off and reserves not available for distribution to equity shareholders. ria O&M means operation and maintenance. rop PPP means public-private partnership. PPP Agreement means the agreement to be executed between the Contracting Authority and the Selected pp Bidder to implement the PPP project, substantially in the format set out in Schedule 16. Pre-Bid Conference means a conference that will be held by the Contracting Authority to answer queries A or clarifications raised by Bidders and to provide information to Bidders on the Project. as Project Company means the special purpose company specifically formed and incorporated in [LOCATION] for the purpose of undertaking the Project pursuant to the PPP Agreement. t RFP or Request for Proposals means this request for proposal dated **** along with its Schedules, and ap Addenda, if issued. Ad Service Provider means the legal entity proposed by the Successful Bidder in its proposal to undertake the PPP Project in accordance with the PPP Agreement nt , Successful Bidder means the Bidder selected by the Contracting Authority to award the Project following the completion of the Bidding Process. me Technical Proposal has the meaning ascribed to it in Clause 2.13.4. Tender Committee means the working group established by the Contracting Authority to carry out the PPP cu procurement. Term means the period during which the Service Provider shall undertake the PPP Project in accordance Do with the PPP Agreement. User Payment means a payment to be paid to the Service Provider by a user of the PPP Project le mp Sa Module 10 : Introduction 8 Sample Request for Proposal for Two-Stage Bid Process 1. INTRODUCTION A. Purpose of Issuing the RFP 1.1. The purpose of issuing the RFP is to enable the Contracting Authority to select the Successful Bidder for the PPP project, by evaluating which among the qualified Bidders presents the best Bid that offers the best value for money for the public in undertaking the PPP Project as set out in the te technical and financial criteria in this RFP. ria 1.2. It is intended that the Bidding Process be conducted in a competitive and transparent manner in order to ensure that the Contracting Authority’s objectives for initiating the PPP are achieved and value for money objectives met. rop B. Project Background pp 1.3. The Contracting Authority is seeking private sector participation to improve [SERVICE] in the [LOCATION] through [DESCRIPTION OF FACILITIES] on a PPP basis. A 1.4. The Service Provider shall undertake: [indicate scope – i.e. design, construction and maintenance as of new facilities / operation and maintenance of existing facilities, etc]. t ap C. PPP Agreement Ad 1.5. The Contracting Authority shall enter into the PPP Agreement with the Service Provider. 1.6. The Term shall be **** years from [here insert start event or date]. nt , 1.7. At the end of this period, the Service Provider shall release or otherwise transfer the assets to the Contracting Authority free of charge and free of any liens or encumbrances. A draft of the PPP me Agreement is set out in Schedule 16. cu D. Financing assumptions Do 1.8. The Service Provider shall be responsible for financing the PPP Project. le 1.9. [Describe any concessional financing or grant funding that was made available for the PPP Project] mp 1.10. [Indicate key financing assumptions] 1.11. In consideration, the Service Provider shall have access to the following types of revenue streams: Sa (a) User Payments from users of the PPP Project; or/and (b) Availability Payments from Contracting Authority. thegpsc.org E. Brief Description of the Bidding Process 1.12. The Contracting Authority has adopted a two-envelope, two-stage process (collectively referred to | as the “Bidding Process”) for selection of the preferred bidder for award of the PPP Project. The World Bank 1.13. The first stage (the “Qualification Stage”) of the process is the qualification / shortlisting of interested Module 10 : Introduction 9 Sample Request for Proposal for Two-Stage Bid Process parties/consortia through their submission of an Application in accordance with the provisions of this RFQ (the “Applicant”). In this stage, Applicants are required to furnish the information specified in this RFQ. The Contracting Authority shall be entitled to disqualify an Applicant in accordance with the aforesaid documents at any stage of the Bidding Process. At the end of this stage, the Contracting Authority shall announce a short-list of prequalified Applicants who shall be eligible for participation in the second stage of the Bidding Process (the “Bid Stage”) comprising Request for Proposals (the “Request for Proposals” or “RFP”). 1.14. The second stage of the process is the bid proper or the Bid Stage. The shortlisted Applicants te / Bidders will be called upon to submit their proposals (the “Bids”) in respect of the project, in accordance with the RFP and other documents herein provided by the Contracting Authority. ria Bidders will be required to deposit, along with its Bid, a refundable bid security which will be specified in the RFP. rop 1.15. Bidders will be required to deposit, along with its Bid, a refundable bid security as specified in this RFP. pp 1.16. Bidders will be required to submit two envelopes – which together, comprises their Bid – containing the following: (1) the Technical Proposal and (2) the Financial Proposal. A 1.17. The first envelope, which contains the Bidder’s Technical Proposal, shall first be opened and evaluated. The Contracting Authority shall then announce the Bidders whose Technical Proposals as meet its minimum requirements, as prescribed in this RFP. Only Bidders who satisfy the Contracting Authority’s minimum technical specifications and requirements shall advance to the opening of the Financial Proposal. For those that do not qualify, their third envelopes shall be returned to them unopened. t ap 1.18. The second envelope, containing the Bidder’s Financial Proposal, shall be opened and evaluated. Ad The Bidder who submits the best Financial Proposal based on the Contracting Authority’s Bid Parameter shall be chosen as the Successful Bidder and shall be awarded the PPP Contract. nt , 1.19. The timeline of the Bidding Process is included as Schedule 2 of this RFP. The Contracting Authority may, in its sole discretion and without prior notice to the Bidders, amend the timelines. Bidders shall not rely in any way whatsoever on the initial timeline and the Contracting Authority shall not incur me any liability whatsoever arising out of amendments to the timelines. The Contracting Authority shall give notice of changes to the timelines, if any, by written addenda. cu Do le mp Sa Module 10 : Instructions to Bidders 10 Sample Request for Proposal for Two-Stage Bid Process 2. INSTRUCTIONS TO BIDDERS A. General Requirements 2.1. Eligibility of Bidders 2.1.1. A Bidder shall submit only 1 (one) Bid for the PPP Project either individually or as te a Member of a Consortium. A Bidder applying individually, or as a member of a Consortium, shall not be entitled to submit another Bid, either individually or as a ria member of any Consortium, as the case may be. 2.1.2. A Bidder may be a natural person, private entity, or any combination of them with a rop formal intent to enter into an agreement or under an existing agreement in the form of a Consortium. A Consortium shall be eligible for consideration subject to the conditions set out in this RFP. pp 2.1.3. The Bidders are expected to carry out their own surveys, investigations and other detailed examination of the Project before submitting their Bids. Nothing contained A in the Bidding Documents shall be binding on the Contracting Authority nor confer any right to the Bidders, and the Contracting Authority its employees and consultants shall as have no liability whatsoever in relation to or arising out of any or all contents of the Bidding Documents. 2.1.4.  t Notwithstanding anything to the contrary contained in this RFP, the detailed terms ap specified in the draft PPP Agreement shall have overriding effect; provided, however, that any conditions or obligations imposed on the Bidder hereunder shall continue to Ad have effect in addition to its obligations under the PPP Agreement. 2.1.5. The Bid should be furnished in the formats specified in this RFP and signed by the Bidder’s authorized signatory. The Bidders should note that the formats specified in the nt , RFP have been provided for the convenience of the Bidders and may not exhaustively enumerate or describe various information required to be provided by the Bidders me under the Bidding Documents. The Bidders should ensure that all the information required to be provided by them under the Bidding Documents is included in their Bid whether or not a particular format specified herein makes provision for submission of cu such information and/or whether or not a format for submission of such information is incorporated in the Bidding Documents. Do 2.1.6. The Bidder shall submit as part of its Bid, a Bid Security in accordance with the provisions of this RFP. The Bidder has the option to provide the Bid Security either as a demand draft or in the form of a bank guarantee, from a [*** rated] bank registered in le [LOCATION] acceptable to the Contracting Authority, as per the format at Schedule 8. mp 2.1.7. The Bidder should submit a power of attorney as per the format in Schedule 9, authorizing the signatory of the Bid to commit the Bidder. Sa 2.1.8. In case the Bidder is a Consortium, the Members thereof should furnish a power of attorney in favour of the Lead Member as per the format in Schedule 10. 2.1.9. Any condition or qualification or any other stipulation contained in the Bid which is inconsistent with the terms of the Bidding Documents may render the Bid liable to thegpsc.org rejection as a non-responsive Bid. 2.1.10. The Bid and all communications in relation to or concerning the Bidding Documents and | the Bid shall be in the English language. Supporting documents and printed literature The World Bank furnished by the Bidder with the Bid may be in any other language provided that they are accompanied by appropriate translations of the pertinent passages in the English language, duly authenticated and certified by the Bidder. Supporting materials which are Module 10 : Instructions to Bidders 11 Sample Request for Proposal for Two-Stage Bid Process not translated into English may not be considered. For the purpose of interpretation and evaluation of the Bid, the English language translation shall prevail. 2.1.11. The Bidding Documents, including this RFP and all attached or other documents, are and shall remain the property of the Contracting Authority and are transmitted to the Bidders solely for the purpose of preparation and submission of a Bid in accordance with the Bidding Documents. Bidders are to treat all information as strictly confidential and shall not use it for any purpose other than for preparing and submitting their Bid. The Contracting Authority reserves the right to make Bids and element thereof public te or otherwise transparent. ria Conflict of Interest: A Bidder shall not have a Conflict of Interest that affects the 2.1.12.  Bidding Process. Any Bidder found to have a Conflict of Interest shall be disqualified. In the event of disqualification, the Contracting Authority shall be entitled to forfeit and rop appropriate the Bid Security and/or Performance Security, as the case may be, without prejudice to any other right or remedy that may be available to the Contracting Authority under the Bidding Documents or otherwise. Determining the presence of Conflict of pp Interest shall be the prerogative of the Contracting Authority. A Bidder shall be deemed to have a Conflict of Interest affecting the Bidding Process, if: (a) the Bidder (or any constituent thereof) and any other Bidder (or any constituent A thereof have common controlling shareholders or other ownership interest; provided that this qualification shall not apply in cases where the direct or indirect as shareholding of a Bidder (or any constituent thereof) is less than **** % of the paid up and subscribed capital of the other Bidder (or any constituent thereof) and it does not have Control of the Bidder; or (b)  t a consortium member or any constituent of such Bidder is also a consortium ap member or constituent of another Bidder; or (c) such Bidder (or any constituent thereof) receives or has received any direct or Ad indirect subsidy from any other Bidder (or any constituent thereof), or has provided any such subsidy to any other Bidder (or any constituent thereof); or (d) such Bidder (or any constituent thereof) thereof has the same legal representative for nt , purposes of this Bid as any other Bidder (or any constituent thereof); or (e) s uch Bidder (or any constituent thereof) has a relationship with another Bidder (or any constituent thereof), directly or through common third parties, that puts either me or both of them in a position to have access to each other’s’ information about, or to influence the Bid of either or each other; or  uch Bidder (or any constituent thereof) has participated as a consultant to the (f) s cu Contracting Authority in the preparation of any documents, design or technical specifications of the PPP Project, or (g) Any legal, financial or technical adviser of the Contracting Authority in relation to the Do PPP Project is engaged by the Bidder (or any constituent thereof) in any manner for matters related to or incidental to the PPP Project. le 2.1.13. This RFP is not transferable and can only be used by the person to whom it has been issued. mp 2.1.14. Any award of the PPP Agreement pursuant to this RFP shall be subject to the terms of the Bidding Documents. Sa 2.1.15. For a detailed list of documents and information to be provided with each envelop constituting a Bid, please refer to Clause 2.9. 2.2. Change in composition of the Consortium 2.2.1. Change in the composition of a Consortium will not be permitted by the Contracting Authority after the Bid Submission Deadline. 2.2.2. If a Bidder has changed the composition of its Consortium since the submission of Application, it is required to submitted an updated Consortium Member Information (Schedule 5), an updated Consortium Agreement (Schedule 9), and the Power of Module 10 : Instructions to Bidders 12 Sample Request for Proposal for Two-Stage Bid Process Attorney for Lead Member of Consortium (Schedule 8) together with its Technical Proposal on or before the Bid Submission Deadline. 2.2.3. Notwithstanding a change in Consortium composition, the Bidder is required to maintain the minimum shareholding structure prescribed as follows: The Lead Member of the Consortium shall hold at least **** % of the subscribed and (a)  paid up equity of the Project Company for **** years after the Completion Date, and at least **** % for the following **** years; and Each member of the Consortium shall hold at least **** % of the subscribed and paid (b)  te up equity of the Project Company for **** years after the Completion Date, and at least **** % for the following **** years. ria 2.3. Cost of bidding rop The Bidders shall be responsible for all of the costs associated with the preparation of their Bid and their participation in the Bidding Process. The Contracting Authority will not be responsible or in any pp way liable for such costs, regardless of the conduct or outcome of the Bidding Process. 2.4. Data Room A 2.4.1. For the benefit of the prospective Bidders, the Contracting Authority has provided a as virtual Data Room. The Bidding Documents can be downloaded from the Data Room. 2.4.2. The Data Room can be accessed by any prospective Bidder by submitting the relevant t details to be provided on the website on the following link. [Insert url] ap 2.5. Site visit and Verification of Information by Bidders Ad 2.5.1. Bidders are encouraged to submit their respective Bids after visiting the Project Site[s] and ascertaining for themselves the sites’ conditions, traffic, location, surroundings, nt , climate, availability of power, water and other utilities for construction, access to sites, handling and storage of materials, weather data, applicable laws and regulations, and any other matter considered relevant by them. me 2.5.2. A site visit shall be organized by the Contracting Authority prior to the pre-bid conference for all Bidders. Further details regarding this site visit shall be given by the cu Contracting Authority to all Bidders in due course. 2.5.3. It shall be deemed that by submitting a Bid, the Bidder has: Do (a) made a complete and careful examination of the Bidding Documents; acknowledged accepted the risk of inadequacy, error or mistake in the information (b)  le provided in the Bidding Documents or furnished by or on behalf of the Contracting Authority relating to any of the matters referred to in Clause 2.5.1; mp satisfied itself about all matters, things and information including matters referred to (c)  in Clause 2.5.1 necessary and required for submitting an informed Bid, execution of the Project in accordance with the Bidding Documents and performance of all of its Sa obligations thereunder; acknowledged and agreed that inadequacy, lack of completeness or incorrectness (d)  of information provided in the Bidding Documents or ignorance of any of the matters referred to in Clause 2.5.1 shall not be a basis for any claim for compensation, damages, extension of time for performance of its obligations, loss of profits, or a thegpsc.org ground for termination of the PPP Agreement by the Service Provider; and (e) acknowledged that it does not have a Conflict of Interest. | 2.5.4. The Contracting Authority, its employees, and consultants shall not be liable for any The World Bank omission, mistake or error in respect of any of the above or on account of any matter Module 10 : Instructions to Bidders 13 Sample Request for Proposal for Two-Stage Bid Process or thing arising out of or concerning or relating to the RFP, the Bidding Documents or the Bidding Process, including any error or mistake therein or in any information or data given by or on behalf of the Contracting Authority. 2.6. Pre-Bid Conference 2.6.1. A pre-bid conference of the Bidders shall be convened at the designated date, time and place. Only duly authorized representatives of the Bidders shall be allowed to participate in the pre-bid conference. te 2.6.2. During the course of the pre-bid conference, the Bidders will be free to seek ria clarifications and make suggestions for consideration of the Contracting Authority. The Contracting Authority shall endeavour to provide clarifications and such further information as it may, in its sole discretion, consider appropriate for facilitating a fair, rop transparent and competitive Bidding Process. 2.6.3 Questions lodged by, and answers obtained from, the Bidders, as well as any relevant pp responses from the Contracting Authority pursuant to these discussions will be made available to all Bidders through the Data Room. However, the identity of each respective Bidder who issued a question / provided a response, will be made anonymous. A as 2.7. Verification and Disqualification 2.7.1. The Contracting Authority reserves the right to verify all statements, information and t documents submitted by the Bidder in response to the RFP or the Bidding Documents ap and the Bidder shall, when so required by the Contracting Authority, make available all such information, evidence and documents as may be necessary for such verification. Ad Any such verification or lack of such verification by the Contracting Authority shall not relieve the Bidder of its obligations or liabilities hereunder nor will it affect any rights of the Contracting Authority thereunder. nt , 2.7.2. The Contracting Authority reserves the right to reject any Bid and appropriate the Bid Security if: me (a) at any time, a material misrepresentation is made or uncovered; or the Bidder does not provide, within the time specified by the Contracting Authority, (b)  cu the supplemental information sought by the Contracting Authority for evaluation of the Bid, or (c) a Conflict of Interest as discussed in Clause 2.1.12 persists. Do 2.7.3. Such misrepresentation/ improper response shall lead to the disqualification of the Bidder. If the Bidder is a Consortium, then the entire Consortium and each Member shall le be disqualified/ rejected. If such disqualification/ rejection occurs after the Bids have been opened and the Successful Bidder gets disqualified/ rejected, then the Contracting mp Authority reserves the right to select the Bidder which proposed the second best Bid as Successful Bidder or cancel the Bidding Process. Sa Module 10 : Instructions to Bidders 14 Sample Request for Proposal for Two-Stage Bid Process B. Documents 2.8. This RFP comprises the Disclaimer, the contents as listed below, and will additionally include any addendum issued in accordance with Clause 2.11 and any clarifications and interpretations issued in accordance with Clause 2.10. Invitation for Bids Schedules Section 1. Introduction Schedule 1. Updated Project Information te Section 2. Instructions to Bidders Schedule 2. Updated Bidding Process Timelines ria Section 3. Evaluation of Bids Schedule 3. Bid Letter rop Schedule 4. Updated Bidder Information Schedule 5. Updated Consortium Member pp Information Schedule 6. Bank Guarantee for Bid Security A Schedule 7. Power of Attorney for Signing of Bid as Schedule 8. Power of Attorney for Lead Member of Consortium t apSchedule 9. Updated Consortium Agreement Schedule 10. Anti-Collusion Certificate Ad Schedule 11. Format for the Technical Proposal Schedule 12. Format for the Financial Proposal nt , Schedule 13. Declaration of Undertaking me Schedule 14. Draft PPP Agreement cu 2.9. Clarifications Do 2.9.1. Bidders requiring any clarification on the Bidding Documents may notify the Contracting Authority by e-mail at the following e-mail address: **** 2.9.2. Queries must be received by the Contracting Authority on or before the last date for le receipt of clarifications mentioned in Schedule 2. mp 2.9.3. The Contracting Authority shall endeavour to respond to the questions raised or clarifications sought by the Bidders within fifteen (15) days of receipt of such questions or clarifications. The Contracting Authority will notify Bidders by e-mail that queries and Sa its responses have been posted in the website / data room. 2.9.4. The Contracting Authority will organize the clarification response procedure. The queries and its responses will be updated in the website of the Contracting Authority. The thegpsc.org Contracting Authority may notify Bidders by e-mail that responses to queries have been posted at the Contracting Authority’s website. 2.9.5. The Contracting Authority may also on its own initiative, if deemed necessary, issue | The World Bank interpretations and clarifications to all Bidders. All clarifications and interpretations issued by the Contracting Authority shall be deemed to be part of the Bidding Documents. Verbal clarifications and information given by the Contracting Authority Module 10 : Instructions to Bidders 15 Sample Request for Proposal for Two-Stage Bid Process or its employees or representatives shall not be binding on the Contracting Authority. 2.9.6. Should the Contracting Authority deem it necessary to amend the RFP as a result of a clarification, it shall do so following the procedure in Clause 2.10 below. 2.11. Amendment 2.10.1. At any time prior to the Bid Submission Deadline, the Contracting Authority may, for any te reason, whether at its own initiative or in response to clarifications requested by a Bidder, modify the RFP by the issuance of addenda. ria 2.10.2. Any addendum issued hereunder will be uploaded in the website of the Contracting Authority. The Contracting Authority may notify Bidders about the issuance of an rop Addendum by e-mail. 2.10.3. In order to afford the Bidders a reasonable time for taking an addendum into account, or pp for any other reason, the Contracting Authority may, at its sole discretion, extend the Bid Submission Deadline. A as C. Preparation and Submission of Bid 2.11. Format and Signing of Bid t ap 2.11.1. The Bidder shall provide in its Bid all the information sought under the Bidding Documents. The Contracting Authority will evaluate only those Bids that are received Ad in the required formats and complete in all respects. Incomplete and /or conditional Application shall be rejected. nt , 2.11.2. The Bidder shall prepare one original set of its Bid (comprising of the two envelopes mentioned in Clause 2.12.1 together with originals/copies of documents required to be submitted along therewith) clearly marked “ORIGINAL”. In addition, the Bidder shall me submit one copy of its Bid clearly marked “COPY”. In the event of any discrepancy between the original and the copy, the original shall prevail. cu 2.11.3. The Bid shall be signed by the authorized signatory of the Bidder who shall also initial each page, in blue ink. In case of printed and published documents, only the cover Do shall be initialled. All the alterations, omissions, additions or any other amendments made to the Bid shall be initialled by the person signing the Bid. The Bid shall contain page numbers. le 2.12. Contents of the Bid mp 2.12.1. The “Bid” shall be comprised of two envelopes: (1) the Technical Proposal, and (2) the Financial Proposal. Sa 2.12.2. Both envelopes shall be marked as follows: “BID FOR THE [NAME OF PROJECT] ENVELOPE [•of 2]”  and shall clearly indicate the number of the envelope and the name and address of the Bidder. Each envelope shall be individually sealed. 2.12.3. Envelope 1: Technical Proposal: This envelope should clearly be marked as  “Envelope 2: Technical Proposal” and shall contain the following attachments to Technical Proposal (Schedule 11): (a) The Bid Letter (Schedule 3); If necessary, the Updated Bidder Information (Schedule 4) including attachments; (b)  Module 10 : Instructions to Bidders 16 Sample Request for Proposal for Two-Stage Bid Process If Bidder underwent change in consortium composition, the Updated Consortium (c)  Member Information to be accomplished by each member of the consortium (Schedule 5) including attachments; The Bank Guarantee for Bid Security (Schedule 6); (d)  (e) The Power of Attorney for Signing of Bid (Schedule 7); If Bidder underwent change in consortium composition, the Power of Attorney for (f)  Lead Member of Consortium (Schedule 8); If Bidder underwent change in consortium composition, the Consortium Agreement (g)  (Schedule 11); te (h) The Anti-Collusion Certificate (Schedule 10); and (i) The Declaration of Undertaking (Schedule 13). ria 2.12.4. The Technical Proposal itself (Schedule 11), must contain the following elements: (a) Conceptual Engineering Design; rop (b) Technical Plan for Construction/Rehabilitation; (c) Operation and Maintenance Plan; and (d) Organization and Staffing. pp 2.12.5.  nvelope 2: Financial Proposal: This envelope should clearly be marked as “Envelope E 3: Financial Proposal” and shall contain the Financial Proposal (Schedule 14), supported A by the following documents: Cost estimates for the design, construction, operation and maintenance components; (a)  as A financial model consistent with the above cost estimates and the technical (b)  proposal, and which includes a short explanatory memorandum; and A project financing plan showing positively showing that the same can adequately (c)  t meet the cost requirements of the PPP Project, which may include the amount of ap equity to be infused, debt to be obtained for the Project, and sources of financing. Ad 2.13. Bid Security 2.13.1. The Bidder shall furnish as part of its Bid a Bid Security. nt , 2.13.2. The Bid Security may be in the form of an irrevocable, unconditional and first demand bank guarantee issued by a bank registered in [LOCATION] acceptable to the me Contracting Authority in favour of the Contracting Authority in the format prescribed in Schedule 6; or an on-demand bond issued by a bank registered in [LOCATION], drawn in favour of the Contracting Authority and payable at [LOCATION]. cu 2.13.3. The Bid Security shall have a validity period of not less than ** days1 from the Bid Submission Deadline. Do 2.13.4. Any Bid not accompanied by a Bid Security shall be summarily rejected by the Contracting Authority as non-responsive. le 2.13.5. The Bid Security of unsuccessful Bidders (which term shall exclude the first and second mp best bidders) will be returned by the Contracting Authority, without any interest, as promptly as possible after execution of the PPP Agreement with the Service Provider or when the Bidding Process is cancelled by the Contracting Authority. Sa 2.13.6. The Successful Bidder’s Bid Security will be returned, without any interest, upon the Service Provider signing the PPP Agreement and, if required, providing the Performance Security in the form required by the PPP Agreement. thegpsc.org 2.13.7. The Contracting Authority shall be entitled to forfeit and appropriate the Bid Security, without prejudice to any other right or remedy that may be available to the Contracting 1 P  eriod should be equal to the period for the Authority under the RFP, under the following conditions: | bid to be extant plus If a Bidder engages in a corrupt practice, fraudulent practice, coercive practice, (a)  The World Bank a margin to allow for undesirable practice or restrictive practice as specified in Clause 2.22 of this RFP; delays in making a call where appropriate. If a Bidder modifies or substitutes (without the prior written approval of the (b)  Contracting Authority) or withdraws its Bid during the period of Bid validity as Module 10 : Instructions to Bidders 17 Sample Request for Proposal for Two-Stage Bid Process specified in this RFP; (c) In the case of a Successful Bidder, if within the specified time: (i) it fails to incorporate a Project Company or such Project Company fails or refuses to sign the PPP Agreement; or the Project Company fails to provide the Performance Security in accordance (ii)  with the Bidding Documents; or Successful Bidder fails to transmit the project development fee to (iii)  the Contracting Authority. te 2.14. Sealing and Marking of Bid ria 2.14.1. Each of the three (3) aforementioned envelopes shall be placed in an outer envelope, which shall be sealed and shall be marked as follows: “BID FOR THE [NAME OF PROJECT]” rop 2.14.2. The Bids shall be addressed to: ATTENTION: [Name of Head of Contracting Authority’s Tender Committee] pp ADDRESS: [Address of Contracting Authority] 2.14.3. If the envelopes are not sealed and marked as instructed above, the Contracting A Authority assumes no responsibility for the misplacement or premature opening of the contents of the Bid submitted and consequent losses, if any, suffered by the Bidder. as 2.14.4. Bids submitted by fax, telex, telegram or e-mail shall not be entertained and shall be rejected2. t ap 2.15. Bid Submission Ad 2.15.1. Bids must be received by the Contracting Authority at the address specified in Schedule 2 no later than the Bid Submission Deadline. nt , 2.15.2. The Bid must be hand-delivered as prescribed by the Contracting Authority. The Contracting Authority shall, on request, provide the Bidder with a receipt showing the date and time when the Bid was received. me 2.15.3. The Contracting Authority may, at its discretion, extend the Bid Submission Deadline by issuing an addendum in accordance with Clause 2.11 uniformly for all Bidders. cu 2.15.4. Bids received by the Contracting Authority after the specified Bid Submission Deadline shall be declared late and shall not be eligible for consideration and Do shall be summarily rejected. 2.16. Modifications / Substitution / Withdrawal of Bid le 2.16.1. The Bidder may modify, substitute or withdraw its Bid after submission, provided that mp the written notice of the modification, substitution or withdrawal is received by the Contracting Authority prior to the Bid Submission Deadline. No Bid shall be modified, substituted or withdrawn by the Bidder on or after the Bid Submission Deadline. Sa 2.16.2. The modification, substitution or withdrawal notice shall be prepared, sealed, marked, and delivered in accordance with Clause 2.15, with the envelopes being additionally marked “MODIFICATION”, “SUBSTITUTION” or “WITHDRAWAL”, as appropriate. 2.17. Rejection of Bids 2  ption for online O submission of bids 2.17.1. Notwithstanding anything contained in this RFP, the Contracting Authority reserves the using secure software right to reject any Bid and to annul the Bidding Process and reject all Bids at any time and procedures may be provided. without any liability or any obligation for such acceptance, rejection or annulment, and without assigning any reasons therefore. Module 10 : Instructions to Bidders 18 Sample Request for Proposal for Two-Stage Bid Process 2.17.2. In the event that the Tender Committee rejects or annuls all the Bids, it may, in its discretion, invite all eligible Bidders to submit fresh Bids under this RFP. 2.18. Validity of Bids 2.18.1. The Bids shall be valid for a period of not less than **** days from the Bid Submission Deadline. 2.18.2. The validity of Bids may be extended by mutual consent of the respective Bidders te and the Tender Committee. ria 2.19. Confidentiality 2.19.1. Information relating to the examination, clarification, evaluation and recommendation rop for the Bidders shall not be disclosed to any person who is not officially concerned with the Bidding Process or is not a retained professional advisor advising the Contracting Authority in relation to or matters arising out of, or concerning the Bidding Process. pp 2.19.2. The Contracting Authority will treat all information, submitted as part of the Bid, in confidence and will require all those who have access to such material to treat A the same in confidence. as 2.19.3. The Contracting Authority may not divulge any such information unless it is directed to do so by any statutory entity that has the power under law to require its disclosure or is to enforce or assert any right or privilege of the statutory entity and/or the Contracting Authority. t ap 2.20. Correspondence with the Bidder Ad Save and except as provided in this RFP, the Tender Committee shall not entertain any correspondence with any Bidder in relation to acceptance or rejection of any Bid. nt , 2.21. Fraudulent and Corrupt Practices me 2.21.1. The Bidders and their respective officers, employees, agents and advisers shall observe the highest standard of ethics during the Bidding Process and subsequent to the issue of the Letter of Award and during the subsistence of the PPP Agreement. cu 2.21.2. The Tender Committee may reject a Bid, withdraw the Letter of Award, or terminate the PPP Agreement, as the case may be, without being liable in any manner whatsoever to Do the Bidder or the Service Provider, as the case may be, if it determines that the Bidder or Service Provider, as the case may be, has, directly or indirectly or through an agent, engaged in corrupt practice, fraudulent practice, coercive practice, undesirable practice le or restrictive practice in the Bidding Process. mp 2.21.3. In such an event, the Tender Committee shall be entitled to forfeit and appropriate the Bid Security or Performance Security, as the case may be, without prejudice to any other right or remedy that may be available to the Contracting Authority under the Bidding Sa Documents and/or the PPP Agreement or otherwise. 2.21.4. In pursuit of this policy, the Government defines, for the purposes of this provision, the terms set forth below as follows: “corrupt practice” means the offering, giving, receiving, or soliciting, of anything (a)  thegpsc.org of value to influence the action of a public official in the Bidding Process (for the avoidance of doubt, offering of employment to or employing or engaging in any manner whatsoever, directly or indirectly, any official of the Contracting Authority | who is or has been associated in any manner with the Bidding Process, at any time The World Bank during the Bidding Process and within one year from the date of the conclusion of such process, shall be deemed to constitute influencing the actions of a person connected with the Bidding Process), and includes inter alia, bribery, extortion or Module 10 : Instructions to Bidders 19 Sample Request for Proposal for Two-Stage Bid Process coercion, which involves threats of injury to person, property or reputation; “ fraudulent practice” means a misrepresentation, omission, or suppression of facts, (b)  or disclosure of incomplete facts, in order to influence the Bidding Process; “coercive practice” means impairing or harming or threatening to impair or harm, (c)  directly or indirectly, any person or property to influence any person’s participation or action in the Bidding Process; and “undesirable practice” means (i) establishing contact with any person connected (d)  with or employed or engaged by the Contracting Authority or member of the Tender Committee with the objective of canvassing, lobbying or in any manner influencing or te attempting to influence the Bidding Process; or (ii) having a Conflict of Interest. ria 2.21.5. Government reserves the right, where the Applicant has been found by a national or international entity to have engaged in corrupt or fraudulent practices, to declare such Applicant ineligible, for a period of ten years, to be awarded a PPP contract or any rop publicly funded contract. A pp t as ap Ad nt , me cu Do le mp Sa Module 10 : Evaluation of Bids 20 Sample Request for Proposal for Two-Stage Bid Process 3. EVALUATION OF BIDS A. Opening and Evaluation of Technical Proposals 3.1. The Tender Committee shall open Envelope 1 of the Bids exactly one hour after the Bid Submission Deadline, at the place specified in Schedule 2 and in the presence of the Bidders who choose to attend. te 3.2. Bids for which a notice of withdrawal has been submitted shall not be opened. ria 3.3. Upon the opening of first envelopes, the Tender Committee shall determine whether each envelope is responsive to the requirements of the RFP. A submission shall be considered responsive only if it: rop (a) contains all the documents required to be submitted by Clause 2.12.3 of this RFP; (b) is received on or before the Bid Submission Deadline, including any extension thereof; (c) is signed, sealed and marked as stipulated in this RFP; and pp (d) does not contain any condition or qualification. 3.4. Only applications that are deemed to be responsive will be evaluated. A 3.5. The Tender Committee reserves the right to reject any Bid which is non-responsive and no request as for alteration, modification, substitution or withdrawal shall be entertained by the Tender Committee in respect of such Bid. 3.6.  t Only Bids with responsive Technical Proposals that fulfil the following may be considered for ap opening of the Financial Proposal: 3  uggested threshold, S (a) Contains all the required elements/content stipulated in Clause 2.12.4 of this RFP; and Ad can be modified based  emonstrates the feasibility of its proposed technical approach and methodology for (b) D on the technical intensity implementing the PPP project based on the minimum criteria indicated in Schedule 11 of the project, capacity of the market and the of this RFP. nt , possible number of bidders. 3.7. The Contracting Authority reserves the right to reject any Bid which is non-responsive. If necessary, 4  The Municipality will have to select one of the two the Contracting Authority may ask the Bidders for clarifications. In this case, the Tender Committee me paragraphs above based will make a request for supplementary information or documentation from the Bidder, provided that on the approach used for this request may only be made to clarify information already provided by a Bidder or to request a evaluation of bids. The first paragraph will be document that should have been included. Whenever a supplementary request is made, the Bidder cu used if the Municipality must respond to the Tender Committee within the time period set by the Committee in its request. is using the pass-fail If the Bidder does not respond to a supplementary request within such time period or does not criteria for technical provide the information or documentation requested, the Tender Committee may consider the Bid Do evaluation, to identify the bidders whose financial non-responsive and reject it. proposal would be opened. In such case the final selection of the 3.8. After the evaluation of Technical Proposals, the Tender Committee will announce the technical le best Bid would be based scores of all the bidders. Bidders who have received less than [70%] 3 will not be eligible for on the evaluation of the evaluation of their respective Financial Proposals. The Financial Proposals of such bidders would mp financial proposal only. The second paragraph be returned unopened. will be selected if the Municipality intends OR Sa to use the weighted average of the scores from Technical and After the evaluation of Technical Proposals, the Tender Committee will announce the technical Financial Evaluations scores of all the bidders. The scores from evaluation of the Technical Proposals will be used for for the selection of the financial proposal. calculation of the combined score for Technical and Financial Proposals based on the weighted average of the respective scores.4 thegpsc.org | The World Bank Module 10 : Evaluation of Bids 21 Sample Request for Proposal for Two-Stage Bid Process B. Opening and Evaluation of Financial Proposals 3.9. The Tender Committee shall schedule the opening of Financial Proposals, which shall be no later than five (5) days after the announcement of qualified Bidders from Clause 3.8. 3.10. The best Financial Proposal is the one that offers the most value-for-money for Government, based on the Bid Parameter as follows: [DEFINITION OF BID PARAMETER] te Notes ria Examples of Financial Bid Parameters for PPP projects and guidance on their use rop PPP projects (based on User Pays PPP models) where it is expected that the Municipality will have to 1.  provide capital grant, the financial bid parameter would be the least capital grant quoted. pp PPP projects (based on User Pays PPP models) where the maximum tariff for the service is not 2.  regulated and will be driven by market forces, will have the minimum tariff quoted as the financial bid A parameter. PPP projects based on annuity/ availability payment model will have the least amount of periodic 3.  annuity or per unit availability payment quoted as the financial bid parameter as PPP projects that are expected to have reasonably high financial returns, without support from the 4.  Municipality, may have the highest revenue share or profit share or lease premium as the financial bid parameter t ap Ad 3.11. Financial Proposals will be evaluated using the following methodology5. Score (in %) for Financial Proposal of Bidder ‘N’= (Financial Bid of Bidder N)/ (Highest Financial Bid among all Bidders) x 100 nt , OR me Score (in %) for Financial Proposal of Bidder ‘N’= (Lowest Financial Bid among all Bidders)/ (Financial Bid of Bidder N) x 100. cu 3.12. The best Bid will be identified based on the highest score from the evaluation of Financial Proposal. (from Clause 3.11). OR Do The best Bid will be identified based on the highest weighted average combined score from the evaluation of the Financial Proposal (from Clause 3.11) and Technical Proposal (as described in le Schedule 11), as indicated below: mp weighted average score of Bidder ‘N’ = (weight for technical score in % x aggregate technical score) + (weight for financial score in % x financial score) Sa 5  he first option is T where: selected if a higher technical score= score from the evaluation of the Technical Proposal; Financial Bid would financial score= score from the evaluation of the Financial Proposal: deliver higher value for the Municipality (like  weight for technical score= weight assigned by Municipality revenue share or lease (can be in the range of 70%-80%); premium), the second weight for financial score= (1- weight for technical score). option is selected if a lower Financial Bid would deliver 3.13. The best Bid, based on the Bid Value submitted, may only be considered indicative until the Tender higher value for the Committee confirms that such Financial Bid fulfils the following: Municipality (like viability gap grant or annuity). It is supported by the documents/attachments required to be included in the Financial Proposal (a)  Module 10 : Evaluation of Bids 22 Sample Request for Proposal for Two-Stage Bid Process according to Schedule 14 of this RFP; (b) It is signed, sealed and marked as stipulated in this RFP; and (c) It does not contain any condition or qualification. 3.14. The Contracting Authority reserves the right to entertain the next best Bid if the indicative best Bid fails to fulfil the requirements indicated in Clause 3.13. If necessary, the Tender Committee may ask the Bidder/s for clarifications following the procedure stipulated in Clause 3.7 of this RFP. 3.15. The Bidder whose Bid is declared to be the best Bid and complies with the requirements of Clause 3.13, or if two or more Bidders have offered exactly the same Bid Value, then the Bidder that has the te better Financial based on the Qualification Documents submitted during prequalification, shall be declared as the Successful Bidder. ria C. Award and Execution of the PPP Agreement rop 3.16. A letter of award (“Letter of Award”) shall be issued to the Successful Bidder by the Contracting Authority. Within seven (7) days from the date of issue of the Letter of Award, the Successful Bidder pp shall send an acknowledgement agreeing to comply with the conditions set out therein and to execute the PPP Agreement. A 3.17. The Tender Committee will promptly notify other Bidders that they have been unsuccessful and their Bid Security shall be returned within 30 days, without interest, of the signing of the PPP Agreement as with the Service Provider. 3.18. Special Purpose Company t ap  he Successful Bidder shall incorporate a special purpose company specifically formed 3.18.1. T and incorporated in [LOCATION] solely for the purpose of undertaking the Project pursuant Ad to the PPP Agreement (“Project Company”). The Successful Bidder shall ensure that the Project Company is incorporated and capitalised within 30 days from the date of issue of the Letter of Award and promptly upon such incorporation and capitalisation provide evidence nt , thereof to the Contracting Authority.  he Successful Bidder shall ensure that the Project Company is incorporated and 3.18.2. T me capitalised within 30 days from the date of issue of the Letter of Award and promptly upon such incorporation and capitalisation provide evidence thereof to the Contracting Authority. cu  ubject to the terms of the PPP Agreement, in the event that the Successful Bidder is a 3.18.3. S single entity, the shareholding of the Project Company shall be fully owned by such entity. In the event that the Successful Bidder is a Consortium, the shareholding of the Project Do Company shall be owned by the Members in accordance with the terms of the Bidding Documents and the Consortium Agreement. le  he Project Company shall execute the PPP Agreement within 45 days from the date of 3.18.4. T issue of the Letter of Award. On the date of signing of the PPP Agreement, the Service mp Provider shall provide the Contracting Authority with a Performance Security as defined in the PPP Agreement. In the event the PPP Agreement is not signed within 45 days, the Contracting Authority may commence discussions with the next best Bidder and so on, on Sa the same terms. 3.19. Bid Development Fee  he Successful Bidder is required to pay, within ten (10) days from the issuance of the Letter 3.19.1. T thegpsc.org of Award, the bid development fee, in consideration of the transaction costs and efforts expended in the tender of the PPP Project. |  he payment of the Bid Development Fee shall be made in immediately available funds in 3.19.2. T The World Bank an account to be specified for this purpose. Module 10 : Evaluation of Bids 23 Sample Request for Proposal for Two-Stage Bid Process D. Miscellaneous 3.20. The Bidding Process shall be governed by, and construed in accordance with, the laws of [LOCATION] and the Courts of [LOCATION] shall have exclusive jurisdiction over all disputes arising under, pursuant to and/or in connection with the Bidding Documents and/or the Bidding Process. 3.21. The Contracting Authority, in its sole discretion and without incurring any obligation or liability or assigning any reason, reserves the right, at any time, to: te suspend, withdraw and/or cancel the Bidding Process and/or amend and/or supplement the (a)  Bidding Process or modify the dates or other terms and conditions relating thereto; ria (b) consult with any Bidder in order to receive clarification or further information; retain any information and/or evidence submitted to the Contracting Authority by, on behalf of, (c)  and/or in relation to any Bidder; rop ndependently verify, disqualify, reject and/or accept any and all submissions or other (d) i information and/or evidence submitted by or on behalf of any Bidder; amend, modify or reissue the Bidding Documents or any part thereof; and/or (e)  pp (f) accept or reject any or all of the Bids. A 3.22. It shall be deemed that by submitting the Bid, the Bidder agrees and releases the Contracting Authority, its employees, agents and advisers, irrevocably, unconditionally, fully and finally from any and all liability for claims, losses, damages, costs, expenses or liabilities in any way related to or as arising from the exercise of any rights and/or performance of any obligations hereunder, pursuant hereto and/or in connection herewith and waives any and all rights and/or claims it may have in this respect, whether actual or contingent, whether present or future. t ap Ad nt , me cu Do le mp Sa Module 10 : Schedule 1: Updated Project Information 24 Sample Request for Proposal for Two-Stage Bid Process Schedule 1: Updated Project Information6 1.1. The Contracting Authority has, as part of its [insert development strategy]7, identified the PPP opportunity at [insert location]. 1.2. t is intended that by the Contracting Authority entering into the PPP with a private party, the I Contracting Authority may be able to [insert the purpose for entering into PPP]. It is intended that the project will be implemented by the private party in compliance with any terms and conditions stipulated in the PPP Agreement. te 1.3.  he Contracting Authority embarked on the project after conducting feasibility studies in order to T ria determine whether it could proceed with the project and whether the project may be viable. 1.4. U  nder the project, the private partner will build an asset by using its own funds or funds it rop has raised, transfer the possession as specified in the PPP Agreement, and transfer it to local ownership upon the expiration of the PPP Agreement. The payment to the private partner will comprise of [user payments from users of the PPP project]; [and/or] [availability payments from the pp Contracting Authority]. A 1.5. [DESCRIPTION OF THE ASSET] 8 1.6. [SITE REVIEW] 9 as All numbered footnotes in Schedule 1 are for guidance of the Contracting Authority and should be omitted prior to issue t 6 of the RFQ. ap All project specific provisions have been enclosed in square parenthesis and may be modified, as necessary, before issuing 7  the RFQ for the project. The square parenthesis should be removed after carrying out the required modifications. The Contracting Authority must provide relevant details regarding the asset and the possible product or service categories 8  Ad which could be provided through the use of the asset. The Contracting Authority will be heavily guided by its feasibility study as to what information is relevant. The Contracting Authority must provide sufficient information so as to allow interested parties to consider whether they would wish to be involved in the PPP. 9  The Contracting Authority must provide a summary on the site information and on issues that were identified during the nt , feasibility phases, such as: legal, environmental, stakeholders, personnel and human resources, infrastructure, equipment, performance standards, transfer of risk and other information identified as being relevant through the inception and feasibility phases. me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 2: Updated Bidding Process Timelines 25 Sample Request for Proposal for Two-Stage Bid Process Schedule 2: Updated Bidding Process Timelines The Contracting Authority shall endeavor to adhere to the following timelines: Event Description Estimated Date, Time, and Location (if applicable) Last date for receipt of queries Pre-bid conference te Contracting Authority’s response to queries ria Bid Submission Deadline rop Opening of Envelope Technical Proposal Announcement of Technical Proposal Short List pp Opening of Envelope Financial Proposal A Selection and Announcement of Successful Bidder as Approval of Successful Bidder Finalization of matters to permit signing of PPP Agreement t ap Ad nt , me cu Do le mp Sa Module 10 : Schedule 3: Bid Letter 26 Sample Request for Proposal for Two-Stage Bid Process Schedule 3: Bid Letter [On the letterhead of the Bidder / Lead Member] Original or Copy number: Date: To: [Contracting Authority’s Name] [Insert Contracting Authority’ s Address] Re: Submission of Bid for the [name of project] Dear Madam/Sir, te With reference to your RFP dated [DATE], I/we, having examined the document and understood its ria contents, hereby submit my/our Bid for the aforesaid Project. We hereby confirm that we/our members in the Consortium satisfy the terms and conditions laid out in the Bidding Documents. We have agreed that _____________ [insert member’s name] will act as the Lead Member of our consortium, and that rop ______________ [insert individual’s name] will act as our representative/ will act as the representative of the consortium on its behalf* and has been duly authorized to submit the Bid.10 pp The Bid is being submitted for the express purpose of qualifying as a Successful Bidder for the aforesaid Project. The Bid is unconditional and unqualified. A I/We hereby certify/declare that: 1. all the required accompanying documents are complete and are all included in this Bid; as 2. all information provided in the Bid are true and correct; t ap 3. nothing has been omitted which renders such information misleading; 4. all documents accompanying such Bid are true copies of their respective originals; Ad /we shall make available to the Contracting Authority any additional information it may find necessary or 5. I require to supplement or authenticate the submissions; nt , 6. I/we will abide by all the terms and conditions of the RFP; me /We have examined and have no reservations to the Bidding Documents, including any addendum 7. I issued by the Contracting Authority; cu n the last 3 years, I/we/any of the Members have neither failed to perform on any contract, as evidenced 8. i by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or arbitration Do award, nor been expelled from any project or contract by any public authority nor have had any contract terminated by any public authority for breach by [us/any of the Members]; I/we are not barred by the Government, or any public agencies from participating in similar projects as of 9.  le [Bid Submission Deadline]; mp /We do not have any Conflict of Interest; 10. I I/We have not directly or indirectly or through an agent engaged or indulged in any corrupt practice, 11.  Sa fraudulent practice, coercive practice, undesirable practice or restrictive practice, as defined in this RFP, in respect of any tender or request for proposal issued by or any agreement entered into with the Contracting Authority or any other public sector enterprise or any government, at central or state level; Please strike out if not thegpsc.org 10  applicable. /we have taken steps to ensure that in conformity with the provisions of this RFP, no person acting for 12. I me/us or on my/our behalf has engaged or will engage in any corrupt practice, fraudulent practice, coercive practice, undesirable practice or restrictive practice; | The World Bank you may cancel the Bidding Process at any time and that you are neither bound to accept any Bid that 13.  you may receive, without incurring any liability to the Bidders; Module 10 : Schedule 3: Bid Letter 27 Sample Request for Proposal for Two-Stage Bid Process /we/any Member, am/are not a member of a/any other Consortium applying for the Project; 14. I /we or any Member of our consortium have not been convicted by a court of law or indicted or adverse 15. I orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community; in regard to matters relating to security and integrity of the country, I/we have not been charged by any 16.  government agency or convicted by a court of law; te  o investigation by a regulatory authority is pending either against me/us/any Member or against our 17. n chief executive officer or any of my/our directors/managers/employees; ria I/We believe that I/we satisfy(s) and meet(s) all the requirements as specified in the RFP and are/is qualified to submit a Bid. rop I/We understand that the Successful Bidder shall be required to incorporate and capitalize a Project Company in accordance with the Bidding Documents prior to execution of the PPP Agreement. pp I/We agree and undertake to be jointly and severally liable for all our obligations under the PPP Agreement as per the provisions set out therein. A as Yours faithfully, t ap (Name, designation, and signature of the authorised representative) For and on behalf of: (name and seal of the Bidder / Lead Member of the Consortium) Ad nt , me cu Do le mp Sa Module 10 : Schedule 4: Updated Bidder Information 28 Sample Request for Proposal for Two-Stage Bid Process Schedule 4: Updated Bidder Information11 Bidder Information Applicant’s legal name In case of Consortium, legal name of each member te Applicant’s actual or intended ria country of constitution Applicant’s actual or intended year rop of constitution Applicant’s legal address in country of constitution pp Applicant’s authorized representative information (name, A designation, address, Telephone/ Fax numbers, E-mail) This section must be 11  completed by the as authorized consortium Attached are copies of original documents of: representative, or 1. Notarized documents of constitution of the legal entity named above if the applicant is a 2. Letter of authorization to represent the applicant sole organization, 3. Letter of intent to form Consortium or Consortium agreement. by that organization. t ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 5: Updated Consortium Member Information 29 Sample Request for Proposal for Two-Stage Bid Process Schedule 5: Updated Consortium Member Information12 Consortium Member Information Consortium member’s legal name Consortium member’s actual or intended country of constitution te Consortium member’s actual or ria intended year of constitution Consortium member’s legal address rop in country of constitution Consortium member’s authorized representative information (name, pp designation, address, Telephone/ Fax numbers, E-mail) A Attached are copies of original documents of: 1. Notarized documents of constitution of the legal entity named above This section is to be 12  2. Letter of authorization to represent the applicant as completed by each 3. Letter of intent to form Consortium or Consortium agreement. consortium member. t ap Ad nt , me cu Do le mp Sa Module 10 : Schedule 6: Bank Guarantee for Bid Security 30 Sample Request for Proposal for Two-Stage Bid Process Schedule 6: Bank Guarantee for Bid Security Address of the guarantor bank: [•] Address of the beneficiary: [•] We, the undersigned [•] (the “Guarantor”), in order to enable [Name of Bidder] to bid for the [Name of the Project], hereby irrevocably and independently guarantee to pay to you an amount up to a total of [•] waiving all objections and defences. te We shall effect payments under this guarantee on your first written demand, which must be accompanied ria by your confirmation that you have accepted the above-mentioned bid and that the firm [Name of Bidder] is no longer prepared to abide by this bid. rop This guarantee shall remain in full force for a period of 180 days from the Bid Submission Deadline (as defined in the RFP). pp By this date we must have received any claims for payment by letter or encoded telecommunication. A It is understood that you will return this guarantee to us on expiry or after payment of the total amount to be claimed hereunder. as This guarantee is governed by the laws of [LOCATION] and shall be subject to the exclusive jurisdiction of the Courts of [LOCATION]. t ap Ad ----------------------------------- --------------------------------- Date Guarantor nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 7: Power of Attorney for Signing of Bid 31 Sample Request for Proposal for Two-Stage Bid Process Schedule 7: Power of Attorney for Signing of Bid I (name of the company) incorporated under applicable laws and having its registered office at [__] “Company”, do hereby irrevocably constitute, nominate, appoint and authorize Mr. /Ms (name), presently residing at [indicate business address], who is presently employed with us and holding the position of [designated position], as our true and lawful attorney (hereinafter referred to as the “Attorney”) to do in our name and on our behalf, all such acts, deeds, matters and things as are necessary or required in connection with or incidental to submission of our Bid and for our selection as Successful Bidder for the [Title of Project] (the ‘Project’) proposed or being developed by the Contracting Authority including but te not limited to signing and submission of our Bid and other documents and writings, participate in pre-bid conferences and other conferences and providing information/responses to the Contracting Authority, ria representing us in all matters before the Contracting Authority, signing and execution of all contracts including the PPP Agreement and undertakings consequent to acceptance of our Bid, and generally dealing with the Contracting Authority in all matters in connection with or relating to or arising out of our Bid rop for the said Project and/or upon award thereof to us and/or till the entering into of the PPP Agreement with the Contracting Authority. pp We hereby agree to ratify and confirm all acts, deed, matters and things lawfully done or caused to be done by our said Attorney pursuant to and in exercise of the powers conferred by this Power of Attorney and that The mode of execution 13  A of the Power of Attorney all acts, deeds and things done by our said Attorney in exercise of the powers hereby conferred shall and should be in accordance shall always be deemed to have been done by us. with the procedure, if as any, laid down by the applicable law and the Capitalised terms not defined herein shall have the meaning assigned to them under the RFP. charter documents of the executant(s) and IN WITNESS WHEREOF, …………………………., THE ABOVE NAMED PRINCIPAL HAVE EXECUTED THIS when it is so required, t POWER OF ATTORNEY ON THIS ……… DAY OF …………., 20** ap the same should be under common seal affixed in accordance For ………………………….. Ad with the required procedure. Wherever (Signature) required, the Applicant (Name, Title and Address) should submit for Witnesses: verification the extract of nt , the charter documents (Notarised) and documents such Accepted as a resolution/ power me of attorney in favour of the person executing this Power of Attorney for the delegation of cu power hereunder on behalf of the Applicant. …………………………… (Signature) (Name, Title and Address of the Attorney)13 Do le mp Sa Module 10 : Schedule 8: Power of Attorney for Lead Member of Consortium 32 Sample Request for Proposal for Two-Stage Bid Process Schedule 8: Power of Attorney for Lead Member of Consortium Whereas, the members of the Consortium are interested in bidding for the Project and implementing the [Title of Project] (the ‘Project’) in accordance with the terms and conditions of the Bidding Documents and other connected documents in respect of the Project. Whereas, it is necessary for the members of the Consortium to designate the Lead Member with all necessary power and authority to do for and on behalf of the Consortium, all acts, deeds and things as may be necessary in connection with the Consortium’s bid for the Project and its execution. who, acting jointly, te would have all necessary power and authority to do all acts, deeds and things on behalf of the Consortium, as may be necessary in connection with the Consortium’s bid for the Project. ria NOW THIS POWER OF ATTORNEY WITNESSETH THAT; rop The mode of execution 14  of the Power of Attorney We, M/s. __________________________(Lead Member) and M/s __________________ (the respective should be in accordance names and addresses of the registered office) do hereby designate M/s. _________________________ with the procedure, if ________ being one of the members of the Consortium, as the Lead Member of the Consortium, to do on pp any, laid down by the applicable Law and the behalf of the Consortium, all or any of the acts, deeds or things necessary or incidental to the Consortium’s charter documents of bid and submission of its proposal for the Project, including but not limited to signing and submission of the executors and when A relevant documents and writings, participating in pre-bid and other conferences, responding to queries, it is so required the same should be under and generally to represent the Consortium in all its dealings with the Contracting Authority or any person in connection with the Project until the PPP Agreement is entered into between the Concessionaire and the as common seal affixed in accordance with the Contracting Authority. required procedure. Wherever required, We hereby agree to ratify all acts, deeds and things lawfully done by Lead Member, our said attorney the Applicant should t submit for verification ap pursuant to this Power of Attorney and that all acts deeds and things done by our aforesaid attorney shall the extract of the charter documents and shall always be deemed to have been done by us/Consortium. and documents such Dated this the _____day of _____, 20** Ad as a resolution/ power of attorney in favour of the person executing this Power of Attorney nt , for the delegation of power hereunder on behalf of the Bidder. (Executors)14 me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 9: Updated Consortium Agreement 33 Sample Request for Proposal for Two-Stage Bid Process Schedule 9: Updated Consortium Agreement THIS CONSORTIUM AGREEMENT is entered into on this [•] day of [•] 20[•] (the “Agreement”) AMONGST [Name of entity], a company incorporated under [legislation] and having its registered office at [business 1.  address] (hereinafter referred to as the “First Part” which expression shall, unless repugnant to the context include its successors and permitted assigns); AND  Name of entity], a company incorporated under [legislation] and having its registered office at [business 2. [ te address] (hereinafter referred to as the “Second Part” which expression shall, unless repugnant to the context include its successors and permitted assigns); ria AND  Name of entity], a company incorporated under [legislation] and having its registered office at [business 3. [ address] (hereinafter referred to as the “Third Part” which expression shall, unless repugnant to the rop context include its successors and permitted assigns). The above mentioned parties of the FIRST, SECOND and, THIRD PART are collectively referred to as the pp “Parties” and each is individually referred to as a “Party”. A WHEREAS, 1. The Contracting Authority has invited Bids by its Request for Proposal No. [•] dated [•] (the “RFP”) for selecting the Successful Bidder for the [Title of the Project] through Public Private Partnership; as 2. T he Parties are interested in jointly bidding for the Project as members of a Consortium (as defined below) and in accordance with the terms and conditions of the Bidding Documents including this RFP; and t 3. I ap t is a necessary condition under the RFP that the members of the Consortium shall enter into a concession agreement and furnish a copy thereof with the Bid. Ad NOW IT IS HEREBY AGREED as follows:  efinitions and Interpretations 1. D nt , In this Agreement, the capitalised terms shall, unless the context otherwise requires, have the meaning ascribed thereto under the RFP. me 2. Consortium 2.1 The Parties do hereby irrevocably constitute a consortium (the “Consortium”) for the purposes of jointly participating in the Bidding Process for the Project. cu 2.2 The Parties hereby undertake to participate in the Bidding Process only through this Consortium and not individually and/or through any other consortium constituted for the Project, either directly Do or indirectly. Covenants 3.  The Parties hereby undertake that in the event the Consortium is declared the Successful Bidder and le awarded the Project, it shall incorporate the Project Company under [legislation] as required by and in accordance with the Bidding Documents for performing all its obligations as the Concessionaire in terms mp of the PPP Agreement for the Project.  ole of the Parties 4. R Sa The Parties hereby undertake to perform the roles and responsibilities as described below.  Party of the First Part shall be the Lead Member of the Consortium and shall have the power of attorney from all Parties for conducting all business for and on behalf of the Consortium during the Bidding Process; {Party of the Second Part shall be [•]; and} {Party of the Third Part shall be [•]}  oint and Several Liability 5. J The Parties do hereby undertake to be jointly and severally responsible for all obligations and liabilities relating to the Project in accordance with the terms of the RFP, and for the performance of the Service Providers obligations under the PPP Agreement. Module 10 : Schedule 9: Updated Consortium Agreement 34 Sample Request for Proposal for Two-Stage Bid Process  hareholding in the Project Company 6. S The Parties agree that the proportion of shareholding among the Parties in the Project Company shall be as follows: First Party: Second Party: Third Party: Subject to the terms of the PPP Agreement, the Lead Member shall for [•] years hold equity share capital not less than **% (** percent) of the subscribed, paid up and voting equity share capital of the Project te Company; and ria Each member of the Consortium shall hold at least ** % of the subscribed and paid up equity of the Project Company for [•] years after the Completion Date, and at least ** % for the following [•] years. rop The Parties undertake that they shall comply with all equity lock-in requirements set forth in the PPP Agreement. pp  epresentation of the Parties 7. R Each Party represents to the other Parties as of the date of this Agreement that: 7.1 such Party is duly organised, validly existing and in good standing under the laws of its A incorporation and has all requisite power and authority to enter into this Agreement; as the execution, delivery and performance by such Party of this Agreement has been authorised by 7.2  all necessary and appropriate corporate or governmental action and a copy of the extract of the charter documents and board resolution/power of attorney in favour of the person executing this t Agreement for the delegation of power and authority to execute this Agreement on behalf of the ap Member of Consortium is annexed to this Agreement, and will not, to the best of its knowledge: Ad 7.3 require any consent or approval not already obtained; 7.4 violate any applicable law presently in effect and having applicability to it; nt , violate the memorandum of association and articles of association, by-laws or other applicable 7.5  organizational documents thereof; me 7.6 violate any clearance, permit, concession, grant, license or other governmental authorization, approval, judgment, order or decree or any mortgage agreement, indenture or any other instrument cu to which such Party is a party or by which such Party or any of its properties or assets are bound or that is otherwise applicable to such Party; and Do 7.7 create or impose any liens, mortgages, pledges, claims, security interests, charges or any other encumbrances or obligations to create a lien, charge, pledge, security interest, encumbrances or mortgage in or on the property of such Party, except for encumbrances that would not, individually le or in the aggregate, have a material adverse effect on the financial condition or prospects or business of such Party so as to prevent such Party from fulfilling its obligations under this mp Agreement; 7.8 this Agreement is the legal and binding obligation of such Party, enforceable in accordance with its Sa terms against it; and 7.9 there is no litigation pending or, to the best of such Party’s knowledge, threatened to which it or any of its affiliates is a party that presently affects or which would have a material adverse effect on the financial condition or prospects or business of such Party in the fulfilment of its obligations under thegpsc.org this Agreement. | The World Bank Module 10 : Schedule 9: Updated Consortium Agreement 35 Sample Request for Proposal for Two-Stage Bid Process Termination 8.  This Agreement shall be effective from the date hereof and shall continue in full force and effect till the full and final satisfaction of all obligations under the PPP Agreement in accordance with the terms thereof, in case the Project is awarded to the Consortium. However, in case the Consortium is either not qualified for the Project or does not get selected for award of the Project as the Successful Bidder, the Agreement will stand terminated, in accordance with the mutual agreement of the Parties. 9.  Miscellaneous This Consortium Agreement shall be governed by laws of ****. te The Parties acknowledge and accept that this Agreement shall not be amended by the Parties without the prior written consent of the Contracting Authority. ria IN WITNESS WHEREOF THE PARTIES ABOVE NAMED HAVE EXECUTED AND DELIVERED THIS AGREEMENT AS OF THE DATE FIRST ABOVE WRITTEN. rop SIGNED, SEALED AND DELIVERED For and on behalf of LEAD MEMBER by: pp (Signature) (Name) (Designation) A (Address) as SIGNED, SEALED AND DELIVERED For and on behalf of SECOND PART (Signature) (Name) t ap (Designation) (Address) Ad SIGNED, SEALED AND DELIVERED For and on behalf of THIRD PART nt , (Signature) (Name) (Designation) me (Address) cu Do le mp Sa Module 10 : Schedule 10: Anti-Collusion Certificate 36 Sample Request for Proposal for Two-Stage Bid Process Schedule 10: Anti-Collusion Certificate15 We undertake that, in competing for (and, if the award is made to us, in executing) the Project, we will strictly observe the laws against fraud and corruption in force in [LOCATION]. We hereby certify and confirm that in the preparation and submission of our Bid, we have not acted in concert or in collusion with any other Bidder or other person(s) and also not done any act, deed or thing which is or could be regarded as anti-competitive. te We further confirm that we have not offered nor will offer any illegal gratification in cash or kind to any person or agency in connection with this Bid. ria rop Dated this ..........................day of ......................, 20** pp A .................................................... (Name of the Bidder) t as .................................................... ap (Signature of the Bidder / Authorised Person) Ad To be executed 15  on stamp paper of nt , appropriate value. .................................................... (Name of the Authorised Person) me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 11: Format and Evaluation of Technical Proposal 37 Sample Request for Proposal for Two-Stage Bid Process Schedule 11: Format and Evaluation of Technical Proposal The Bidders shall prepare a Technical Proposal based on the requirements given in the RFP, setting out the proposed plan for implementation of the PPP Project. The Technical Proposal shall comprise the technical approach and methodology for implementing the Project, implementation schedule and timelines, manpower deployment, etc. The Technical Proposal shall be in adherence to Laws and the requirements set out in the draft PPP Agreement. The Bidders shall submit their Technical Proposal in line with the contents provided in the table below. The te Technical Proposals shall be evaluated against the criteria outlined for each of the parameters in the table below, with Bidder receiving marks for each parameter based on the predefined scoring scale. ria Parameter16 Criteria for Evaluation Marking Scale rop Conceptual Engineering Design:  rchitectural analysis of the Project - A  he conceptual engineering - T To be defined based on the needs Location and its peripheral areas design must conform to the output and characteristics of each pp specifications prescribed in the individual project - D  etails key design/engineering Bidding Documents concepts considered in the design of the facility  he engineering surveys, plans, - T A and estimates should be doable - C  onceptual layout of the facility, within +/- **% of the final quantities illustrating technical specifications of as key components of the facility. Technical Plan for Construction/ Rehabilitation: t -  Methodology statement outlining - T ap  ime planning and procedures for To be defined based on the needs appreciation of the project the construction of the completed and characteristics of each individual facility must be well-defined, shown project Ad - I mplementation Plan – present a to be feasible at the municipal detailed activity schedule along context, allow a completion, with milestones in line with the commissioning, and handover of the requirements set out in the PPP PPP Project on time Agreement. This should also outline nt , the timeline envisaged for obtaining  ust be in line with output - M various Government/Local Government specifications approvals me Operation & Maintenance Plan: Process Flow Chart and Material -   ystem/methodology for the O&M of - S To be defined based on the needs Balance Statement setting out the the completed facility must be well- and characteristics of each individual cu activities and the outputs at each stage defined, shown to be feasible and project practicable at the municipal context, - Methodology for operations. Do  ust show that key performance - M - T  imelines and frequency for carrying indicators are achievable by the out and completion of various activities. proposed O&M system  esource Utilization Statement - R le indicating the proposed organizational structure, employee deployment, mp equipment procurement and utilization, contracting activities, utilization of office and other facilities. Sa  he maintenance (regular & - T emergency) schedules should also be indicated over the Term Organization & Staffing: Bidders should present the calculations - Adequacy of proposed organization To be defined based on the needs for manpower requirement for the and characteristics of each individual Project. Proposed organization structure  ell defined roles & responsibility - W project and composition of the project and that facilitates the implementation of operational team to be presented, the proposed Technical and O&M including staff deployment plan, Plans number of shifts per day of operations 16  ay vary based M and roles and responsibilities Bidders  ocal staffing in line with public - L on the requirements should indicate the number of staff to be sector expectations of the PPP Project. sourced locally. Module 10 : Schedule 11: Format and Evaluation of Technical Proposal 38 Sample Request for Proposal for Two-Stage Bid Process The marks would be summed up for all evaluation parameters for each individual bidder. The score for evaluation of the Technical Proposal will be calculated as follows: Score (in %) for evaluation of Technical Proposal of Bidder ‘N’’ = (total marks from evaluation for Bidder N/ highest total marks among all Bidders) x 100 Bidders receiving less than 70% score would not be eligible for the evaluation of their financial proposals. Financial proposals of all such bidders would be returned unopened.17 te OR ria The scores from evaluation of the Technical Proposal would be used for calculation of the weighted average score, along with the score from the evaluation of the Financial Proposal, as described in Section 3.8 of this document. rop The Municipality will have to select one of the two paragraphs above based on the approach used for evaluation of bids. 17   pp The first paragraph will be used if the Municipality is using the pass-fail criteria for technical evaluation, to identify the bidders whose financial proposal would be opened. In such case the final selection of the best Bid would be based on the evaluation of the financial proposal only. The second paragraph will be selected if the Municipality intends to use the weighted average of the scores from Technical and Financial Evaluations for the selection of the financial proposal. A t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 12: Format of Financial Proposal 39 Sample Request for Proposal for Two-Stage Bid Process Schedule 12: Format of Financial Proposal [On the letterhead of the Applicant / Lead Member] Original or Copy number: Date: To: [Contracting Authority’s Name] [Insert Contracting Authority’ s Address] Re: Financial Proposal for the [Title of the PPP Project] te Dear Madam/Sir, ria Please find below our Financial Proposal for the [Title of the Project] (the “Project”) in response to the Request for Proposal (“RFP”) issued by [the Name of the Contracting Authority] (“the Contracting Authority”) on [DATE]. rop We hereby confirm the following: This Financial Proposal is being submitted by [name of Bidder] in accordance with the conditions -  pp stipulated in the RFP; We have examined in detail and understand and agree to abide by all terms and conditions stipulated -  A in the Bidding Documents issued by the Contracting Authority, as amended, and in any subsequent communication sent by the Contracting Authority; Our Financial Proposal is consistent with all requirements of submission stated in the RFP and in any -  as subsequent communication sent by the Contracting Authority; It is adequately supported by the following documents as attachments: -  (a) Supporting cost estimates for the design, construction, operation and maintenance components; t (b) A ap  financial model consistent with the above cost estimates and the technical proposal, and which includes a short explanatory memorandum; and (c) A project financing plan showing positively showing that the same can adequately meet the cost Ad requirements of the PPP Project, which may include the amount of equity to be infused, debt to be obtained for the Project, and sources of financing. nt , Our Bid Value is as follows: [Grant/ Fee] [amount in [CURRENCY]/ percentage] me We are solely responsible for any errors or omissions in our Financial Proposal. cu Respectfully, Do le (Name, designation, and signature of the authorised representative) For and on behalf of: (name and seal of the Applicant / Lead Member of the Consortium) mp Sa Module 10 : Schedule 13: Declaration of Undertaking 40 Sample Request for Proposal for Two-Stage Bid Process Schedule 13: Declaration of Undertaking We underscore the importance of a free, fair and competitive procurement process that precludes abusive practices. In this respect we have neither offered nor granted directly or indirectly any inadmissible advantages to any public servant or other person nor accepted such advantages in connection with our Application, nor will we offer or grant or accept any such incentives or conditions in this Bidding Process or, in the event that we are awarded the contract, in the subsequent execution of the contract. We also declare that our company/all members of the consortium has/have not been included in the list of te sanctions of the United Nations nor in any other list of sanctions and affirm that our company/all members of the consortium will immediately inform the client if this situation should occur at a later stage. ria We acknowledge that, in the event that our company (or a member of the consortium) is added to a list of sanctions that is legally binding for the client, the client is entitled to exclude our company/ the consortium rop from the Bidding Process and, if the contract is awarded to our company/ the consortium, to terminate the contract immediately if the statements made in the Declaration of Undertaking were objectively false or the reason for exclusion occurs after the Declaration of Undertaking has been issued. A pp as .................................................... ......................................................................... t Place, date ap Authorized Representative of the Bidder Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 10 : Schedule 14: Draft PPP Agreement 41 Sample Request for Proposal for Two-Stage Bid Process Schedule 14: Draft PPP Agreement te ria rop A pp t as ap Ad nt , me cu Do le mp Sa Module 10 : 42 Sample Request for Proposal for Two-Stage Bid Process te ria rop pp A t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank AGREEMENT SAMPLE PPP Municipal 11 Public-Private Partnership Framework Module 11 : 2 Sample Public-Private Partnership Agreement Important Note: This PPP Agreement is provided only as a sample document. It must be adapted to fit the unique circumstances and needs of each particular Municipality and project for which its use is intended. National and local laws, regulations, policies and practices may prescribe a different approach to procuring project-level consulting services. It is based on the World Bank Guidance on PPP Contractual Provisions (2017 Edition). This agreement has been kept as simple as possible. te It should be modified to take into account the specific aspects of the transaction in question, including: - Payment structure of the project (e.g. availability payment); ria - Liquidity support (e.g. escrow account, performance bond); -  Greenfield/brownfield (this template assumes that there will be at least some assets constructed and financed). rop -  External financing (the template assumes that the asset will be financed by way of limited recourse debt financing). - Whether or not there will be employees transferred to the project; pp -  Whether the Service Provider will deliver services directly to Users and/or collect payment from them. Whether tariffs will be regulated by an independent authority. - The application of local legislation, in particular PPP laws. A -  Time allotted for notices and decisions and other actions: the periods of time indicated are based on usual practice, and may need to be adapted. as -  A Government guarantee template is included, but if used will need to be adapted to applicable law and State practice. t ap ADDITIONAL GUIDANCE MATERIAL Ad World Bank Group’s Public-Private Partnership Legal Resource Center, https://ppp.worldbank.org/public-private-partnership/ nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : 3 Sample Public-Private Partnership Agreement DATED [•] MUNICIPAL PPP AGREEMENT te Between ria [CONTRACTING AUTHORITY] rop and [SERVICE PROVIDER] pp   A t as ap Ad nt , me cu Do le mp Sa Module 11 : Table of Contents 4 Sample Public-Private Partnership Agreement TABLE OF CONTENTS DEFINITIONS AND INTERPRETATION 1  5 INTERPRETATION 11 2  3 COMMENCEMENT, DURATION, RENEWAL 12 RIGHTS AND OBLIGATIONS 14 4  CONSTRUCTION, TESTING AND COMMISSIONING 5  15 PAYMENTS 16 6  te COMMUNITY ENGAGEMENT 17 7  ANTIQUITIES 17 8  ria REPORTING, PLANNING AND MANAGEMENT 9  18 10 OPERATION AND MAINTENANCE PLAN 18 11 RETENDERING OF THE FACILITIES 18 rop 12 HANDOVER 19 13 CHANGE NOTICE 19 14 FACILITIES’ DATA AND PERSONNEL AND SAFETY 20 pp 15 LIABILITY 21 16 CONTRACTING AUTHORITY STEP-IN RIGHT 21 A 17 LIQUIDITY SUPPORT MECHANISM (OPTIONAL) 22 18 E ARLY TERMINATION 23 19 FORCE MAJEURE 25 as 20 MATERIAL GOVERNMENT ACTION 26 21 CHANGE IN LAW 28 22 REPRESENTATIONS AND WARRANTIES OF THE SERVICE PROVIDER 29 t 23 R ap  EPRESENTATIONS AND WARRANTIES OF CONTRACTING AUTHORITY 30 24 REFINANCING 30 25 GOVERNING LAW 30 Ad 26 DISPUTE RESOLUTION 30 27 CONFIDENTIALITY 32 28 MISCELLANEOUS 33 nt , SCHEDULE 1 - PROJECT SPECIFIC INFORMATION, CONDITIONS PRECEDENT AND FINANCING 36 SCHEDULE 2 - WORKS SPECIFICATIONS 39 SCHEDULE 3 - FACILITIES SERVICES AND SPECIFICATIONS 41 me SCHEDULE 4 - PERMITS TO BE OBTAINED BY THE CONTRACTING AUTHORITY 43 SCHEDULE 5 - BULK AND USER PAYMENTS 44 SCHEDULE 6 - REPORTING REQUIREMENTS 45 cu SCHEDULE 7 - INSURANCES 46 SCHEDULE 8 - TERMINATION PAYMENTS 47 Do SCHEDULE 9 - ASSETS TRANSFER PLAN 51 SCHEDULE 10 - ASSETS HANDOVER AGREEMENT 52 SCHEDULE 11 - GOVERNMENT GUARANTEE 53 SCHEDULE 12 - FORM OF ESCROW LETTER 60 le SCHEDULE 13 - FORM OF FIRST DEMAND GUARANTEE 61 SCHEDULE 14 - FORM OF PERFORMANCE SECURITY 62 mp SCHEDULE 15 - LENDER’S DIRECT AGREEMENT KEY PRINCIPLES 63 Sa thegpsc.org | The World Bank Module 11 : Agreement 5 Sample Public-Private Partnership Agreement This agreement (the “Agreement”) is made on [•] BETWEEN (1) [Contracting Authority], a [local public entity] established under the laws of the [relevant country], whose address is [•] (the “Contracting Authority”); and (2)  Service Provider], a [form of the company] incorporated in [relevant country1] under [ certificate of incorporation number [•], whose address is [•] (Service Provider). te The Contracting Authority and the Service Provider shall hereinafter be referred to individually as a “Party” ria and collectively as the “Parties”. WHEREAS 2 rop (A) The Contracting Authority wishes to engage the Service Provider to deliver the Services and to develop the Facilities, all as described in Schedule 2 and Schedule 3. pp (B) [The Contracting Authority] 3 has procured the Services and the development of the Facilities by competitive tender in accordance with Applicable Laws, and the Service Provider has been A selected by the Contracting Authority following its offer dated [•] (the “Bid Submission Date”)]4. as (C) The Contracting Authority wishes to contract with the Service Provider to [design, finance, build, maintain, operate] the Facilities and carry out the Services and then hand over the Facilities to the Contracting Authority at the end of the Term. t ap NOW THE PARTIES AGREE AS FOLLOWS: Ad 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions nt , 1  rafting note: the country D  In this Agreement (including the recitals and schedules), the following words and expressions of incorporation of the have the following meanings: Service Provider may me depend on applicable PPP laws. Most PPP Acceptable Bank means a bank or financial institution having international ratings for its long- laws require the Service term unsecured unsubordinated debt obligations from at least two of Standard & Poor’s Ratings Provider to be locally Services, Fitch Ratings Limited and Moody’s Investors Service, Inc., such ratings being no less cu incorporated within the country where the PPP than “A-” (Standard & Poor’s Ratings Services or Fitch Ratings Limited) or “A3” (Moody’s Investors takes place. Service, Inc.) or as otherwise agreed by the Parties from time to time. 2 Drafting note: Project and Do rationale for entry into Agreement to be briefly Affected Party means the Party affected by a Force Majeure Event.  described here. 3 Drafting note: the  Affiliate means, with respect to any Person, any other Person that, directly or indirectly, le Contracting Authority may not be the one in through one or more intermediaries, Controls or is controlled by or is under common Control with charge of the tendering such Person. mp of the delivery of the Services and development of the Annual Financial Report has the meaning given in Schedule 6. Facilities. Sa 4  Drafting note: this Antiquities means all fossils, antiquities and all other forms of Cultural Heritage as identified agreement assumes that the Services have in Performance Standard 8 including structures, and other remains, objects or things, having been procured under archaeological, historical, artistic, geological and/or monetary value or interest, discovered a competitive bidding on the Site. process. The key steps of the competitive bidding process should Applicable Law5 means laws and any other legal instruments having the force of law in the  be briefly described. Country and includes any applicable statute, ordinance, decree, regulation or by-law or any rule, If this is not the case, additional wording to be circular, directive or any license, consent, permit, authorization, concession or other approval added. issued by any Governmental authority which has appropriate jurisdiction, or any binding 5  Drafting note: to be interpretation thereof. adjusted depending on jurisdiction. Module 11 : Agreement 6 Sample Public-Private Partnership Agreement Approval means any approval, consent, license, permit or other authorization of any kind that is required from any Government entity under the Applicable Law in order for the Service Provider to carry out the Works and perform the Services and otherwise to perform its obligations under this Agreement. Base Case Equity IRR means the Equity IRR set out in the Original Base Case. [Bid Submission Date means the date in Recital (B).] 6 te Bulk Payments means the payments, if any, to be paid to the Service Provider by the Contracting  Authority for the Services pursuant to Clause 4.2 (Service Provider’s Rights) and Schedule 5. ria  ertificate of Insurance Policy means any certificate to be provided by the Service Provider to C the Contracting Authority as a condition precedent to the Commencement Date. rop Change Confirmation means the confirmation to be given under Clause 13 (Change Notice). pp Change in Law means, after the [Bid Submission Date/Effective Date]7 any of the following events occurring in the Country: (a) the enactment of any new Applicable Law; A (b) the repeal, modification or re-enactment of any existing Applicable Law; (c) a change in the interpretation or application of any Applicable Law; as which: (a)  t materially and adversely affects the ability of a Party to enforce its rights or comply with its ap obligations under the Agreement; and (b) was not published as a draft law in the [specify the relevant source of publication] at the Ad date on which the [successful bidder submitted its bid/the Service Provider signed this Agreement] 8. nt , Change Notice means the notification of a contemplated change to be given under Clause 13 (Change Notice). me Commencement Date has the meaning given under Clause 3.2.3. Conditions Precedent has the meaning given to it under Clause 3.2 (Conditions Precedent). cu Construction Period has the meaning given to it in Schedule 1. Do Construction Program has the meaning given in Schedule 2. Contracting Authority Event of Default has the meaning given to it under Clause 18.2  le (Contracting Authority Event of Default). mp Contractor means any entity appointed by the Service Provider to perform functions in relation to  6  rafting note: only D the Services, but shall not include staff of the Service Provider. applicable when the Sa Services were procured Control means (i) the power to elect a majority of the board of directors (or other similar  under a competitive bidding process. constituent body) or otherwise direct the management and policies of a Person, directly or 7 Drafting note: to be indirectly, whether through the ownership of voting securities, by contract or otherwise; or (ii) the adapted depending on holding of the majority of the rights to dividends with respect to a Person. the fact that the Services thegpsc.org were procured under a competitive bidding Country mean the [specify the country where the PPP Project takes place]. process. 8 Drafting note: to be  adapted depending on Default Interest means the interest to be paid according to the Default Interest Rate. | the fact that the Services The World Bank were procured under Default Interest Rate has the meaning set out in Part 1 of Schedule 1. a competitive bidding process. Module 11 : Agreement 7 Sample Public-Private Partnership Agreement Defects Notification Period means the period of twelve (12) months from the date of the  Performance Certificate. Design and Construction Plan has the meaning given in Schedule 2. Dispute has the meaning given under Clause 26. Dispute Resolution Procedure has the meaning set out under Clause 26 (Dispute Resolution). te Distribution means: (a) the payment of a distribution by the Service Provider (whether directly or indirectly) to ria its Shareholders; (b) any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) declared, paid or made on or in respect rop of share capital (or any class of share capital) in the Service Provider; (c) the redemption, repurchase, defeasance, retirement or repayment of any share capital of the Service Provider, including in connection with any merger or consolidation, or any resolution pp to do so. Early Termination has the meaning given under 18.1 (Early Termination Event). A Effective Date means the date on which this Agreement is executed by both Parties. as Equity means the capital of the Service Provider attributed to its Shareholders in respect of their investment in the Service Provider (including indebtedness for money borrowed by the t Service Provider from a Shareholder or any Affiliate of a Shareholder which by its terms is ap subordinated to any indebtedness for borrowed money incurred by the Service Provider under any Lenders Documents). Ad Equity IRR means the projected blended internal rate of return to the Shareholders and any  of their Affiliates over the entire Agreement period, having regard to Distributions made and nt , projected to be made. Escrow Account means, where applicable, the [offshore/onshore] [specify currency] bank  me account with the Escrow Agent. Escrow Agent means, where applicable, [specify the bank elected by the Parties]. cu Escrow Letter means, where applicable, any letter agreement to be entered into between the  [Contracting Authority] 9, the Service Provider and the Escrow Agent dated on or before the Do Effective Date substantially in the form set out in Schedule 12, as may be adjusted to reflect the legal requirements of the jurisdiction of the Escrow Agent10. le 9 D  rafting note: to be adapted depending on Estimated Change in Project Costs means the aggregate of any estimated increase in  who will deposit funds on construction costs, operating costs and Financing Costs less the aggregate of any estimated mp the Escrow Account, i.e. reduction in construction costs, operating costs and Financing Costs. the Contracting Authority or the Government. Drafting note: depending 10  Exempt Refinancing11 means: Sa on the security (a) any Refinancing fully contemplated in the Original Base Case; mechanism, reference to Escrow Account, Escrow (b) a change in taxation or in accounting treatment; Agent and Escrow Letter (c) the exercise of rights, waivers, consents and similar actions which relate to day to day should be deleted. administrative and supervisory matters 11  Drafting note: this definition may be (d) any sale of shares in the Service Provider by the Shareholders. extended/reduced on a case-by-case basis, Existing Facilities means the structures and other facilities, whether immovable or movable, [ to reflect the particular circumstances of the equipment, supplies and other property, owned or used by or on behalf of the Contracting PPP Project. Authority on the Effective Date which are to be transferred in connection with the Project as 12 Drafting note: only  detailed in Schedule 9.]12 applicable in the event of a brownfield project. Module 11 : Agreement 8 Sample Public-Private Partnership Agreement Expiry Date means the last day of the Term as specified Schedule 1. Environmental and Social Impact Assessment means the environmental assessment prepared by [•]. Facilities means [Existing Facilities and New Facilities]13. Financial Closing means the date on which the conditions precedent to drawdown under the Lender Documents covering; te (a) one hundred percent (100%) of the total capital cost of the PPP Project; less (b) the percentage to be funded by Equity as specified in the Service Provider’s offer, ria have been met or otherwise waived in accordance with the terms of the Lenders Documents. Financial Year means the period from 1 January to 31 December of any year. rop Financing Costs means those costs to be determined and agreed between the Parties following  the securing of finance in accordance with Schedule 1. pp Financial Model means the financial model [provided by the Service Provider as part of its bid/ agreed between the Parties prior to the date of the Agreement]14 and as amended from time A to time. as First Demand Guarantee means any irrevocable, unconditional, first demand guarantee in a  form acceptable to the Service Provider, acting reasonably, issued in favor of the Service Provider by an Acceptable Bank and valid for a term of no less than 12 (twelve) months, in the form of Schedule 13. t ap Force Majeure Event has the meaning given under Clause 19.1 (Definition of Force Majeure Event).  Ad Government means the government of [specify the relevant country] nt , [Government Guarantee means a guarantee issued by the Government of the Country to secure the Contracting Authority’s obligations under the Agreement substantially in the form of Schedule 11.]15 me Insurance Policies means those insurances required to be effected and maintained by the  Service Provider pursuant to Clause 3.2 and Schedule 7. cu [Lease means the lease agreement to be entered into between the Contracting Authority and the Service Provider in relation to the Site and request for the Service Provider to [construct/ Do modernize] and operate the Facilities.]16 13  rafting note: this D Lenders means any Person providing debt financing or refinancing under the Lenders  le definition should be amended based on the Documents to the Service Provider for the PPP Project and their permitted successors and nature of the project. assigns and transferees, including any agent or trustee for such Persons but not including a mp Drafting note: to be 14  Shareholder or Affiliate of a Shareholder or any other Person providing Equity. adapted depending on whether the Financial Model is agreed Lenders’ Direct Agreement means a direct agreement executed between the Contracting Sa between the Parties or Authority, any of the Lenders and the Service Provider based on the principles set out in is part of the bid of the Service Provider. Schedule [•]. 15  Drafting note: applies if a Government Lenders Documents means any and all loan agreements, notes, bonds, indentures, security  Guarantee is required agreements, registration or disclosure statements, subordination agreements, mortgages, deeds thegpsc.org to obtain financing at acceptable rates. of trust, credit agreements, note or bond purchase agreements, participation agreements, 16 Drafting note:  hedging agreements, and other documents entered into by the Service Provider relating to the depending on the Applicable Laws, a financing or refinancing of the PPP Project provided by any Lender, including any modifications, | lease agreement might supplements, extensions, renewals and replacements of any such financing or refinancing. The World Bank be necessary to govern the right of the Service Provider on the Site. Liquidated Damages for Delay has the meaning given in Schedule 1. Module 11 : Agreement 9 Sample Public-Private Partnership Agreement Liquidity Support Balance means, at any time, the sum of: (a) The balance standing to the credit of the Escrow Account; and (b) the uncalled and available for draw face value of any valid and enforceable First Demand Guarantee. Material Adverse Government Action has the meaning given in Clause 20.1.1. Mediation Notice has the meaning given in Clause 26.2 (Mediation). te Monthly Construction Report has the meaning given in Schedule 6. ria Monthly Service Report has the meaning given in Schedule 6. rop Net Present Value means the aggregate of the discounted values, calculated as of the estimated  date of the Refinancing, of each of the relevant projected Distributions, in each case discounted using the Base Case Equity IRR. pp [New Facilities means facilities, whether immovable or movable, including vehicles, equipment, supplies and other property, constructed or purchased by the Service Provider during the A Term for the provision, by the Service Provider, of the Services including those facilities set out in Schedule 2.]17 as Operating Staff means the staff engaged by the Service Provider or its Contractors to deliver the  Services pursuant to this Agreement. t ap Operating and Maintenance Plan or O&M Plan has the meaning given under Clause 10  (Operation And Maintenance Plan). Ad Original Base Case means the Financial Model for the purpose of amongst other things  calculating [insert the various defined terms used to calculate the Parties payment scheme], nt , as updated from time to time in accordance with the terms of this Agreement. Performance Certificate means a certificate issued under Clause 5.3.4. me Performance Indicators has the meaning given in Schedule 1. cu Performance Security means an unconditional and irrevocable on-demand bank guarantee  issued by a bank reasonably acceptable to the Contracting Authority and with offices in the Country, having a credit rating of at least [BBB under Standards and Poor’s rating or with Baa2 Do under Moody’s rating]18, in an amount of [•] and substantially in the form set out in Schedule 14 (Form of Performance Security) (or in any other form acceptable to the Contracting Authority). le Performance Tests means the tests, specified in the Specifications and designated as such, to be carried out before the Performance Certificate is issued by the Contracting Authority. mp Person means any Country national or foreign natural or legal person, partnership, enterprise,  Governmental agency or any other entity or instrumentality, whether public or private. Sa 17  rafting note: only D applicable in the event of a greenfield project.  PP Project means the project described in this Agreement, including [the development of the P Drafting note: to be 18  New Facilities, the operation, repair and maintenance of Facilities and the provision of Services by adapted depending on the Service Provider.]19 the PPP Project. 19  Drafting note: to be adapted depending on  re-Refinancing Equity IRR means the Equity IRR calculated immediately prior to any P the PPP Project. Refinancing, but without taking into account the effect of such Refinancing and using the Financial 20 Drafting note: this  definition shall be Model as updated (including as to the performance of the PPP Project). amended or deleted depending on the [Project Fee means the initial or periodic payment to be made by the Service Provider to the Service Provider’s remuneration structure. Contracting Authority as set out in Schedule 1, and calculated in accordance with Schedule 5.] 20 Module 11 : Agreement 10 Sample Public-Private Partnership Agreement Project Officer means the person designated as such by the Contracting Authority and  performing the functions stated under Clause 9.1.1.  rudent Industry Practice means the standards, practices, methods and procedures expected P from a person seeking in good faith to perform its contractual obligations and in so doing and in the general conduct of its undertaking exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in the same type of undertaking under the same or similar circumstances and conditions as contemplated by this Agreement. te Qualifying Refinancing means any Refinancing that will give rise to a Refinancing Gain greater  ria than zero and that is not an Exempt Refinancing. Recitals means recitals of this Agreement. rop Reference Shareholder means [to be inserted from the Bid]. pp Refinancing means: (a) any amendment, variation, novation, supplement or replacement of any Lenders Documents; (b) the grant of any waiver or consent, or the exercise of any similar right under any A Lenders Documents; (c) the creation of or granting of any form of benefit or interest in the Lenders Documents, or as the creation or granting of any rights or interest in any contracts, revenues or assets of the Service Provider’s whether by way of security or otherwise; and (d) any other arrangement having been put in place by any Person which has an effect similar to t any of (a) to (c) above or which has the effect of limiting the Service Provider’s ability to carry ap out any of (a) to (c) above. Ad Refinancing Gains means a positive amount equal to A-B, where: the Net Present Value of Distributions, as projected immediately prior to the Refinancing A= nt , (taking into account the effect of the Refinancing and using the Financial Model as updated so as to be current immediately prior to the Refinancing) to be made to each Shareholder or affiliate over the remaining term of the Agreement following the Refinancing; and me the Net Present Value of Distributions, as projected immediately prior to the Refinancing B =  (but without taking into account the effect of the Refinancing and using the Financial Model cu as updated so as to be current immediately prior to the Refinancing) to be made to each Shareholder or affiliate over the remaining term of this Agreement following the Refinancing. Do Regulatory Agency means the regulatory body stated in Schedule 1. [Regulatory Fee means an amount payable to the Regulatory Agency during the Term] 21. le Required Liquidity Support Amount means the amount specified in Schedule 1. mp Rules has the meaning given under Clause 26.4.3. Sa Scheduled CP Satisfaction Date has the meaning given under Clause 3.2.2. Service Commencement Date means the date following the date on which the Contracting  Authority issues the Performance Certificate under Clause 5.3 (Performance Tests), whichever is the earlier. thegpsc.org Service Period means the period commencing on Service Commencement Date and ending on  the Expiry Date or earlier termination of this Agreement in accordance with its terms. | The World Bank Service Provider means [name of the company] incorporated in [place of incorporation] in  To be adjusted/deleted 21  charge of the Works to be provided under this Agreement as specified in Schedule 2. Module 11 : Agreement 11 Sample Public-Private Partnership Agreement Service Provider Event of Default has the meaning given under Clause 18.3 (Service Provider  Event of Default). Service Standards means those standards listed in the Schedule 3. Services means the services provided by the Service Provider in connection with the PPP Project  during the Term under this Agreement. te Shareholder means any shareholder in the share capital of the Service Provider from time to time. ria Site means the area described in Schedule 5. Specifications mean the specifications for the Facilities set out in Schedule 2. rop Taxation means all taxes (direct and indirect) and including: (a) customs and excise duties, corporate tax, income tax (including pay-as-you-earn pp withholdings), national insurance contributions, VAT and stamp duty; (b) all other levies, imposts, duties, charges or withholdings in the nature of taxes imposed by any Government entity having functions (including the right to levy Tax) in relation to Taxation A in the Country; and (c) all interest, penalties, fines and other charges relating to any of the above or to a failure to as make any return or supply any information in connection with any of the above, and “Tax” and “Taxes” shall be construed accordingly. t Term means the period stated in Clause 3.1 (Effective Date and Term). ap Termination Date means the date that any termination of this Agreement takes effect. Ad Termination Payments mean the net amounts payable under Schedule 8. nt , Testing and Commissioning Plan has the meaning given in Schedule 2. Time for Completion means the date by which the Facilities are to have passed the Performance  me Tests as set out in Schedule 2, calculated from the Effective Date. Users means any person or class of persons or legal entity entitled to benefit from the Services. cu [User Payment means a payment by a User in accordance with the provisions of Clause 6.2, subject to User Payment Adjustments under Schedule 5.] 22 Do [User Payment Adjustments means the level of User Payments payable by Users in accordance with this Agreement.] 23 le Working Hours means those hours during which the Facilities are generally open, as designated  mp in Schedule 1 and Schedule 3. Works means those works to be undertaken by the Service Provider in accordance with Sa Schedule 2. 22  rafting note: this D 2. INTERPRETATION definition shall be amended or deleted depending on the 2.1 The Recitals and the Schedules to this Agreement shall form an integral part thereof. This Service Provider’s Agreement shall be read as a whole. In the event of discrepancy and/or contradiction between the remuneration structure. main body of the Agreement and its Schedules, the Agreement shall prevail. Drafting note: this 23  definition shall be amended or deleted 2.2 References to Schedules shall be references to Schedules to this Agreement unless otherwise depending on the agreed by the Parties. Service Provider’s remuneration structure. Module 11 : Agreement 12 Sample Public-Private Partnership Agreement 2.3 The headings of Clauses of this Agreement and the Table of Contents are inserted for convenience and reference purposes only and shall not in any way limit, alter or affect the interpretation of this Agreement. 2.4 In this Agreement, words denoting the singular include the plural and vice-versa, words denoting persons include companies, corporations, partnerships or other legal persons and references to any Party or person include references to its respective successors and permitted assigns. te 2.5 References to gender include any other gender as well as neuter. ria 2.6 Neither the giving of any approval, consent, examination, acknowledgement, knowledge of the terms of any agreement or document nor the review of any document or course of action by or on behalf of the Contracting Authority, nor the failure of the same, shall unless expressly stated rop in this Agreement, relieve the Service Provider of any of its obligations under this Agreement or of any duty which it may have hereunder to ensure the correctness, accuracy or suitability of the matter or thing which is the subject of the approval, consent, examination, acknowledgement or pp knowledge. 2.7 The words “include”, “includes”, and “including” shall at all times be construed as if followed by A the words “without limitation” or “but not limited to”. as 2.8 A reference to any law shall include any amendment brought to such law from time to time or any law which may replace or consolidate the same. 3. COMMENCEMENT, DURATION, RENEWAL t ap 3.1 Effective Date and Term Ad  This Agreement shall enter into full force and effect on the date of its execution by all Parties (the “Effective Date”) and shall remain in full force and effect for a period of [•] ([•]) years starting from the Commencement Date (the “Term”), unless terminated earlier or extended in accordance nt , with the provisions of this Agreement. 3.2 Conditions Precedent me 3.2.1 Subject to Article 3.2.6, the rights and obligations of the Parties under this Agreement shall be conditional upon the occurrence of the Commencement Date. cu 3.2.2 The Service Provider and the Contracting Authority shall use their best efforts to respectively procure the satisfaction of the conditions precedent listed in Schedule 1 as being their Do responsibility (the “Conditions Precedent”) as soon as is practicable and in any event no later than [one hundred and twenty/one hundred and eighty] ([120/180] 24) days from the Effective Date (the “Scheduled CP Satisfaction Date”). le 3.2.3 Within five (5) days from the date on which the Service Provider and the Contracting Authority mp have provided to the other written notice that they have met or are in a position to meet or waive (as applicable) the Conditions Precedent, the Contracting Authority and the Service Provider shall meet to evidence the fulfillment of the Conditions Precedent and if they are satisfied that all Sa the Conditions Precedent have been satisfied or waived pursuant to this Agreement they shall both sign a joint statement to that effect. The date of signature of this joint statement shall be the “Commencement Date”. 3.2.4 If any of the Conditions Precedent are not satisfied or waived on the last day before the thegpsc.org  Scheduled CP Satisfaction Date, the Parties shall promptly meet to discuss how to satisfy the outstanding Conditions Precedent. If the Parties cannot agree on a timetable for the completion of the outstanding Conditions Precedent within thirty (30) days after the Scheduled CP |  Satisfaction Date then: The World Bank 24 T  o be adjusted (a)  If the only conditions that have not been satisfied or waived at that time are Conditions depending on whether financial close is a CP Precedent under the Service Provider’s responsibility as specified in Schedule 1: (1) the Contracting Authority may choose to terminate this Agreement by giving a thirty (30) Module 11 : Agreement 13 Sample Public-Private Partnership Agreement days’ notice to the Service Provider; and upon the expiry of such period, this Agreement shall automatically terminate without the (2)  need for further notice, unless, during such period, the Service Provider has provided notice that all the outstanding Conditions Precedent have been satisfied and the Contracting Authority is satisfied of the same, in which case this Agreement shall not terminate. (b) If the only conditions that have not been satisfied or waived at that time are the Conditions Precedent under the Contracting Authority’s responsibility as specified in Schedule 1 Part 1: te (1) the Service Provider may choose to terminate this Agreement by giving give a thirty (30) days’ notice to the Contracting Authority; and ria (2) upon the expiry of such period, this Agreement shall automatically terminate without the need for further notice, unless, during such period, the Contracting Authority  has provided notice that all the outstanding Conditions Precedent have been satisfied rop and the Service Provider is satisfied of the same, in which case this Agreement shall not terminate. pp (c) If the only conditions that have not been satisfied or waived at that time are the Conditions Precedent under both Parties’ responsibility as specified in Schedule 1: (1) any of the Parties may choose to terminate this Agreement by giving a thirty (30) days’ A notice to the other Party; and (2) upon the expiry of such period, this Agreement shall automatically terminate without as the need for further notice, unless, during such period, the Parties agree that all the outstanding Conditions Precedent have been satisfied, in which case this Agreement shall not terminate. t ap 3.2.5 In the event of termination of the Agreement under Clause 3.2.4: (a)  if the conditions that have not been satisfied at that time are conditions precedent under Ad the Service Provider’s responsibility, the Service Provider shall compensate the Contracting Authority for all dully evidenced reasonable costs and expenses suffered or incurred by the Contracting Authority in connection with this Agreement, up to [•] nt , (b)  if the conditions that have not been satisfied at that time are conditions precedent under the Contracting Authority’s responsibility, the Contracting Authority shall compensate the Service Provider for all dully evidenced reasonable losses (excluding loss of profits), costs and me expenses suffered or incurred by the Service Provider in connection with this Agreement, up to [•]; and (c)  if the conditions that have not been satisfied at that time are conditions precedent under cu both Parties’ responsibility, no Party shall have any liability to the other Party under or in connection with this the termination of this Agreement. Do 3.2.6 The rights and obligations of the Parties under the following Clauses shall not be conditional upon the fulfillment of the Conditions Precedent and are effective from the Effective Date: Clause 3 (Commencement, Duration, Renewal ), Clause 19 (Force Majeure), Clause 20 (Material Government le Action), Clause 21 (Change In Law), Clause 22 (Representations And Warranties Of The Service Provider), Clause 23 (Representations And Warranties Of Contracting Authority), Clause 24 mp (Refinancing), Clause 27 (Confidentiality), and Clause 28 (Miscellaneous). 3.3 Commencement of Services Sa  The Service Provider shall take over the Site 25 and thereafter commence the provision of the Services in accordance with the programme set out in Schedule 2 as soon as the Commencement Date is reached. 25 D  rafting note: subject to the structuring 3.4 Term of the Project, the  Unless terminated earlier pursuant to Clause 18 (Early Termination), this Agreement shall remain in Service Provider may full force for the Term. need to have access to the Site before the Commencement Date, including if any land survey has to be performed. Module 11 : Agreement 14 Sample Public-Private Partnership Agreement 4. RIGHTS AND OBLIGATIONS 4.1 Service Provider Obligations The Service Provider shall, at its own costs and expenses: 4.1.1 (a) design, build and [modernize] the Facilities in accordance with the Specifications, the Construction Schedule and Prudent Industry Practice; (b) provide all financing for the Facilities; te (c) operate the Facilities and deliver the Services under this Agreement in accordance with Prudent Industry Practice, Service Standards, and all Applicable Laws; ria (d) obtain all necessary licenses, permits and warranties necessary to carry out its obligations under this Agreement, other than the permits if any listed in Schedule 1 to be obtained by the Contracting Authority; rop (e) [unless otherwise stated in Schedule 2, arrange for the utility supplies for the Facilities to be installed in accordance with Schedule 2 and supply such utilities as required for the performance of its obligations under this Agreement ] 26; pp (f) repair and maintain the Facilities in good working order and not dispose of any of the Facilities without the authorization of the Contracting Authority, other than to charge or otherwise pledge its interest in the Facilities to the Lenders, subject to Applicable Law and A the Lenders’ Direct Agreement; (g) employ Operating Staff who have the relevant qualifications / experience for the performance as of its obligations under this Agreement; (h) provide as a minimum to staff [statutory benefits and terms and conditions of employment] 27; (i) obtain appropriate insurance coverage for the Term in accordance with Clause 28.3 (Insurance); t ap (j) prepare operating manuals within six (6) months of the [Commencement Date / the Service Commencement Date], including the information set out in Schedule 2 keep a copy thereof Ad on site and keep such operating manuals up to date; (k) cooperate with the Contracting Authority, the Project Officer and [the Regulatory Agency] 28 to allow effective monitoring, including for the purposes of Clause 4.4 (Contracting nt , Authority Supervision); 26 D  rafting note: to be (l) [pay the Project Fee]; deleted if no utility (m) update any Environmental and Social Impact Assessment where its design impacts on the me supplies are to be provided under the assessment prepared by the Contracting Authority so as to meet the requirements of not Agreement. only the Applicable Laws but also the IFC Performance Standards on Environment and Drafting note: this 27  Social Sustainability; and cu depends on local law applicable to the (n) act in a non-discriminatory manner toward Users. Agreement. 28  Drafting note: this 4.2 Service Provider’s Rights Do depends on local law applicable to the Agreement. 4.2.1 The Service Provider shall be entitled to: 29 Drafting note: to be  (a) access, use and occupy the Site, and more generally benefit from peaceful and le adapted if a lease agreement is not unencumbered possession of the Site for the purpose of the Project [in accordance with the necessary. Lease] 29 including any necessary easements, rights of way and rights to [lay pipes or other mp 30 Drafting note: to be  conduits to the Site] 30; adapted depending on the type of Services to (b) [payment of the Bulk Payments in accordance with Schedule 5] 31; be provided. (c) payment of the Termination Payments in accordance with Schedule 8; and Sa 31 Drafting note: to be  (d) [levy User Payment Adjustments on Users in accordance with Schedule 5] 32. adapted depending on the remuneration method of the Service 4.3 Contracting Authority Obligations Provider 32  Drafting note: to be 4.3.1 The Contracting Authority, from the Commencement Date shall: thegpsc.org adapted depending on the remuneration (a) [grant the Lease to the Service Provider] 33; method of the Service (b) assist the Service Provider to gain access to assets or to other land on which it is required to Provider.  Drafting note: this exercise its duties; | 33 provision shall be (c) cooperate with the Service Provider to facilitate the securing by the Service Provider of the The World Bank deleted if a lease funding of the Project; agreement is not necessary. Module 11 : Agreement 15 Sample Public-Private Partnership Agreement (d) except where expressly entitled pursuant to the terms of this Agreement, not interfere and cause its employees, sub-contractors or agents not to interfere or obstruct the Service Provider in carrying out its obligations under this Agreement and providing the Services; (e) give the Service Provider full access to all available necessary information, plans,  policies, papers, reports and data in order to enable the Service Provider to carry out the Services; and (f) assist the Service Provider in obtaining, from the Government, other local Government or statutory bodies, all necessary consents, permits and authorizations as required by Applicable Law, other than permits listed in Schedule 4 to be obtained by the te Contracting Authority. ria 4.4 Contracting Authority Supervision  The Contracting Authority (including the Project Officer and all other duly authorized officers, employees and representatives as well as the financial and technical auditors) may access rop during Working Hours the Facilities and premises, works and sites of the Service Provider and its Contractors and access the Service Provider’s employees and the books, records and other material kept by or on behalf of the Service Provider in connection with the Facilities, for the pp purposes of monitoring, inspection, supervision and, as applicable, retendering, and shall  use all reasonable efforts not to disturb the Service Provider’s performance of its obligations under this Agreement. A 5. CONSTRUCTION, TESTING AND COMMISSIONING as 5.1 Works 5.1.1  t The Service Provider shall carry out and complete the design, procurement, construction, ap installation and commissioning of the Works. 5.1.2 The Service Provider shall procure the issue of Performance Certificate in accordance with Clause Ad 5.3.4 below by the Time for Completion. 5.1.3 The Service Provider will provide monthly status reports to the Contracting Authority during the Construction Period setting out progress of the Works and whether there are any delays or issues nt , that have arisen. The first report shall be provided following the end of the first calendar month after the Commencement Date. Each monthly report shall be provided within ten (10) days from the end of the related calendar month. me 5.2 Delay in Construction  If the Service Provider fails to comply with Clause 5.1.2 for reasons other than a Force Majeure cu Event, a Material Adverse Government Action or a Change in Law, the Service Provider shall pay to the Contracting Authority Liquidated Damages for Delay as set out in Schedule 1, up to the cap set out therein. Do 5.3 Performance Tests le 5.3.1 The Service Provider shall carry out the Performance Tests in accordance with this Clause 5.3 (Performance Tests) and the Specifications set out in Schedule 2. The Service Provider shall give mp to the Contracting Authority a seven (7) days’ notice of the date on which the Service Provider will carry out the Performance Tests and invite the Contracting Authority to observe the performance of such Performance Tests. The Performance Tests shall be carried out as scheduled by the Service Sa Provider irrespective of whether the Contracting Authority is attending the Performance Tests or not. 5.3.2 As soon as the Facilities have passed the Performance Tests, the Service Provider shall provide the Contracting Authority with a report of the results of all such Performance Tests, and in any case no later than five (5) days from the execution of the Performance Tests. 5.3.3 If the Facilities fail to pass the Performance Tests, the Service Provider shall promptly and in any event within three (3) days from the failure to pass the Performance Tests, inform the Contracting Authority of the action the Service Provider proposes to take to ensure that the Facilities pass the Performance Tests when performed again. The Performance Tests shall be performed again no later than seven (7) days (or any time that is reasonable in light of the actions to be taken) from the previous failed Performance Tests. Module 11 : Agreement 16 Sample Public-Private Partnership Agreement 5.3.4 The Service Provider may apply by notice to the Contracting Authority for a Performance Certificate not earlier than three (3) days after it has provided the certified report evidencing that the Performance Tests have been passed to the Contracting Authority. The Contracting  Authority shall, within three (3) days after the receipt of the Service Provider’s application for a Performance Certificate: (a)  issue the Performance Certificate to the Service Provider, stating the date on which the Facilities have passed the Performance Tests; or (b)  reject the application, stating the Contracting Authority’s reasons for considering that the Facilities have not passed the Performance Tests. The Service Provider shall then proceed te in accordance with Clause 5.3.3, or submit the dispute to the Dispute Resolution Procedure under Clause 21 (Change In Law). ria 5.3.5 If the Contracting Authority fails either to issue the Performance Certificate or to reject the Service Provider’s application within three (3) days, the Performance Certificate shall be deemed to rop have been issued on the following day of that period and the date of issue of the Performance Certificate shall be deemed to be the date of receipt of the application. pp 5.4 Performance Security 5.4.1 In order to secure the obligations of the Service Provider under the Agreement, the Service A Provider shall maintain the Performance Security in full force and effect until the date on which the Defects Notification Period expires. The Contracting Authority shall return the Performance as Security to the Service Provider by the date which is 30 days after the date on which the Defects Notification Period expires. 5.4.2  t If the Performance Security is scheduled to expire prior to the aforementioned date, then at least ap thirty (30) days prior to the scheduled expiry of the Performance Security, the Service Provider shall arrange for the extension or replacement of the Performance Security, failing which the Ad Contracting Authority may draw on the Performance Security for its full amount. In such an event, the Contracting Authority shall return the proceeds of any drawing to the Service Provider upon the delivery by the Service Provider to the Contracting Authority of an extension or replacement of nt , the Performance Security. 5.4.3 The Contracting Authority shall have the right to claim under the Performance Security any me amounts which are or may become due under the Agreement as a result of the Service Provider’s failure to comply with any of its obligations, responsibilities or commitments until the end of the Defects Notification Period (including any Liquidated Damages for Delays that the Service cu Provider is liable to pay under this Agreement). 5.4.4 If the Agreement is terminated before the Service Commencement Date for any reason, the Do Performance Security shall be returned to the Service Provider on the date which is 90 days after the date on which the Agreement terminates. le 6. PAYMENTS mp 6.1 [Bulk Payments shall be calculated and paid in accordance with Schedule 5, subject to adjustment by reference to actual performance in accordance with Schedule 5. Sa 6.2 The Service Provider shall be entitled to collect, receive and retain User Payments, calculated  in accordance with Schedule 5, subject to User Payment Adjustments in accordance with Schedule 5.] 34 6.3 As between the Parties: thegpsc.org (a) the Contracting Authority shall deliver a statement of account compliant with all relevant tax laws for any monies which become payable by the Service Provider to the Contracting Authority under this Agreement; and |  rafting note: to be D (b) the Service Provider shall deliver statements of account compliant with all relevant tax laws The World Bank 34 adapted depending on in accordance with the provisions of Schedule 5. the remuneration mode of the Service Provider. Module 11 : Agreement 17 Sample Public-Private Partnership Agreement 6.4 All payments shall be made within the Time for Payment set out in Schedule 5. In the case where a Party disputes the amount to be paid to the other, the claiming Party shall pay to the other Party the undisputed amount within the Time for Payment, and shall pay the balance agreed or determined to be due under the Disputes Resolution Procedure set under Clause 21 (Change In Law) together with the Default Interest on that balance calculated from the time that balance ought to have been paid had there been no dispute. All other delayed payments shall bear Default Interest from the day of expiry of the Time for Payment to the date of actual payment. 7. COMMUNITY ENGAGEMENT te 7.1 User Relations ria 7.1.1 The Service Provider shall ensure that Users have easy access to information from the Service Provider and are able to lodge complaints with it. rop 7.1.2 The Service Provider shall record all complaints from Users and shall report to the Contracting Authority on a quarterly basis on the complaints received showing numbers, nature and trends pp as well as the steps being taken to remedy the issues raised in legitimate complaints. The Service Provider shall promptly respond to requests for information and complaints according to the Minimum Service Level Guidelines published in accordance with Schedule 3. The Service A Provider will use every reasonable effort to resolve complaints from Users in connection with the Services. as 7.1.3 The Service Provider shall ensure that all of its employees who have contact with Users can be easily identified. t ap 7.2 Employment Ad 7.2.1 The Service Provider undertakes that the Services and/or Works shall be subcontracted with equal opportunity to Country nationals and businesses Controlled by Country nationals Persons, provided those Services or Works can be carried out with competitive conditions in terms of price, nt , quality, warranties and delivery periods equivalent to those available on the international market 35. 7.2.2 [•] 36. me 8. ANTIQUITIES cu 8.1 If any Antiquities are discovered at the Site after the Site Handover Date, the Service Provider shall: (a)  take all steps required by the Applicable Law and IFC Performance Standard 8: Cultural Do Heritage in relation to the Antiquities; (b) promptly notify the Contracting Authority of such discovery; (c)  take such steps as any appropriate Government entity may legally require, which may le include ceasing and not carrying out any operations which may hinder the excavation of the Antiquities or in any way interfere with the Antiquity; and mp (d)  take all necessary steps to preserve the Antiquity in the same position and condition in which it was found. 35 D  rafting note: this Sa provision is subject to 8.2 All Antiquities will be the property of the Government. applicable laws. Specific community 36  engagement 8.3 The Contracting Authority, any appropriate Government entity and any person acting on behalf undertaking to be of either of them shall be entitled to have access to the Site for the purposes of investigating any considered. Drafting Note: Please 37  Antiquity, drawing up a plan to deal with the Antiquity and/or any related excavation work and the note that based on Service Provider shall provide reasonable assistance to the Contracting Authority, any appropriate the specificities of the Government entity and/or any person acting on behalf of either of them, including making project, in some projects contracting authorities available its labor and equipment. may condition the application of this clause 8.4 Actions taken by the Contracting Authority or any Government entity in relation to Antiquities in subject to a financial threshold. accordance with this Clause 8 shall constitute a Material Adverse Government Action 37, subject to and in accordance with Clause 20 (Material Government Action). Module 11 : Agreement 18 Sample Public-Private Partnership Agreement 9. REPORTING, PLANNING AND MANAGEMENT 9.1 Reporting and Management The Project Officer shall be in charge of the following: 9.1.1 (a) monitoring the performance of the Service Provider and ensure that the Agreement is properly implemented; (b) day to day supervision of the PPP Project; (c) acting as the liaison officer between the Service Provider and the Contracting Authority; te (d) preparing quarterly and annual reports on the development of the PPP Project; (e) maintaining records on PPP Project implementation from the Commencement ria Date to Term; and (f) measuring the implementation, performance and outputs of the PPP Project under the Agreement. rop 9.1.2 The Service Provider shall proactively support the Project Officer in supplying information and material in order to enable the Project Officer to carry out its responsibilities under this Agreement. pp 10. OPERATION AND MAINTENANCE PLAN A 10.1 The Service Provider shall prepare and submit within one hundred and twenty (120) days of the [Commencement Date / Services Commencement Date] 38 an annual operation and maintenance as plan for the Facilities which shall comply with the Service Standards and Prudent Industry Practice (the “Operation and Maintenance Plan” or “O&M Plan”) with sufficient detail of all critical and routine operating tasks with the objective of achieving and maintaining the technical specifications t set out in Schedule 2 and the Performance Indicators. ap 10.2 The O&M Plan shall comprise the operating and maintenance strategy for improving the operating Ad efficiency, methodology, organization structure, human resource plan, equipment deployment plan, environmental management measures, responsibilities for unit operations, monitoring and emergency response, related processes, systems, protocols, procedures including detailed costs nt , for each activity of operations and maintenance etc. 10.3 Within thirty (30) days of receipt of the Operation and Maintenance Plan, the Contracting Authority me shall send to the Service Provider its comments on the Operation and Maintenance Plan. If the Contracting Authority fails to provide their comments as aforesaid, the Operation and Maintenance Plan shall be deemed to be approved. cu 10.4 If the Contracting Authority raises any objections in respect of the Operation and Maintenance Plan, the Service Provider shall issue a revised version incorporating such amendments and/or Do comments, or notify the Contracting Authority within ten (10) days of receipt of the Contracting Authority’s comments that it disagrees with such amendments and/or comments, together with a reasonably detailed explanation for such disagreement. le 10.5 The approval (or deemed approval) by the Contracting Authority of the Operation and mp Maintenance Manual shall not relieve the Service Provider of any duty, obligation or liability under this Agreement, and the Contracting Authority shall not be liable to the Service Provider as a result of such approval. In the event of a failure by the Parties to agree on the appropriate amendments Sa to the Operation and Maintenance Plan, any Party may refer the Dispute for determination by the Technical Expert in accordance with Clause 26.2 (Mediation). 11. RETENDERING OF THE FACILITIES thegpsc.org 38 D  rafting note: please 11.1 Retendering of the Facilities note that this plan  The Service Provider acknowledges that the Contracting Authority may wish, to invite persons should be approved as part of a condition (who may, except in case of early termination of this Agreement for Service Provider Event of | precedent to the Default, include the Service Provider) to tender for the right to provide all or some of the services The World Bank Commencement Date in related to the PPP Project after expiry or termination of this Agreement. the event of a brownfield project. Module 11 : Agreement 19 Sample Public-Private Partnership Agreement 11.2 Cooperation 11.2.1 From the date which is (i) one year prior to the expiry of the Term or (ii) one month prior to early termination (as applicable), the Service Provider shall co-operate with the Contracting Authority during the preparation for, and running of, any tender organized under Clause 11.1 for a replacement service provider and, unless otherwise stated in Schedule 1 and provided the Service Provider is not in breach of its obligations under this Agreement, the Service Provider shall have the right to participate to the bidding process. te 11.3 Maintenance as Going Concern ria 11.3.1 The Service Provider shall maintain, operate and manage the Facilities so that: (a) the Contracting Authority or a successor operator will be able to take over the operation and management of the Facilities at any time; and rop (b) the Facilities may be transferred, in the manner contemplated under this Agreement, at any time. pp 11.4 T  he Service Provider shall upon reasonable notice allow the Contracting Authority or such successor service provider to have access to all the Facilities and related employees for those purposes. A 11.5 Preparation for Retendering as  The Service Provider shall make available during the last twelve (12) months of the Agreement to the Contracting Authority and its authorized representatives such information as the Contracting Authority shall reasonably require in connection with such preparation for tendering. t ap 12. HANDOVER Ad 12.1 Each Party shall comply with the provisions of Schedule 10. 12.2 Upon termination or expiration of this Agreement, the Parties shall have no further rights or nt , obligations hereunder except for rights and obligations which arose prior to such termination or expiration and those which expressly survive termination or expiration pursuant to this Agreement. me 12.3 All Facilities initially transferred from the Contracting Authority to the Service Provider pursuant to Schedule 9 (Assets Transfer Plan) (as modernized, modified or replaced in accordance with this Agreement), as well as all Facilities built, installed or delivered by the Service Providers, will be cu transferred to the Contracting Authority at the end of the Term (or Expiry Date) of this Agreement or in the event of an early termination of this Agreement in accordance with the provisions of Schedule 10. Do 12.4 All tangible assets purchased by the Service Provider for the purpose of the PPP Project will be owned by the Service Provider and transferred to the Contracting Authority subject to and in le accordance with the provisions of Schedule 10 39. mp 12.5 Except in the case of early termination pursuant to Clauses 18 (Early Termination) or 21.3 (Termination due to Change in Law), the Service Provider and the Contracting Authority shall cooperate as reasonably necessary during the twelve (12) month before expiration of this Sa Agreement in order to ensure the smooth continuation and provision of Services, including the selection of a new service provider, if relevant. 13. CHANGE NOTICE 13.1 The Contracting Authority may request in writing from the Service Provider a change in the Specification for the Facilities, the Service Standards and/or a variation in the Services (a “Change Notice”). Drafting Note: There 39  may be certain assets 13.2 Within seven (7) days from the reception of the Change Notice, the Service Provider shall provide that the Service Provider will want to retain. the Contracting Authority with a written answer showing the impact of the Change Notice on the Module 11 : Agreement 20 Sample Public-Private Partnership Agreement PPP Project both in terms of time, cost and effect on the delivery of the Services. The Contracting Authority may then: (a) accept the response of the Service Provider and issue a Change Confirmation; (b) refuse the response from the Service Provider and refer the issue to the Service provider under the Dispute Resolution Procedure set out under Clause 26 (Dispute Resolution) to assess what should be the proper cost and/or effect on the delivery of the Services, and then either issue a Change Confirmation or withdraw the Change Notice; or (c) withdraw the Change Notice. te 13.3 If the Contracting Authority does not act pursuant to Clause 13.2 within five (5) days  from the reception of the answer from the Service Provider, the Change Notice shall be ria considered as withdrawn. 14. FACILITIES’ DATA AND PERSONNEL AND SAFETY rop 14.1 Data pp 14.1.1 All plans, drawings, specifications, programs, quality assurance programs designs, reports, and other documents and software prepared by the Service Provider in the course of performing its obligations under this Agreement shall remain property of the Service Provider. A 14.1.2 The Service Provider hereby grants to the Contracting Authority a non-exclusive, perpetual, as irrevocable, royalty free license to use for all purposes in connection with the Facilities all such plans, drawings, specifications, programs, quality assurance programs, designs, reports, and other documents and software prepared by the Service Provider together with a right to use all t intellectual property rights pertaining to the same. ap 14.1.3 Where such plans, drawings, specifications, programs, quality assurance programs designs, Ad reports, other documents and software prepared by the Service Provider, as well as the asset condition register, are retained on electronic storage, the Service Provider shall provide access for the Contracting Authority to such electronic storage. In any case, the Contracting Authority shall nt , not amend any of those data as long as the Service Provider is in charge of providing the Services and operate the Facilities under this Agreement. me 14.1.4 On the Expiry Date or earlier termination of this Agreement, the Service Provider shall deliver a copy of all the documents and software identified in Clauses 14.1.2 and 14.1.3 above (or an electronic version thereof) to the Contracting Authority as it may reasonably require, together with cu a detailed inventory thereof. 14.1.5 The Service Provider may retain in safe custody copies of such documents and software identified Do in Clauses 14.1.2 and 14.1.3 above. 14.2 Personnel le 14.2.1 Subject to the provisions of Clause 19 (Force Majeure), the Service Provider shall not be relieved mp or excused of any responsibility, liability or obligation under this Agreement by the appointment of any Contractor. The Service Provider shall, as between itself and the Contracting Authority, be responsible for the selection, pricing, performance, acts, defaults, omissions, breaches and Sa negligence of all Contractors. All references in this Agreement to any act, default, omission, breach or negligence of the Service Provider shall be construed accordingly to include any such act, default, omission, breach or negligence of a Contractor. 14.2.2 The Service Provider shall only enter into a contract with a Contractor who has either been thegpsc.org included in the list of Contractors appearing in Schedule 2 or who has been approved in writing by the Contracting Authority; | 14.2.3 If the Contracting Authority has reasonable cause to be dissatisfied with the qualification and/or The World Bank performance of any Operating Staff or Contractors, the Service Provider shall, at the Contracting Authority’s written request specifying the grounds thereof, provide as a replacement an Operating Staff or Contractor with qualifications and experience acceptable to the Contracting Authority. Module 11 : Agreement 21 Sample Public-Private Partnership Agreement 14.2.4 The Service Provider shall have no claim for additional costs arising out of or incidental to the removal and/or replacement of Operating Staff or Contractors under Clause 14.2.3. 14.2.5 On the Expiry Date or earlier termination of this Agreement, the Operating Staff will not be transferred to the Contracting Authority unless and subject to prior agreement of the Service Provider and the Contracting Authority. 14.3 Safety te 14.3.1 The Service Provider shall throughout the progress of the PPP Project have full regard for the safety of all persons using or carrying out operations on the Facilities (whether lawfully or not) ria and shall keep the Facilities in an orderly state, appropriate in accordance with Prudent Industry Practice, to avoid danger to such persons. rop 14.3.2 The Service Provider shall take such measures, including the retention of security staff where appropriate, as are reasonable in accordance with Prudent Industry Practice to prevent access to the Facilities of any persons or creatures not entitled to such access. The Contracting Authority pp shall use its best endeavour to provide the Service Provider with the support of the relevant security forces in order to ensure the safety of the Facilities as well as the enforcement of any Applicable Laws. A 15. LIABILITY as 15.1 Service Standards 15.1.1  t The Service Provider shall meet the Service Standards as defined under Schedule 3 and shall be ap subject to the application of the Performance Incentives as defined under Schedule 1. Ad 15.1.2 The Service Provider shall not be liable for failure to meet Service Standards to the extent such failure is caused by: (a)  failure by the Contracting Authority to perform its obligations under this Agreement; or nt , (b) Force Majeure or Material Adverse Government Action. 15.2 Duty to mitigate me 15.2.1 The Parties shall be under a duty to mitigate any loss or delay it may suffer in connection with this Agreement, including any loss or delay due to a Force Majeure event, provided that the suffering cu Party can do so without unreasonable inconvenience or cost. 15.3 Consequential loss Do  No Party shall be liable to the other Parties for special, consequential, or punitive damages or indirect losses, costs or expenses or loss of actual or anticipated profits, lost opportunities (including opportunities to enter into or complete arrangements with third parties), loss or inability le to use equipment, a failure to realize anticipated savings or loss of reputation, howsoever caused (including by negligence) except to the extent expressly provided herein. mp 15.4 Indemnity  A Party shall indemnify, defend and hold harmless the other Party and/or its contractors, Sa subcontractors or their officers, agents or employees against any and all claims for loss, damage and expense of whatever kind and nature (including all related costs and expenses) in respect of personal injury to or death of third parties and in respect of loss of or damage to any third party property which arises out of or in consequence of the performance or non-performance by this Party of its obligations under this Agreement except and to the extent that the same arises out of any negligence, default or breach of statutory duty on the part of the Party seeking the indemnity, its subcontractors or their officers, agents or employees. 16. CONTRACTING AUTHORITY STEP-IN RIGHT 16.1 If the Contracting Authority reasonably believes that it needs to take action in connection with the supply of Services: Module 11 : Agreement 22 Sample Public-Private Partnership Agreement (a) because a serious risk exists to the health or safety of persons or property or to the environment; and/or (b) to discharge a statutory duty; and/or (c) because the Service Provider ceases to operate the Facilities for a period of [•] ([•]) consecutive hours other than due to a (i) Force Majeure Event, (ii) Material Adverse Government Action, (iii) Change in Law, or (iv) breaches of this Agreement by the Authority; then the Contracting Authority shall have the right to enter the Facilities and take over operation of the Facilities upon not less than twenty-four (24) hours advance notice to the Service provider te (such right, the “Contracting Authority Step-In Right”). The Contracting Authority may continue to exercise the Contracting Authority Step-In Right until the circumstances giving rise to the ria Contracting Authority Step-In Right have been cured or otherwise cease to exist. 16.2 In the exercise of the Contracting Authority Step-In Right, the Contracting Authority shall (i) cause rop the Facilities to be operated by an adequate number of sufficiently qualified personnel, (ii) use commercially reasonable efforts to continue to perform all of the Service Provider’s obligations under this Agreement and the PPP Project related agreements; (iii) and not do anything which pp would cause the Service Provider to breach this Agreement or any of the PPP Project related agreements or any of the Service Provider’s insurance policies. A 16.3 In the exercise of the Contracting Authority Step-In Right, the Service Provider shall (i) cooperate in all respects with the Contracting Authority and (ii) to the extent reasonably requested by the as Contracting Authority, assign its rights under all permits, contracts and relevant documents to the Contracting Authority during the period that the Contracting Authority is exercising the Contracting Authority Step-In Right. t ap 16.4 The exercise by the Contracting Authority of the Contracting Authority Step-In Right shall not affect any other right or remedy the Contracting Authority may have, nor shall the existence of the Ad Contracting Authority Step-In Right or its exercise thereof relieve the Service Provider of any duty, obligation or liability under this Agreement. 16.5 The Contracting Authority shall, once the circumstances giving rise to the Contracting Authority nt , Step-In Rights have ended, except where the Service Provider has agreed to a shorter period, give not less than twenty (21) days notice and hand over the Facilities to the Service Provider and me vacate the Facilities in accordance with Prudent Industry Practice. 16.6 The costs, expenses, losses and liabilities reasonably incurred or suffered by the Service Provider cu in connection with the exercise of the Contracting Authority Step-In Right shall be borne: (a)  by the Contracting Authority with respect to events referred to in Clause 16.1(a) (only to the extent not caused by the Service Provider’s breach of its obligations under this Agreement) Do and (b); and (b) by the Service Provider in any other cases. le 17. LIQUIDITY SUPPORT MECHANISM (OPTIONAL) mp 17.1 Liquidity Support Balance 17.1.1 The Contracting Authority shall ensure that at all times until the termination or expiry of this Sa Agreement, the Liquidity Support Balance is no less than the Required Liquidity Support Amount. The Service Provider shall promptly notify the Contracting Authority and the Government of any withdrawal from any Escrow Account or claim under any First Demand Guarantee pursuant to Clause 17.3. thegpsc.org 17.1.2 If at any time before the termination or expiry of this Agreement, the Liquidity Support Balance is less than the Required Liquidity Support Amount, the Contracting Authority shall take such steps as are necessary (whether by making further deposits into any Escrow Account or procuring | that the undrawn portion of the First Demand Guarantee is increased or that the First Demand The World Bank Guarantee is replaced) to increase the Liquidity Support Balance to the Required Liquidity Support Amount as soon as reasonably practicable and in any event within fifteen (15) days following receipt by the Contracting Authority of any notice under Clause 17.1. Module 11 : Agreement 23 Sample Public-Private Partnership Agreement 17.2 First Demand Guarantee 17.2.1 Where the Contracting Authority has procured a First Demand Guarantee in favour of the Service Provider and that such First Demand Guarantee is due to expire before the term of this Agreement, the Contracting Authority shall, by no later than 14 days prior to the expiry of a Letter of Credit: (a) replace the existing First Demand Guarantee with a new First Demand Guarantee; and/or (b) increase the balance in the Escrow Account,  in each case, in an aggregate amount necessary to ensure that, upon the expiry of the existing te First Demand Guarantee, the Contracting authority will be in compliance with its obligations under Clause 17.1.1, failing which the Seller may immediately call on the existing First Demand ria Guarantee and require that all proceeds are deposited into the Escrow Account. If the Purchaser subsequently procures a replacement First Demand Guarantee and subject (i) to the Service Provider’s right to have recourse to amounts in the Escrow Account in accordance with this rop Agreement, and (ii) to the requirement that the Liquidity Support Balance is no less than the Required Liquidity Support Amount, the proceeds deposited in the Escrow Account shall be repaid to the Contracting Authority immediately upon the Purchaser procuring the replacement of pp the Letter of Credit. 17.3 Use of funds A  If at any time the Contracting Authority fails to pay the Service Provider any undisputed amount due and payable under this Agreement within three (3) days from its due date under this as Agreement; then the Service Provider shall be entitled to: (a)  withdraw an amount equal to such payment and any default interest accruing thereon in accordance with this Agreement from any Escrow Account; and/or (b)  t make a claim under the First Demand Guarantee in an amount equal to such payment and ap any default interest accruing thereon in accordance with this Agreement, to the extent not withdrawn under paragraph (a) above. Ad 18. EARLY TERMINATION nt , 18.1 Early Termination Event This Agreement shall terminate: (a)  due to a prolonged Force Majeure Event in accordance with Clause 19.3 (Termination due to me Prolonged Force Majeure); or (b)  due to a prolonged Material Adverse Government Action in accordance with Clause 20.3 (Termination due to Prolonged Material Adverse Government Action); or cu (c) due to a Change in Law in accordance with Clause 21.3.1; or (d)  due to a Contracting Authority Event of Default in accordance with Clause 18.2 (Contracting Authority Event of Default); or Do (e)  due to a Service Provider Event of Default in accordance with Clause 18.3 (Service Provider Event of Default); or (f)  due to the non-occurrence of the Commencement Date in accordance with Clause 3.3 le (Commencement of Services). mp 18.2 Contracting Authority Event of Default 18.2.1 The following events, provided that they are not caused by a Service Provider Event of Default or a Sa Force Majeure Event and are not cured within five (5) days following the issuance of a notice from the other Party, shall constitute a Contracting Authority Event of Default and the Service provider shall be entitled to terminate this Agreement: (a)  the Contracting Authority fails to pay the Service Provider any undisputed amount due and payable in excess of [•] under this Agreement within three (3) days from its due date under this Agreement; or (b)  any representation or warranty made by the Contracting Authority in this Agreement is incorrect when made and the Service Provider’s ability to perform its obligations in accordance with this Agreement is materially adversely affected; or (c) the Contracting Authority is in material breach of its obligations under this Agreement; or Module 11 : Agreement 24 Sample Public-Private Partnership Agreement (d) [the Government Guarantee terminates, is revoked or otherwise ceases to be in full force and effect40]; or (e) a breach by the Contracting Authority of its obligation to maintain the Liquidity Support Balance at the Required Liquidity Support Amount which has not been remedied within thirty (30) days of the Service Provider notifying that it requires such breach to be remedied. 18.3 Service Provider Event of Default  The following events, provided that they are not caused by a Contracting Authority Event of Default or a Force Majeure Event and are not cured within five (5) days following the issuance of a te notice from the other Party, shall constitute a Service Provider Event of Default and the Contracting Authority shall, subject to the Lenders’ Direct Agreement, be entitled to terminate this Agreement: ria (a)  any representation or warranty made by the Service Provider in this Agreement is incorrect when made or repeated in accordance with Clause 22; (b) liquidation or insolvency of the Service Provider; rop (c)  the Service Provider ceases to be Controlled by the Reference Shareholder (unless previously approved by the Contracting Authority); (d) transferring the Services in violation of this Agreement; pp (e)  the amount identified in Schedule 2 and Schedule 3 for Liquidated Damages For Delay has been reached; (f)  failure of the Service Provider to deliver and/or maintain the Performance Security as and A when required under Clause 5.4; (g)  the Service Provider has been convicted of any fraudulent conduct, including, but not limited as to, any bribes, kick-backs, unlawful payments or promises of payment or other unlawful gifts or similar actions by any of the parties thereto or their employees, representatives, agents or similar Persons; t (h) the Service Provider is in material breach of its obligations under this Agreement; and ap (i)  [The Service Provider has, directly or indirectly, or through an agent, engaged in corrupt practices, fraudulent practices, coercive practices, or restrictive practices during the bidding Ad process for this PPP Project]41. 18.4 Termination Procedure nt , Termination of this Agreement by the Contracting Authority 18.4.1   The Contracting Authority may terminate this Agreement by giving a Termination Notice to the me Service Provider if, without prejudice to the Lenders’ rights under the Lender’s Direct Agreement, a Service Provider Event of Default has occurred and is continuing for more than thirty (30) days after the Contracting Authority has delivered notice to the Service Provider of such Service cu Provider Event of Default. Such a Termination Notice shall be effective from its reception by the Service Provider. Do 18.4.2 Termination of this Agreement by the Service Provider  The Service Provider may terminate this Agreement by giving a Termination Notice to the Contracting Authority if a Contracting Authority Event of Default has occurred and is continuing for le more than thirty (30) days after the Contracting Authority has received a notice from the Service Provider mentioning the Contracting Authority Event of Default and requesting the Contracting mp Authority to remedy such Event of Default. Such a Termination Notice shall be effective from its reception by the Contracting Authority. 40 I f government Sa guarantees are provided 18.5 Termination Payments and subject to the terms of that regime.  In the event of Early Termination of this Agreement in accordance with Clauses 18.4.1 41  Drafting note: to be (Termination of this Agreement by the Contracting Authority) and 18.4.2 (Termination of this inserted only if the Agreement by the Service Provider) above, or Clause 20.3 (Termination due to Prolonged Material PPP Project has been Adverse Government Action) and Clause 21.3 (Termination due to Change in Law) below, the thegpsc.org awarded following a bidding process. Please Parties shall comply with their obligations under Clause 12 (Handover), and shall proceed to also note that under the Termination Payments as set forth in Schedule 8 tender documentation these corrupt practices, | fraudulent practices, The World Bank coercive practices, or restrictive practices will be defined. Module 11 : Agreement 25 Sample Public-Private Partnership Agreement 19. FORCE MAJEURE 19.1 Definition of Force Majeure Event 19.1.1 In this Agreement, a “Force Majeure Event” means any event or circumstance or combination of events or circumstances: (a)  beyond the reasonable control of the Party affected by such event, circumstance or combination of events or circumstances (the “Affected Party”); (b)  which was not foreseeable or, if foreseeable, could not have been prevented or avoided or te overcome by the Affected Party having taken all reasonable precautions and due care; (c)  which directly causes the Affected Party to be unable to comply with all or a material part of ria its obligations under this Agreement; and (d)  which is not the direct result of a breach by the Affected Party of its obligations under this Agreement or, in respect of the Service Provider, under any other PPP Project agreement rop 19.1.2 Force Majeure Events include but are not limited to the following circumstances, provided that they meet the criteria set forth in Clause 19.1 (Definition of Force Majeure Event) above: pp (a) plague, epidemic and natural disaster, such as but not limited to, storm, cyclone, typhoon, hurricane, tornado, blizzard, earthquake, volcanic activity, landslide, tsunami, flood, lightning, and drought; A (b) fire, explosion, or nuclear, biological or chemical contamination (other than caused by the negligence of the Service Provider, its contractors, or any subcontractor, supplier or vendor); as (c) war (whether declared or not), armed conflict (including but not limited to hostile attack, blockade, military embargo), hostilities, invasion, act of a foreign enemy, act of terrorism, sabotage or piracy, in each case occurring outside the Country; (d)  t civil war, riot rebellion and revolution, military or usurped power, insurrection, civil commotion ap or disorder, mob violence, act of civil disobedience, in each case occurring outside the Country; and Ad (e) general labor disturbance such as boycotts, strikes and lock-out, go-slow, occupation of factories and premises, excluding similar events which are unique to the PPP Project and specific to the Service Provider or to its sub-contractors, and occurring outside the Country. nt , 19.2 Consequences of Force Majeure Event me 19.2.1 If a Force Majeure Event has occurred, the Affected Party shall be entitled to relief from its obligations under the Agreement if it meets the requirements of Clause 19.2.2 below. cu To obtain relief under Clause 19.2.1 above, the Affected Party must: 19.2.2 (a) as soon as practicable, and in any event within fifteen (15) days after it became aware that the Force Majeure Event has caused or is likely to cause breach of an obligation under this Do Agreement, give to the other Party a notice of its claim for relief from its obligations under the Agreement, including (i) satisfactory evidence of the existence of the Force Majeure Event, (ii) full details of the nature of the Force Majeure Event, (iii) the date of occurrence; le (iv) its likely duration; and (v) details of the measures taken to mitigate the effect of the Force Majeure Event. mp (b) within seven (7) days of receipt of the notice referred to in clause (a) above, give to the other Party full details of the relief claimed, as well as information on all actions being taken by the Affected Party to mitigate the consequences of the Force Majeure Event; Sa (c) demonstrate to the other Party that: (1)  the Affected Party, and its contractors, could not have avoided such occurrence or consequences by steps which they might reasonably be expected to have taken, without incurring material cost; (2) the Force Majeure Event directly caused the need for the relief claimed: (3)  the relief claimed could not reasonably be expected to be mitigated by the Affected Party, including recourse to alternate sources of services, equipment and materials and construction equipment, without incurring material cost; and (4)  the Affected Party is using all reasonable endeavors to perform its affected obligations under this Agreement. (d) If the Affected Party has complied with its obligations under Clause 19.2.2 above, then it Module 11 : Agreement 26 Sample Public-Private Partnership Agreement shall be subsists for a continuous period of more than one hundred and eighty (180) days under this Agreement to the extent it is prevented, hindered or delayed in such performance by reason of the Force Majeure Event. (e) [If information required under Clause 19.2.2 above is provided after the dates referred to in that clause, then the Affected Party shall not be entitled to any relief during the period for which the information is delayed.]42 (f) The Affected Party shall notify the other Party as soon as practicable after the Force Majeure Event ceases or no longer causes the Affected Party to be unable to comply with the applicable obligations under Agreement. Following such notification this Agreement shall te continue to be performed on the terms existing immediately prior to the occurrence of the Force Majeure Event. ria (g) If the Parties cannot agree the extent of the relief required, or a Party disagrees that a Force Majeure Event has occurred, the Parties shall resolve the matter in accordance with Clause 26 (Dispute Resolution). rop 19.3 Termination due to Prolonged Force Majeure  If a Force Majeure Event subsists for a continuous period of more than one hundred and eighty pp (180) days, either Party may in its discretion terminate this Agreement by issuing a written termination notice to the other Party which shall take effect five (5) days after its receipt. If, at the end of this five (5) day period, the Force Majeure Event continues, the Agreement shall be A terminated pursuant to Clause 18 (Early Termination). as 20. MATERIAL GOVERNMENT ACTION 20.1 Material Adverse Governmental Action - Meaning t ap For purposes of this Agreement, a Material Adverse Government Action means: 20.1.1 (a) any act or omission by the Contracting Authority, or any relevant public authority, which Ad occurs during the term of this Agreement and which: (1) renders the Service Provider unable to comply with all or a material part of its obligations under this Agreement and/or nt , (2) has a material adverse effect on the cost or the profits arising from such performance. (b) For the purpose of Clause 20.1 (Material Adverse Governmental Action - Meaning) above, any act or omission shall mean and be limited to the following circumstances43: me (1) failure of any relevant public authority to grant to the Service Provider or renew any permit or approval that is required for the purposes of the Service Provider’s proper performance of its obligations and enforcement of its rights under this Agreement, in cu each case within the required timeframe under Applicable Law, except where such failure results from the Service Provider’s non-compliance with Applicable Law; (2) any act of war (whether declared or undeclared), invasion, armed conflict or act of Do foreign enemy, blockade, embargo or revolution, occurring inside the Country; (3) radioactive contamination or ionizing radiation, originating from a source in the Country; (4) any riot, insurrection, civil commotion, act or campaign of terrorism, occurring inside le 42  rafting note: to be D included within the the Country; expropriation, compulsory acquisition or nationalization by any relevant Agreement depending authority within the Country of any material asset or right of the Service Provider, mp on the Project. This including any of the shares in the Service Provider; part of Clause 18.2.2 reduces flexibility for (5) any instructions of any Government entity further to the discovery of Antiquities under any Affected Party to Clause 8 (Antiquities); Sa invoke a Force Majeure (6) [ground conditions on the Site, which are adverse and were not by the Bid Submission Event and obtain relief pursuant to such event. Date drawn to the Service Provider’s attention, or within its knowledge (as is evidenced 43 Drafting note: inclusion  by written records), or foreseeable from the data supplied to the Service Provider by the of Contracting Contracting Authority, or reasonably available to the Service Provider]44; Authority’s default as a (7) any act or omission of any relevant authority within the Country adversely affecting the thegpsc.org MAGA might be subject to discussions with legality, validity, binding nature or enforceability of this Agreement; and bidders. (8) [add any other event specific to the Project] 44  Drafting note: risk allocation on Site to be | allocated depending on 20.2 Consequences of Material Adverse Governmental Action The World Bank the Project (including, as the case may be, reference to landmines). 20.2.1 If a Material Adverse Government Action occurs, the Service Provider: (a)  shall be excused from the performance of its obligations under this Agreement to the extent Module 11 : Agreement 27 Sample Public-Private Partnership Agreement that it is prevented, hindered or delayed in the performance of such obligations by reason of the Material Adverse Government Action; and (b) shall be entitled to compensation under this Agreement, in each case subject to and in accordance with the provisions of this Clause 20.2 (Consequences of Material Adverse Governmental Action). To obtain relief pursuant to Clause 20.2.3 below, the Service Provider must: 20.2.2 (a) as soon as practicable, and in any event within thirty (30) days after the Service Provider became aware that the Material Adverse Government Action has occurred, give to the te Contracting Authority a notice of its claim for payment of compensation and/or relief from its obligations under this Agreement, following which the Parties shall meet and discuss in good ria faith to consider any option to mitigate the impact of Material Adverse Government Action; (b) within fourteen (14) days of receipt by the Contracting Authority of the notice referred in paragraph (a) above; give full details of (i) the Material Adverse Government Action and (ii) rop any Estimated Change In Project Costs and/or loss of revenue claimed and/or delay and/or any breach of the Service Provider’s obligations under this Agreement; (c) demonstrate to the Contracting Authority that: pp (1) the Service Provider could not avoid such occurrence or consequences by actions which it might reasonably be expected to have taken without incurring material costs; (2) the Material Adverse Government Action was the direct cause of the Estimated Change A In Project Costs and/or loss of revenue and/or delay and/or breach of the Service Provider’s obligations under this Agreement; as (3) time lost and/or relief from the obligations under the Agreement claimed, could not be mitigated or recovered by the Service Provider; and (4) the Service Provider is using all reasonable endeavours to perform its obligations under this Agreement. t ap 20.2.3 If the Service Provider has complied with its obligations under Clause 20.2.2, then the Contracting Ad Authority shall: (a)  compensate the Service Provider for the Estimated Change In Project Costs as adjusted to reflect the actual costs reasonably incurred, and without double counting, for revenue nt , actually lost to the extend it could not reasonably have been mitigated; (b)  give the Service Provider such relief from its obligations under this Agreement as is reasonable for such Material Adverse Government Action; and me (c)  [if the Material Averse Governmental Action occurs during the Construction Period and causes a delay in achieving the Time for Completion, such date shall be postponed by such time as is reasonable.]45 cu 20.2.4 In the event that information is provided after the dates referred to in 20.2.2 above, then the Service Provider shall not be entitled to any extension of time, compensation or relief from its Do obligations under this Agreement in respect of the period for which the information is delayed. 20.2.5 If the Contracting Authority and the Service Provider cannot agree on the extent of any le compensation, delay incurred, or relief from the Service Provider’s obligations under this Agreement, as applicable, or the Contracting Authority disagrees that a Material Adverse mp Government Action has occurred, the Parties shall resolve the matter in accordance with Clause 26 (Dispute Resolution). Sa 20.3 Termination due to Prolonged Material Adverse Government Action 20.3.1 If a Material Adverse Government Action subsists for a continuous period of more than one hundred and eighty (180) days, a Party may in its discretion terminate this Agreement by issuing a written termination notice to the other Party which shall take effect thirty (30) days after its receipt.  [If, at the end of this thirty (30) day period, the Material Adverse Government Action continues,] the Agreement shall be terminated pursuant to Clause 18 (Early Termination) and the Service Provider shall be entitled to the compensation set out under Clause 18.5 (Termination Payments). Drafting Note: to be 45  deleted when there is no Construction Period for the PPP Project. Module 11 : Agreement 28 Sample Public-Private Partnership Agreement 21. CHANGE IN LAW 21.1 Occurrence of a Change in Law 21.1.1 If a Change in Law occurs or is shortly to occur, then any Party may, within five (5) days starting from the day it was aware (or should have been aware) of the Change in Law, notify the other Party to express an opinion on its likely effects, giving details of its opinion of: (a)  any necessary change to the terms of this Agreement including any necessary Contracting Authority variation; te (b) whether relief from compliance with obligations is required; (c) whether any deadline under the Agreement should be postponed; ria (d)  any (positive or negative) estimated change of revenue that will directly result from the relevant Change in Law; (e)  any (positive or negative) estimated change in the costs of the PPP Project that will directly rop result from the Change in Law; or (f) any capital expenditure that is required or no longer required as a result of a Change in Law. pp 21.1.2 As soon as practicable and in any event within thirty (30) days after receipt of any notice from the affected Party, the Contracting Authority and the Service provider shall discuss and agree the matters referred to in Clause 21.1.1 above and any ways in which either Party can, if applicable, A mitigate the effect of the Change in Law, including, in relation to the Service Provider: (a)  providing evidence that the Service Provider has used reasonable endeavors (including as (where practicable) the use of competitive quotes) to oblige its subcontractors to minimize any increase in costs and maximize any reduction in costs; (b)  demonstrating how any capital expenditure to be incurred or avoided is being measured in t a cost effective manner, including showing that when such expenditure is incurred or would ap have been incurred, foreseeable Changes in Law at that time have been taken into account by the Service Provider; Ad (c)  giving evidence as to how the Change in Law has affected prices charged by any similar businesses to the PPP Project; and (d)  demonstrating that any expenditure that has been avoided on account of the Change in Law nt , has been taken into account in the amount which in its opinion has resulted or is required under Clauses 21.1.1 (e) or 21.1.1 (f) above, provided that if the Parties cannot agree on the effects of the Change in Law, the matter shall be referred for determination in accordance me with Clause 22 (Representations And Warranties Of The Service Provider). 21.2 Consequences of a Change in Law cu 21.2.1 If the Parties have followed the procedure set out under Clauses 21.1.1 and 21.1.2 above, then: (a)  the affected Party shall be excused from the performance of its obligations under the Do Agreement to the extent it is prevented, hindered or delayed in such performance by reason of the Change in Law; (b)  if the Change in Law has occurred before the Commencement Date, the scheduled le Commencement Date shall be postponed to take into account the effect of such Change in Law; and mp (c)  the Parties shall agree on the amount and payment of any compensation to reflect the Estimated Change in Project Costs as adjusted to take into account the actual increase or reduction in costs reasonably incurred as a result of the Change in Law, provided that no Sa compensation shall be made in relation to a Change in Law under this clause unless the claiming Party can demonstrate that the aggregate impact of all Changes in Law that have occurred during [specify the relevant period in time] exceeds [insert amount]. 21.2.2 If the notice and relevant information are not provided within the period referred to under Clause thegpsc.org 21.1.1 above, the affected Party shall not be entitled to any compensation or relief from its obligations under the Agreement in respect of the period for which the information is delayed. | The World Bank Module 11 : Agreement 29 Sample Public-Private Partnership Agreement 21.3 Termination due to Change in Law If a Change in Law: 21.3.1 (a)  prevents a Party from performing its material obligations under this Agreement for a period of fifteen (15) consecutive days; or (b)  results in performance of the Agreement being illegal and such illegality cannot be remedied by a Contracting Authority variation, either Party may in its discretion terminate this Agreement by issuing a written termination notice which shall take effect five (5) days after receipt of such termination notice and the Service te Provider shall be entitled to the compensation set out under Clause 18.5 (Termination Payments). ria 22. REPRESENTATIONS AND WARRANTIES OF THE SERVICE PROVIDER  The Service Provider hereby represents and warrants to the Contracting Authority as of the Effective Date as follows: rop 22.1 Power, Authority, No Contravention pp 22.1.1 The Service Provider is duly organized, validly existing and in good standing under the Applicable Laws of the Country and has the right, power and authority to enter into this Agreement and to perform in all material respects its obligations hereunder. A 22.1.2 The execution of, delivery of and performance by the Service Provider of its obligations arising as under this Agreement have been duly authorized by all necessary corporate action of the Service Provider, and this Agreement constitutes the valid, binding and enforceable obligation of the Service Provider. t ap 22.1.3 Every approval of any Government entity or third party required with respect to the Service Provider in connection with its execution and delivery of, and performance of its obligations Ad under, this Agreement has been obtained other than those which are not required at the time this representation is made or deemed to be repeated. nt , 22.2 Litigation 22.2.1 There is no pending or, to the best of the Service Provider’s knowledge, threatened, action, suit, me investigation, arbitration or other proceeding that would impair the ability of the Service Provider to perform its obligations under this Agreement. cu 22.2.2 Neither the Service Provider nor any of its Affiliates has received any notice of any violation or potential violation of any Applicable Law pertaining or that would reasonably be likely to affect the Service Provider’s use or occupancy of the Site, or the Service Provider’s right to [design, finance, Do build, maintain, operate] the Facilities, or the Services Provider’s provision of the Services, are in violation of any Applicable Law pertaining to and affecting the Site which violation or potential violation could have a material adverse effect on the ability of the Service Provider to perform its le obligations under this Agreement or the ability of the Service Provider to use and enjoy the Site for the purposes contemplated by this Agreement. mp 22.2.3 The execution and delivery of this Agreement by the Service Provider and the performance by the Service Provider of its obligations under this Agreement do not violate, conflict with or result in a Sa breach of any decree, memorandum or articles of incorporation, charter, bylaw, Applicable Law, contract or obligation to which the Service Provider is a party. 22.3 Skills and Expertise  The Service Provider, the Contractors, its employees, agents and independent contractors at all times are duly licensed to the extent required by Applicable Law, suitably qualified and experienced. 22.4 Continuing Warranties  The representations and warranties in this Clause 22 (Representations And Warranties Of The Service Provider) shall be deemed to be repeated by the Service Provider on the Commencement Module 11 : Agreement 30 Sample Public-Private Partnership Agreement Date and thereafter as of December 31 of each year during the Term, as if made as of the Effective Date with reference to the facts and circumstances on such dates. 22.5 Information  The Service Provider shall notify the Contracting Authority in writing if any of the warranties given by it in Clauses 22.1 (Power, Authority, No Contravention) to 22.3 (Skills and Expertise) ceases to be true in any material respect as soon as practicable and in any event within five (5) days of becoming aware of the same. te 23. REPRESENTATIONS AND WARRANTIES OF CONTRACTING AUTHORITY  The Contracting Authority hereby represents and warrants to the Service Provider as of the ria Effective Date as follows: 23.1 The Contracting Authority has full power and authority to enter into and perform in all material rop respects its obligations under this Agreement. 23.2 The Contracting Authority has taken all necessary action for the authorization of its entering into pp this Agreement and the performance of its obligations thereunder. 24. REFINANCING A 24.1 The Service Provider shall promptly provide the Contracting Authority with full details in relation to as any contemplated Refinancing, which shall include the proposed changes to the Financial Model, a justification of the assumptions on which it is based, the proposed contractual documentation and any other information that the Contracting Authority may reasonably request in relation to that Refinancing. t ap 24.2 The Contracting Authority shall, at all time, have unrestricted rights to audit the Financial Model Ad used (or proposed to be used) in relation to a Refinancing. 24.3 The Service Provider shall obtain the Contracting Authority’s prior written consent in relation to any nt , Qualifying Refinancing. 24.4 The Contracting Authority shall be entitled to receive a [fifty per cent (50%)]46 share of any me Refinancing Gain in a Qualifying Refinancing47. 24.5 The Service Provider shall pay, on behalf of the Contracting Authority, all reasonable costs of cu external advisors appointed by the Contracting Authority in relation to a Refinancing or potential refinancing and the calculation of a Refinancing Gain. Do 25. GOVERNING LAW  This Agreement, and any non-contractual obligation connected with it, shall be governed by and construed in accordance with the laws of the Country. le 26. DISPUTE RESOLUTION mp  If any dispute arises out of or in connection with this Agreement including any dispute concerning any non-contractual obligations arising out of or in connection with it (a “Dispute”) it shall be resolved in accordance with this Clause 26 (Dispute Resolution). Sa Either Party may by notice in writing to the other Party, at the address for sending of notices under this Agreement and in a manner provided by Clause 28.11 (Notices), give notice that a Dispute has arisen (“Notice”). The Notice shall set out brief details of the nature of the Dispute. thegpsc.org 46 D  rafting note: to be 26.1 Amicable Settlement adjusted to fit the Parties negotiation on the payment structure. 26.1.1 From the receipt of one of the Party’s Notice; the Parties shall meet together promptly, in an effort |  Drafting note: to be to resolve the related Dispute amicably. The World Bank 47 adapted depending on the agreed sharing mechanism. 26.1.2 The representatives of both Parties shall meet to resolve such Dispute. To this end, each Party shall designate in writing to the other Parties from time to time a representative who shall be Module 11 : Agreement 31 Sample Public-Private Partnership Agreement authorized to resolve between them any Dispute and, unless otherwise expressly provided herein, to exercise the authority of such Party to reach such resolution. The representatives shall meet if and when necessary from time to time and attempt in good faith and use their best endeavors at all times to resolve the Dispute and produce written terms of settlement. The meetings of the representatives shall be conducted in [specify language of the meetings]. 26.1.3 If the Dispute is not amicably resolved, as evidenced by a written agreement, within [fifteen] (15) days of raising such Dispute, any Party may decide to submit the Dispute to Mediation, a Technical Expert or to Arbitration (as the case may be) in accordance with either Clauses 26.2 te (Mediation), 26.3 (Technical Expert) and 26.4 (Arbitration). ria 26.2 Mediation48 26.2.1 If the Parties are unable to negotiate the settlement of a Dispute referred to in a Notice within rop [fifteen] (15) days of the date of the Notice (or such further period as is agreed in writing between the Parties before the expiry of that [fifteen] (15) days period), either Party may refer the Dispute to mediation by notice in writing to the other Party at the address given for the sending of notices pp under this Agreement at Clause 28.11 (Notices), and in a manner provided for in that Clause (a “Mediation Notice”). If a Party refers a Dispute to mediation in accordance with this Clause both Parties to the Dispute shall be obliged to follow the procedure below. A 26.2.2 The mediation shall be conducted by a single mediator who shall be appointed by agreement as in writing between the Parties. If the Parties are unable to agree on the identity of a mediator within [five (5)] days of the date of the Mediation Notice, or if the mediator agreed by the Parties is or becomes unable or unwilling to act, the mediator shall be appointed by [the ICC] on the application of either Party. t ap 26.2.3 The mediation shall be conducted in [specify the place of mediation] and in the [specify Ad language of mediation] under the [ICC Mediation Rules]. Each Party shall be represented at the mediation by an individual with authority to settle the Dispute. nt , 26.2.4 Save for the purposes of implementing and/or enforcing a written legally binding settlement agreement or as otherwise required by law, the mediation shall be conducted without prejudice to the rights of the Parties in any future proceedings. me 26.2.5 The costs of the mediation, including the fees and expenses of the mediator (but excluding each Party’s own costs, which shall be borne by the Party incurring those costs) shall be borne equally cu by the Parties, unless otherwise agreed in writing. 26.3 Technical Expert Do 26.3.1 Where the Parties are unable to reach an agreement on any Dispute that relates to any matters of fact of a financial, technical, engineering, operational or environmental aspect of this Agreement, le including factual determination of a matter of fact of technical, engineering, operational or environmental nature relating to the existence, nature and consequences of a Force Majeure mp Event, of an Event of Default (but excluding any legal aspects of the same) or the remedy of defaults and termination procedures (a “Technical Dispute”) within thirty (30) days of raising such Technical Dispute, any Party may ask for the matter to be referred to a Technical Expert. Sa Drafting Note: as a 48  26.3.2 The Parties shall agree on the appointment of the expert and shall agree with the expert the terms general comment, we of his/her appointment. If the Parties are unable to agree on the identity of the expert, or if the recommend aligning person proposed is unable or unwilling to act, then, within [•] days of either Party serving details mediation rules with arbitration rules, in of a suggested expert on the other or the proposed expert declining to act, either Party shall then order for the Parties to be entitled to request that an expert be appointed by [the ICC]49 on the application of a Party. All benefit from similar and costs of and associated with the request for the appointment of an expert by the [ICC] shall be compatible processes. 49 Drafting note: Drafting  borne equally between the Parties. note: Parties may elect another rules 26.3.3 The expert appointed may be an individual, partnership, association or body corporate and shall for Technical Expert appointment. be generally recognized as an expert in [specify the field of the PPP Project] and shall have [•] years of experience in that field. Module 11 : Agreement 32 Sample Public-Private Partnership Agreement 26.3.4 The decisions of the Technical Expert shall be binding upon the Parties. 26.3.5 The costs of the Technical Expert and associated expenses shall be borne equally by the Parties. 26.3.6 If the Technical Dispute is not resolved by the Technical Expert within thirty (30) days of service of a notice raising a such Technical Dispute, or if a Party fails to implement fully the Technical Expert’s decision, any Party may decide to submit the Dispute to Arbitration in accordance with Clause 26.4 (Arbitration). te 26.4 Arbitration ria 26.4.1 If any Dispute has not been resolved between the Parties through an amicable settlement, or if any Party is unsatisfied with the decision of the Technical Expert in respect of the Technical Dispute in accordance with Article 26.2 above, such Dispute may then be referred to and finally rop resolved by arbitration as provided below. 26.4.2 The Agreement, and the rights and obligations of the Parties hereunder shall remain in full force pp and effect pending the award in such arbitration proceeding, which award, if appropriate, shall determine whether and when any termination shall become effective. A 26.4.3 All arbitration proceedings with respect to the foregoing shall be held and finally settled in [specify place of arbitration], [specify country of the seat of arbitration], and shall be as conducted pursuant to the [specify arbitration rules] (the “Rules”) then in force by three (3) arbitrators appointed in accordance with the said Rules. Where the Rules are silent, [specify applicable law] law shall apply to the arbitration proceedings. t ap 26.4.4 The arbitration shall be conducted in [specify arbitration language] and all documents submitted in connection with such proceedings shall be in [specify arbitration language] or Ad accompanied by a certified [specify arbitration language] translation. 26.4.5 The decisions of arbitrators shall be final and binding upon the Parties. nt , 26.5 Continuing Obligations  Performance of this Agreement shall continue during arbitration proceedings or any Dispute me resolution mechanism pursuant to this Clause 21 (Change In Law). 26.6 Waiver of Immunities cu 26.6.1 To the fullest extent permitted by law the Contracting Authority irrevocably and unconditionally: (a)  submits to the courts of any jurisdiction in relation to the recognition of any judgment or order Do of the courts of [jurisdiction of arbitration seat] in support of any arbitration in relation to any Dispute and in relation to the recognition of any arbitral award and waives and agrees not to claim any sovereign or other immunity from the jurisdiction of any court in relation to the le recognition of any such judgment or court order or arbitral award and agrees to ensure that no such claim is made on its behalf. mp (b)  consents to the enforcement of any order or judgment in support of arbitration or any award made or given in connection with any Dispute and the giving of any relief in the courts of any other jurisdiction whether before or after final arbitral award including, without limitation: Sa (i) relief by way of interim or final injunction or order for specific performance or recovery of any property; (ii) attachment of its assets; and (iii) enforcement or execution against any property revenues or other assets whatsoever (irrespective of their use or intended use) and waives and agrees not to claim any sovereign or other immunity from the courts of any other jurisdiction in relation to such enforcement and the giving of such relief (including to the thegpsc.org extent that such immunity may be attributed to it), and agrees to ensure that no such claim is made on its behalf. | 27. CONFIDENTIALITY The World Bank 27.1 Each Party shall hold, and shall use its best efforts to cause its shareholders and Affiliates (as applicable) to hold, in strict confidence from any other person (other than any such Affiliates Module 11 : Agreement 33 Sample Public-Private Partnership Agreement or Lenders) all documents and information concerning the other Parties or any of its Affiliates furnished to it or its advisors, consultants, contractors or agents by any other Party in connection with this Agreement or the transaction contemplated hereby (“Confidential Information”), unless: (a)  required to disclose any such information by any relevant stock exchange, judicial or administrative process (including in connection with obtaining from relevant authorities the necessary approvals of this Agreement and the transactions contemplated hereby) or by other requirements of Applicable Law; (b)  disclosed in or pursuant to the offering statement provided to potential investors in the Service Provider, as the case may be, it being provided that in such event the Service te Provider shall make these investors sign a non-disclosure agreement which content shall reflect the Service Provider’s confidentiality undertakings as set out in this Agreement; ria (c)  disclosed in an action or proceeding brought by any Party for the purpose of pursuing its rights or in the exercise of its remedies hereunder; or (d)  disclosed by the Contracting Authority to any Person, its advisers and its lenders involved rop in the retendering process for the right to provide all or some of the Services, should the Contracting Authority decide to proceed with such retendering at the expiry of this Agreement or in the event of any early termination of this Agreement. pp 27.2 This Clause 27 (Confidentiality) shall not apply to such documents or information that were: (a) previously known by the Party receiving such documents or information; A (b) in the public domain (either prior to or after the furnishing of such documents or information hereunder) through no fault of such receiving Party; as (c) later acquired by such receiving Party from another source if such receiving Party is not aware that such source is under an obligation to any other Party to keep such documents and information confidential; (d)  t disclosed by the Contracting Authority to any relevant authority; ap (e) required to be disclosed to a Lender for the purpose of negotiating and/or entering into the Lender’s Documents; or Ad (f) required to be disclosed to insurance providers for the purposes of obtaining and/or maintaining insurance cover. nt , 28. MISCELLANEOUS 28.1 Survival me 28.1.1 The covenants and agreements of the Parties contained in Clauses 14.1 (Data) 22 (Representations And Warranties Of The Service Provider), 15 (Liability), 18 (Early Termination), cu 21 (Change In Law), 27 (Confidentiality), and 28 (Miscellaneous), shall survive any termination of this Agreement, for a period of two (2) years after such termination or expiration of this Agreement, provided, however, that with respect to the confidentiality provisions of Clause 27 (Confidentiality): Do (a)  each Party shall be entitled to use such information as may be reasonably required in connection with the ownership and operation of the PPP Project by such Party or such Party’s assignee or transferee; and le (b)  each Party shall continue to be bound by such confidentiality provisions to the extent only that disclosure of any Confidential Information might have a material adverse effect on the mp other Parties’ interests in the PPP Project. 28.2 Authorized Representative Sa 28.2.1 Any action required or permitted to be taken, and any document required or permitted to be executed under this Agreement by the Contracting Authority or the Service Provider may be taken or executed by the officials specified in, or designated in accordance with, Part 1 of Schedule 1. 28.3 Insurance 28.3.1 The Service Provider shall procure and maintain, and shall cause any Contractor or sub- contractors to procure and maintain, throughout the term of this Agreement, an insurance coverage as stipulated in Schedule 7. Such insurance shall be purchased by the Service provider at its own cost at such levels as are consistent with Prudent Industry Practice. Such insurance shall be effective as of the Commencement Date and cover the persons identified in Schedule 7. Module 11 : Agreement 34 Sample Public-Private Partnership Agreement 28.3.2 The Service Provider shall provide the Contracting Authority with certificates of insurance or other satisfactory evidence that the required insurance policies have been issued and are in force and shall promptly pay all insurance premiums, fees or other costs due in relation with the required insurance policies. The said insurance policies may not be cancelled or modified except with the prior written consent of the Contracting Authority obtained not less than [•] ([•]) days before the intended date of cancellation or modification. 28.3.3 To the extent that a loss or damage suffered by any of the insured under the relevant insurance policies falls within the terms of the insurance cover required under this Clause 28.3 (Insurance), te the Service Provider shall forthwith make the appropriate claims thereunder and in the case of property insurance shall replace or repair such loss or damage. ria 28.4 Assignment rop 28.4.1 Except where required under any law passed by the [insert the relevant Government], the Contracting Authority shall not assign or transfer all or any part of its rights or obligations under this Agreement without the prior written consent of the Service Provider, such consent not to be pp unreasonably withheld or delayed. 28.4.2 The Service Provider shall not without the prior written consent of the Contracting Authority, A such consent not to be unreasonably withheld or delayed, transfer all or any part of its rights or obligations under this Agreement other than by way of security assignment to the Lenders for the as purpose of the financing of the PPP Project. 28.5 Relations between the Parties t ap 28.5.1 The Service Provider shall be an independent contractor in its performance of this Agreement. This Agreement does not create any agency, partnership, joint venture or other joint relationship Ad between the Service Provider and the Contracting Authority. 28.5.2 All Operating Staff, Contractors and sub-contractors shall be under the complete control of the nt , Service Provider and nothing contained in this Agreement or any related contract or sub-contract awarded by the Service Provider or under any Lenders Documents shall be construed to create any contractual relationship between the Service Provider’s Contractors, subcontractors or me Lenders and the Contracting Authority except and to the extent that such relationship shall be governed by a collateral agreement entered into between such Contractor and the Contracting Authority or by a direct agreement between the Lenders (or their agent) and the Contracting cu Authority as referred to in Schedule 1. 28.6 Variations in Writing Do  All additions, amendments and variations to this Agreement shall be binding only if in writing, and signed by duly authorized representatives of each of the Parties. le 28.7 Entire Agreement  This Agreement, together with the Lease, including the Recitals and the Schedules attached mp hereto, represents the entire agreement between the Parties in relation to the subject matter thereof and supersedes any or all previous agreements, communications or arrangements, whether oral or written, between the Parties. Sa 28.8 Severability  If any term or partial term of the agreement is prohibited or rendered invalid or unenforceable, such prohibition, invalidity or unenforceability shall not affect the validity or enforceability of the agreement or any other term or partial term of the agreement. thegpsc.org 28.9 Non-Waiver  None of the provisions of this Agreement shall be deemed waived by either Party except when | such waiver is given in writing. The failure by either Party to insist upon strict performance of any The World Bank of the provisions of this Agreement or to take advantage of any of its rights under this Agreement shall not be construed as a waiver of any such provisions or the relinquishment of any such rights for the future. Module 11 : Agreement 35 Sample Public-Private Partnership Agreement 28.10 Further Assurances  Each Party agrees to execute all deeds, instruments, transfers or other documents as may be necessary or desirable to give full effect to the provisions of this Agreement. 28.11 Notices  Unless otherwise agreed between the Parties, notices to be given under this Agreement shall be in [specify language of the notice], in writing and shall be given by hand delivery,  recognized international courier or mail and delivered to the Parties at their respective addresses set forth below: te The Contracting Authority: [•] ria Attention: [•] (Authorized Representative) Address: [•] The Service Provider: [•] rop Attention: [•] (Authorized Representative) Address: [•] pp or such other address as may be notified by that Party to the other Party from time to time. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their respective A duly authorized representatives. as Made in [•], on [•] in [•]([•]) originals by: [•] t As Service Provider ap ____________________________ Ad [•] As Contracting Authority nt , ___________________________ me cu Do le mp Sa Module 11 : Schedule 1 - Project Specific Information, Conditions Precedent and Financing 36 Sample Public-Private Partnership Agreement Schedule 1 - Project Specific Information, Conditions Precedent and Financing Part 1 - Project Specific Information [Should indicate the Project specific information, and at least the following information:] 1. Base Case Equity IRR [•] te 2. Bid Submission Date [•] ria 3. Construction Period [•] rop 4. Country [•] 5. Default Interest Rate [•] pp 6. Escrow Account [•] A 7. Escrow Agent [•] 8. Expiry Date [•] as 9. Existing Facilities [•] 10. Financing Costs t [•] ap 11. Land Rights 50 [•] Ad 12. Liquidated Damages for Delays [•] 13. Performance Indicators [•] nt , 14. Project Fee [•] me 15. Regulatory Agency [•] 16. Related Agreements [•] cu 17. Reference Shareholder [•] Do 18. Required Liquidity Support Amount 19. Service Period [•] le 20. Site [•] mp 21. Site Handover Date [•] Sa thegpsc.org | The World Bank 50 Drafting note: if any.  Module 11 : Schedule 1 - Project Specific Information, Conditions Precedent and Financing 37 Sample Public-Private Partnership Agreement Part 2 - Conditions Precedent 1. CONDITIONS PRECEDENT UNDER SERVICE PROVIDER’S RESPONSIBILITY 1.1 In accordance with Clause 3.2 (Conditions Precedent), it shall be condition precedent to the Commencement Date that each of the following is provided by the Service Provider in form and substance satisfactory to the Contracting Authority: (a) Certificate of Insurance Policies to be subscribed as specified in Schedule 7; (b) Copies of the certificate of incorporation and the articles of incorporation of the te Service Provider; (c) A certificate of good standing issued by the [relevant corporate and business ria  registration administration to be specified] dated no more than five (5) days before the Commencement Date; (d) A certificate (or equivalent) from the Lenders confirming that Financial Closing has occurred rop (or is conditional upon full effectiveness of the Agreement); (e) the Performance Security; (f) all the Approvals that are required prior to the Commencement Date; pp (g) [to be completed as may be necessary in the light of the specificities of the Project]. 2. CONDITIONS PRECEDENT UNDER CONTRACTING AUTHORITY’S RESPONSIBILITY A 2.1 In accordance with Clause 3.2 (Conditions Precedent), it shall be condition precedent to the as Commencement Date that each of the following is provided by the Contracting Authority in form and substance satisfactory to the Service provider: (a) A signed copy of the Government Guarantee; (b)  t A signed copy of the Escrow Letter and of the First Demand Guarantee, with a Liquidity ap Support Balance not inferior to the Required Liquidity Support Amount; (optional) (c) [to be completed as may be necessary in the light of the PPP Project] Ad 3. CONDITIONS PRECEDENT UNDER BOTH PARTIES’ AUTHORITY nt , 3.1 In accordance with Clause 3.2 (Conditions Precedent), it shall be condition precedent to the Commencement Date that each of the following is provided by both Parties: (a) the Asset Transfer Plan agreed between the Parties and attached in Schedule 9; me (b) the Assets Handover Agreement agreed between the Parties and attached in Schedule 10; (c) the Lenders’ Direct Agreement is in full force and effect, (d) [to be completed as may be necessary in the light of the PPP Project] cu Do le mp Sa Module 11 : Schedule 1 - Project Specific Information, Conditions Precedent and Financing 38 Sample Public-Private Partnership Agreement Part 3 - Financing [Should contain, among others, the following information. In any case, this table will have to be filled in and reviewed by financial advisors of the municipality/service provider, as applicable] Element of Financing Maximum Limit Principal amount of the credit granted [•] te Indemnities or other payments due in the event of early repayment of the credit outstanding, including the early [•] ria repayment penalties, as appropriate. Calculation methodologies of the applicable interest rate [•] rop Applicable late payment interest rate [•] Arrangements for amortization of the credit/amortization pp [•] table Information on the planned hedging instruments (for rates/ A [•] currencies), and percentage of the debt concerned. as Maturity of the credit (and the various tranches as [•] appropriate) Interest Rate t [•] ap Fees [•] Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 2 - Works Specifications 39 Sample Public-Private Partnership Agreement Schedule 2 - Works Specifications [Should indicate specifications and standards to be complied with concerning the reinstatement (if any) of the Existing Facilities, and design and construction of the New Facilities. Should also indicate penalties the Service Provider may face if the Works Specifications are not met, as well as the Performances Tests to be carried out before the Contracting Authority issues the Performance Certificate] 1. GENERAL TECHNICAL REQUIREMENTS te 1.1 The Project shall be designed, installed, commissioned, tested and operated in accordance with Prudent Industry Practice, the Applicable Law, and relevant international standards including but ria not limited to those listed in the table below51: rop Code Standard Title [•] [•] pp 2. WORKS DELIVERY PLAN A 2.1 The Service Provider shall develop and maintain a Works Delivery Plan. as 2.2 The Works Delivery Plan shall include as a minimum: (a) the Design and Construction Plan; and (b) the Testing and Commissioning Plan. t ap 2.3 Each plan that forms part of the Works Delivery Plan shall: (a) describe how the Service Provider plans to deliver the Facilities 52 demonstrating a clear Ad critical path; (b) outline the order and timing of the major operations and major activities; temporary works; procurement of equipment; construction; commissioning; and Performance Tests; nt , (c) be sufficiently detailed to enable an experienced third party, who does not have prior knowledge of the Project, to take over the Works identified in the current Works Delivery Plan without undue delay or disruption; me (d) describe communications strategy and procedures for interfacing between all parties and covering inter alia: parties within the Contracting Authority; the interfaces between [designers, constructors and operators] 53, and other relevant Government entities and utilities; cu (e) describe reporting procedures; and (f) describe use of IT and software. Do 2.4 The Service Provider shall provide information on the parties undertaking each component of the Works, including: (a) team structure and management; le (b) employment of Contractors; (c) named persons responsible for health and safety with contact details; and mp Drafting Note: 51  depending on the (d) details of responsible persons for each site at daytime and out of hours contact details. project, it may be necessary to specify the 2.5 Design and Construction Plan Sa applicable standards for each works category (e.g. mechanical 2.5.1 The Service Provider shall prepare the Design and Construction Plan which shall provide a installations, electric comprehensive explanation of the Service Provider’s approach to designing and constructing the installations, structures, etc…) Facilities and shall include, as a minimum: Drafting Note: drafting to 52  (a) design codes and standards to be used; be adapted depending (b) security arrangements during construction; on the delivery or not of New Facilities. (c)  procedures for supervision, quality control and reporting that will be applied to ensure quality Drafting Note: to be 53  of workmanship and that the requirements of this Agreement have been met; and adapted depending (d) strategy for managing public relations. on the various parties involved in the Project. Module 11 : Schedule 2 - Works Specifications 40 Sample Public-Private Partnership Agreement 2.6 Testing and Commissioning Plan 2.6.1 The Service Provider shall prepare the Testing and Commissioning Plan which shall provide a comprehensive explanation of how the Service Provider intends to commission and carry out the Performance Tests on the Facilities and shall include, as a minimum: (a) clear explanations of how the constraints on testing and commissioning are to be complied with; (b) details of testing and commissioning and Performances Tests activities; (c) detailed measurement and testing regime to demonstrate compliance with the [specify the te applicable requirements]; and (d) [specify any additional element that should be part of the Testing and ria Commissioning Plan]. 3. OPERATION AND MAINTENANCE PLAN rop 3.1 The Service Provider shall, in accordance with Clause 10 (Operation And Maintenance Plan), prepare and submit to the Contracting Authority an Operation and Maintenance Plan. This pp Operation and Maintenance Plan shall include the following: (a) [specify details of all critical and routine operating tasks to be executed with the objective of achieving and maintaining the technical specifications set out in this A schedule and the Performance Indicators] as 4. SERVICE PROVIDER PENALTIES [Should describe the penalties applicable to the Service Provider in the case where the Works  do not comply with the Works Specifications. Liquidated damages that the Service Provider may t ap have to pay to the Contracting Authority should be deduced from the bulk payment paid by the Contracting Authority (when applicable), and paid to the Contracting Authority when the Service Provider remuneration only comes from user fees] Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 3 - Facilities Services and Specifications 41 Sample Public-Private Partnership Agreement Schedule 3 - Facilities Services and Specifications [Should indicate specifications and standards to be complied with concerning the operation and maintenance of the Facilities by the Service Provider. Should also indicate penalties the Service Provider may face if the Facilities Services and Specifications are not met] 1. GENERAL SERVICES REQUIREMENTS 1.1 The Services shall be provided in accordance with Prudent Industry Practice, the Applicable Law, te and relevant international standards including but not limited to those listed in the table below: ria Code Standard Title rop [•] [•] 2. ADMINISTRATIVE REQUIREMENTS pp  [Depending on the Project, this section may be used to describe the administrative requirements to be followed by the Service Provider in performing the Services (i.e. records to be kept, format of A documents, etc.) If no administrative requirements are necessary for the Project, this section may be deleted] as 3. SERVICE DELIVERY PLAN 3.1 The Service Provider shall develop and maintain a Service Delivery Plan describing how the Service t ap Provider intends to deliver the Services. The Service Delivery Plan shall include, as a minimum: (a) Operation and Maintenant Plan (including Operation and Maintenance Manuals); and (b) Environmental Management Plan Ad (c) [to be completed depending on the Project] Each plan that forms part of the Service Delivery Plan shall: 3.2 nt , (a) be structured so as to cover the Services at the Facilities; (b) be consistent with the Applicable Law standards and Prudent Industry Practice; (c) be sufficiently detailed to enable an experienced service provider, who does not have me previous knowledge of the Assets, to take over the delivery of the Services without undue delay or disruption; and (d) [specify any other applicable standard. IFC Performance Standards, or standards from  cu another IFI, may be required by such IFI]. Do 3.3 Each plan that forms part of the Service Delivery Plan shall include, as a minimum: the relationship between that Service Delivery Plan and other plans maintained by the (a)  Service Provider; (b) parties contributing to and affected by the activities covered by the Service Delivery Plan; le (c) employment of Contractors; (d) team structure and management; mp (e) named persons responsible for health and safety with contact details; (f) details of responsible persons for the Site and day-time and out of hours contact details; (g)  contain communications strategy and procedures for interfacing between all parties and Sa covering inter alia: parties within the Contracting Authority, the interfaces between designers, constructors and operators, other relevant Government entities and utilities; (h) reporting procedures; (i) use of IT and software; (j)  strategy and procedures to comply with health and safety requirements in accordance with Prudent Industry Practice; (k) strategy and procedures for ensuring the minimization of environmental impact; (l)  quality procedures including checking and approval, document management and control, Drafting Note: this list 54  change control; and is to be completed depending on the (m) numbers of key human resources 54. Project specifications. Module 11 : Schedule 3 - Facilities Services and Specifications 42 Sample Public-Private Partnership Agreement [Depending on the Project, the Service Provider may have to provide the Contracting Authority with other plans, such as Facilities management plan (enabling the condition and performance of the Facilities to be monitored)] 4. SERVICE PROVIDER PENALTIES [Should describe the penalties applicable to the Service Provider in the case where the Services  do not comply with the Services Specifications. Liquidated damages that the Service Provider may have to pay to the Contracting Authority should be deduced from the bulk payment paid by the Contracting Authority (when applicable), and paid to the Contracting Authority when the Service te Provider remuneration only comes from user fees]   ria rop A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 4 - Permits to be obtained by the Contracting Authority 43 Sample Public-Private Partnership Agreement Schedule 4 - Permits to be obtained by the Contracting Authority [Enumerates the permits required to be obtained by the Service Provider for the project, including the deadlines for acquisition of such permits, beyond which such delay may be considered a MAGA. Permits to be obtained are generally in relation with the following topics, but will and will vary depending on the local law applicable to the project as well as the project itself: • Construction/urban planning permits (as the case may be, construction permits may have to be obtained at the national/municipal level); te • Exploitation permits (as the case may be, exploitation permits may have to be obtained at the national/ ria municipal level); • Environmental permits (generally only at the national level); rop • Foreign exchange permits (generally only at the national level); and pp • Foreign employees permits (generally at the national level)] A tas ap Ad nt , me cu Do le mp Sa Module 11 : Schedule 5 - Bulk and User Payments 44 Sample Public-Private Partnership Agreement Schedule 5 - Bulk and User Payments [Must contain a detailed discussion of the terms of payments, depending on whether the project is availability-based or concession/user-fee based with/without some Government support or subsidy. The income of the Service Provider may come from: (a) A bulk payment from the Contracting Authority made up of: (1) Fixed payment for non-variable costs; and te (2) Variable payment, availability based. ria In the case of a bulk payment, any liquidated damages to be paid by the Service Provider to the Contracting Authority will be through deduction on the amount to be paid to the Service Provider by the Contracting Authority. rop Bulk payment formula is to be specified in this schedule, as well as the formula related to liquidated damages imputation on bulk payments. pp (b) A user fee made up of fees paid by users in order to benefit from the Services. A  Amount of fees to be paid will be determined within a separate agreement between the Service Provider and users, but may be subject to specific regulations depending on the local law as applicable to the project] t ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 6 - Reporting Requirements 45 Sample Public-Private Partnership Agreement Schedule 6 - Reporting Requirements [Must indicate the reports that need to be submitted by the Service Provider to the Contracting Authority, the content of these reports, as well as the deadlines and frequency of submission. The construction and service reports are to be submitted on a monthly basis, and provide for information on the Works and Services. The financial report are to be submitted on an annual basis. The following sample clause may be used] te 1. MONTHLY CONSTRUCTION REPORT ria 1.1 During the Construction Period, the Service Provider shall prepare the Monthly Construction Reports. rop 1.2 Each Monthly Construction Report shall provide the Contracting Authority with information reasonably required to assess the progress of the construction and commissioning of the Works; and be structured to cover the Works as a whole. pp 1.3 Each Monthly Construction Report shall include, as a minimum: A (a) A summary; (b) Project summary data including: (c) Progress update including; as (1) an up to date construction program; (2) progress against key milestones; (3) commentary on areas that are behind construction program and details of measures t being taken to mitigate delays; ap (4) a summary of testing and commissioning activities results (if any); and (5) health and safety record (including accident records). Ad 2. MONTHLY SERVICE REPORT nt , 2.1 During the Service Period, the Service Provider shall prepare the Monthly Service Reports. 2.2 Each Monthly Service Report shall provide the Contracting Authority with information reasonably me required to assess the adequacy of the delivery of the Services and be structured to cover the Project as a whole. cu  Each Monthly Service Report shall include, as a minimum: [specify content of the Monthly Service Reports] Do 3. ANNUAL FINANCIAL REPORT 3.1 During the [specify the period], the Service Provider shall prepare the Annual Financial Report. le 3.2 Each Annual Financial Report shall provide the [Contracting Authority/Lenders] with information mp reasonably required to assess the adequacy of the financial model for the delivery of Works and Services and be structured to cover the Project as a whole. Sa 3.3 Each Annual Financial Report shall include, as a minimum: [specify content of the Annual Financial Reports] Module 11 : Schedule 7 - Insurances 46 Sample Public-Private Partnership Agreement Schedule 7 - Insurances [Should include a list of insurance policies to be obtained by the Service Provider in relation with the execution of Works and Services. The required insurance policies listed in this schedule are usually condition precedents to the Commencement Date. This list is generally provided by insurance experts from IFC (or any other relevant IFI). For information purpose, this list may include, but not limited to: • Construction insurance policy; te • Transportation insurance; ria • General liability insurance; • Environmental liability insurance; rop • Workmen’s compensation insurance; and pp • Vehicle insurance;] A t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 8 - Termination Payments 47 Sample Public-Private Partnership Agreement Schedule 8 - Termination Payments55 For the purpose of this Schedule, words and terms beginning with a capital letter herein shall the meaning ascribed to them below. Capitalized terms used and not defined herein shall have the meaning set out in the Agreement. Adjusted Net Equity means, on and as of the Termination Date, an amount equal to the sum of: te (a) An amount equal to the sum of the Adjusted Value of all Equity less the sum of the Adjusted Value of all Distributions, in each case in [specify currency] and in each case within a period of [•] years prior to ria the Termination Date (or such lesser period as may then exist between the Commencement Date and the Termination Date); and (b) An amount equal to the sum of all Equity less the sum of the Adjusted Value of all Distributions, in each rop case in [specify currency] and in each case made outside a period, if any, of [•] years prior to the Termination Date, pp p  rovided that, if any such difference in sub-clause (a) or (b) shall result in an amount that is less than zero (0), such amount shall be deemed to be zero (0). A Adjusted Value means, on and as of the Termination Date, the value of any Equity or Distribution, as the case may be, which value shall be determined by taking the amount of such Equity or Distributions (in as each case in [specify currency] ) adjusting such value for each year during the period from the date of such Equity or Distributions to the Termination Date, using as an upward adjustment factor for each such completed calendar year of [[•] per cent. ([•%)]. t ap Compensation Payment Date has the meaning given to it in Clauses 1.2.2, 2.2 and 3.2 of this Schedule (as applicable). Ad Connected Person means, in relation to the Service Provider: nt , (a) any Shareholder of, or other provider or owner of subordinated loans or capital contributions to, the Service Provider or an Affiliate of the Service Provider, or any Affiliate of that shareholder or provider; or me (b) any Affiliate or director of the Service Provider; or (c) any Person in which any one or more of the Service Provider, a Shareholder, or any Affiliate of the Service Provider, of a Shareholder, or of any other person within the description in paragraph (a) cu above, has any direct or indirect interest or connection (whether that interest or connection is financial, economic or of any other nature), and indirect shall include (without limitation) through a chain of any Do one or more Persons or interests. Deferred Equity Amounts means, on the Compensation Payment Date, any amount of unfunded Equity that has been committed to the Service Provider as of the Financial Close. le Distribution means whether in cash or in kind: mp (a) dividend or other distribution in respect of share capital; (b) reduction of capital of the Service Provider, redemption or purchase of shares or any other Sa reorganization or variation to share capital of the Service Provider; (c) payments under any subordinated financing agreements (whether of principal, interest, fees, charges, breakage costs or otherwise) to a Shareholder or one of its Affiliates or any Connected Person of the Service Provider; (d) payment, loan, contractual arrangement or transfer of assets or rights to the extent (in each case) it was put in place after Financial Close and was neither in the ordinary course of business nor on reasonable commercial terms; or This schedule should 55  (e) the receipt of any other benefit which is not received in the ordinary course of business and on be amended to take reasonable commercial terms. into account the risk profile of the project and jurisdiction. Module 11 : Schedule 8 - Termination Payments 48 Sample Public-Private Partnership Agreement Financial Close means the date which all conditions precedent to initial disbursement under the Lenders Documents have been fulfilled or waived. Initial Equity means, as of the date of termination of the Agreement, the initial equity investment disbursed by the Shareholders plus any such other equity contributions approved by the Contracting Authority expressed in [specify currency]. Insurance Proceeds means all proceeds from Insurances paid or payable to the Service Provider or the Lenders (or that should have been payable to the Service Provider or the Lenders except in the event te of a failure of the Service Provider to take out or maintain such Insurance in accordance with the terms of this Agreement). ria New Tender Costs means the reasonable and proper costs incurred/to be incurred and/or reasonably expected to be incurred by the Contracting Authority in carrying out a new award procedure. rop Outstanding Senior Debt means the sum of: (a) the total amount outstanding, if any, to the Lenders under any Lenders Documents and interest pp (including default interest); plus (b) any winding-up costs, prepayment charges, costs of terminating any hedging arrangements or similar charges or costs passed through by the Lenders in accordance with the Lenders Documents; A less: as (a) all credit balances held on any bank accounts held by or on behalf of the Service Provider on the termination date of the Agreement which are available for application in or towards discharge of the t amounts referred to in (a) and (b) above on the Termination Date of the Agreement; ap (b) all amounts payable by the Lenders or the hedging counterparty to the Service Provider as a result of a repayment of amounts outstanding under the Lenders Documents; and Ad (c) without double counting, all other amount received by the Lenders on or after the Term and before the date on which compensation is payable by the Contracting Authority to the Service Provider as a result of enforcing any other rights that they may have. nt , Redundancy Payments means the payment of all wages earned, accrued unused vacation time and any other payments required by Applicable Law. me Service Provider Default Deduction Amount meant the amount equal to the aggregate of the following: (a) the New Tender Costs; and cu (b) any delay contractual penalties accrued and unpaid as at the Termination Date. 1. CONTRACTING AUTHORITY TERMINATION Do 1.1 Service Provider Default le 1.1.1 If the Contracting Authority terminates this Agreement in the event of a Service Provider Event of Default, the Contracting Authority shall, to the extent permitted under Applicable Law, pay to the mp Service Provider a compensation amount equal to the aggregate sum of: (a) [•] percent ([•]%) 56 of the Outstanding Senior Debt; Sa less (b) the Service Provider Default Deduction Amount; (c) the Deferred Equity Amounts; and (d) Insurance Proceeds (excluding proceeds of personal injury, property damage or other third thegpsc.org party liability insurance payable to or for the account of a third party). 56  o be adjusted T depending on the jurisdiction. In most 1.1.2 The Compensation Payment Date for the Termination Payment referred to in Clause 1.1 above shall | developing countries, be a date twelve (12) months after the Termination Date (or earlier if the Contracting Authority so The World Bank haircut on debt will not chooses). be accepted by the Lenders. Module 11 : Schedule 8 - Termination Payments 49 Sample Public-Private Partnership Agreement 1.2 Material Adverse Government Action and Change in Law 1.2.1 If the Contracting Authority terminates this Agreement in the event of a Material Adverse Government Action or a Change in Law, the Contracting Authority shall, to the extent permitted under Applicable Law, pay the Service Provider the amount equal to the aggregate sum of: (a) one hundred percent (100%) of the Outstanding Senior Debt, if any; (a) one hundred percent (100%) of the Adjusted Net Equity; (b)  Redundancy Payments for employees of the Service Provider that have been incurred as a direct result of the termination of this Agreement; and te less ria (c) the Deferred Equity Amounts; and (d) Insurance Proceeds (excluding proceeds of personal injury, property damage or other third rop party liability insurance payable to or for the account of a third party). 1.2.2 The Compensation Payment Date for the Termination Payment referred to in Clause 1.2.1 above pp shall be the later of: (a) a date three (3) months after the Termination Date; and (b)  if the Contracting Authority notifies the Service Provider prior to the date referred in Clause A 1.2.2(a) that it elects to defer payment of the Termination Payment, the date (being not later than a date twelve (12) months after the Termination Date) that the Contracting Authority so as specifies as the Compensation Payment Date by written notice to the Service Provider. 1.2.3 Interest shall be payable on the unpaid Termination Payment from the Termination Date to the due t date for payment, in accordance with the Default Interest Rate. ap 2. SERVICE PROVIDER TERMINATION Ad 2.1 If the Service Provider terminates this Agreement in the event of a Contracting Authority Event of Default, a Material Adverse Government Action or a Change in Law, the Contracting Authority shall, nt , to the extent permitted under Applicable Law, pay the Service Provider the amount equal to the aggregate sum of: (a) one hundred percent (100%) of Outstanding Senior Debt, if any; me (b) one hundred percent (100%) of the Adjusted Net Equity; (c)  Redundancy Payments for employees of the Service provider that have been incurred as a direct result of the termination of this Concession Agreement; cu less Do (c) the Deferred Equity Amounts; and (d) Insurance Proceeds (excluding proceeds of personal injury, property damage or other third party liability insurance payable to or for the account of a third party). le 2.2 The Compensation Payment Date for the Termination Payment referred to in Clause 2.1 above shall mp be the later of: (a) a date three (3) months after the Termination Date; and (b) if the Contracting Authority notifies the Service Provider prior to the date referred in Clause (a) Sa that it elects to defer payment of the Termination Payment, the date (being not later than a date twelve (12) months after the Termination Date) that the Contracting Authority so specifies as the Compensation Payment Date by written notice to the Service Provider. 2.3 Interest shall be payable on the unpaid Termination Payment from the Termination Date to the due date for payment, in accordance with the Default Interest Rate. 3. TERMINATION FOR FORCE MAJEURE EVENT 3.1 If this Agreement is terminated by any Party as a result of a Force Majeure Event, the Contracting Authority shall pay the Service Provider the amount equal to the aggregate of: Module 11 : Schedule 8 - Termination Payments 50 Sample Public-Private Partnership Agreement (a) one hundred percent (100%) of Outstanding Senior Debt, if any; (b) the Initial Equity less the sum of all Distributions to Shareholders from the Commencement Date to and including the Termination Date; and (c) Redundancy Payments for employees of the Service Provider that have been incurred as a direct result of the termination of this Agreement; less (d) Insurance Proceeds (excluding proceeds of personal injury, property damage or other third te party liability insurance payable to or for the account of a third party). ria 3.2 The Compensation Payment Date for the Termination Payment referred to in Clause 3.1 shall be a date twelve (12) months after the Termination Date, or earlier if the Contracting Authority so chooses. rop 3.3 Interest shall be payable on the unpaid Termination Payment from the Termination Date to the due date for payment, in accordance with the Default Interest Rate. pp 4. TAX GROSS-UP PROVISIONS A 4.1 If any Termination Payment payable by the Contracting Authority to the Service Provider in  accordance with Clauses 1, 2 and 3 of this Schedule 8 is subject to Tax payable by the Service as Provider to a Government entity in the Country, then the Contracting Authority shall, subject to paragraph 3, be jointly and severally liable and shall pay to the Service Provider such additional amount as will put the Service Provider in the same after Tax position as it would have been had the t Termination Payment not been subject to Tax, such Tax liability to be determined for this purpose in ap accordance with Clause 4.2. Ad 4.2 For the purpose of determining the additional amount referred to in paragraph 4.1 above, the liability of the Service Provider for Tax in the Country with respect to a Termination Payment for the purpose of Clause 4.1 shall be deemed to be reduced to take full account of any relief, allowance, nt , deduction, setting-off or credit in respect of Tax which may be available to the Service Provider or any Shareholder, or any Affiliate of the Service Provider, to reduce the Tax. For the purpose of this Clause 4.2 a reduction in Tax shall be treated as including obtaining any refund of Tax paid or any me credit in respect of any Tax payable. 4.3 If the Service Provider wishes to claim the additional amount referred to in paragraph 4.1 above cu in accordance with paragraph 4.1, the Service Provider must make that claim prior to the Compensation Payment Date. The Contracting Authority may dispute any such claim, in which case (if not agreed between the Parties) the claim will be determined in accordance with Clause Do 26 (Dispute Resolution). The Contracting Authority shall be entitled to withhold from payment to the Service Provider any additional amounts agreed or determined to be payable by the Contracting Authority pursuant to paragraph 4.1 and pay those amounts directly to the Government entity upon le the date the relevant Tax becomes due and payable by the Service Provider, in which case such payment shall discharge any liability to the Service Provider in respect thereof. mp 5. CLAWBACK AFTER TERMINATION DATE  Any amounts paid by the Lenders to the Service Provider after the date on which the Contracting Sa Authority pays termination compensation to the Service Provider in accordance with this Schedule 8 as a result of repayment of the amounts outstanding under the Lenders Documents shall be repaid by the Service Provider to the Contracting Authority within thirty (30) days from the date on which it is paid to the Service Provider.   thegpsc.org | The World Bank Module 11 : Schedule 9 - Assets Transfer Plan 51 Sample Public-Private Partnership Agreement Schedule 9 - Assets Transfer Plan [Details which assets are to be transferred, as well as the procedure and schedules for the transfer. This schedule is to be proposed by the Contracting Authority, discussed between the Parties and finally integrated to the Agreement as a Condition Precedent] te ria rop A pp t as ap Ad nt , me cu Do le mp Sa Module 11 : Schedule 10 - Assets Handover Agreement 52 Sample Public-Private Partnership Agreement Schedule 10 - Assets Handover Agreement [Details which assets are to be handed over from the Service Provider to the Contracting Authority at the term of the agreement. This schedule is to be proposed by the Contracting Authority, discussed between the Parties and finally integrated to the Agreement as a Condition Precedent] te ria rop A pp t as ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank Module 11 : Schedule 11 - Government Guarantee 53 Sample Public-Private Partnership Agreement Schedule 11 - Government Guarantee [Specify Government of the Country] (the “Government”) represented by its Ministry of Finance and Economic Planning57; and ………….., a company incorporated under the laws of ……….., whose registered office is located in [insert Address], and with registration number [………….] (the “Service Provider”). (The Government and the Service Provider are collectively referred to as the “Parties” and each a “Party”) te WHEREAS, [Contracting Authority] and the Service Provider have entered into a Public Private Partnership ria Agreement (“Agreement”) in relation to the [design, planning, financing, construction, commissioning, operation and maintenance] 58 of a [specify the relevant Facilities] (“Facilities”) located in ………… (“Project”). Pursuant to the Agreement, the Contracting Authority undertakes, inter alia, to pay [specify the rop relevant payments to be made by the Contracting Authority], starting on the Services Commencement Date, until the date which is [•] ([•]) years from the Commencement Date. pp WHEREAS, in accordance with Schedule 1 of the Agreement, the provision of this guarantee (the “Government Guarantee”) by the Government is a Condition Precedent to the Commencement Date. A 1. DEFINITIONS - INTERPRETATION as 1.1 The terms of Articles 1 (Definitions And Interpretation) and 2 (Interpretation) of the Agreement apply mutatis mutandis to this Government Guarantee as if they were expressly stated herein. t 1.2  ap Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Agreement. Ad NOW THEREFORE, IT IS HEREBY AGREED as follows: 2. GOVERNMENT GUARANTEE nt , 2.1 In consideration of the Service Provider entering into, and performing or having agreed to perform its obligations under the Agreement (and for valuable consideration, receipt of which the Government me hereby acknowledges), the Government irrevocably and unconditionally, as a continuing obligation: (a)  guarantees to the Service Provider, the payment of any and all sums which the Contracting Authority has failed to pay when due under the Agreement; and cu (b)  undertakes, upon failure of the Contracting Authority to pay any amount now or hereafter owing, due or payable by the Contracting Authority to the Service Provider under the Do Agreement, to immediately on demand pay that amount,  each and every liability of, and sum owing, due or payable by, the Contracting Authority referred to in this Article 2.1, the “Liabilities”. le Drafting Note: to be 57  2.2 [Without prejudice to its obligations under Article 2.1, [and to the extent permitted under Applicable adapted depending on Law], the Government unconditionally and irrevocably undertakes with the Service Provider as a mp the local law applicable to the Project[•] separate, additional, continuing and primary obligation, that, should any amount not be recoverable Drafting Note: to be 58  from it or any obligation not be enforceable against it under Article 2.1 for any reason whatsoever adapted depending on (including, for the avoidance of doubt and without limitation, as a result of any unenforceability, Sa the Project. Drafting Note: this 59  invalidity or illegality of the Agreement) then, notwithstanding that such reason may have been clause may have to be known to the Service Provider, the Government shall, upon first written demand by the Service adapted depending Provider make payment of any amount the Service Provider would otherwise have been entitled to on the local law. In most civil law recover from the Contracting Authority as is provided for in the Agreement.] 59 countries, guarantees are accessory of the 3. PRESERVATION OF RIGHTS guaranteed debt. Unenforceability of the initial debt may 3.1 The obligations of the Government under this Government Guarantee shall be in addition, have the effect to independent of and not in substitution to or derogation of, any other security which the Service make the guarantee unenforceable. Provider may at any time hold in relation to any of the Liabilities. The Service Provider may enforce this Government Guarantee notwithstanding that it may hold any other guaranty, lien, or security Module 11 : Schedule 11 - Government Guarantee 54 Sample Public-Private Partnership Agreement of or for the obligations of the Contracting Authority under the Agreement or have available to the Service Provider any other remedy at law or equity. 3.2 Any settlement or discharge given by the Service Provider to the Government in respect of the Government’s obligations under this Government Guarantee or any other agreement reached between the Service Provider and the Government in relation to it shall be, and be deemed always to have been, void if any act on the faith of which the Service Provider gave the Government that  r discharge or entered into that agreement is subsequently avoided by or in pursuance settlement o of any provision of law. te 4. WAIVER OF DEFENCES ria 4.1 Neither the obligations of the Government contained in this Government Guarantee nor the rights, powers and remedies conferred in respect of the Government upon the Service Provider rop by this Government Guarantee shall be discharged, modified, impaired or otherwise affected by the occurrence from time to time of any act, event or omission which, but for this Article, might operate to discharge, impair or otherwise affect any obligation of the Government contained in pp this Government Guarantee or any of the rights, powers or remedies conferred upon the Service Provider by this Government Guarantee , including, but not limited to, the following: (a)  the privatization, winding-up, dissolution, administration, reorganization or any other legal A alteration of the legal structure of the Contracting Authority, the Service Provider, the Government; as (b)  any failure of the Contracting Authority, the Government, the Service Provider or any other person to comply with the requirements of any law, regulation or order; (c)  any time or other indulgence being granted or agreed to be granted to, or any composition t with, the Contracting Authority or any other person in respect of any of the Liabilities or under ap any other security; (d)  any amendment to, or any variation, waiver, departure from or release of, the Agreement, or Ad any of the Liabilities or obligations of the Contracting Authority under any other security; (e)  the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take-up or enforce, any rights against the Contracting Authority, including under any nt , other security, payment guarantee, letter of credit, other liquidity support or otherwise; (f)  [to the extent permitted under Applicable Law, any of the Liabilities or obligations of the Contracting Authority under any security relating to any of the Liabilities or obligations of the me Contracting Authority being or becoming illegal, invalid, unenforceable or ineffective in any respect, or the Contracting Authority having or purporting to have any defense or counterclaim against the Service Provider] 60; cu (g)  the extension for payment of any amounts due or of time for performance of any of the covenants, terms, undertakings or obligations of the Contracting Authority set forth in the Agreement; Do (h)  the failure, omission, or delay by the Service Provider to enforce, ascertain, or exercise any right, power, or remedy under or pursuant to the terms of the Agreement; (i) the failure or financial disability of the Government; le (j)  any insolvency or similar proceedings in respect of the Contracting Authority or any other person; or mp (k)  any assignment by the Service Provider of the Agreement or this Government Guarantee in accordance with their respective terms and conditions. Sa 5. CONTINUING SECURITY 5.1 The liabilities and obligations of the Government contained in this Government Guarantee shall constitute and be continuing obligations and shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the obligations of the Contracting Authority in relation to the thegpsc.org Liabilities and shall continue in full force and effect until final payment in full of all amounts owing by the Contracting Authority in respect of the Liabilities and total satisfaction of all the Contracting Authority’s actual and contingent obligations in relation to the Liabilities is received and can be | D  rafting note: see the retained by the Service Provider. The Service Provider is entitled to enforce this Government The World Bank 60 above drafting note Guarantee at any time when any of the conditions set forth in Article 6.1 has occurred. No demand in relation to civil law countries. made by the Service Provider hereunder shall prejudice or restrict the right of the Service Provider to make further or other demands. Module 11 : Schedule 11 - Government Guarantee 55 Sample Public-Private Partnership Agreement 6. CLAIM MECHANISM 6.1 Right to make a claim  The Service Provider shall make a claim under this Government Guarantee only upon the occurrence of a [Contracting Authority Event of Default referred to under Clause 18.2.1 (a)] 61 of the Agreement in respect of which the Service Provider has sent a Notice in accordance with Clause 28.11 (Notices) of the Agreement. 6.2 Demand - Certification te 6.2.1 If the event set out in Article 6.1 has occurred, the Service Provider may send a written demand (a ria “Demand”) for payment to the Government under this Government Guarantee, and the Government shall make payment of the requested sum within ninety (90) days thereafter. rop 6.2.2 Any Demand shall be signed by a duly authorized officer of the Service Provider in person at the Government’s offices indicated below or by national or international courier sent at the below address: pp [specify the relevant office] and shall be accompanied by a certificate signed by such duly authorized officer of the Service A Provider stating the following: as “We hereby certify that (1) [the name of the Service Provider] is making this demand on the Government of [specify country] (the “Government”) in the amount of [insert amount] [specify currency] in accordance with Article 2 of the Government Guarantee dated [•], between the t Government and the Service Provider; (2) the amount specified above is due and payable by ap [specify name of the Contracting Authority] under the Agreement entered into on [specify the date] between the Service Provider and the Contracting Authority and (3) the Government Ad Guarantee is enforceable in accordance with its terms. 6.3 Non Business Days nt ,  If a payment under this Government Guarantee is due on a day which is not a business day in [specify country], the due date for that payment shall instead be the next business day in the same calendar month (if there is one) or the preceding business day (if there is none or the next business me day would fall after the expiry of the Government Guarantee). 6.4 Account - Currency cu 6.4.1 Any Demand shall specify the account on which the payment of any amount payable under this Government Guarantee shall be paid. Do 6.4.2 Any amount payable under this Government Guarantee shall be paid in the same currency in which such amount is expressed to be payable under the Agreement, and the Government waives any le right it may have in any jurisdiction to pay any amount under this Government Guarantee in another currency or currency unit. mp 6.4.3 If any sum due from the Government under this Government Guarantee (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the Sa “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of: 61  rafting note: add, if D (a) making or filing a claim or proof against the Government, o need be, additional (b) obtaining or enforcing an order, judgment or award in relation to any litigation or Contracting Authority Event of Default entitling arbitration proceedings, the Service Provider  the Government shall as an independent obligation, within three business days of demand, to make a claim under indemnify the Service Provider against any cost, loss or liability arising out of or as a result of the the Government Guarantee. The clause conversion including any discrepancy between (A) the rate of exchange used to convert that Sum is limited to the event the from the First Currency into the Second Currency and (B) the rate or rates of exchange available to Contracting Authority that person at the time of its receipt of that Sum. did not paid the Service Provider. Module 11 : Schedule 11 - Government Guarantee 56 Sample Public-Private Partnership Agreement 7. IMMEDIATE RECOURSE  E xcept as expressly provided in Article 6.2.1, the Service Provider shall not be obliged to exercise any other remedies that may be available to the Service Provider under or in respect of the Agreement or to initiate any proceedings or obtain judgment or an arbitration decision against the Contracting Authority before enforcing its rights arising under this Government Guarantee. 8. NON-COMPETITION  Until this Government Guarantee expires, the Government shall not, after a claim has been made in accordance with this Government Guarantee, be subrogated to any rights, security or money held, te received or receivable by the Service Provider or be entitled to any right in respect of  any payment made or money received on account of the Government’s liability under this ria Government Guarantee. 9. NO SET-OFF rop  No set-off, counterclaim, reduction, or diminution of any obligation that the Government has or may have against the Service Provider shall be available to the Government against the Service  Provider in connection with any obligation of the Government to the Service Provider under this pp Government Guarantee 10. OBLIGATIONS ABSOLUTE A  [To the extent permitted under Applicable Law,] 62 the Government’s payment obligations under this Government Guarantee are absolute and unconditional and accordingly, but without limitation, as the Government shall have no right to defer, withhold or adjust any payment due to the Service Provider arising out of this Government Guarantee, nor to obtain the deferment of any judgment for any such payment or part thereof nor to obtain deferment of execution of any judgment. Should the t Government default in any of its obligations in terms of this Government Guarantee, the Government ap hereby indemnifies and holds the Service Provider harmless on demand against all and any losses which may be incurred or sustained or claimed from or threatened against the Service Provider by Ad reason of or pursuant to such default. 11. ARBITRATION; JURISDICTION nt ,  In the event that the Parties, notwithstanding the use of reasonable endeavors to do so, are unable to resolve a difference or dispute between them arising out of or in connection with this Government Guarantee (including, without limitation, any question regarding its existence, validity or termination), me then, either Party shall be entitled to require that such matter be referred to and finally resolved by arbitration as provided in Clause 26.4 (Arbitration) of the Agreement. cu 12. SOVEREIGN IMMUNITY 12.1 The Government unconditionally and irrevocably agrees that the execution, delivery and Do performance by it of this Government Guarantee constitute private and commercial acts. In furtherance of the foregoing, the Government irrevocably and unconditionally agrees that: (a)  should any proceedings be brought against the Government or its assets, other than Excluded le Assets, as defined below, in any jurisdiction in connection with this Government Guarantee, or any of the transactions contemplated by this Government Guarantee, no claim of immunity mp (sovereign or otherwise) from such proceedings will be raised by or on behalf of the Government on behalf of itself or any of its assets, other than Excluded Assets; (b)  it waives any right of immunity (sovereign or otherwise) which it or any of its assets, other than Sa Excluded Assets, now has or may in the future have in any jurisdiction in connection with any such proceedings; and 62  rafting note: this clause D (c)  it consents generally in respect of the enforcement of any judgment against it in any such may have to be adapted depending on the local proceedings in any jurisdiction to the giving of any relief or the issue of any process in connection with such proceedings, including, without limitation, the making, enforcement or thegpsc.org law. In most civil law countries, guarantees execution against, or in respect of, any of its assets, other than Excluded Assets, of any order are accessory of the guaranteed debt. or judgement which may be made or given in such proceedings. Unenforceability of | the initial debt may 12.2 For the purpose of this Government Guarantee, “Excluded Assets” means (i) [specify assets to The World Bank have the effect to make the guarantee be excluded from the scope of the Government’s waiver of right of immunity] and (ii) unenforceable.  property of the Government subject to the Vienna Convention on Diplomatic Relations or the Vienna Module 11 : Schedule 11 - Government Guarantee 57 Sample Public-Private Partnership Agreement Convention on Consular Relations that is being used exclusively for diplomatic or consular purposes. 13. TAXATION  The Service Provider shall be liable for any tax levied or imposed by a Government authority or any political subdivision or authority thereof on or with regard to any payment hereunder if such payment, if made by the Contracting Authority, would have caused the Service Provider to become liable for the tax, provided for the sake of clarity that the Service Provider shall not have to pay any tax already deducted in full from sums payable by the Contracting Authority under the Agreement. te There shall be no additional taxes or fees imposed on the Service Provider in connection with a ria payment by the Government to the Service Provider under this Government Guarantee, provided that, if any law or regulation imposes any such additional taxes or fees such amounts will be paid by the Service Provider and subsequently reimbursed by the Government. Should the Government rop default in its obligations to pay such additional taxes or fees, the Government hereby indemnifies and holds the Service Provider harmless on demand against all and any losses which may be incurred or sustained or claimed from or threatened against the Service Provider by reason of or pp pursuant to such default. 14. DURATION A  This Government Guarantee shall remain in full force and effect from and after the date hereof for so long as any amount owed to the Service Provider by the Contracting Authority is or may be as outstanding and the Government and the Contracting Authority have fulfilled all their respective obligations under this Government Guarantee and the Agreement in full. 15. NO WAIVER; REMEDIES CUMULATIVE t ap 15.1 No Waiver Ad 15.1.1 No failure by the Service Provider to exercise, nor delay by the Service Provider in exercising, any right or remedy under this Government Guarantee shall constitute a waiver of that right or remedy or nt , constitute an election to affirm this Government Guarantee. No single or partial exercise of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver or election to affirm this Government Guarantee by the Service Provider shall be me effective unless it is in writing. 15.2 Remedies Cumulative cu  The rights and remedies of the Service Provider provided by this Government Guarantee are cumulative and not exclusive of any rights or remedies provided by law. Do 16. NOTICES 16.1 Unless otherwise provided in this Government Guarantee, all notices and other communications le required or permitted between the parties by this Government Guarantee shall be in writing and either hand delivered, sent by nationally or internationally reputable courier or by electronic or mp facsimile transmission to the address of the Party concerned as set forth below. No communication shall be effective until received and such shall be deemed to have been received: (a) by hand when so delivered; Sa (b)  on the date indicated by the courier’s delivery tracking system when delivered by nationally or internationally reputable courier; (c)  if by facsimile, when received in legible form; and (d) if by electronic transmission, when actually received (or made available) in readable form.  However, a notice given in accordance with the above but received on a day which is not a business day or after business hours in the place of receipt will only be deemed to be given in the next business day. Address for notices For the Government Module 11 : Schedule 11 - Government Guarantee 58 Sample Public-Private Partnership Agreement [specify the Government’s address] For the Service Provider [specify the Service Provider’s address] 16.2 Either Party may change its nominated address to another address by giving at least fifteen (15) days prior written notice to the other Party. te 17. ASSIGNMENT ria 17.1 Assignment by the Government  The Government may not assign or transfer all or any part of its rights or obligations hereunder without the prior written consent of the Service Provider. rop 17.2 Assignment by the Service Provider  The Service Provider may not assign or transfer all or any part of its rights or obligations hereunder pp without the prior written consent of the Government. Notwithstanding the provision of the immediately preceding sentence, the Service Provider may, pursuant to the terms of the Agreement, (i) assign or create a security interest over its rights and interests in and to this Government A Guarantee in favour of the Lenders under the Lenders Documents, or (ii) transfer the benefit of this Guarantee to a third party to which the Service Provider rights and liabilities under the Agreement as are transferred [in accordance with the Direct Agreement] 63. 17.3 Successors  t This Government Guarantee shall be binding upon and inure to the benefit of the Government and ap the Service Provider and the respective lawful successors and permitted assigns of each of them. Ad 18. GOVERNING LAW  The provisions of this Government Guarantee, including but not limited their validity, interpretation, execution, and termination, shall be governed by and construed under the [specify the nt , applicable law]. 19. MISCELLANEOUS me 19.1 Severability:  If one or more provisions contained in this Government Guarantee is held or found to be invalid, cu illegal, or unenforceable in any respect, the provision(s) shall be given effect to the extent permitted by law and the invalidity, illegality, or unenforceability of any provision shall not affect the validity of the remaining provisions of this Government Guarantee. Do 19.2 Representations and Warranties:  The Government represents and warrants as of the date of signing of this Government le Guarantee, that: (a) it has the full power, authority and legal right to incur the obligations, to execute and deliver, mp and to perform the terms and provisions of this Government Guarantee; (b) this Government Guarantee constitutes legal, valid and binding obligations of the Government, enforceable against the Government in accordance with its terms; Sa (c) all necessary actions have been taken and all necessary approvals and consents have been obtained under the laws of [specify country] to enable the Government to enter into and to perform its obligations hereunder; (d) the execution, delivery and performance of this Government Guarantee does not, and will not, constitute a violation of any statute, judgment, order, decree or regulation or rule of any thegpsc.org court, Government authority or arbitrator of competent jurisdiction applicable or relating to the Government, its assets or its business or any contract or agreement to which it is a party or by 63 D  rafting note: to be which it or its property may be bound; | adapted. It is however the person signing this Government Guarantee for the Government is authorized to do so. (e)  The World Bank usual to have a direct agreement being signed   for the project. Module 11 : Schedule 11 - Government Guarantee 59 Sample Public-Private Partnership Agreement The Government of [specify country] Represented by [specify the relevant official] _______________________________ By: Service Provider te _______________________________ By: ria   rop App as t ap Ad nt , me cu Do le mp Sa Module 11 : Schedule 12 - Form of Escrow Letter 60 Sample Public-Private Partnership Agreement Schedule 12 - Form Of Escrow Letter To: [Escrow Agent’s Name] [Escrow Agent’s address] [Pro forma letter subject to tailoring according to jurisdiction of the Escrow Agent/Escrow Account] Dear Sirs te Date: [•] ria We are writing to confirm the terms on which funds deposited in the account [number] (the “Escrow Account”) today and from time to time thereafter by [Contracting Authority] 64 (the “Contracting Authority”) may be transferred, pursuant to the terms of the agreement dated [•] made between the Service Provider rop and the Contracting Authority (the “Agreement”). These terms are: pp (1) You shall maintain the Escrow Account as an interest-bearing account numbered [•]. (2) Subject to paragraph 4 below, you shall hold the funds in the Escrow Account (or any part of it) in the A name of the Contracting Authority. (3) If a payment is made from the Escrow Account to the Service Provider: (a) such payment shall be made gross; as (b) in the event that a deduction or withholding is required by law, you shall increase the sum due to the extent necessary to ensure that, after such deduction or withholding, the Service Provider receives a sum equal to the sum it would have received had no deduction or t withholding been made; and ap (c) in the event that such payment will be or has been subject to tax, you shall pay to the Service Provider on request, from the Escrow Account, the amount (after taking into account any tax) Ad necessary to ensure that the Service Provider receives and retains a net sum equal to the sum it would have received had the payment not been subject to tax. (4) If the Service Provider notifies you that it is entitled to a payment in accordance with the Agreement nt , and provides a copy of a notice from [a director] of the Service Provider confirming such entitlement, you shall pay or hold the amount notified to or for the Service Provider or in the manner directed in the Service Provider’s written instructions. me (5) You shall provide to the Service Provider a copy of the account statement on a monthly basis. (6) The balance on the Escrow Account shall earn interest at such rate and on such terms as may be agreed between you and the Contracting Authority from time to time. Interest shall be paid [annually/ cu monthly] by you into the Escrow Account. (7) The Contracting Authority will pay your costs in respect of your duties under or in respect of this letter Do and the maintenance of the Escrow Account as such costs may be agreed between you and the Contracting Authority from time to time. (8) You acknowledge that security over the Escrow Account may be granted in favour of any lenders to the Service Provider, and the rights of such lenders will prevail over any rights you may have over the le Escrow Account or the funds standing to the credit of the Escrow Account. (9) This letter and any contractual obligations arising out of or in connection with it shall be governed by, mp and construed in accordance with, [specify the applicable law to the Escrow Letter]. Please countersign this letter to confirm your acceptance of the terms set out above. Sa [Contracting Authority] Service Provider By: By: thegpsc.org _________________________________________________________________________________ 64 D  rafting note: to be adapted depending on We confirm our acceptance of the terms of this letter. who will deposit funds | on the Escrow Account, The World Bank i.e. the Contracting [Name of Escrow Agent] Authority or the Escrow Agent Government. By: Module 11 : Schedule 13 - Form of First Demand Guarantee 61 Sample Public-Private Partnership Agreement Schedule 13 - Form of First Demand Guarantee FORM OF FIRST DEMAND GUARANTEE - LETTER OF FIRST DEMAND GUARANTEE [Specify name and address of the Service Provider] Letter of Guarantee No.: ________________________ Date: ________________________ Since you have signed with our clients, _______________________________ (the “Contracting Authority”) a Public-Private Partnership Agreement for [Financing, Construction and Operation] 65 of a [briefly describe the Project infrastructure] on [•] (the “ Agreement”): te We, _________________________ (the “Bank”), hereby unconditionally and irrevocably undertake to pay ria you any sums up to a maximum amount of [specify applicable currency] ______________________ (the “Maximum Amount”), in connection with the Contracting Authority’s obligations under the Agreement and in accordance with the following: rop (a) Unless otherwise defined herein, terms defined in the Agreement shall have the same meaning herein. (b) We shall pay you immediately upon your written demand and irrespective of any objection by the Contracting Authority or any other party such amount or amounts as you may demand up to the pp Maximum Amount, by transfer to your account or in any other manner acceptable to you. (c) All payments made based on your demand shall be free and clear of, and without any present or A future deduction for payment of, any taxes, levies, duties, charges, fees, deductions or withholdings of any nature whatsoever and by whomsoever imposed. (d) The undertakings contained in this guarantee constitute direct and fundamental obligations of ours as and are unconditional and irrevocable. We shall not be excused from any or all of these obligations for any reason or reasons of whatever nature or source, such as change in the conditions of the Agreement or extension thereof or change in the scope or nature of work to be performed, or any t ap omission, act or proceeding by you or by a third party which would excuse or discharge us from the obligations and liabilities stated in this guarantee. (e) This guarantee shall remain valid and in full force and effect up to the end of the ________ day of the Ad month of ____________ of the year ________. This guarantee shall be governed by and construed in accordance with the laws, regulations, decisions, rules and instructions of the [specify applicable law] and any dispute with respect to this guarantee shall be resolved exclusively by the competent nt , authorities in the [specify the relevant country] and according to [specify applicable law]. The Bank me Authorized signatories   cu Do le mp Sa 65 D  rafting note: to be adapted depending on the obligations to be performed by the Service Provider under the Project. Module 11 : Schedule 14 - Form of Performance Security 62 Sample Public-Private Partnership Agreement Schedule 14 - Form of Performance Security FORM OF PERFORMANCE SECURITY - LETTER OF FIRST DEMAND GUARANTEE [Specify name and address of the Contracting Authority] Letter of Guarantee No.: ________________________ Date: ________________________ Since you have signed with our clients, _______________________________ (the “ Service Provider”) a Public-Private Partnership Agreement for [Financing, Construction and Operation] 66 of a [briefly describe the Project infrastructure] on [•] (the “ Agreement”): te We, _________________________ (the “Bank”), hereby unconditionally and irrevocably undertake to pay ria you any sums up to a maximum amount of [specify applicable currency] ______________________ (the “Maximum Amount”), in connection with the Service Provider’s obligations under the Agreement and in accordance with the following: rop (f) Unless otherwise defined herein, terms defined in the Agreement shall have the same meaning herein. (g) We shall pay you immediately upon your written demand and irrespective of any objection by the Service Provider or any other party such amount or amounts as you may demand up to the Maximum pp Amount, by transfer to your account or in any other manner acceptable to you. (h) All payments made based on your demand shall be free and clear of, and without any present or A future deduction for payment of, any taxes, levies, duties, charges, fees, deductions or withholdings of any nature whatsoever and by whomsoever imposed. (i) The undertakings contained in this guarantee constitute direct and fundamental obligations of ours as and are unconditional and irrevocable. We shall not be excused from any or all of these obligations for any reason or reasons of whatever nature or source, such as change in the conditions of the Agreement or extension thereof or change in the scope or nature of work to be performed, or any t ap omission, act or proceeding by you or by a third party which would excuse or discharge us from the obligations and liabilities stated in this guarantee. (j) This guarantee shall remain valid and in full force and effect up to the end of the ________ day of the Ad month of ____________ of the year ________. This guarantee shall be governed by and construed in accordance with the laws, regulations, decisions, rules and instructions of the [specify applicable law] and any dispute with respect to this guarantee shall be resolved exclusively by the competent nt , authorities in the [specify the relevant country] and according to [specify applicable law]. The Bank me Authorized signatories   cu Do le mp Sa thegpsc.org 66  rafting note: Drafting D note: to be adapted depending on the | obligations to be The World Bank performed by the Service Provider under the Project. Module 11 : Schedule 15 - Lender’s Direct Agreement Key Principles 63 Sample Public-Private Partnership Agreement Schedule 15 - Lender’s Direct Agreement Key Principles The Lenders’ Direct Agreement shall be drafted on terms that are customarily provided in such agreements in use in the international project finance market and shall include, among others, the following provisions: 1. GENERAL SUPPORT  The [Government and the] 67 Contracting Authority (the Public Entities) shall reiterate their support to the PPP Project and undertake to perform their obligations under this Agreement and any Government guarantee (the PPP Documents) as applicable. te 2. CONSENT TO SECURITY ria  Each Public Entity shall acknowledge and consent to the security to be listed in the Lenders’ Direct Agreement over any PPP Document granted to Lenders. rop 3. CURE RIGHTS  A suspension period of [120] days starting on the date on which the Finance Parties receive a default notice (the Default Notice) from a Public Entity notifying that a default has occurred under pp a PPP Document (the Suspension Period) shall apply during which the Lenders and the Service Provider may cure any such default. During the Suspension Period, no Public Entity shall take any A action against or with respect to the Service Provider or any of its assets. 4. STEP IN RIGHTS as  During a Suspension Period or if an event of default has occurred under the Lenders Documents and is continuing (the Financing EoD Period), the Lenders may appoint an additional obligor to step-in and act with the Service Provider to cure the default as applicable and, if applicable, step t ap out again. The identity of the additional obligor will be subject to objective criteria to be agreed. Where step-in rights have been exercised, an extended cure period of [210] days shall apply starting on the date on which the Lenders receive a Default Notice (and other than in relation to Ad default for outstanding amounts due and payable to the Public Entities at the appointment date which shall be paid within 30 days after such date). nt , 5. SUBSTITUTION RIGHTS  During a Suspension Period or a Financing EoD Period, the Lenders may appoint a substitute operator, possessing or having available to it under contract the technical and financial capacity me required to build and/or operate (as applicable) the PPP Project, who may assume (by novation or otherwise) the rights and obligations of the Service Provider under the PPP Documents. Where substitution rights have been exercised, an extended cure period of [210] days starting on the date cu on which the Lenders receive a Default Notice (and other than in relation to default for outstanding amounts due and payable to the Public Entities at the transfer date which shall be paid within 60 Do days after such date). 6. INFORMATION NOTICES  The Lenders shall be entitled to (i) certain information relating to any PPP Document as requested le by Lenders during a Financing EoD Period, and (ii) copies of various notices given to the Service Operator and details of related unperformed liabilities, in particular, the right to be informed of any mp default by the Service Provider. 7. PAYMENTS AND OTHER RIGHTS Sa  The Public Entities agree to make payments owing to the Service Provider to specified accounts or, in the event of a default under the Lenders Documents, in the manner specified by the Lenders. 8. SET-OFF  All payments are to be made free of set-off or deductions except that, in effecting payments to the Service Provider, the Contracting Authority shall have a right of set-off for mature amounts due and owing to the Contracting Authority by the Service Provider under the Agreement. 67  elete if no government D guarantee is issued. Module 11 : Schedule 15 - Lender’s Direct Agreement Key Principles 64 Sample Public-Private Partnership Agreement 9. REPRESENTATION  The representation and warranties made by each Public Entity shall include the lawful execution by the relevant Public Entity of the Lenders’ Direct Agreement and the validity, enforceability, and lawful execution of each PPP Document. 10. SECURITY AND RELATED MATTERS  The Public Entities shall undertake (i) not to terminate any PPP Document or the Service Provider’s rights thereunder by reason of Lenders’ enforcement of security over such documents and rights, and (ii) consent to the change in control of the Service Provider through Lenders’ enforcement of te their security. ria 11. CERTAIN CONFIRMATIONS AND GENERAL ASSURANCES  The Public Entities shall make the confirmations required with respect to any PPP Document as agreed with Lenders and provide general assurances with respect to Project and its assets and, rop including in the event a PPP Document is terminated or expires. 12. GOVERNING LAW AND DISPUTE RESOLUTION pp  The Lenders’ Direct Agreement shall be governed by [specify the Country law] Law and provide for international arbitration as dispute resolution forum. A 13. BENEFICIARIES, TERM AND MISCELLANEOUS  The Lenders’ Direct Agreement shall contain miscellaneous customary provisions satisfactory to the as Lenders, including in relation to the beneficiaries, language, notices, and liability of, or in connection with, the Lenders’ Direct Agreement. t ap Ad nt , me cu Do le mp Sa thegpsc.org | The World Bank CONTRACT MANAGEMENT Municipal 12 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 Contract Management Plan 03 and Organizational Approach 3.0 Contract Management over the 04 4.0 Management of Contract 08 PPP Project Life Cycle Variations 3.1 Pre-Construction Stage 04 3.2 Construction Stage 05 3.3 Operations Stage 05 3.4 Handback Stage 06 5.0 Management of 09 6.0 List of References 10 Contingencies 5.1 Change in Law 09 5.2 Force Majeure Events 09 5.3 Contract Termination 09 Module 12 : Purpose of this Module 2 Contract Management 1.0 Purpose of this Module This module provides guidance on contract European PPP Expertise Centre. 2014. Managing •  management over the PPP project life cycle— PPPs during Their Contract Life, Guidance for what activities and risks should be monitored Sound Management. https://ppp.worldbank.org/ and managed during various stages of project public-private-partnership/library/managingppps- implementation. There is a tendency in PPP projects during-their-contract-life-guidance- to focus efforts on the procurement process, award, soundmanagement. and financial close. However, the real work starts during implementation, when the parties must Dombkins, David. 2019. United Nations. Public •  deliver on their obligations. The municipality has Private Partnership Contract Management a critical role to play during implementation. This Manual. https://www.unece.org/info/ece- module provides guidance on how the municipality homepage.html. can manage implementation of the PPP to improve the likelihood of success. Ministry of Finance of India. 2015. Guidelines •  for Post- Award Contract Management for PPP For further discussion of PPP contract Concessions. https://www.pppinindia.gov.in/ management, see: documents/20181/33749/Guidelines+on+Post+A ward+Contract+Management+of+PPP+Concessi World Bank. n.d. “Managing PPP Contracts”. PPP •  ons/75c24213-59c6-44df-a874-8485066ef97a. Reference Guide 3.0. Accessed July 19, 2019. https://pppknowledgelab.org/guide/sections/73- • 4ps. 2007. A Guide to Contract Management for managing-ppp-contracts. PFI and PPP Projects. London: Public-Private Partnerships Programme. http://docplayer. Global Infrastructure Hub. 2018b. “Disputes”. •  net/9794015-A-guide-to-contract-management- PPP Contract Management Report. https:// for-pfi-and-ppp-projects.html. managingppp.gihub.org/report/disputes/. thegpsc.org | The World Bank Module 12 : Contract Management Plan and Organizational Approach 3 Contract Management 2.0 Contract Management Plan and Organizational Approach Establishing the PPP CMU The CMU is responsible for monitoring financial, legal, consumer service or other areas performance, ensuring that the parties comply of performance. with the terms and conditions of the PPP contract and that specific changes, such as adjustments CMUs need to gather specific data and information in tariffs or prices, are properly analyzed and on the actual level of performance being delivered implemented. Key decisions about whether or by the PSP. Examples of some of the kinds of by how much tariffs and prices should be adjusted performance data gathered by CMU staff include are generally contained within specific formulas the following: in the PPP contract. The volume of services being provided or volume •  of end users being served. The municipality must design the PPP project’s The percentage of time that the project is •  performance monitoring plan. The staffing available for users. and operation of the CMU is the institutional The proven ability of a new project or service, •  responsibility of the municipality. The municipality through commissioning tests, to operate at its must ensure continuity of knowledge and key staff intended and contracted capacity. and plan for staff turnover. The number of proven and justified complaints •  received from end users for inadequate service. PPP CMUs require capable staff, adequate information technology systems, and the budget CMUs ensure that the contract’s key payment resources needed to gather and verify technical, formulas are implemented. operational, financial, and legal performance data, in particular the following: The CMU should be in place before the PPP • Gathering and verifying data on the technical contract is signed, to allow the CMU to understand performance of a PPP, as specified by the key the formulation of the project and enable it to start performance indicators and ‘outputs’ required by implementation processes as soon as possible. It the PPP agreement. is easy to delay setting up the CMU in the frenzy • Gathering and verifying financial and cost leading up to financial close. performance data of PPP projects. • Monitoring and ensuring compliance with and The CMU will need to establish balance, accessing enforcement of the legal terms and conditions of enough information to ensure the project is well the PPP agreement. implemented without impeding the ability of the PSP • Coordinating with other relevant compliance to perform its obligations and in view of the limited bodies and regulators or outside monitoring capacity of the CMU. 1  ee: European PPP S Expertise Centre. specialists, such as specialized outside lawyers, 2014. Managing PPPs engineers, environmental specialists, or other A contract management manual1 will cover all during Their Contract experts retained to advise on specific PPP relevant topics and provide a guide to the CMU Life, Guidance for Sound Management. performance issues. staff to ensure that key issues are addressed on https://ppp.worldbank. time. It will also help integrate CMU activities with org/public-private- For smaller, uncomplicated PPPs, the CMU could those of other municipal staff in related areas. partnership/library/ managingppps- consist of just a single individual. A single contract Constant communication is key—with municipal during-their-contract- management officer would usually be supported by staff, the PSP, and any PPP unit or national life-guidance- qualified, part-time, outside specialists, as needed, authority—to ensure sharing of lessons learned soundmanagement (providing an outline at to address specific technical, legal, or other and early identification and management of conflict. page 30 for the possible performance issues. For larger and more complex content of a contract PPPs, a CMU often requires a team of different management manual). specialists responsible for monitoring technical, Module 12 : Contract Management over the PPP Project Life Cycle 4 Contract Management 3.0 Contract Management over the PPP Project Life Cycle This section describes activities undertaken by the municipality and the PSP and project risks to be monitored and managed across different implementation stages of the PPP project.2 3.1 Pre-Construction Stage During pre-construction, the CMU ensures that Table 1 lists the activities of each party in the PPP the municipality and the PSP comply with their agreement during pre-construction that need contractual commitments. to be monitored: Table 1: Compliance Monitoring Aspect Activities 3 Ensuring compliance by • Handover of the project site and access to the project site within the agreed schedule. municipality • Approvals, authorizations, and permits that are the responsibility of the municipality. • Review of technical designs. • Delivery of associated infrastructure to be delivered by the municipality. Monitoring compliance • Preparation and submission of detailed designs. by the PSP All approvals and permits (other than those which are the responsibility •  of the municipality). • Arrangement of the financial resources needed for the project (financial close). • Project insurance. • Arrangement of utilities (electricity connection and construction water supply). • Submission of performance/security bonds and guarantees. • Bank account and escrow arrangements. 2  ee: European PPP S Expertise Centre. 2014. Managing PPPs during Their Contract The CMU should be apprised of project financing These could include the following: Life, Guidance for negotiations to ensure that the PSP complies with Lack of prior experience in raising project-backed •  Sound Management. its obligations. The municipality should stand ready financing. https://ppp.worldbank. org/public-private- to respond to requests from lenders for additional The project is not sufficiently financially robust or •  partnership/library/ information. Typically, lenders will hire their own is otherwise too risky for lenders to finance. managingppps- advisers and sector experts to verify all The financial market has shifted in appetite or •  during-their-contract- life-guidance- background information. available terms soundmanagement One of the private investors dropped out of the •  (providing a checklist Failure to reach financial closure is a costly consortium. of tasks involved in the operational management experience for all parties. While private bidders of the different phases risk losing their performance bond as well as The CMU will require regular progress reports of a PPP project after writing off the value of several years of preparation from the PSP. These reports help the CMU contract signature). and development costs, the municipality faces identify challenges early. The CMU should be thegpsc.org 3  The responsibilities mentioned in this table significant new delays in the provision of important proactive in working with the PSP to resolve and in succeeding tables new public facilities and services. Even lenders risk challenges and identify innovative methods of relate to typical PPP projects and may vary losing the value of their own time and expenses overcoming obstacles. | invested in due diligence and negotiating with The World Bank from project to project. investors. The municipality should carefully evaluate the reasons why financial closure was not reached. Module 12 : Contract Management over the PPP Project Life Cycle 5 Contract Management 3.2 Construction Stage At this stage, the key objective is to ensure that the approved design. The activities to be monitored construction timelines/deadlines are met based on for this stage are described in Table 2. Table 2: Verifying Compliance during Construction Aspect Activities Ensuring compliance of municipality’s responsibilities • Payment of capital grants based on the contractual milestones. • Access to the site. In-kind contributions, including materials, equipment, •  or existing facilities. • Approvals of tests and commissioning. Monitoring compliance by the PSP • Reports and as-built drawings. • Construction progress against milestones. • Construction implementation against approved designs. • Independent engineer (if any) reports. • Testing and results. The main risks to be monitored and managed at this • Stakeholder consultation; stage include the risk that: • Delivery of interconnection facilities, such as • Approved design of the project is defective; approach roads to the site or electricity, water, • Actual cost of construction is significantly higher and sewerage interconnections, completed than envisaged, creating a likelihood of default; on schedule; • The completion will be delayed beyond the • Delivery of detailed designs and as-built targeted schedule; drawings reviewed by the municipality; • The social or environmental impacts of the • Financial close, including all conditions project construction are more than expected and/ precedent to effectiveness of finance or mitigation strategy is not effective; and agreements; There is widespread public opposition to •  • Delivery of performance bond (or conversion of the project. bid bond to performance bond); • Time for completion and milestones; During the construction stage, the CMU will monitor • Testing of works and materials; and key performance indicators including: • Commissioning of works and readiness for Obtaining required permits and licenses •  commercial operation. (environmental permits, zoning permits, building permits, import approvals, and so on), on schedule; 3.3 Operations Stage This stage includes the commissioning of the of the municipality and the PSP meets the expected PPP project until the expiry of contract or its early standards, and the users’ rights and interests are termination, as the case maybe. The CMU’s focus protected. The activities of the contracting parties during this stage is to ensure that the performance during the operations stage are listed in Table 3. Table 3: Verifying Compliance during Operation Aspect Responsibilities Ensuring compliance of municipality’s responsibilities • Payment of operation period grants, if any. • Compliance with commitments of the municipality, such as o Not allowing the development of competing facilities during the project tenure. Coordinating with other government departments for o  connecting infrastructure facilities and services. • Continuity of services. Module 12 : Contract Management over the PPP Project Life Cycle 6 Contract Management Aspect Responsibilities Monitoring compliance by the PSP • Performance against defined output standards. • Project financials to ensure no looming default. • User experience/grievances. • Review of the maintenance activities. • Planned maintenance and replacement activities. • Usage and performance data and revenues reported by the PSP. • Payment of revenue share (if any). Penalty regimes for PSP failure to achieve The project will not be able to service the project •  performance targets are best used as an incentive debt (including working with the lenders to help to improve performance rather than a punishment. address any potential events of default under the The risks that need to be monitored and managed financing agreements). during operations include the risk that: • The actual demand of the project facilities/ During the operation stage, the CMU will monitor services is higher or lower than expected; key performance indicators including: • The actual revenues of the project are lower/ • Maintaining of licenses and permits; higher than expected; • Performance testing of completed works; • The revenue leakage is higher than expected • Monitoring of service and (for example, where tolls are charged but do not performance standards; reach the project accounts or where bill collection •  Periodic testing of the works, to ensure quality falls behind expectations); and maintenance standards; • The operating cost for the project is higher or • Reporting by the PSP to the municipality; lower than expected; • Whether demand is meeting forecasts; • The project may not be able to deliver the • Stakeholder engagement; expected performance; • Monitoring of scope changes; • The cost of financing during the operations • Condition of assets against handback standards; period is higher than expected (this may or may • Implementation of the maintenance regime; not be available to the CMU, but the CMU should • Tariff levels and review; be aware of the market conditions and work with •  Changes in laws and regulations and any the PSP to identify any forthcoming challenges); implications for the project. • Conflicts are not identified and managed early and therefore become disputes; and 3.4 Handback Stage Project facilities are handed back to the municipality stage, the key focus is to ensure that project (or to a new PSP) at the expiry of the contract or facilities are handed over in a pre-agreed condition at termination of the contract (in conformity with and in a way consistent with the PPP agreement, the terms of the PPP agreement). At the handover including those listed in Table 4. Table 4: Verifying Compliance during Handback Aspect Responsibilities Ensuring compliance of municipality’s responsibilities  andover payments, if required, in particular for project • H equipment, spares, or materials that the municipality wants to purchase. • Taking over possession of the project facilities. • Ensuring that there is no disruption in service during the handover. • Initiating the bid process to appoint a new PSP (optional). thegpsc.org Monitoring compliance by the PSP • Performance against defined output standards. • Project financials to ensure no looming default. • User experience/grievances. | The World Bank • Review of the maintenance activities. • Planned maintenance and replacement activities. • Usage and performance data and revenues reported by the PSP. • Payment of revenue share (if any). Module 12 : Contract Management over the PPP Project Life Cycle 7 Contract Management The key risks that need to be monitored and  he municipality negotiates with the current (3) T managed at this stage include the risk that: PSP to extend the contract, including The project facilities at the end of the contract •  new investments if needed: This can period do not meet the prescribed condition; create a moral hazard for the municipality The PSP will need to spend a higher-than- •  where a reasonable arrangement cannot be expected amount to bring the project facilities up achieved; the municipality may want to use this to the required operating standards; and approach only where an open competition is The service is disrupted during the handover. •  unsuccessful.  he PSP maintains the assets and the (4) T As the project approaches handover stage, the municipality allows the contract to expire: municipality has four main options: Most infrastructure assets are meant to deliver services over the long term, well beyond the  he municipality takes over delivery of the (1) T end of the project, but some assets may be project services: The municipality will need short-term in nature, for example information, to verify that the facilities are in good condition communication and technology, and therefore and assess how much additional investment will after the end of the period, the municipality may be needed to bring the facilities up to current prefer to leave the assets in the hands of the requirements and to deliver services PSP to manage their remediation. to standard. (2)  The municipality conducts an open The municipality should conduct a new feasibility competitive tender for a new PSP to deliver analysis for the project to systematically evaluate the services: The municipality will need to which option provides the best value for the gather data on the project and the facilities to public’s money. inform the bidding process. Module 12 : Management of Contract Variations 8 Contract Management 4.0 Management of Contract Variations The municipality or PSP submits a variation risk-sharing between the parties. Below are some proposal describing the nature of the variation indicative procedures that can serve as a guide in and an assessment of the technical, financial, proceeding with these variations: contractual, and time implications of the proposed  ariations involving no additional costs: If the (1) V variation. Payment for the variation can be made variation will result in a reduction in costs, by adjustments to tariffs, availability payments, the parties need to agree on a distribution of government support payments, or other payments the savings. For variations proposed by the contemplated in the PPP agreement. The parties municipality net savings should accrue to the discuss and agree variations in accordance with municipality, while savings from a variation the PPP agreement. A variation or amendment proposed by the PSP should be divided of the PPP agreement may respond to changes between the municipality and the PSP. in circumstances not contemplated in the PPP (2) Small works variations: The PSP should provide agreement, or where the original project design is a schedule of rates for small works each year, flawed. The CMU will need to assess any proposed or the parties can agree on such a schedule as amendment or variation to assess whether it and when needed. Small works can be priced complies with the agreement, and whether it will according to such a schedule. provide (1) VFM, (2) affordability, and (3) appropriate thegpsc.org | The World Bank Module 12 : Management of Contingencies 9 Contract Management 5.0 Management of Contingencies PPP contracts generally provide for relief for the PSP (2) force majeure events, and (3) termination.4 for specified contingency events: (1) change in law, 5.1 Change in Law A change in law event is generally defined as a the change in law event from the following material change in the legal or regulatory framework perspective: that governs the project and has a material impact Does the event meet the defined criteria of o  on the parties. The management of change in law change in law? involves the following: o What is the impact of the change in law event? Definition of change in law: Typically as set out •  What compensation/relief does the PPP o  in the PPP agreement. agreement award for the change in law event? • Notice of change in law: The party that is affected by the change in law is expected Based on the review, the CMU recommends a to issue a written notice to the other party solution. Based on CMU advice, the municipality communicating that a change in law has decides whether to recognize the change in law occurred and also estimating the financial impact event and compensate the PSP. External experts that the change in law event may cause. may likewise be consulted. Where the parties • Approval of change in law: The CMU must, cannot agree, this issue will be submitted to the on receipt of a change in law notice, review disputes review process. 5.2 Force Majeure Events Force majeure events are generally defined as End of force majeure event: When the party •  unforeseen circumstances that materially affect the affected by the force majeure event is aware that ability of the contracting parties to perform their the event has concluded, it should send a notice contractual responsibilities. The management of the to the other party. force majeure regime will involve the following: • Notice of force majeure event: The CMU advises on the liabilities of the The party becoming aware of the force majeure municipality for compensation payable to the event prepares a written notice describing the counterparty (if applicable), according to the PPP event and the likely impact on the project. The agreement. The force majeure event can trigger CMU will review the notice to ensure that the termination under certain circumstances. event in question meets the criteria of a force majeure event. 5.3 Contract Termination Contract termination refers to the severing of the f the reasons for termination are valid (a) I contractual relationship before the term of the PPP and eligible under the terms of the PPP agreement expires. There are several situations: agreement; and where termination can be initiated by either party. If there are any alternatives to termination. (b)  4  ee the checklist of S issues to manage in a f the termination is initiated by the municipality, (1) I dispute negotiation in: the CMU will provide a detailed notice, including The CMU will work with the PSP to find an agreed Global Infrastructure supporting evidence and will be issued to solution, and will advise the municipality on a Hub. 2018b. “Disputes”. PPP Contract the PSP. response to the notice. Management Report. If the termination is initiated by the PSP, the (2)  https://managingppp. contract manager will review the termination The municipality will determine the likely value gihub.org/report/ disputes/ notice to assess of the termination compensation, and will seek sources to finance such payments. Module 12 : List of References 10 Contract Management 6.0 List of References 4ps. 2007. A Guide to Contract Management for PFI and PPP Projects. London: Public-Private Partnerships Programme. http://docplayer. net/9794015-A-guide-to-contract-management-for- pfi-and-ppp-projects.html. Dombkins, David. 2019. United Nations. Public Private Partnership Contract Management Manual. https://www.unece.org/info/ece-homepage.html. European PPP Expertise Centre. 2014. Managing PPPs during Their Contract Life, Guidance for Sound Management. https://ppp. worldbank.org/public-private-partnership/library/ managingppps-during-their-contract-life-guidance- soundmanagement. Global Infrastructure Hub. 2018b. PPP Contract Management Report. https://managingppp.gihub. org/report/. Ministry of Finance of India. 2015. Guidelines for Post- Award Contract Management for PPP Concessions. https://www.pppinindia.gov.in/ documents/20181/33749/Guidelines+on+Post+Awa rd+Contract+Management+of+PPP+Concessions/7 5c24213-59c6-44df-a874-8485066ef97a. World Bank. n.d. “Managing PPP Contracts”. PPP Reference Guide 3.0. Accessed July 19, 2019. https://pppknowledgelab.org/guide/sections/73- managing-ppp-contracts. thegpsc.org | The World Bank Module 12 : 12 Contract Management thegpsc.org | The World Bank CAPACITY BUILDING Municipal 13 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 PPP Capacity Requirements 03 2.1 PPP Capacity Requirements in 3 Project Execution  apacity Requirements in Municipal 2.2 C 5 Decision Making on PPPs 3.0 PPP Capacity Development 6 Module 13 : Purpose of this Module 2 Capacity Building 1.0 Purpose of this Module This module provides guidance on the skills that municipalities should possess to sustainably develop, implement, and manage municipal PPP projects. thegpsc.org | The World Bank Module 13 : PPP Capacity Requirements 3 Capacity Building 2.0 PPP Capacity Requirements The municipality is not required to possess all the the procurement and management of consultants, detailed PPP skills and expertise on its own to and the understanding of the outputs of the pursue PPP projects. Instead, municipalities should consultants for decision making. be supported by experienced PPP consultants and advisers. While PPP projects require different key approaches to service delivery (for example, output-based Consultants are more often available to contracting, private finance, performance-related municipalities for the development of feasibility remuneration, longer duration, and risk transfer),2 studies and transaction advice.1 This means the municipality’s own experience and capacities that municipality staff will likely be on their own in the sector remain applicable and important in a during the early phases of the PPP project cycle municipal PPP. (recognizing and identifying potential PPP projects), 2.1 PPP Capacity Requirements in Project Execution In table 1, PPP project management functions project management. A municipality may also opt during the development and implementation of to assign individual staff to further ‘specialize’ in a municipal PPP projects are matched with the particular skill (for example, PPP financial modelling, required PPP skills and capacities to perform economic cost-benefit analysis, and so on). such roles, identifying those skills that may be different from publicly procured infrastructure Table 1: Required Project Execution Capacities and Skills Phase 1: Inception Roles Required Capacity Required Knowledge/Skills dentification of potential • I dentify the long-term • I • Understand basic concepts and requirements of PPP. PPP projects to be infrastructure needs in the Knowledge about the infrastructure sector, economic •  subjected to screening. municipality and develop viability, environmental and social issues. Screening of potential •  an annual/multi-annual Understand advanced concepts about PPP •  municipal PPP projects. master plan to address requirements and options. Preparation of project •  such needs. Knowledge of concepts and models of private •  concept notes. Recognize and assess, at •  involvement in the development and management of 1  ee Module 5: Managing S an early phase of the project public infrastructure. Consultants and Module cycle, characteristics that • Ability to implement PPP screening methodologies. 6: Sample Consultants determine the potential Advanced knowledge about the infrastructure sector, •  Terms of Reference. viability and desirability of a economic viability, environmental and social issues. 2  See Municipal project as a PPP. Ability to translate and summarize specialized PPP and •  PPP Framework infrastructure issues and analyses into clear, - Guidance Note. non-technical reports for senior decision makers. Module 13 : PPP Capacity Requirements 4 Capacity Building Phase 2: Development and Approval Roles Required Capacity Required Knowledge/Skills  rocurement of specialist • P  etermine the required • D  echnical knowledge about the infrastructure for which • T PPP consultants. scope and depth of the the municipality is responsible. PPP feasibility study3 Understand the requirement of local procurement laws •  (and transaction advisory and regulations (for consulting services). support) and come up with a sufficient cost and resource estimate. Translate the above in clear •  terms of references for the specialist consultants.  versight and management • O  eview, monitor, and • R  nderstand advanced PPP concepts about PPP • U of specialist PPP challenge findings and feasibility, especially affordability and bankability. consultants.4 recommendations of all Understand key requirements of output standards •   eview of feasibility study • R PPP consultants so that the versus input specifications in the context of PPPs. documents, findings and feasibility study is coherent, Technical knowledge about the infrastructure for which •  recommendations. completed on time, and the municipality is responsible. Recommendation of •  according to terms of Intermediate-level knowledge on the following •  preferred PPP project reference. (that is, enough to comprehend and discuss the option, including the Ability to interpret and •  methodologies utilized in the PPP feasibility study as preferred procurement question the findings of well as interpret its findings): option (PPP or non-PPP). the PPP feasibility study to o Whole life cycle costing of infrastructure determine the best technical o VFM analysis of PPP projects and procurement option. o PPP financial modelling o Economic cost-benefit analysis o Demand analysis and forecasting o Risk analysis, mitigation, and management Ability to translate and summarize different specialized •  PPP topics and issues into clear, non-technical reports for senior decision makers. Phase 3: Procurement and Award Roles Required capacity (general) Required skills (detailed)  versight and management • O  eview, monitor, and • R  nderstand advanced PPP concepts about tendering • U of PPP transaction advisers. challenge the findings and procurement. Review of PPP tender •  and recommendations Understand VFM analysis requirements and issues of •  documents for procurement of transaction advisers PPP projects. of PPP project. so that all PPP tender Understand requirements of output-based standards •  documents and the for procurement of PPP contracts. draft PPP agreement are Understand requirements of local procurement laws •  coherent, completed on and regulations. time and according to terms of reference, and consistent with municipal objectives. Ability to understand •  and review PPP tender documents specifically the qualification requirements, technical output specifications, financial bid parameters, and draft PPP agreement.  onduct of procurement • C  bility to efficiently manage • A  bility to conduct bid consultations and negotiations • A procedure, leading to the procurement procedure with third parties. selection of private partner. in accordance with local Understand requirements of local procurement laws •  3  See Module 4: Supervision of winning •  legal requirements and fair and regulations. Feasibility Study. bidder’s compliance with competition. • Administrative law. 4  See Module 5: post-award requirements. Understand project financing and the likely •  thegpsc.org Managing Consultants. requirements of PPP financiers. | The World Bank Module 13 : PPP Capacity Requirements 5 Capacity Building Phase 4: Contract Management and Monitoring Roles Required capacity (general) Required skills (detailed)  verseeing of specialist • O  bility to update/review • A  nderstand advanced PPP concepts on requirements • U advisers designing the PPP the contract management for organizational design, technical performance, contract management plan. plan in accordance price/cost review, and legal management of PPP Review and finalization •  with the obligations and contracts. of the contract management responsibilities of the Understand requirements for drafting and reviewing •  plan. municipality indicated in PPP contracts. the provisions of the signed PPP agreement.  verseeing of contract • O  bility to monitor efficiently • A  erification of selected performance levels/events by • V management including and effectively the output- the PSP. monitoring of performance, based performance of Ability to calculate and assess any requests for •  managing communications, the PSP. adjustments to tariffs. payment management, Coordinate and manage •  Ability to coordinate the responses to any requests to •  handling of claims of any adjustments of tariffs. revise, update, or renegotiate PPP contracts. the PSP. Efficient processing of •  Implementation and management of long-term PPP •  Coordination and •  invoices and payments. contracts. management of periodic Ability to assess and verify •  • Government budgeting and accounting procedures. PPP project reporting. the validity of claims of the private partner. 2.2 Capacity Requirements in Municipal Decision Making on PPPs Decision makers in municipalities must possess and comprehensive risk allocation, termination intermediate-level understanding of the broad provisions, and output specifications. requirements of sustainable PPP preparation, Characteristics of PPP financial feasibility, (5)  implementation, and management, including affordability, and bankability.  he differences between conventional (1) T Competitive PPP procurement, and the benefits (6)  procurement and PPP. thereof. The driving factors of the costs and benefits (2)  Long-term PPP contract management and (7)  of PPP, resulting in an understanding of the performance monitoring.6 circumstances where PPP can, or cannot, create value for the municipality. The above enables decision makers to understand  he interests and concerns of all stakeholders (3) T the reports and recommendations prepared by the 5  ee Module 18: S Community Engagement to a PPP project, and the key role of municipal municipality’s staff, the consultants, and the tender and Module 19: Private leadership in managing and resolving committee, which will allow them to take informed, Sector Context. stakeholder issues.5 clear decisions about PPP projects review and 6  See Module 12: Contract Management.  ey PPP mechanisms, for example, output (4) K approval. specifications, payment mechanisms, clear Module 13 : PPP Capacity Development 6 Capacity Building 3.0 PPP Capacity Development There are different, complementary ways to develop already having implemented a similar project allows the needed PPP capacities and skills within the practical advice and sharing of the tender and municipality. The fastest way for the municipality to contract documents used in the successful project. develop capacity is by recruiting staff with previous The municipality may also want to send staff on a experience in the development and implementation temporary exchange to share PPP experience with of PPP projects, for instance, in national projects other agencies at the local or national levels. (possibly on a part-time basis, based on the volume of PPP projects or when the available resources do However, the most effective method for building not warrant a full-time appointment). capacity in the municipality is learning by doing. Staff working on projects will gain understanding In young PPP markets, nevertheless, such experts and insights. The staff of the municipality can may be difficult to find and are expensive. In learn from the feasibility study consultants and these cases, where temporary and specialized transaction advisers who are hired to assist in the advice is necessary to get the PPP project or development and implementation of PPP projects. program rolling, it can be even more useful to The contract with the feasibility study consultants hire a residential PPP adviser; a senior consultant and transaction advisers must prescribe frequent who advises the municipal administration on all interaction with the project manager or the members aspects of the establishment of the PPP program of the project team,8 permitting the latter to learn and the procurement of PPP projects (for instance, from the consultants. One may also include explicit development of manuals and procedures, knowledge transfer obligations in the consultancy screening of PPP projects, procurement of contract, for instance training on VFM analysis. consultants,7 financial analysis and VFM analysis, and recommendations to decision makers). The One useful component of PPP capacity residential adviser also trains selected municipal development is formal training, such as workshops staff members in the required PPP skills so that they and classroom learning. The text box below can later take up the municipal responsibilities in the presents tables of contents of training courses development and implementation of PPP projects. aimed at various levels of municipal officers and decision makers. Large municipalities with many Another cost-efficient way to supplement the PPP projects may organize their own training municipality’s capacity development is through program (conducted by externally procured 7 S  ee Module 5: Managing exchange of experience and model documents trainers). Municipalities may also want to send staff Consultants and Module 6: Sample Consultants with other municipalities or national agencies with to follow commercial courses, or to attend training Terms of References. previous experience in PPPs. For instance, if a programs organized by the central government or 8 See Module 6:  municipality is considering establishing a PPP by development partners (if available). Sample Consultant Terms or Reference. for water distribution, then an interview with the project manager in a neighboring municipality thegpsc.org | The World Bank Module 13 : Sample PPP Course Programs 7 Capacity Building Sample PPP Course Programs A. Foundation Courses 1. Executive  Seminar: PPPs for Municipal distinguish between different forms of PPP Senior Policy and Decision Makers Format: Purpose: Lectures, workshops, cases, exercises, Raise general awareness of PPP at senior and discussions municipal government level; introduce senior Participants: executives, policy makers, and decision makers Senior to mid-level municipal government staff to the range of issues involved in municipal involved in PPP project inception, development, PPPs; enable informed decision making on procurement, and monitoring PPP issues at the municipal level; and promote Content: support at senior level for PPPs. • Understanding definitions and concepts Format: around PPPs. Briefings, cases, and executive workshop Understanding the importance of having PPP •  discussion/round tables. legal frameworks in place. Participants: Assessing opportunities and risks of public •  Restricted, municipal government decision sector participation in PPPs. makers involved in PPP; senior staff involved in Assessing PPPs as a tool to meet •  supporting decision makers; and senior staff development objectives. involved in policy development • Assessing opportunities and risks of PPPs. Content: Understanding when PPP should be •  • Understanding definitions and concepts considered advantageous to the municipality, around PPPs. including how to assess VFM and how to use •  Creating PPP-enabling environment and PPP- cost-benefit analysis for PPP projects. readiness at the municipal level. Managing fiscal risk (for example, municipal •  •  Creating conditions for a mature municipal liabilities under the PPP agreement, PPP market. including guarantees). •  Supporting PPPs from a municipal Incentivizing promotion of PPP (for example, •  government’s perspective. tax benefits and mixed-use developments). •  Assessing opportunities and risks of PPPs. Recognizing the characteristics of a good PPP •  •  Understanding when PPP should be project from the investor’s perspective. considered advantageous to the municipality, Assessing the importance of transparency, •  including how to assess VFM and how to use public disclosure, and protection of cost-benefit analysis for PPP projects. confidential information. •  Managing fiscal risk (for example, municipal Assessing different PPP structures. •  liabilities under the PPP agreement, including Assessing revenue-sharing options, •  guarantees). opportunities, and risks. Understanding the PPP implementation and •  2. I ntroduction to Structuring, Procuring, and procurement process. Managing Municipal PPPs • Monitoring PPPs. Purpose: Evaluating and managing USPs/ •  Introduce basic PPP concepts; introduce direct negotiations. terminology and procedures; support Developing business cases: success and •  identification of PPP projects; include PPP failure stories. in investment/development planning; and Module 13 : Sample PPP Course Programs 8 Capacity Building B. Intermediate Courses 1.  PPP Procedures and Managing • Preparing PPP project legal and institutional the Consultant feasibility analysis. Purpose: • Preparing project environmental and social Introduce core parts of the PPP transaction impact assessments. process; ensure government staff have the • Identifying, analyzing, and mitigating PPP core skills required to lead a PPP through the project risks. implementation process and are able to identify • Developing the recommended PPP risk and procure the missing skills from external allocation structure. advisers • Designing tariffs adjustment mechanisms and Format: understanding internal rate of returns, price  Lectures, workshops, cases, exercises, and caps, and tariff regulation. discussions • Designing and writing the draft PPP agreement.  Participants: • Reviewing the final PPP feasibility analyses and Senior to mid-level municipal government staff approval/disapproval to proceed to tendering. involved in PPP project inception, development, • Developing business cases: success and and procurement failure stories. Content: • Preparing approval procedures for 3. P PP Procurement municipal PPPs. Purpose: •  Preparing terms of reference for the Ensure that municipal government staff has recruitment of the consultant. the skills required to effectively procure a PPP • Recruiting and managing a consultant. project • Managing PPP projects through their life cycle. Format: •  Developing business cases: success and Lectures, workshops, cases, exercises, and failure stories. discussions Participants: 2. P PP Project Selection and Development Senior to mid-level municipal government staff Purpose: involved in PPP project procurement  Ensure municipal government staff has the skills Content: required to develop a PPP from a project concept • Drafting RFQ documents for PPP projects. to a full-fledged feasible and bankable project •  Evaluating submitted PPP qualifications from Format: interested bidders. Lectures, workshops, cases, exercises, and • Drafting RFP documents for PPP projects. discussions Responding to bidders’ questions and •  Participants: completing modifications to final RFP. Senior to mid-level municipal government • Evaluating PPP technical bids. staff involved in PPP project inception and • Evaluating of PPP financial bids. development Managing the final negotiation of •  Content: PPP agreements. • Reviewing identified PPP candidate projects. • Designing and establishing the PPP CMU. • Screening and selecting suitable candidate Developing business cases: success and •  projects for PPP. failure stories. • Preparing project concept notes. •  Preparing the work plan for completing the  PP Contract Management 4. P PPP feasibility study. Purpose: •  Developing the PPP project’s required output Deepen contract management skills of municipal levels of service. government staff to enable them to efficiently •  Designing and managing the PPP project’s monitor PPP projects and manage contractual stakeholders consultation plan. relationships with the private sector partner • Economic appraisal of projects. Format: thegpsc.org •  Conducting PPP project affordability analysis Lectures, workshops, cases, exercises, and willingness to pay. and discussions •  Conducting project demand analysis, Participants: including market study. Senior to mid-level specialized municipal | The World Bank •  Conducting project technical feasibility analysis. government staff involved in PPP •  Developing the PPP project financial project monitoring feasibility analysis. Module 13 : Sample PPP Course Programs 9 Capacity Building Content: • Understanding refinancing. • Designing and establishing the contract Managing contractual breaches, •  management plan. consequences, and remedies. • Establishing CMUs—powers, authority, Carrying out unilateral termination or •  functions, duties, training, staffing, turnover, early termination. and funding. • Understanding and using step-in rights. • Ensuring continuity of knowledge and Arbitrating and resolving disputes through •  capabilities between PPP projects or programs. amicable resolution. • Conducting performance monitoring. Engaging project stakeholders by •  • Ensuring compliance with PPP agreement. the municipality. • Evaluating reporting mechanisms. Developing business cases: success and •  • Designing intervention mechanisms including failure stories. economic equilibrium. • Hiring an independent engineer. • Understanding renegotiation options and techniques. Module 13 : 10 Capacity Building thegpsc.org | The World Bank STRATEGY COMMUNICATION Municipal 14 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of the Module 02  PP Communication 2.0 P 03 Strategy Framework 2.1 PPP Stakeholder Engagement 04 2.2 Stakeholder Identification 05 Framing the Message to Various 2.3  08 Stakeholder Groups Communication Instruments 2.4  10  ime Frame 2.5 T 10 3.0 Communication Plan 12 4.0 List of References 14 Module 14 : Purpose of the Module 2 Communication Strategy 1.0 Purpose of the Module This module provides guidance on the preparation of a communication strategy for the implementation of municipal-level PPPs. thegpsc.org | The World Bank Module 14 : PPP Communication Strategy Framework 3 Communication Strategy 2.0 PPP Communication Strategy Framework A communication strategy conveys to stakeholders identify conflicts early, manage risks, and increase the objectives, roles, safeguards, and key the chance of success of the project. Stakeholder performance targets of the project. Devising and communication and involvement is useful to gauge implementing a sound communication plan can public support for the project, and to identify project help prevent critical misunderstandings as well as issues as early as possible. ensure mechanisms to better address the specific needs and concerns of each stakeholder within the The key elements of a communication strategy for PPP project structure. the implementation of municipal PPPs involves a number of key considerations: At the same time, since PPPs are long-term contracts, communicating with stakeholders helps Figure 1: Communication Strategy Obtain wider support for the municipal PPP project and gather useful data from WHY? stakeholders to reduce risk and increase the chance of success of the PPP project Identify stakeholders who Engage stakeholders WHEN? WHO? will be directly affected by at the earliest time the PPP project as well as possible to better Communication those that have the capacity manage opposition to influence its outcome and garner broader Strategy positively or negatively public support for the Framework municipal PPP project Determine what communication HOW? WHAT? Plan and carefully articulate tools and instruments would the message to be conveyed to most effectively convey the stakeholders in order to cultivate desired message to the good relations and positively identified stakeholder group influence the preception on the project and PPP in general The sections below elaborate on these elements. Module 14 : PPP Communication Strategy Framework 4 Communication Strategy 2.1 PPP Stakeholder Engagement PPP stakeholder engagement helps ensure that community leaders, regulators, those who will be PPP projects are prepared and implemented in inconvenienced during construction of the project an open and transparent manner by including or who will be displaced by the project. Broadly, the the participation of key stakeholders such as the community can be classified into two groups: end users, labor, private sector, public sector, nongovernmental organizations (NGOs), civil 1. User community: The end users or society, and other relevant sectors.1 customers of the infrastructure and/or services provided, for example, the people The purpose of designing and implementing a who use the highway; and consumers of stakeholders’ engagement plan is to determine if the electricity being produced. While most there are significant policy concerns, issues, or projects prioritize the interests of the direct even opposition to a potential PPP project that need purchaser of the services, the ultimate user to be addressed and resolved before the project is often insufficiently engaged in project can be considered viable as a PPP. International development or implementation. experience has shown that PPP projects have the 2. Affected community: For example, best chance of being sustainable when they can communities to be resettled as their land address the important views of end users and other would be used for the construction of the affected stakeholder groups within the project’s highway; those living near the site for a structure (see project summary No. 91 - North new coal-fired power station; potential Toronto Collegiate Institute, Canada). PPP projects employees of the companies being that generate vocal public opposition and whose expanded, reformed, or replaced; and local impacts on stakeholders do not get satisfactorily residents who will not benefit from the new addressed, often risk being stopped, delayed, and services or local government officials. especially cancelled at significant cost (see project summary No. 24 - Udaipur Waste Water Treatment When: Stakeholder engagement should occur at Plant, India each stage of a project, starting from the feasibility and concept stages right through to the operational Infrastructure projects by design have multiple phase. Engaging with key stakeholders from the stakeholders and managing all of them successfully early stages of a project assists in establishing is critical to the viability of the project. The failure to strong relationships, ensuring project designs fit engage with the local community during PPP projects with local community needs and identifying key has undermined many projects, an example might be risks that those stakeholders may know best. the Cochabamba water project, where water tariffs were increased several-fold on poor consumers Why : The decision to engage with the local without proper community engagement.2 community is not just altruistic. Effective community engagement can help projects avoid cost and time 1 See Module 18:  Community engagement must be strategic. Poorly overruns, enhance operational efficiencies, and Community Engagement. 2  Special Unit for South- managed engagement can create delay, increase mitigate other risks. A project fully engaged with South Cooperation. cost, and complicate projects. Many legal systems stakeholders and the local community is more 2012. Cochabamba, allow interested parties to challenge a project, likely to survive changes in government and Bolivia, Urban Water Expansion - Case Study. and potentially request an injunction until the courts policy. An example would be a water project in https://www.esc-pau. can review the claim.3 This can create significant Rwanda being developed by the private operator fr/ppp/documents/ risk for investors and delay for projects. Finding Aquavirunga with help from Smart Development featured_projects/ bolivia.pdf. the right balance of engagement is a difficult but Works—an NGO engaged with consumers in 3  This module seeks to essential task. several districts. The campaign increased the provide a framework community’s understanding and acceptance of for engaging with the local community when Who: Establishing dialogue and building trust with water payments and improved the relationship designing, developing, a community can be a difficult task. One must first between consumers and community leaders. From and implementing a identify the community who will be affected by or 2009 to 2011, water loss reduced from 69 percent PPP project (‘community engagement’). This is have an influence over the project.4 A community to 49 percent and the operational cost coverage thegpsc.org specifically different defined too narrowly misses out important inputs ratio increased to 91 percent. About 75 percent from the stakeholder and buy-in and that defined too broadly loses of water access points were managed by water consultation and other processes designed to voice and relevance. For an infrastructure project, user committees and 600 water user committee engage with affected the community is anyone who will be affected by members were trained in basic maintenance, | persons for resettlement The World Bank or have an influence over the project. This could conflict resolution, and financial management. where land is acquired by the government. be people receiving services from the project, 4 See Module 18:  those near the project but not receiving services, Community Engagement. Module 14 : PPP Communication Strategy Framework 5 Communication Strategy 2.2 Stakeholder Identification Figure 2 provides a quick overview of stakeholder identification. Figure 2: Stakeholder Identification Understanding Identification the motivations and Assessment of the of all possible incentives of each potential impact direct and Prioritization stakeholder group, of implementing indirect of stakeholder as well as their the municipal PPP stakeholders of relevance and issues perspectives on project on each the municipal the municipal PPP stakeholder group PPP project project Table 1 presents an overview of the potential create a stakeholder map to ensure it has identified stakeholders in a municipal PPP project, their likely all key stakeholders and has assessed their concerns and interests. The municipality will want to respective interests and concerns. Table 1: Stakeholders Stakeholder Group Probable Interests and Concerns in the PPP Project Residential, commercial, and industrial Interests • Improved, more accessible, and reliable levels of service users (large, medium and small), • Lower prices consumer associations (private and commercial) Concerns • Prices increasing • Service quality reductions over time Changing demands for services over time and ability of PSP to •  adjust service delivery • Lack of influence of consumers over service delivery Local landowners (in and around the Interests • Increasing land values project site) and affected persons • New economic opportunities • Compensation for land or lost land value Concerns • Concerns about being forced to sell land • Concerns about limitations of use of land • Concern about value of land decrease Current providers of services within the Interests New business opportunities with the new PPP, such as •  sector (for example, local water vendors providing services or supplies to the new PPP company in the case of a water treatment PPP, or • Jobs with the PPP waste pickers in the case of a solid waste Safer working conditions (for example, where waste pickers •  management PPP) will be working in a well-organized solid waste management framework) • Compensation for lost livelihood Concerns • Reduced demand for their services Increased cost of supplies (for example, where water vendors •  buy bulk water from the system and prices are likely to go up under the PPP) Module 14 : PPP Communication Strategy Framework 6 Communication Strategy Stakeholder Group Probable Interests and Concerns in the PPP Project Labor groups Interests New employment opportunities with the new PPP company, its •  suppliers and vendors • Better employment conditions under PPP • Compensation for change in employment benefits Concerns • Retrenchments due to new competing PPP project • More restrictive terms of employment under PPP Less attractive compensation regime under PPP employment •  Community-Based Organizations (CBOs) Interests New opportunities to improve community and social services •  and NGOs due to new PPP Better service delivery to the poorest and to remote •  communities New economic opportunities for the community, including jobs •  and service contracts Concerns Environmental impact, loss of land, loss of economic •  opportunities, affordability of services, and other impacts of the PPP, including influx of foreign workers taking jobs and changing the social dynamic of the community Environmental groups Interests • Improving environmental impact of services • Remediating existing environmental issues Concerns Environmental impact of PPP, including indirect such as influx •  of foreign workers, increased industrial activity in the area Industry or trade associations and local Interests • E xpanding opportunities for local businesses to participate chambers of commerce in supplying and contracting with the new PPP or through associated economic opportunities • Local businesses provided with improved, more reliable levels of service Concerns Prices increasing •  • Service quality reduction over time • Lack of influence in PPP operation Municipality/Staff Interests • Delivery of more, higher-quality services at a better price • Mobilization of private capital for municipal investment • Capacity building for municipal staff Concerns • Labor impacts • Public response to PPP • Ability to monitor the performance of the PPP and enforce the contract Government policy makers and senior Interests Providing new mechanism (PPP) to address investment needs •  officials in the municipality Attracting support from national government where PPP is an •  identified priority • Better services/solutions for municipal needs • Improved transparency and access to information • Access to new and better technology and methodologies Concerns • Political opposition to the PPP • Prices increasing or becoming unaffordable • Legality of the PPP contract Regulatory bodies Interests • Better services to more users and better prices • Improved transparency and access to information • Access to new and better technology and methodologies thegpsc.org • Improved transparency and access to information • Access to new and better technology and methodologies Concerns Any impediment on the regulator’s ability to set prices or •  | otherwise regulate sector activities The World Bank Module 14 : PPP Communication Strategy Framework 7 Communication Strategy Stakeholder Group Probable Interests and Concerns in the PPP Project The press The press seeks to capture the imagination of all stakeholders, and therefore its interests and concerns should be a composite of all stakeholders. But the press needs to maintain maximum visibility and will therefore likely focus on those interest and concerns that attract the most attention from those most likely to appeal to the advertisers that provide the media with their revenues. 2.2.1 Municipal Government depending on whether the project is  Public sector stakeholders include mid-level perceived to be beneficial or detrimental municipal government staff and project from an economic, social, or environmental managers, policy makers (for example, point of view. members of the municipal legislative council), and regulatory agencies, among I n the case of PPP projects, concerns may others. The municipality’s long-term, relate to the quality of the service to be strategic commitment to the PPP project is delivered, the cost implications of the PPP, indispensable. As project managers and and transparency of the procurement and implementers, municipal government staff implementation process. need to be apprised of their responsibility to be well informed about the details of the 2.2.4 Residential, Commercial, and project and be up to date about issues and Industrial Users recent developments regarding its progress.  Users are key stakeholders in any PPP but represent a large spectrum of different  he support of other municipal institutions— T interests and perspectives. Users may be for example, the municipal legislative residential, commercial, or industrial. They council, the finance committee, the planning may be government institutions, even police agency, and municipal/national regulatory or military. They may be large, medium, agencies—is essential before a project can or small. Users may also be represented proceed to implementation or even tender. by associations or NGOs with a different The role and interest of these institutions perspective on user concerns. A robust as independent assessors should also be communications strategy must consider considered in the communication strategy. each type of user, their respective concerns The project benefits, disadvantages, and and interests, and may need to include issues must be reported comprehensively different communication strategies for each to allow these institutions to conduct an of these groups. accurate assessment of the project. 2.2.5 Affected Persons 2.2.2 National Government  Municipal PPP projects will generally  National government institutions may also have significant impacts on land and be key stakeholders in the PPP project, activities surrounding the project. Either the in particular where national government municipality will need to acquire the land approvals are required, for example, through or certain rights over the land (for example, the Ministry of Finance or the Ministry of where the land can no longer be used for Home Affairs. National government interests certain activities because of the presence and concerns will often differ from municipal of the project); or the land may increase interests and concerns, and therefore in value, where the project provides new the communication strategy should services or facilities to the occupants of the treat national government as a distinct land or where new economic opportunities stakeholder to ensure its issues arise (for example, the construction of a are addressed. nearby bus terminal will provide transport links to surrounding land and make that land 2.2.3 Community more valuable). Where the project has an At the outset, this group of stakeholders  impact on activities in and around the site, may include the constituents of the for example commercial activities on land municipality that will be directly affected, near the project, those parties affected by whether positively or negatively, by the the project are important stakeholders and municipal PPP project. The interests of must be part of the communication strategy. these stakeholders may vary considerably Module 14 : PPP Communication Strategy Framework 8 Communication Strategy 2.2.6 Service Providers f unders (governments, other interest The municipality will need to engage with  groups, and individual donors). Constructive the current providers of services within the dialogue with these groups should be sector (for example, local water vendors pursued not only to address and clarify in the case of a water treatment PPP or project-related issues but also as an waste pickers in the case of a solid waste opportunity to gather needed information management PPP). In some cases, these and garner public support. service providers can be engaged as part of the project, as employees of the PPP 2.2.9 Local Businesses, Industry, or Trade or service providers to the PPP. In others, Associations and Local Chambers the alternative service providers may need of Commerce to adapt their services to the context of  Local business and commercial perception the PPP project, or find other economic of the municipal PPP project can serve activities to replace those lost to the PPP as a useful gauge in determining the project. These alternative service providers marketability and financial viability of the can be enthusiastic supporters of the PPP or project, as well as the sector’s level of may resist the project, if the communication confidence on the municipality to implement strategy is not successful. long-term PPP contracts. Local businesses and trade associations have long 2.2.7 Labor Groups experience working with the municipality A municipal PPP project is likely to have an  and understand the sector better than most impact on employment in the community. stakeholders. It may create new job opportunities, in which case a communication strategy can T  he thrust of the communication strategy in help the local community prepare for the this case would be to (1) reassure private kind of employment the project will need. sector of the municipality’s capacity to In others, in particular where the PPP implement the PPP program by providing involves management of an existing facility, information on relevant regulations current employees may be concerned pertaining to infrastructure procurement that some jobs may be retrenched or and implementation, taxation, and contract requirements may change such that the management, among others and (2) pursue current employees will not have the skills or frequent project-specific consultations with experience needed by the PPP. various stakeholders (that is, banks and other financial institutions, investors, and A  proactive communication strategy can technical firms) to gather market feedback help the community and employees prepare on project viability and bankability. for the changes resulting from a PPP, identify those people whose livelihoods will 2.2.10 The Media be affected, and help develop a strategy to The media, which includes print and non-  support those individuals and ideally find print, provides an important opportunity them alternate employment. to convey information, updates, and other messages. For example, the media can 2.2.8 CBOs, NGOs, and Environmental Groups serve as a powerful tool for the municipality  Interest groups help generate dialogue and to generate domestic and international public discourse, especially on key issues interest in the municipal PPP project, as well (social, gender, environmental, economic, as to combat any disinformation or regulatory) that are most important to its and/or misinformation. constituents (the community) and its 2.3 Framing the Message to Various Stakeholder Groups thegpsc.org At the same time, the communication strategy preserved. The particular interests and concerns should clearly convey the specific objectives of the stakeholder group to be consulted must also of the municipal PPP project, its benefits and be considered when presenting the objectives of | disadvantages, and how the interests and concerns the project. The World Bank of stakeholders will be monitored, protected, or Module 14 : PPP Communication Strategy Framework 9 Communication Strategy Table 2 provides indicative areas on which areas can be verified and further expanded communication related to the implementation of pursuant to dialogues and consultations with the a municipal PPP project may focus. These focus various stakeholder groups: Table 2: Stakeholder Groups Stakeholder Group Focus Areas for Communication Municipal executive 1.  • Objectives and long-term benefits of the overall municipal PPP program government stakeholders • Cost-benefit analysis Transparency and objectivity in developing municipal PPP projects and selection of •  private sector partners • Global best practices • Protection of public interest • Contract management framework Policy makers/Municipal 2.  • Objectives and long-term benefits of the overall municipal PPP program legislative government • Transparency and objectivity in selecting private sector partners • Cost-benefit analysis • Economic benefits and value to be generated • Protection of public interest • Implementation audit 3. Regulators • Transparency and objectivity in selecting PSP • Impact on service levels, costs of providing service • Compliance with regulatory rules • Provision of performance management and regulation of the PSP • Systemic risks and market impact, including proposed risk mitigation strategies 4. Community • Objectives and long-term benefits of the municipal PPP project • Transparency and objectivity in selecting the PSP • Cost-benefit analysis of the PPP decision • Impact on service levels, costs of providing service • Risk mitigation (socioeconomic, environmental, and so on) 5. National governments •  Institutional capacity and stability in implementing PPPs • Objectives and long-term benefits • Opportunity pipeline • Transparency and objectivity in selecting the PSP • Technical and financial viability of the municipal PPP project • Expected value for community of the municipal PPP project • Support required from the government to achieve project viability (if any) Alternative service 6.  • Objectives and long-term benefits of the overall municipal PPP program providers • Economic benefits and value to be generated • Opportunity pipeline • Protection of public interest Interest groups (NGOs, 7.  • Objectives and long-term benefits of the overall municipal PPP program civil society organizations • Transparency and objectivity in selecting the PSP. (CSOs), and so on) • Cost-benefit analysis • Impact on service levels, costs of providing service • Risk mitigation (socioeconomic, environmental, and so on) • Economic benefits and value to be generated • Protection of public interest Local businesses and trade 8.  • Objectives and long-term benefits of the overall municipal PPP program associations • Transparency and objectivity in selecting the PSP • Global best practices • Protection of public interest • Contract management framework Module 14 : PPP Communication Strategy Framework 10 Communication Strategy 2.4 Communication Instruments Table 3 provides the different instruments that can be used to convey the desired messages: Table 3: Communication Instruments No Instrument Purpose 1. White paper/Policy document Communication of the overall PPP program, objectives, and its long-term benefits. It can form the basis for inviting suggestions and feedback. Such documents are targeted to all stakeholders for the widest dissemination. 2. Project information Communication of the project objectives, background, and key details on the memorandum/Project brief PPP structure. Targeted to all stakeholders for the widest dissemination. 3. Brief on the municipal PPP Communication of the process to be followed for implementing municipal PPP process projects with focus on project appraisal and tender. Targeted to all stakeholders for the widest dissemination. 4. Conferences and symposiums Communication of the overall municipal PPP strategy and project pipeline targeted toward dissemination to the investor community, experts, and civil society. It can also be an avenue to obtain feedback and advice on the municipal PPP program and its project pipeline. 5. Individual meetings Communication with strategic interest groups to obtain information and help mold perceptions of the municipal PPP program or the specific municipal PPP project. 6. Social media, visual media Communication with general public—explaining the socioeconomic benefits of PPP, creating a positive perception about the municipal PPP program, and addressing any specific issues that have arisen. 7. Print media - newspapers and Directing focused articles and analysis toward all stakeholders, creating a magazines positive perception of the PPP program, and addressing any specific issues that have arisen. Also used for transactional communication—EOI notices, RFP advertisements, and so on. 8. TV discussions, interviews Communication with general public—explaining the socioeconomic benefits of PPP, creating a positive perception about the municipal PPP program and municipal PPP projects, and addressing any specific issues that have arisen. 9. Press conferences To be held at key stages of the PPP project cycle—launch, major transaction, and progress update. 2.5 Time Frame The timing to engage and communicate with various time possible. Table 4 gives an indication on stakeholders is just as crucial as the message to be the ideal timing to engage and involve various communicated itself. It is ideal for the municipality stakeholder groups in the municipal PPP process: to involve stakeholders in the project at the earliest Table 4: Engaging Stakeholder Groups thegpsc.org Stakeholder Group Communication Time Frame 1. Municipal government Development (earliest stage) and implementation of the municipality’s PPP program and •  project pipeline | All key stages of the municipal PPP project cycle (that is, inception, development and •  The World Bank approval, procurement and award, and contract management and monitoring) Module 14 : PPP Communication Strategy Framework 11 Communication Strategy Stakeholder Group Communication Time Frame Policy makers/municipal 2.  • Development and approval of the municipality’s PPP program and project pipeline government leadership • Project approval for tender • Before signing of final PPP agreement • Contract implementation 3. Regulators • During project development • Project approval for tender • PPP agreement drafting • Before signing of final PPP agreement • Contract implementation 4. Community • Development and approval of the municipality’s PPP program and project pipeline • During project development • Contract implementation 5. National government • Development of municipality’s PPP project pipeline (inception phase) • During project development • During tender process • Before signing of final PPP agreement • Contract implementation Alternative service 6.  • During project development (for updates and venue to respond/clarify project issues) providers • Upon approval of project for tender (announcement to prospective bidders) • During project tender (updates) • Upon contract award • During project implementation Interest groups (for 7.  • During project development example, NGOs, CSOs) • During project implementation Local businesses and trade 8.  • Development and approval of the municipality’s PPP program and project pipeline associations • During project development • During project implementation Module 14 : Communication Plan 12 Communication Strategy 3.0 Communication Plan Table 5 presents a template of a communication plan, which summarizes all the key elements of the communication strategy framework. Table 5: Communication Plan Stakeholder Focus Areas for Communication Communication Instruments Time Frame Municipal 1.  Objectives and long-term benefits of the overall •  • White paper/Policy document Development (earliest stage) and •  government municipal PPP program Project information memorandum/ •  implementation of the municipality’s staff • Cost-benefit analysis of the PPP decision Project brief PPP program and project pipeline Transparency and objectivity in developing •  • Brief on the municipal PPP process All key stages of the municipal PPP •  municipal PPP projects and selection of PSP project cycle (that is, inception, • Global best practices development and approval, • Protection of public interest procurement and award, and contract • Contract management framework management and monitoring) Policy makers/ 2.  Objectives and long-term benefits of the overall •  • White paper/Policy document Development and approval of the •  municipal municipal PPP program Project information memorandum/ •  municipality’s PPP program and legislative • Transparency and objectivity in selecting PSP Project brief project pipeline government • Cost-benefit analysis • Brief on the municipal PPP process • Project approval for tender • Economic benefits and value to be generated • Individual meetings Before signing of final •  • Protection of public interest PPP agreement • Implementation audit • Contract implementation 3. Regulators • Transparency and objectivity in selecting PSP Project information memorandum/ •  • During project development • Impact on service levels, costs of Project brief • Project approval for tender providing service • Individual meetings • PPP agreement drafting • Compliance with regulatory rules Before signing of final •  • Provision of performance management and PPP agreement regulation of the PSP • Systemic risks and market impact of the municipal PPP project, proposed risk mitigation strategies 4. Community • Objectives and long-term benefits of the • Social media, visual media Development and approval of the •  municipal PPP project Print media - newspapers •  municipality’s PPP program and • Transparency and objectivity in selection of and magazines project pipeline the PSP • TV discussions, interviews • During project development • Cost-benefit analysis • Press conferences • Contract implementation • Impact on service levels, costs of providing service • Risk mitigation (socioeconomic, environmental, and so on) National 5.  • Institutional capacity and stability of the municipal Project information memorandum/ •  Development of municipality’s PPP •  governments government in implementing PPPs Project brief project pipeline (inception phase) • Objectives and long-term benefits of the • Brief on the municipal PPP process • During project development municipal PPP project • Conferences and symposiums • During tender process (for bidders) • Opportunity pipeline • Social media, visual media Before signing of final PPP agreement •  • Transparency and objectivity in selecting PSP Print media - newspapers •  (for preferred bidder) thegpsc.org • Technical and financial viability of the municipal and magazines • Contract implementation (for PSP) PPP project • Press conferences • E xpected value for investors of the municipal PPP project | • Support from the government to achieve project The World Bank viability (if any) Module 14 : Communication Plan 13 Communication Strategy Stakeholder Focus Areas for Communication Communication Instruments Time Frame Alternative 6.  Objectives and long-term benefits of the overall •  • Brief on the municipal PPP process • Upon finalization of the municipality’s service municipal PPP program • Social media, visual media PPP program and project pipeline providers • Economic benefits and value to be generated Print media - newspapers •  • During project development (for • Opportunity pipeline and magazines updates and venue to respond/clarify • Protection of public interest • TV discussions, interviews project issues) • Press conferences • Upon approval of project for tender (announcement to prospective bidders) • During project tender (updates) • Upon contract award • During project implementation Interest groups 7.  • Objectives and long-term benefits of the overall Project information memorandum/ •  • During project development (NGOs, CSOs, municipal PPP program Project brief • During project implementation and so on) • Transparency and objectivity in selecting private • Conferences and symposiums sector partners • Individual meetings • Cost-benefit analysis • Impact on service levels, costs of providing service • Risk mitigation (socioeconomic, environmental, and so on) • Economic benefits and value to be generated • Protection of public interest Local 8.  Objectives and long-term benefits of the overall •  • White paper/ Policy document. Development and approval of the •  businesses municipal PPP program Project information memorandum/ •  municipality’s PPP program and and trade • Transparency and objectivity in selecting PSP Project brief project pipeline associations • Global best practices • Brief on the municipal PPP process • During project development • Protection of public interest • Conferences and symposiums • During project implementation • Contract management framework Module 14 : List of References 14 Communication Strategy 4.0 List of References Special Unit for South-South Cooperation. 2012. Cochabamba, Bolivia, Urban Water Expansion - Case Study. https://www.esc-pau.fr/ppp/documents/ featured_projects/bolivia.pdf. thegpsc.org | The World Bank SECTOR ISSUES Municipal 15 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of the Module 02 2.0 Bus/Truck Terminals 03 2.1 Types of PPP in the Sector 03 2.2 Lessons Learned/Key Issues 03 3.0 Water and Sanitation 05 4.0 Information, Communication, and 08 3.1 Types of PPP in the Sector 05 Technology (ICT) 3.2 Lessons Learned/Key Issues 06 4.1 Types of PPP in the Sector 08 4.2 Lessons Learned/Key Issues 09 5.0 Public Markets 10 6.0 Public Parking 12 5.1 Types of PPP in the Sector 10 6.1 Types of PPP in the Sector 12 5.2 Lessons Learned/Key Issues 10 6.2 Lessons Learned/Key Issues 12 7.0 Government Administrative Offices 14 8.0 Sporting, Cultural and Tourism 16 7.1 Types of PPP in the Sector 14 Venues 7.2 Lessons Learned/Key Issues 14 8.1 Types of PPP in the Sector 16 8.2 Lessons Learned/Key Issues 17 9.0 Rooftop Solar Power Generation 18 10.0 Street Lighting 20 9.1 Types of PPP in the Sector 18 10.1 Types of PPP in the Sector 20 9.2 Lessons Learned/Key Issues 18 10.2 Lessons Learned/Key Issues 20 11.0 Solid Waste Management (SWM) 22 12.0 Urban Redevelopment 24 11.1 Types of PPP in the Sector 22 12.1 Types of PPP in the Sector 24 11.2 Lessons Learned/Key Issues 22 12.2 Lessons Learned 25 13.0 Affordable Housing 26 14.0 Schools 28 13.1 Types of PPP in the Sector 26 14.1 Types of PPP in the Sector 28 13.2 Lessons Learned/Key Issues 26 14.2 Lessons Learned 29 15.0 Health Clinics 30 16.0 Bus Rapid Transit (BRT) and 32 15.1 Types of PPP in the Sector 30 Light Railway Transit (LRT) 15.2 Lessons Learned/Key Issues 30 16.1 Types of PPP in the Sector 32 16.2 Lessons Learned 32 17.0 Ports and Airports 34 18.0 List of References 36 17.1 Types of PPP in the Sector 34 17.2 Lessons Learned/Key Issues 35 Module 15 : Purpose of this Module 2 Sector Issues 1.0 Purpose of this Module This module sets out some of the specific requirements of a few different sectors to help understand the different risks and issues relevant to each project type: transportation, telecommunications, power, water and sanitation, health, education, and urban services.1 1 F  or further discussion thegpsc.org of PPP and sector issues, see Delmon, Jeffrey. 2016. Private Sector Investment in Infrastructure: Project | Finance, PPP Projects The World Bank and PPP Frameworks. Third Edition. Wolters Kluwer. Module 15 : Bus/Truck Terminals 3 Sector Issues 2.0 Bus/Truck Terminals Municipalities often provide facilities to manage congestion, and depriving the municipality of other and coordinate transportation modes, such as benefits to be obtained from the terminal. Bus/ buses, taxis, and trucks. These facilities help truck terminal projects require robust consultation reduce congestion, centralize services for the processes to understand the context of bus and community, and provide services to the transport truck companies, their client and passengers, sector such as petrol stations, maintenance their business models, the local community, and facilities, lodging, and restaurants. the services that can or should be provided in these terminals. This consultation process ensures Revenues collected from buses, taxis, and trucks that design, services offerings, and construction in these terminals are generally limited, often not methodologies are appropriate, minimize enough to cover operating costs. Charging high disruption, and avoid resistance from and conflict fees for transport operators to use the terminal with key stakeholders. can create perverse incentives, causing fewer transport operators to use the facility, increasing  2.1 Types of PPP in the Sector Bus and truck terminal PPPs are often structured In the Amritsar intercity bus terminal in Punjab, as a concession for the PSP to design and build India, a number of buses started operating from the terminal, then to operate the terminal, and outside the terminal to avoid the payment of the collect revenues from users and from commercial ‘Adda Fee’. Where 2,000–3,000 buses per day activities. Bus/truck terminals provide an excellent were forecast, only 1,100 buses were actually opportunity to deliver other services for users, coming to the facility (see project summary 7). which can mobilize commercial revenues. The The focus was therefore adjusted, reducing fees large number of passengers using the terminals charged to buses and leveraging more revenues are ready customers for other services such as from commercial activities. In a similar structure, grocery stores, restaurants, cafes, retail shopping, the bus terminal and municipal market in El Danlí, and advertising. These terminals can also offer El Paraíso, Honduras provide access to municipal commercial services for the buses and trucks and inter-municipal transportation and to more than using the terminal, such as petrol, mechanics, 400 commercial stalls in the same location (see and garages. project summary 5). 2.2 Lessons Learned/Key Issues Some of the key issues that need to be addressed can be used for commercial activities within while developing a bus/truck terminal project, a terminal, in an effort to meet the objectives include the following: of financial feasibility as well as terminal operating efficiency. • The design of the PPP must prioritize the • Bus/truck terminals are already congested basic functions of the terminal with respect to places. Commercial activities should ideally transport services. The commercial activities be targeted to the passengers/users of must not take priority, even if they are the the terminal, and should not attract any primary source of project profits. Therefore, it significant incremental traffic from outside the may be apt to specify the maximum space that terminal, adding to the stress on the terminal Module 15 : Bus/Truck Terminals 4 Sector Issues infrastructure, unless space and capacity are • The location of the bus/truck terminal must be sufficient. consistent with current practices—for example, • The service parameters of the bus/truck with current bus/truck routes—to facilitate terminals must be clearly and objectively transition and avoid service disruption. defined. For example, • Support infrastructure at bus/truck terminals o Within how many minutes should a bus be are typically under-designed, leading to heavy able to drop and pick up all passengers and congestion resulting in a drop in levels of depart the terminal; services of terminal operations. Project design o How long should someone take to find a needs to follow master planning guidelines to parking spot or exit the passenger parking; ensure that the support infrastructure is designed and to reflect the projected reality of the facility. o What frequency and standard should be applied to maintenance and cleaning, for example, minimum luminosity levels, energy conservation, schedule for repainting, the quality of maintenance of the toilets. Table 1. Further Information on Bus/Truck Terminal PPPs Toolkit PPIAF. 2007. The Urban Bus Toolkit. https://library.pppknowledgelab.org/PPIAF/ documents/2067. PPIAF. 2009. “Toolkit for Public-Private Partnerships in Roads and Highways.” https:// ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/index.html. Asian Development Bank and Government of India. 2011. Toolkit for Public-Private Partnerships in Urban Bus Transport - Maharashtra India. https://ppp.worldbank.org/ public-private-partnership/library/toolkit-public-private-partnerships-urban-bus-transport- maharashtra-india. Asian Development Bank. 2008. Bus Rapid Transport: Toolkit for Feasibility Studies. https://ppp.worldbank.org/public-private-partnership/library/bus-rapid-transport-toolkit- feasibility-studies. General Information Global Infrastructure Hub. 2016d. “Transport Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/risk_category/transport/. World Bank. 2019h. “Public-Private Partnerships for Transport”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/ transportation. World Bank. 2019k. “Transport”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/transport. thegpsc.org | The World Bank Module 15 : Water and Sanitation 5 Sector Issues 3.0 Water and Sanitation Water distribution is characterized by the high This heavily regulated sector is also one of the cost of transporting water, relative ease of storage, oldest, with key water and sanitation assets often 2 S  ee also Delmon, Jeffrey. 2017. Public-Private and significant social and political sensitivity. 2 The installed long ago and located underground, Partnership Projects high cost of transportation makes the creation making it difficult to know their condition and in Infrastructure: An of a competitive market for water and sanitation to forecast investment needed in such assets Essential Guide for Policy Makers. Second Edition. services from competing providers particularly without time-consuming and costly investigations.3 New York: Cambridge challenging. In smaller and more remote areas, the Social risk takes on a particular prevalence for University Press. cost of transportation can be prohibitive, as they water services, where local communities are 3 Delmon, Victoria  Rigby. 2014b. Toolkit: do not benefit from the economies of scale of more particularly sensitive to access to water services Structuring Private- heavily populated areas. For these communities, and tariffs charged. For this reason, the PSP will Sector Participation and for poor and/or informal communities, informal be concerned that the water tariffs charged often (PSP) Contracts for Small Scale Water water vendors may be the norm. do not cover costs, much less capital expenditure, Projects. https://www. or a reasonable return on investment, and that the wsp.org/sites/wsp.org/ utility will not be able to pay the PSP fees. files/publications/PPP- Contracting-Toolkit. pdf; Marin, Philippe. 2009. Public Private Partnerships for Urban 3.1 Types of PPP in the Sector Water Utilities: A Review of Experiences in Developing Countries. Loss reduction is a common challenge for water of raw water. However, where the condition of Washington, DC: supply. The PSP can be rewarded for the amount the system is poor, the installation of meters may World Bank; Andres, of, for example, water or energy saved by reducing only make things worse because for each meter Luis A.; Guasch, J. Luis; Haven, Thomas; leakage, which affords the utility higher revenues two new connections to the existing assets must Foster, Vivien. 2008. as it has more water to sell and defers the cost of be made, multiplying the potential for leaks and The impact of private new treatment capacity. Caution should be used in further damaging assets. sector participation in infrastructure: lights, the creation of incentives to reduce leakage. In one shadows, and the road contract, the PSP was paid a fee per leak eliminated. Resistance to new investments in water supply ahead (English). Latin Of course, it is easier to eliminate small leaks, may come from staff concerned that an increase American development forum. Washington, especially at meters and household connections, in efficiency will cause them to lose their jobs. DC: World Bank. http:// but these leaks have a limited impact on the system If incentivized properly, labor productivity can documents.worldbank. capacity. The PSP was well paid, but the utility increase efficiency gains and improve staff comfort org/curated/en/912 661468231538767/ received less-than-anticipated aggregate benefit. and safety. Bucharest Water and Sanitation System The-impact-of-private- in Romania improved the water and sanitation sector-participation- The private sector often has superior billing and system while maintaining low tariffs without in-infrastructure-lights- shadows-and-the- collection systems and methodologies than most subsidy by tying improvements in services with road-ahead; Gassner, public entities and can thereby improve revenues tariff increases, investing in new equipment that Katharina, Alexander significantly. The municipality may require metering increased employee safety and productivity while Popov, and Nataliya Pushak. 2007. “An improvement to help monitor performance delegating more responsibility to the staff (see Empirical Assessment requirements, for example, standards for project summary 18). of Private Sector unaccounted-for water and efficiency of treatment Participation in Electricity and Water Distribution in Developing and Transition Countries”. World Bank; and Delmon, Jeffrey. 2001. Water Projects: A Commercial and Contractual Guide. London: Kluwer Law International. Module 15 : Water and Sanitation 6 Sector Issues 3.2 Lessons Learned/Key Issues • Private investors would like an accurate • To help align incentives, tariff increases should assessment of network assets to estimate be tied to water service improvements. capital expenditure requirements, whereas such • The PPP needs to provide a robust continuous an assessment is time and technical expertise monitoring system for project services and intensive. Any error in this assessment can result levy penalties and offer incentives to ensure in costly and protracted disputes. compliance. o To manage this risk, the PPP agreement • To protect consumers and ensure that the should provide for a robust mechanism project is operated to a standard consistent for negotiation one to two years after with modern industry practice, the municipality commencement of the PPP agreement, will want to establish a progressive and that is, after the private partner has had reasonable regulatory structure (including adequate time to assess the network economic and technical regulation). This assets. This renegotiation can be tricky structure should give the regulator sufficient because the PSP will be in a stronger latitude to supervise the activities of the position, since it would have mobilized PSP without unreasonably restricting its resources based on the assumptions competitiveness or the ability of the PSP to set out in the PPP agreement. Also, failed operate and finance its activities within the bidders might object that had they known context of the market. Creating a regulatory about the actual asset conditions they structure can involve a substantial investment might have been more competitive in the of resources by the municipality. It also creates bidding process. risk for the PSP, to the extent that the regulator o Another approach is to start with a short- can impose obligations and standards different term (say, one to two years) operation from the PPP agreement. and maintenance contract with a leading • The municipality will need to specify the private operator to generate a detailed management of existing municipal staff report on the condition of network assets. engaged in water and sanitation services. The operation and maintenance contract Municipalities should consider (1) reallocation is then replaced with a PPP agreement of roles and responsibilities to perform other (after an open, competitive bid) based on activities for the municipality, (2) absorption the updated asset register. The challenge of staff by the private partner to leverage their of this approach is that the operation knowledge and experience of the existing and maintenance contractor will be in a system (private partners often do not want to strong position to win the bid to be the absorb all staff without an evaluation of their PPP operator which may discourage other competence, dedication, attitude, and so on, bidders. Or, under applicable law/practice, and some municipal staff also often do not the operation and maintenance contractor want to enter into private sector performance- may be disqualified from bidding as oriented employment contracts); (3) offering of having an undue advantage over other redundancy packages to municipal staff. When bidders. The former situation undermines considering options, the municipality should the bid process. The latter situation will consult with staff and relevant organizations (for limit interest of good firms to compete to example, labor unions). deliver the operation and maintenance services. • For PPP projects involving treatment plants (water or sewage), the input and output quality parameters and quantities supplied (of raw water and raw untreated sewage) need to be clearly established and monitored regularly. thegpsc.org | The World Bank Module 15 : Water and Sanitation 7 Sector Issues Table 2. Further Information on Water and Sanitation PPPs Toolkit Delmon, Victoria Rigby. 2014a. “Structuring Private-Sector Participation (PSP) Contracts for Small Scale Water Projects.” World Bank. https://library.pppknowledgelab.org/ documents/4129?ref_site=kl. General Information Delmon, Jeffrey. 2001. Water Projects: A Commercial and Contractual Guide. London: Kluwer Law International. Gassner, Katharina, Alexander Popov, and Nataliya Pushak. 2007. “An Empirical Assessment of Private Sector Participation in Electricity and Water Distribution in Developing and Transition Countries”. World Bank. Global Infrastructure Hub. 2016e. “Water and Waste Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/content/ uploads/2016/07/160610-GIHub-Allocating-Risks-in-PPP-Contracts-2016-Edition.pdf. World Bank. 2019n. “Water and Sanitation PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/water- sanitation. World Bank. 2019o. “Water and Sanitation”. PPP Knowledge Lab. https:// pppknowledgelab.org/sectors/water-sanitation. Module 15 : Information, Communication, and Technology (ICT) 8 Sector Issues 4.0 Information, Communication, and Technology (ICT) The growth and investment in ICT by the private where such consumers are not yet an attractive sector have been significant, in particular over the market for private operators, at service standards last 10 years. Public involvement has been limited sought by the municipality. ICT PPPs can also help primarily to issuing of licenses. However, some key deliver administrative services such as property activities may still need to be undertaken through registration, visa applications, voting registration, PPP, for example, broadband backbone and identification document issuance, and complaint e-government.4 management. Generally speaking, the government is best placed to provide a good investment climate Governments have sought to increase connectivity and let the private sector deliver such services. of their populations to access the commercial and educational opportunities that come with ICT, and to encourage economic growth. ICT PPPs can help deliver services to disadvantaged communities, Types of PPP in the Sector 4.1  Where there is demand, the private sector is Singapore’s Next Generation Nationwide generally best placed to deliver ICT services. Broadband Network is a wired network offering However, in certain limited circumstances the open access, competitively priced broadband municipality may need to encourage private through more than 12 different service providers investment through PPP, for example, where the and over 40 fiber-based broadband access plans municipality wants to attract investment in higher for consumers and enterprise users.6 NetCo capacity systems (that are not yet profitable) must fulfill all reasonable requests to install fiber or services delivered to less developed areas.5 termination points in homes, offices, and buildings. The PPP model might involve the municipality Nationwide Broadband Network has catalyzed a providing access to land to install the network and greater range of innovative services for end users network operating centers. The municipality may in homes, offices, schools, and other locations and also purchase in advance access to the system has enabled Singapore to exploit new economic for public buildings, offices, schools, hospitals, opportunities (see project summary 32). and so on, to provide upfront funding to pay down 4  ee also Delmon 2017. S the construction costs of the system. One of the The City of Barcelona bundled the different ICT 5 See World Bank.  challenges of ICT PPP projects is the need to services (previously outsourced with various 2012. Developing keep up with technological changes. The payment operators) into one contract to update, operate, Successful Public-Private Partnerships to Foster mechanism needs to provide incentives for the and maintain the city’s fiber optic and WiFi system, Investment in Universal PSP to adopt latest technology. Also, where the which led to better ICT infrastructure and easier Broadband Networks. municipality supports an ICT PPP, the PSP should network control, and allowed the city to provide https://ppp.worldbank. org/public-private- provide open access on the same terms for better corporate services to its citizens; in addition, partnership/library/ everyone to avoid creating a monopoly. it generated a new revenue stream for the city, as developing-successful- the private partner pays a yearly fee for the use of public-private- the spare ICT infrastructure capacity, which it sells thegpsc.org partnerships-foster- investment-universal- to its customers (see project summary 31). broadband-netw. 6 Infocomm Development  Authority of Singapore. | 2012. “Next Generation The World Bank Nationwide Broadband Network”. www.ida.gov. sg. Module 15 : Information, Communication, and Technology (ICT) 9 Sector Issues 4.2 Lessons Learned/Key Issues • PPP projects should focus on ICT services that the • Where government ICT services are to be private sector is unlikely to offer on its own accord provided in parallel with commercial services due to relatively lower financial returns. These earning revenues for the PSP, the municipality will projects therefore need to be evaluated closely need to ensure incentives on the PSP to deliver from an economic point of view, that is, projects those government services and give them priority need to have strong economic justification. over commercial services. • ICT involves technology that changes quickly, and PPPs are long-term arrangements. The project will need to consider adopting changes in technology, sharing costs and benefits of new technology. Table 3. Further Information on ICT Sector PPPs Toolkit ICT Regulation Toolkit. n.d. “ICT Regulation Toolkit”. Accessed October 03, 2019. http:// www.ictregulationtoolkit.org/index. General Information European Regulators Group. 2009. Report on Next Generation Access - Economic Analysis and Regulatory Principles. https://ppp.worldbank.org/public-private-partnership/ library/report-next-generation-access-economic-analysis-and-regulatory-principles. Government of India. 2017. Guidance Notes for IT PPP Projects: Model RFP Templates for Public Private Partnership. https://meity.gov.in/writereaddata/files/public%20-private%20 -partnerships%20.pdf. Um, Paul Noumba, Laurent Gille, Lucile Simon, Christophe Rudelle. 2004. A Model for Calculating Interconnection Costs in Telecommunications. Washington, DC: World Bank and the Public–Private Infrastructure Advisory Facility. https://openknowledge.worldbank. org/handle/10986/15040. World Bank. 2019i. “Public-Private Partnerships in E-Government”. PPP Knowledge Lab. https://library.pppknowledgelab.org/documents/2938?ref_site=kl&restrict_ pages=1§or%5B%5D=ICT%20%28Information%20and%20Communications%20 Technology%29&site_source%5B%5D=Handshake%20Journal&site_ source%5B%5D=Knowledge%20Lab. World Bank. 2019d. “ICT”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/ict. Module 15 : Public Markets 10 Sector Issues 5.0 Public Markets Public markets are generally publicly owned economic opportunities for supply chains and and operated facilities that provide vendors with associated economic activities, provide individual structured space at affordable rents to offer empowerment, provide entrepreneurial momentum, their products. These spaces provide economic ensure creative usage of space, and promote opportunities for low-income vendors, save public health.7 time and provide convenience to buyers, offer more hygienic space for trade, provide spillover  5.1 Types of PPP in the Sector PPP in public markets generally involves the PSP The main market in Mandaluyong, Manila, the building, maintaining, and operating the public Philippines, was destroyed by a fire in 1991. Due market as well as associated commercial activities, to lack of funds, serious traffic congestion, and such as warehousing, logistics, cold storage, and sanitation problems, the city decided to rebuild the office space. The PSP earns revenues from rental public market through PPP. To make the project of stalls, leasing of commercial space, and delivery commercially attractive, the project included a of commercial services. Another model of PPP for seven-story commercial center with street-front public markets involves the PSP building the stores, a parking garage, commercial shops, a entire facility, including the public market and bowling alley, and a movie theatre to subsidize the associated commercial facilities. The PSP leases low-cost vendor facilities (see Project Summary 38). the public market to the municipality and earns the majority or all of its revenues from the remaining commercial space. 5.2 Lessons Learned/Key Issues • Engagement with community and main services to low-income vendors are prioritized, stakeholders throughout the project cycle is for example, by establishing clearly defined particularly critical for public market PPP (see services requirements and systems to monitor Module 18: Community Engagement). The local them regularly. community can provide critical information • If the project involves redevelopment of an about project design and implementation existing market, the PPP agreement needs to parameters. Consulting vendors during project include an intensive engagement with existing development is crucial due to their knowledge lessees regarding temporary relocation to of the market and customers. another site for the period of construction of the • Where retail facilities cross-subsidize low- refurbished market, and any compensation for income vendors, the project will need to place such relocation. thegpsc.org 7 T  he Ford Foundation. sufficient incentives on the PSP to ensure that 2003. Public Markets as a Vehicle to Upward Mobility and Social Integration. https:// | s3.amazonaws.com/ The World Bank aws-website-ppsimages- na05y/pdf/Ford_Report. pdf. Module 15 : Public Markets 11 Sector Issues • It is tempting to charge lessees a higher rate for the refurbished facility, as services will be better and vendors will earn more revenues from the new facility. However, the community should be consulted on such higher rents, affordability/ willingness of lessees to pay, and the social impact of such higher rents. The municipality may want to consider a lesser increase for those less able to pay. Table 4. Further Information on Public Market PPPs General Information The Ford Foundation. 2003. Public Markets as a Vehicle to Upward Mobility and Social Integration. https://s3.amazonaws.com/aws-website-ppsimages-na05y/pdf/Ford_Report. pdf. World Bank. 2016c. “PPPs for Public Markets, Malls and Slaughter Houses / Abattoirs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public- private-partnership/ppps-public-markets-malls-and-slaughter-houses-abattoirs. Module 15 : Public Parking 12 Sector Issues 6.0 Public Parking Rapid growth has its challenges, including the proliferation of vehicles and urban congestion. Parking in major urban centers is often a key challenge for municipalities looking to reduce congestion and free up space at street level. 6.1 Types of PPP in the Sector  Public parking offers a number of commercial and allowed the operator to charge only modest opportunities from parking fees and from parking fees, which helped the municipality to development rights within and above the parking reduce congestion. facility. Parking has the added advantage of not needing natural light. Underground space is ideal A PPP parking project in Peru’s capital city, for parking and is often not thoroughly exploited Lima, reduced traffic congestion in a highly when land is developed, in particular for public commercial area by providing parking spaces facilities. Parking fees can be fixed or variable under an existing public park. The three-story depending on the amount of time spent in the underground facility will provide more than 9,000 facility. The mechanisms to collect parking fees m2 for 353 vehicle spaces and about 5,200 can vary from self-payment kiosks, in-person m2 for commercial areas (see project summary assisted payment, and basic parking meters. 46). Revenues from the project also fund the Parking garages can function for public use and to refurbishment and maintenance of the public park. support residential units at the same time. In Virginia Beach, United States, a PPP project The City of Chicago leased its metered parking turned a little-used 244-space surface parking lot system for USD 1.2 billion in February 2009.8 into 147 residential apartments, a unique indoor skydiving facility, and a public parking garage with A parking garage was built in the center of Dar 377 slots. The residential building provides parking es Salaam, Tanzania, with office space and a to its tenants through the public parking garage commercial shopping center built above and (see project summary 78). around the parking structure. The commercial facilities earned important revenue for the project 6.2 Lessons Learned/Key Issues • Integral planning, proper land/space • The provision of commercial activities in and 8 F  or more information, see World Bank. management, and community engagement around a parking garage can create additional 2016a. “Chicago are key elements for successful PPPs in public congestion and increase the number of parking Metered Parking parking. spaced needed. Therefore, project design System Concession of • Innovative approaches and creative use of needs to achieve a balance between financial thegpsc.org 2008”. Public-Private Partnership Legal space is key to solve urban traffic congestion. feasibility and the incremental number of cars Resource Center. Adding commercial activities, for example above that can fit in the facility. https://ppp.worldbank. org/public-private- a parking facility, helps mobilize additional | partnership/library/ revenue sources. The World Bank chicago-metered- parking-system- concession-of-2008. Module 15 : Public Parking 13 Sector Issues • Public parking facilities reduce congestion if the municipality does not enforce parking by moving vehicles out of on-street parking restrictions on the street, the parking project and into the parking facility. This will only work will not achieve its goals and may not be to the extent that vehicles are incentivized to financially viable. use the parking facility. If the rates charged in the public parking garage are too high, or Table 5. Further Information on Public Parking PPPs Toolkits Kittelson & Associates Inc. 2016. Portland Parking Analysis and Toolkit for Mixed-Use Centers and Corridors Parking Management Toolkit. https://www.portlandoregon.gov/ transportation/article/567030. World Bank. 2019e. “Municipal Parking”. Public-Private Partnerships Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/municipal-parking. Module 15 : Government Administrative Offices 14 Sector Issues 7.0 Government Administrative Offices Municipalities need to invest in administrative and PPP can help municipalities consolidate their other office space to deliver an effective public offices in one location to provide more access service. But property management is often not a to facilities and to other government departments, strength of municipal staff. A PPP can be a more saving time and delivering better/coordinated effective mechanism to develop office facilities with services. latest technology and well maintained over time. The PPP will use a carefully crafted performance regime to ensure that the municipality receives the government offices to the right standard. 7.1 Types of PPP in the Sector  One potential model for PPP for government office commercial/residential facilities but accessed and space involves the development of a mixed-use managed separately, allowing the PSP to earn facility, comprising government offices, private revenues from the commercial space to offset the offices, commercial space, and possibly residential amount of revenue mobilized through availability space. This allows government staff to work in payments. a dynamic, mixed-use space. The revenues from commercial and other activities reduce or The Municipality of Tlajomulco, Mexico, was eliminate the cost of the government offices to struggling with outdated facilities spread around the municipality. Where conditions are right (for the city and was in a constant state of disrepair. example, the land value is high, the site is large, The Tlajomulco Administrative Center PPP project and the market is buoyant), the municipality may delivered an administrative building for more also receive a revenue share from such a project. than 630 public servants and with a capacity to serve more than 2,000 daily visitors. The PSP also Many municipalities do not want government constructed a multiple-use gymnasium, outdoor offices to share space with other users, for security sports facilities, and renovated 7 km of main roads or other reasons. In such cases, the PSP can build around the center (see project summary 49). and maintain government office space against availability payments from the municipality. Or the project may involve both government offices and 7.2 Lessons Learned/Key Issues • Proper use of space to maximize the benefits purposes, but access may be desirable where of a PPP administrative offices project can these ancillary services include things that include 24/7 public access, such as parks benefit government staff such as grocery and recreation areas, commercial and shopping, copy and printing services, thegpsc.org ancillary services. A separate entrance for the photography labs (for example, for personal government offices may be needed for security identification documents), cafes, restaurants. | The World Bank Module 15 : Government Administrative Offices 15 Sector Issues • Public buildings need to be multi-functional to • The maintenance obligation placed on the PSP address changes in usage over time. A PPP must be clearly and objectively defined and agreement is long term and therefore must be regularly monitored (maintenance levels should able to adjust to changes in use and needs of be defined based on output parameters not on government staff. input requirements). • The long-term nature of PPP can also create challenges where government budget changes over time. Where a municipality needs to reduce costs and looks to reduce government office costs, the PPP must be sufficiently flexible to allow such reduction of costs where the level of occupancy is reduced or where the office is left empty for a time. Table 6. Further Information on Government Administrative Offices PPPs General Information World Bank. 2019j. “Sub-national and Municipal PPPs”. Public-Private Partnerships Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/ppp-sector/sub- national-and-municipal-ppps/sub-national-and-municipal-ppps. Module 15 : Sporting, Cultural, and Tourism Venues 16 Sector Issues 8.0 Sporting, Cultural, and Tourism Venues Providing space to the community for sport and culture facilities can help provide a better life quality, attract more tourism, and create new revenue sources for the city, just to name a few.9 8.1 Types of PPP in the Sector  Tourism, sports, and cultural facilities while Similarly, in Jaipur, India, an 18th century pleasure often not profitable by themselves, can provide palace called Jal Mahal is located in the middle commercial opportunities. Convention centers of a 300-acre lake. The lake was an ecological are often developed next to hotels and shopping disaster, with the dumping of untreated sewage centers, where those attending conventions can and poor upkeep. After several failed attempts at spend their money. In France, a town built an restoration through other means, the Government aquatic center to attract tourists to the area and, of Rajasthan awarded a PPP to use part of the site thus, create new income sources for the locals and for private commercial development, and for the revenue for the city (see project summary 54). In restoration and maintenance of the public space Bogotá, Colombia, a private developer renovated (see project summary 57). After a first phase, this an old coliseum that was being underutilized; today project has been stalled for political reasons. the new venue is one of the most modern arenas in Latin America (see project summary 53). An art The Revolutionary Government of Zanzibar issued museum in Düsseldorf, Germany, was revitalized a concession for Chumbe Island, a 55-acre resort through a PPP for its reconstruction, operation, and with marine park and forest reserve. The revenues maintenance (see project summary 55). generated from ecotourism cover operational expenses, park management, and environmental Historic and cultural sites are a key asset for education. Chumbe Island Coral Park Ltd. (CICP) government and investors alike. PPP can bring has a 33-year lease and a 10-year management private investments to refurbish and maintain contract. The concessionaire had to work with historic and cultural assets and, in the process, seven government departments and gain the create an investment opportunity. An example support of area fishermen and local communities would be PPP projects for the development of before the project was approved (see project historic palaces in Rajasthan, India, that were summary 60). falling to ruins due to lack of investment and maintenance. These historic properties were leased to private investors through a competitive process that allowed them to redevelop the properties for commercial purposes, in many cases resorts and hotels. The investors have clear obligations to develop the properties on time, maintain their historic properties, and provide thegpsc.org access to the public. | The World Bank 9 See also Delmon 2017.  Module 15 : Sporting, Cultural, and Tourism Venues 17 Sector Issues 8.2 Lessons Learned/Key Issues • Tourism, sports, and culture PPPs need to • Community engagement is of critical identify commercial activities with a strong importance in these types of projects. Local synergy to avoid the PSP focusing entirely on communities are similarly interested in the commercial activity. Ideally, commercial maintaining local natural resources or key activities should be designed to further cultural facilities, and can be a key partner for bolster the attractiveness of the tourism, any PPP project to help ensure its success and sports, or culture. For example, in commercial to resolve any conflict with the community that activities in nature reserves or safari parks, might arise. the PSP is incentivized to maintain the natural • The project design and communication to the surroundings as they are directly linked to the public needs to ensure that the tourism, sports, profits the PSP will make from the commercial or cultural attraction is not perceived to have facilities—if the natural beauty of the area is been sold to the private partner. It should be as lost, the tourists will stop coming. Similarly a easily accessible to the public and as much a hotel next to a convention center will have part of the community as before the PPP. fewer vacancies if the convention center is used more often. Table 7. Further Information on Tourism, Sports and Culture Venue PPPs General Information Akhmetshina, E. R., O.A. Ignatjeva, and I.M. Ablaev. 2017.”Tendencies and Prospects of Public-Private Partnership Development in the Field of Physical Culture and Sport”. European Research Studies Journal XX (2A). https://core.ac.uk/download/pdf/155235631. pdf. World Bank. 2019j. “Sub-national and Municipal PPPs”. Public-Private Partnerships Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/ppp-sector/sub- national-and-municipal-ppps/sub-national-and-municipal-ppps. Module 15 : Rooftop Solar Power Generation 18 Sector Issues 9.0 Rooftop Solar Power Generation The power sector is characterized by unique transmission, and distribution is generally an constraints in the delivery of electricity to public, issue for national government or a national utility, commercial, and residential consumers.10 municipalities often use PPP for power generation. Electricity is relatively easy to transmit over Sections 9 and 10 will discuss in particular rooftop long distances but hard to store, so it must solar generation and street lighting projects. be generated constantly and responsively, to meet demand instantaneously in its daily and seasonal variations. While electricity generation,  9.1 Types of PPP in the Sector One of the most common municipal PPP projects In 2010, the Government of Gujarat launched the in the energy sector is rooftop solar. Solar ‘Gandhinagar Rooftop Program’, the first of its kind panels are installed on municipal buildings and in India. The 5 MW solar rooftop program installed facilities, industrial/commercial sites, and possible 4 MW solar panels on public buildings rooftops residential properties. Power is purchased by and 1 MW on private residences in Gandhinagar. the municipality, offsetting the power it needs Although the project faced some difficulties in its to purchase from the utility. Municipal demand inception, it is now being replicated in more cities for power is generally greatest during the day (see project summary 64). when solar generation is most effective, reducing the need for storage (which can be expensive). Industrial/commercial purchasers can help diversify demand risk and ensure different revenue sources. 9.2 Lessons Learned/Key Issues  • Rooftop solar projects generally involve the • Rooftop solar can be an interesting opportunity municipality paying fees for energy or efficiencies for the municipality to take more control of delivered. The PSP will need to be confident its power needs, in particular where the cost that the municipality will pay fees when due. of power to be purchased from rooftop solar The municipality may not have a good history of is cheaper than power purchased from the paying amounts due to private investors and will grid. In some cases, the lower price of solar is need to reassure investors and lenders that the achieved through government subsidies for the municipality is a good credit risk. In some cases, use of renewable energy. The municipality will this may require a guaranty, escrow arrangement, need to consider the risk that these subsidies or other credit enhancement. might be withdrawn by the government. thegpsc.org 10 F  or a good review of the power sector, in particular its regulation, see Hunt, Sally. 2002. | Making Competition The World Bank Work in Electricity. New York: Jonh Wiley & Sons. See also: Delmon 2017. Module 15 : Rooftop Solar Power Generation 19 Sector Issues • Similarly, while power tariffs for solar may be lower than power delivered over the grid, the municipality may not pay its bills to the power utility or may pay only a portion in practice. If the municipality will not be saving money, the PSP will need to understand the municipality’s motivation to allay concerns that future governments might not be interested in continuing with the project. Table 8. Further Information on Rooftop Solar PPPs Toolkit International Finance Corporation. 2015. Utility-Scale Solar Photovoltaic Power Plants: A Project Developer’s Guide. https://www.ifc.org/wps/wcm/connect/ a1b3dbd3-983e-4ee3-a67b-cdc29ef900cb/IFC+Solar+Report_Web+_08+05. pdf?MOD=AJPERES&CVID=kZePDPG. World Bank. 2014c. Rooftop Solar Public-Private Partnerships: Lessons from Gujarat Solar. https://library.pppknowledgelab.org/attached_files/documents/2408/original/PIQ_ RooftopSolar_INTERACTIVE.pdf?1438367268. General Information Global Infrastructure Hub. 2016b. “Energy Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/risk_category/energy/. World Bank. 2019b. “Energy and Power PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/energy. World Bank. 2019g. “Power”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/power. Module 15 : Street Lighting 20 Sector Issues 10.0 Street Lighting The power sector is characterized by unique municipalities often use PPP for power generation. constraints in the delivery of electricity to public, Sections 9 and 10 discuss in particular rooftop commercial, and residential consumers.11 solar generation and street lighting projects. Electricity is relatively easy to transmit over long distances but hard to store, so it must Street lighting can be an energy intensive and be generated constantly and responsively, to expensive service for the municipality to provide. meet demand instantaneously in its daily and Latest technology in lightbulbs and energy seasonal variations. While electricity generation, management provide even more of an transmission, and distribution is generally an opportunity for PPP street lighting. issue for national government or a national utility,  10.1 Types of PPP in the Sector The PSP partners with the municipality to install well, for example in Nairobi, Kenya, a street lighting energy-saving streetlights to improve efficiency, project mobilized revenues from advertising free of charge; the PSP recovers its investment installed on each streetlight. The PSP was given through a shared energy-saving mechanism. With strict size and other parameters to avoid abuse this mechanism, the savings are shared between of the advertising space allotted. The revenues the two partners according to percentages set generated were sufficient to cover installation out in the PPP agreement. For example, in Nasik, of the streetlights and maintenance, with the Maharashtra, India, the PPP contract is provided municipality providing electricity. for different sharing percentages depending on the year of the contract, for the first year the sharing percentages were 70 percent for the public partner and 30 percent for the private; for the second year the percentages were 60 percent and 40 percent respectively, and so on (see project summary 67). Another PPP model mobilizes other revenues as 10.2 Lessons Learned/Key Issues  • Street lighting PPP often results in the • The municipality may not have a good history municipality’s total cost of street lighting of paying amounts due to private investors and increasing because (1) a larger number of street will need to reassure investors and lenders that lights are installed in the municipality and (2) the municipality is a good credit risk. In some more street lights are operational. This means cases, this may require a guaranty, escrow that while energy cost per street light is lower, arrangement, or other credit enhancement. thegpsc.org total energy usage may be higher. Project 11  or a good review of F analysis should incorporate the social and the power sector, in economic benefits of better street lighting rather particular its regulation, see Hunt, Sally. 2002. than only the financial saving in energy costs. | Making Competition The World Bank Work in Electricity. New York: Jonh Wiley & Sons. See also: Delmon 2017. Module 15 : Street Lighting 21 Sector Issues Table 9. Further Information on Street Lighting PPPs Toolkit Energy Efficiency Services Limited. n.d. “Street Lighting National Programme”. Accessed October 03, 2019. https://eeslindia.org/content/raj/eesl/en/Programmes/SLNP/ about-slnp.html. General Information Global Infrastructure Hub. 2016b. “Energy Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/risk_category/energy/. World Bank. 2019b. “Energy and Power PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/energy. World Bank. 2019g. “Power”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/power. Module 15 : Solid Waste Management (SWM) 22 Sector Issues 11.0 Solid Waste Management (SWM) Management of solid waste is one of the most informal waste pickers are key players in solid important functions of a municipality.12 Improper waste, gathering, sorting, trading and, in some treatment of solid waste poses a serious challenge cases, recycling, either individually or grouped in for the environment and the entire community. microenterprises. Waste pickers represent some Rapidly improving technologies and a deeper of the most vulnerable, low-income communities, understanding of the use or reuse of solid waste whose interests need to be considered in any has created increasingly larger roles for the waste project.13 private sector. In many developing countries,  11.1 Types of PPP in the Sector PPPs in solid waste tend to focus on treatment, In China, the City of Wenzhou generated for example the construction and management approximately 400,000 tons in household waste of sanitary landfills, incineration facilities, each year, with a growth rate of 8–10 percent recycling centers, or waste-to-energy facilities. annually. A PPP developed a waste-to-energy These projects might include collection from plant able to treat 320 tons of MSW per day and transfer stations, where local waste collection is generate up to 25 million (kWh) of electricity aggregated in a few locations and the PPP collects annually (see project summary 28). waste from those locations and bring it to the treatment facility, using larger trucks to reduce the cost of transportation and facilitate treatment. In the city of Poznán, Poland, the local government entered into a PPP for the design, construction, financing, management, and maintenance of a waste-to-energy production plant. About 30 percent of the city’s domestic electricity is generated by this new facility (see project summary 27). 11.2 Lessons Learned/Key Issues  • SWM projects can have multiple revenue difficult to achieve to the levels required. People sources: the collection fee paid by households, generally do not like to pay for trash collection, in waste collection tax, associated revenues (for particular to the levels required to pay for proper example, power generation and recycling fees), management and treatment. The municipality and governmental budget allocations. The may need to start engaging with the community to thegpsc.org fees and taxes charged by the municipality communicate the need for charging for collection for collection are usually an important part long before the PPP project is launched. of this revenue stream, and one of the most | The World Bank 12 See also Delmon 2017. 13 See also Delmon 2017. Module 15 : Solid Waste Management (SWM) 23 Sector Issues • SWM projects should use technology facility is designed to cater to this minimum appropriate to the local community, affordable guaranteed waste. If the municipality delivers for the community, or that reflects local demand less waste, then municipalities may have to for the services.14 For instance, where waste compensate the PSP accordingly. Therefore, a to energy is contemplated, the efficiency of detailed and robust study of how much waste a generation of electricity from waste depends not city is actually generating, and more importantly only on the quantum of waste generated and collecting, on a daily basis, is important before collected per day but also on the waste mix, bidding out SWM projects. in particular the quantum of organic content in • If the PPP includes a treatment facility as well as the waste and the calorific value of waste. The a sanitary landfill, then the municipality should municipality should first undertake a detailed specify the maximum percentage or quantity assessment of waste generated from various of waste that can be transferred to the sanitary parts of the city to understand the composition landfill, creating an incentive to maximize of waste and the potential of generating treatment efficiency and ensuring that the electricity from the waste. sanitary landfill lasts longer. • Where the PSP is responsible for collecting • Waste to energy plants are often not financially waste from a transfer station or waste feasible based on selling electricity to the is delivered to the treatment facility, the electricity grid and require a significant ‘tipping municipality will typically have to guarantee fee’ per ton of waste delivered to the treatment a minimum quantity of waste that would be facility. available to the PSP every day. The treatment Table 10. Further Information on Solid Waste PPPs Toolkit Swiss Centre for Development Cooperation in Technology and Management. 2000. Private Sector Participation in Municipal Solid Waste Management: Guidance Pack (5 Volumes). https://ppp.worldbank.org/public-private-partnership/library/private-sector- participation-municipal-solid-waste-management-guidance-pack-5-volumes. World Bank. 2017b. Draft Concession Agreement: Municipal Solid Waste Management, Delhi. https://ppp.worldbank.org/public-private-partnership/library/draft-concession- agreement-municipal-solid-waste-management-delhi. General Information Global Infrastructure Hub. 2016c. “Solid Waste Collection, Disposal, Landfill and Recycling”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk. gihub.org/risk_category/solid-waste/. World Bank. 2019f. “Municipal Solid Waste (MSW) PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/ transportation. World Bank. 2019m. “Waste”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/waste. 14 International Finance Corporation. 2014. “Waste PPPs”. Handshake (12). https:// www.ifc.org/wps/wcm/ connect/97a0af43- 441a-4528-bf39- 9a7b1af1d7c7/ Handshake12_ WastePPPs.pdf? MOD=AJPERES&CV ID=lKbDLHE. Module 15 : Urban Redevelopment 24 Sector Issues 12.0 Urban Redevelopment Urban redevelopment can take many shapes cities, borrowing), policy and regulatory tools, including street space optimization,15 heritage and strategic partnerships with the private conservation,16 public facilities renovation,17 and sector, among other resources.19 The complexity neighborhood rehabilitation18 involving a wide and creativity of urban regeneration makes it array of expertise, long-term planning, community difficult to establish standard bidding documents, engagement, maintenance, and operation risks. revenue models, or model commercial structures. Cities deploy a combination of internal resources Partnering with the private sector is a key tool (including revenues and municipal land), external available to municipalities to achieve sustainable funding sources (including intergovernmental redevelopment. 20 transfers, grants and, in the case of sovereign 15 See, for example,  12.1 Types of PPP in the Sector Capitol Crossing project in Washington, D.C. (project summary 75). PPPs in urban redevelopment can range from a percent of the area median income (see project 16 See Macdonald, master developer for an entire new city—such summary 73). By providing prime development Susan, and Caroline Cheong. 2014. The as a satellite city, for example the Canary Wharf rights above the library and fire station, the Role of Public-Private development in London—to the development of a municipality was able to provide refurbished public Partnerships and discrete portion of an urban center, where disaster, facilities and affordable housing. the Third Sector in Conserving Heritage urban blight, or some other circumstance has Buildings, Sites, and made a large tract of land available for a significant Where the facility is located in a dense urban Historic Urban Areas. urban redevelopment. Urban redevelopment area, building up or digging down may provide Getty Conservation Institute. PPP is therefore extremely difficult to define or opportunities for commercial revenues. Washington, 17 See, for example, delimit but offers extensive opportunities to deliver D.C., redeveloped an area, building over a major Redevelopment of redevelopment through mixed-use facilities and highway to develop new residential and retail space Library and Fire Station in Washington DC diversification of revenues to fund much needed and to bring life to that part of the city. The platform (project summary redevelopment. supports a 7-acre (204,386 m 2 ), mixed-use 73), Mandaluyong development space for four office buildings, one City Market in Manila (project summary 38), In Washington, D.C., United States, two outdated residential structure with retail facilities at the ground and Campin Coliseum public facilities, a library and a fire station, were floor, parking facilities with four underground levels (Movistar Arena) refurbished with latest technology and capacity in and a capacity of 1,146 vehicles, and green space. in Bogota (project summary 53). addition to providing approximately 150 multifamily (see project summary 75). 18 See, for example, residential condominiums, 9,600 square feet Regent Park Affordable for retail space, and 52 residential rental units Housing Project in Toronto (project affordable to households earning at or below 60 summary 80). 19 Amirtahmasebi, Rana, Mariana Orloff, Sameh Wahba, and Andrew Altman. 2016 Regenerating Urban Land: A Practitioner’s thegpsc.org Guide to Leveraging Private Investment. 2016. Urban Development Series. Washington, DC: World | Bank. doi: 10.1596/978- The World Bank 1-4648-0473-1. 20 Amirtahmasebi et al. 2016. Module 15 : Urban Redevelopment 25 Sector Issues 12.2 Lesson Learned  • Strong political support, community • Redevelopment projects may offer an enticing engagement, and proper planning are critical prospect but with so many challenges and success factors for urban redevelopment PPPs. uncertainties that private sector involvement in It is often the private sector that has more early stages may be unattractive or uneconomic. adequate human and technical resources to Building momentum with initial public drive project development to achieve planning redevelopment projects can attract investors for goals. 21 Designing a structure that allocates future-linked/adjacent projects. 22 risks between the municipality and the PSP in • Municipalities are often optimistic about the most effective manner requires a thorough the value that can be unlocked from real understanding of the redevelopment, the estate opportunities that emerge from such local community, and the likely economic and redevelopment projects. At the project financial outcomes of the redevelopment. development stage, it is important to get a realistic and maybe even worst case scenarios of unlocked real estate value from such redevelopment projects. Table 11. Further Information on Urban Redevelopment PPPs Guidelines City of Liverpool. 2006. Public Private Partnership in Urban Regeneration. A Guide to Opportunities and Practice. https://urbact.eu/sites/default/files/p4a-_final_ english_060906.pdf. General Information International Finance Corporation. 2012. “Cities & PPPs”. Handshake (4). https://library. pppknowledgelab.org/documents/1947?ref_site=kl. United Nations Habitat. 2011. Public-Private Partnership in Housing and Urban Development. https://new.unhabitat.org/sites/default/files/download-manager-files/Public- Private%20Partnership%20in%20Housing%20and%20Urban%20Development.pdf. World Bank. 2019l. “Urban Revitalization”. PPP Knowledge Lab. https://pppknowledgelab. org/sectors/urban-revitalization. 21 International Finance Corporation. 2012. “Cities & PPPs”. Handshake (4). https://library. pppknowledgelab.org/ documents/1947?ref_ site=kl. 22 Reuschke, Darja. “Public-Private Partnerships in Urban Development in the United States”. NEURUS Program, University of California in Irvine: 2001. https:// core.ac.uk/download/ pdf/7035711.pdf. Module 15 : Affordable housing 26 Sector Issues 13.0 Affordable Housing Private developers deliver low-cost housing where the right incentives for private developers to do they can earn a reasonable profit. 23 Housing more. The municipality can also make affordable policies, 24 government support/incentives, and housing commercially attractive for private building codes/planning regulation can help create developers, including through PPPs.  13.1 Types of PPP in the Sector Affordable housing can be achieved by the population groups, that is, families waiting for municipality providing land and allowing the PSP public housing, low-income young couples, postal to develop mixed-use facilities, including high-, workers, students, and immigrants. The building middle-, and low-income housing as well as retail consisted of 182 flats equipped with 470 beds with facilities. Mixed-use facilities also create a better kitchen, and ancillary services such as restaurant, living experience for the low-income tenants who laundry, grocery store, medical clinic, employment will prefer to be closer to economic and social office, after-school activity, and car/bike-sharing opportunities, such as jobs, schools, and health system. Aside from the flats which are rentable for care, that are available through or near such 12 months maximum, the building is also equipped mixed-use facilities. with 58 affordable hotel rooms (see project summary 81). In Turin, Italy, two abandoned buildings were turned into temporary social housing projects to provide housing to support disadvantaged  13.2 Lessons Learned/Key Issues • Affordable housing PPPs are capital intensive. • At the project development stage, Unless other revenues are available, the project the municipality will need to decide how to may demand significant financial support allocate low-cost housing, for example leased or from the municipality. Sometimes this financial sold, with the municipality subsidizing either the support can be accessed through national capital cost or the interest on the housing loan. subsidies or tax incentives designed to promote • Municipalities may want to play a role in affordable housing. The PPP project will need to determining the specific beneficiaries or be designed to access those funds. groups of beneficiaries of the municipality • Where affordable housing is provided through supporting low-cost housing. In such cases, 23 Owens, Kate. 2016. a mixed-use development, there is a risk that the municipality can either require the PSP to “Constructing housing the PSP will focus efforts and investment on the construct the low-cost houses and hand them PPPs to build trust”. World Bank Blogs. more profitable activities in the development, over to the municipality for allocation or outline https://blogs.worldbank. with less attention paid to affordable housing. the criteria for allocation of the low-cost housing org/ppps/constructing- Incentives should be created (and enforced) to and require the PSP to implement. thegpsc.org housing-ppps-build- trust. ensure that the affordable housing is provided to 24 India passed a ‘Housing the agreed specifications, quality, and livability. Policy and Affordable Housing Plan’ in 2015 | aiming to deliver The World Bank between 50,000 and 100,000 affordable houses. Module 15 : Affordable housing 27 Sector Issues • Payment for maintenance of common areas the municipality may want the specification of needs to be designed early, for example, the maintenance to prioritize affordability. The should the occupants of low-cost housing maintenance of the common areas may form pay for maintenance of the common areas part of the PPP arrangements for say the first or is it cross-subsidized from other project 10–15 years. revenues. If funding for maintenance is limited, Table 12. Further Information on Affordable Housing PPPs Toolkits SALGA. n.d. MUNICIPALITIES: Municipal Focus - Municipal Guidelines on Social & Rental Housing. https://www.salga.org.za/Municipalities%20F%20MGOSARH.html. General Information United Nations Habitat. 2011. Public-Private Partnership in Housing and Urban Development. https://new.unhabitat.org/sites/default/files/download-manager-files/Public- Private%20Partnership%20in%20Housing%20and%20Urban%20Development.pdf. World Bank. 2019l. “Urban Revitalization”. PPP Knowledge Lab. https://pppknowledgelab. org/sectors/urban-revitalization. Module 15 : Schools 28 Sector Issues 14.0 Schools Educational facilities are often provided by national while teachers will generally be regulated and government, but municipalities may be responsible possibly provided by the national government. for primary or even secondary school facilities, 14.1 Types of PPP in the Sector  A number of different approaches and creative this approach is for the municipality to contract out commercial engagements have been developed to students’ enrollment in specialized services that support the education sector through PPP. For the are not available in the public sector. This type of sake of discussion, these might be organized into contract can be targeted to specific students and the following: groups, such as low-income, disadvantaged, or • Infrastructure Delivery.25 The PSP builds, disabled students. 30 These targeted beneficiaries 25 For example, in Toronto, maintains, and operates an educational facility need to be defined from the beginning to ensure Canada, The Toronto District School Board such as a public school, university building, that the financial structure delivers the benefits suffered from a shortage or hostel.26 Payments under the contract are desired. of funds and limited contingent upon the PSP delivering services to land availability and the NTCI, a public high an agreed performance standard.27 In 1993, the James F. Oyster Bilingual Elementary school founded in 1912, • Under Management Services, the PSP School was in danger of closure due to a crumbling, was an aging facility manages one or more facilities. The schools inadequate building and lack of public capital. A with a strategic location in midtown Toronto with remain publicly owned and all non-managerial PPP was formed between DC Public Schools, the direct access to public personnel continue to be public sector District of Columbia, and a national real estate transit and vibrant employees.28 development firm. They divided the school property retail main street. After a PPP for the school • Service Delivery involves the PSP delivering in half to make room for a new school and a new redevelopment, a four- facilities and educating students, possibly a residential development. The District of Columbia story secondary school mix of private and public students. The PSP issued a 35-year, US$11 million tax-exempt bond building was delivered to accommodate 1,200 may charge fees to private students, and the for the construction costs to be repaid entirely with students and it includes municipality purchases education services for the revenue generated by the private apartment science, art, music, and public students. building. The private partner redeveloped the drama classrooms, a 600-seat theatre, library, school on half the site, built a new 211-unit and a triple gymnasium PPP arrangements can be used to make apartment building on the other half, and agreed to (see project summary educational philanthropic support more sustainable pay US$804,000 a year for 35 years to repay the 91). 26 See also Delmon 2017. and better coordinated with government activities. bond. The school facilities included a computer 27 LaRocque, Norman. Examples abound globally. 29 lab, library, gym, and classrooms designed to 2008. Public-Private accommodate the school’s bilingual program and Partnerships in Basic Education: An By paying for students to enroll in existing schools, office space 31 (see project summary 88). International Review. governments can quickly expand access without CfBT Education Trust. incurring any upfront expenditure on constructing 28 World Bank. 2011. The Role and Impact and equipping new schools. Another variation of of Public-Private  thegpsc.org Partnerships in Education. 29 LaRocque 2008. 30 World Bank 2011. ULI Development Case | 31 Studies. 2015. James The World Bank F. Oyster Bilingual Elementary School and Henry Adams House. Module 15 : Schools 29 Sector Issues 14.2 Lessons Learned/Key Issues • The municipality needs to work out its objectives for the PPP and create incentives accordingly.32 Left to its own, the PSP will prioritize the most profitable services. • Educational facilities can also mobilize commercial revenues, for example the PSP could utilize school infrastructure such as classrooms, the computer lab, the gymnasium, or the library to deliver other services such as training programs for adults after school hours on a for-profit basis. Table 13. Further Information on Education PPPs General Information Hogan Lovells Lee & Lee. 2011. PPP Projects in the Education Sector - Key Principles. https://www.hoganlovells.com/~/media/hogan-lovells/pdf/publication/ pppprojectsintheeducationsectorkeyprinciplessept11_pdf.pdf. World Bank. 2019a. “Education”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/education. 32 LaRocque 2008. Module 15 : Health Clinics 30 Sector Issues 15.0 Health Clinics The health sector is generally regulated by the innovation, and service improvement, but some national government; however, in many countries important challenges have arisen, including labor municipalities must provide local clinics and even resistance, need for better monitoring and contract some small hospital and specialist facilities. management, access to experienced health care specialists, rapid technological change, and the PPPs in the health sector33 have delivered need to introduce flexibility into the contract to important advantages, including more timely accommodate change.34 completion, delivery to cost, technological  15.1 Types of PPP in the Sector Health PPPs can be divided into two broad PPP is often used to deliver specialist services, categories: facility-based PPPs and clinical such as cancer clinics, imaging services, and PPPs.35 Facility-based PPPs involve the PSP dialysis centers. The National Kidney and providing construction, maintenance, and Transplant Institute in the Philippines specializes operation of a hospital or clinic, but not delivery in the treatment of renal diseases. In 2003, it of clinical services. The United Kingdom had entered into a Hemodialysis Center PPP, to furnish vastly underinvested in its National Health Service the hospital with state-of-the-art machines for (NHS) hospitals, many of which were built in the patients suffering from end-stage renal diseases, Victorian era (during the late 1800s). Beginning serving more than 120 outpatients a day.37 The in the 1990s through the Private Finance Initiative Government of Andhra Pradesh entered into a PPP (PFI), the United Kingdom built approximately 100 in 2010 to establish and operate dialysis centers in 33 See also Delmon 2017. 34 A major issue in hospital new NHS hospital buildings in 12 years. Since 11 tertiary care state-run hospitals for a period of PPPs is the need to 2003, more than 50 hospital PPPs valued at over seven years 38 (see project summaries 97 and 98). constantly update CAD 18 billion have been developed in Canada.36 medical equipment to reflect advances. This model is also common in Australia and Italy. 35 UNECE, WHO, ADB. In clinical PPPs, the PSP delivers all services, 2012. “A Preliminary including supply of infrastructure and clinical Reflection on the Best Practice in PPP in services. This model has been adopted in, for Healthcare Sector: A example, Australia, Spain, Portugal, India, and Review of Different Lesotho. PPP Case Studies and Experiences”. Paper prepared for the conference PPPs in Health Manila 2012: 15.2 Lessons Learned/Key Issues Developing Models, Ensuring Sustainability: Perspectives from • Health service PPPs should include a thorough can be challenging. Many countries use PPP Asia and Europe. baseline study to capture specific performance to deliver the facilities (the hospital building, https://www.unece. and outcomes of the project. utilities, heating, air conditioning, maybe even org/fileadmin/DAM/ thegpsc.org ceci/images/ICoE/ • The split between clinical services and facilities laundry) under simple performance-based PPPHealthcareSector_ DiscPaper.pdf. 36 UNECE, WHO, ADB 2012. | UNECE, WHO, ADB The World Bank 37 2012. 38 UNECE, WHO, ADB 2012. Module 15 : Health Clinics 31 Sector Issues obligations. In such projects, the interface Where compensation is paid for patients that between facilities management and clinical get better quickly (for example, shorter stays in services (the medical services provided - the hospital), the municipality may find that the doctors, nurses, and specialist technicians) hospital has a tendency to treat only the easiest, can be challenging, the clinical staff will have a least complicated cases. certain way they want the facilities managed, but • The regulator for the health sector will need to a PPP establishes a mechanism for management adjust to the presence and context of the PPP to for a long period, say, 20–30 years. The services ensure that the sector remains cohesive, within should be flexible enough to allow the clinical the constraints created by the PPP agreement. staff to get the support they need. The regulator should be involved in PPP project • Clinical services are difficult to define on a design, and should develop the capacity performance basis, for example if the PPP needed to regulate both the public sector and contract requires the PSP to keep fatalities below the PPP. a certain level, the PSP may be incentivized not • PPPs involve a long-term commitment by the to treat the most complex patients. The incentive PSP to operate and maintain the facility. This framework for a PPP providing both facilities makes it difficult for the government to save and clinical services will need to establish the money in times of budget shortfalls by reducing right balance and urgency of service delivery. use of the facility or even closing it for a period An incentive scheme that compensates well for the PPP payments must still be made and the cleaning and maintenance may find itself with a PSP must be compensated where it is not able beautiful clean facility, but few patients treated. to earn the agreed revenues. Table 14. Further Information on Health PPPs General Information PricewaterhouseCoopers (PwC). 2017. PPPs in Healthcare: Models, Lessons and Trends for The Future. https://www.pwc.com/gx/en/healthcare/assets/ppps-in-healthcare.pdf. World Bank. 2019c. “Health”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/ health. World Bank. n.d. “Public-Private Partnerships Legal Resource Center.” PPPLRC. Accessed July 19, 2019. https://ppp.worldbank.org/public-private-partnership/. Module 15 : Bus Rapid Transit (BRT) and Light Railway Transit (LRT) 32 Sector Issues 16.0 Bus Rapid Transit (BRT) and Light Railway Transit (LRT) Construction of high-capacity transportation However, in certain situations BRT and LRT systems in urban areas is usually tied to large or projects are delivered through municipal PPP. country-wide programs managed by the national government given their size and complexity.  16.1 Types of PPP in the Sector Rail is a highly regulated industry. Where work A number of light rail train or metro systems have is to be done on an existing rail system, access been delivered through PPP, for instance in Kuala to that rail system will be limited to those times Lumpur, Malaysia or in Manila, the Philippines. when the track can be cleared (that is, when it is The structures used range from the PSP designing, not in use or to the extent it can be closed down). building, financing, and operating the facility to the Construction works will need to consider the municipality financing the infrastructure and the PSP specific requirements of existing signaling systems, operating and maintaining, possibly also providing rolling stock, and other issues associated with the network operating centers and/or rolling stock.39 management of services for the railway. Where the existing railway is to be modified, the signaling system design will need to be amended to consider changes in the physical infrastructure. 16.2 Lessons Learned/Key Issues • Rail services are often unprofitable, even (metro and buses) and interurban (highways 39 Mandri-Perrot, Cledan, recovering operating costs may be difficult. and railways) transportation modes intersect to and Iain Menzies. In addition to public capital contributions, facilitate connectivity (see project summary 1). 2010. Private Sector finding other sources of revenues will be • The need for access to large amounts of land (or Participation in Light Rail - Light Train Metro, critical, including land value capture,40 property right of way) and space to build transportation Transit Initiatives. development,41 and, where those are insufficient, facilities makes them expensive, long-term, and Washington, DC: World payments from government.42 Commercial and politically sensitive undertakings. Public reaction Bank. http://documents. worldbank.org/curated/ property development opportunities at terminal to new transport facilities can be challenging, en/355141\468323 stations can be particularly important. In Hong no one wants a railway line or new road running 976491/Private- Kong, SAR, China, the mass rapid transit system through their backyard. It is best for all land to sector-participation-in- light-rail-light-metro- not only pays for itself through commercial be acquired before the bid process. It may be transit-initiatives. revenues but it also provides a revenue stream tempting to try to accelerate the process and 40 See Module 16: for the Hong Kong Government (see project commence bidding assuming that the land will be Harnessing Land Value Capture. summary 2). acquired on time; but this has been the downfall 41 See Module 17: • Railway, as well as other mass transport projects of many projects and has created massive Capturing Commercial need to be linked to other transport services. liabilities for governments across the globe. Value. For example in Madrid, Spain, the Moncloa thegpsc.org 42 For further information on how policy makers Transportation Exchanger is where urban can best deal with the main risks involved in designing, procuring, | and implementing urban The World Bank rail transportation, see Mandri-Perrott and Menzies 2010. Module 15 : Bus Rapid Transit (BRT) and Light Railway Transit (LRT) 33 Sector Issues • Transport projects are particularly vulnerable to assumptions. Lenders will generally undertake subsurface risk, where subsurface conditions their own traffic forecasting exercises to verify encountered differ to those anticipated requiring those provided by the contracting authority and changes in construction methodologies and the project company. The inherent vulnerability subsequent increases in cost and delays. of traffic forecasts to optimism bias was Often, the contracting authority will bear the demonstrated more than 15 years ago in a risk of unforeseeable subsurface conditions. Standard & Poors study43 from 2002 of traffic The contracting authority needs to financially forecasts in user fee-based toll road schemes. provide for this to assure potential bidders Of 32 different projects, actual traffic was on that they would have access to funds in average only 70 percent of that forecast, with case of unforeseen changes required during a large majority of projects not reaching even construction. Another common approach is 90 percent of the forecast traffic. Governments to establish a baseline for anticipated ground therefore often provide revenue or traffic conditions, sharing costs, and delays to the guarantees 44 to protect the project company extent the baseline proves inaccurate. and/or the lenders from a certain portion of • Where the PSP takes traffic risk, the toll regime traffic risk. for a transportation project should be based on reliable economic, technical, and financial Table 15. Further Information on BRT and LRT PPPs Toolkits Asian Development Bank. 2008. Bus Rapid Transport: Toolkit for Feasibility Studies. https://ppp.worldbank.org/public-private-partnership/library/bus-rapid-transport-toolkit- feasibility-studies. Asian Development Bank and Government of India. 2011. Toolkit for Public-Private Partnerships in Urban Bus Transport - Maharashtra India. https://ppp.worldbank.org/ public-private-partnership/library/toolkit-public-private-partnerships-urban-bus-transport- maharashtra-india. PPIAF. 2007. The Urban Bus Toolkit. https://library.pppknowledgelab.org/PPIAF/ documents/2067. PPIAF. 2017. Railway reform: Toolkit for improving rail sector performance (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/ en/529921469672181559/Railway-reform-Toolkit-for-improving-rail-sector-performance. PPIAF. 2009. “Toolkit for Public-Private Partnerships in Roads and Highways.” https:// ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/index.html. Pulido, Daniel, Georges Bianco Darido, Ramon Munoz-Raskin, Joanna Charlotte Moody. 2018. The Urban Rail Development Handbook (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/583011538651181032/The-Urban- Rail-Development-Handbook. 43 Standard and Poor’s General Information Global Infrastructure Hub. 2016d. “Transport Sector”. Allocating Risks in Public-Private 2002. Partnership Contracts. https://ppp-risk.gihub.org/risk_category/transport/. 44 With the revised act on Private Participation World Bank. 2019h. “Public-Private Partnerships for Transport”. Public-Private Partnership in Infrastructure, the Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/ Republic of Korea transportation. introduced a PPP framework that is World Bank. 2019k. “Transport”. PPP Knowledge Lab. https://pppknowledgelab.org/ designed to reduce sectors/transport. traffic forecasting risk by guaranteeing a minimum revenue. See Kim, Kang-Soo. 2013. Valuation of the Minimum Revenue Guarantee in the Urban Railway PPP Project. Korea Development Institute. http://www.kdi.re.kr/ kdi_eng/publications/ publication_view. jsp?pub_no=13482. Module 15 : Ports and Airports 34 Sector Issues 17.0 Ports and Airports Ports and airports are normally national-level also hinterland space to allow the development projects given their size, complexity, and of other services linked to port operations, for importance to national connectivity agendas.45 example industrial development, warehousing However, some port and airport investments are and storage for cargo, or hotels, restaurants, and managed at the municipal level, such as ferry retail facilities for passengers. Suape Port in Brazil terminals and local airports, and will therefore be was developed in 2001 under a 30-year PPP and addressed here briefly. was the first dedicated container terminal in the country. Thereafter it became one of the 12 ports Airport projects generally benefit from a diversity with the highest number of regular routes and of revenue sources, a strong monopoly position, general cargo ships in the country. and access to foreign currency revenues from international traffic and duty-free shopping. One of the major challenges for a port is depth. Airport charges are often based on taxes that The larger the ship to be received at the port, can be imposed on the use of airport services or the deeper is the required draft and therefore other such fees and charges. Non-aeronautical the deeper the water required in front of the revenues represent more than 60 percent of quays. Ports located at the mouth of a river or in total international airport revenues in developed a coastal position that suffers from long-shore countries Services provided by ports include cargo currents will need to manage siltation, which will facilities and passenger services. A port requires gradually reduce depth. Dredging is expensive, at space, not just for the equipment needed to deliver construction and during operation (maintenance services and to process cargo and passengers dredging). (cranes, gantries, immigration, and customs) but 17.1 Types of PPP in the Sector  Port and airport PPPs tend to involve the entire port Airports and ports can often mobilize foreign or airport, or possibly an entire port terminal or currency revenue from international traffic, and are airport terminal building. Examples abound.46 PPPs generally an attractive opportunity for PPP. can also be let for smaller parts of the facilities, for example terminal facilities, fueling facilities, cargo warehouses, cargo handling, catering, parking, hotels, commercial businesses, and a variety of other support services. For example, a private concession was issued for the non-aeronautical facilities in the airport in Bali, Indonesia. This private concession increased non-aeronautical revenues by 15 times (Q3 2009 versus 2014) from US$444,000 to US$6.8 million (see project summary 12). thegpsc.org 45 Kim 2013. 46 Ricover, Andy, and Jeffrey Delmon. 2020. | Airport Public Private The World Bank Partnerships: A practical guide for decision makers. Routledge. Module 15 : Ports and Airports 35 Sector Issues 17.2 Lessons Learned/Key Issues • The PSP will need sufficient flexibility to improve revenue flow and investment in infrastructure on the site, and the experience of passengers, airlines, and shipping companies. • Airport and port demand may be heavily influenced by government policy, including locations of competing facilities, open sky policies, governance of local carriers/shippers/ logistics, and low-cost carrier traffic. Clarity on these issues will help PSPs assess airport and port projects and to place a premium on asset values. Table 16. Further Information on Port and Airport PPPs Toolkits World Bank. 2016f. Port Reform Toolkit PPIAF, World Bank, 2nd Edition. https://ppp. worldbank.org/public-private-partnership/library/port-reform-toolkit-ppiaf-world-bank-2nd- edition. General Information Global Infrastructure Hub. 2016e. “Water and Waste Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/content/ uploads/2016/07/160610-GIHub-Allocating-Risks-in-PPP-Contracts-2016-Edition.pdf. Ricover, Andy, and Jeffrey Delmon. 2020. Airport Public Private Partnerships: A practical guide for decision makers. Routledge. World Bank. 2019h. “Public-Private Partnerships for Transport”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private-partnership/sector/ transportation. World Bank. 2019k. “Transport”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/transport. Module 15 : List of References 36 Sector Issues 18.0 List of References Akhmetshina, E. R., O.A. Ignatjeva, and I.M. Ablaev. Delmon, Jeffrey. 2017. Public-Private Partnership 2017.”Tendencies and Prospects of Public-Private Projects in Infrastructure: An Essential Guide Partnership Development in the Field of Physical for Policy Makers. Second Edition. New York: Culture and Sport”. European Research Studies Cambridge University Press. Journal XX (2A). https://core.ac.uk/download/ pdf/155235631.pdf. Delmon, Victoria Rigby. 2014a. “Structuring Private- Sector Participation (PSP) Contracts for Small Amirtahmasebi, Rana, Mariana Orloff, Sameh Scale Water Projects.” World Bank. https://library. Wahba, and Andrew Altman. 2016 Regenerating pppknowledgelab.org/documents/4129?ref_site=kl. Urban Land: A Practitioner’s Guide to Leveraging Private Investment. 2016. Urban Development Delmon, Victoria Rigby. 2014b. Toolkit: Structuring Series. Washington, DC: World Bank. doi: Private-Sector Participation (PSP) Contracts for 10.1596/978-1-4648-0473-1. Small Scale Water Projects. https://www.wsp.org/ sites/wsp.org/files/publications/PPP-Contracting- Andres, Luis A.; Guasch, J. Luis; Haven, Thomas; Toolkit.pdf. Foster, Vivien. 2008. The impact of private sector participation in infrastructure: lights, shadows, Energy Efficiency Services Limited. n.d. “Street and the road ahead (English). Latin American Lighting National Programme”. Accessed October development forum. Washington, DC: World 03, 2019. https://eeslindia.org/content/raj/eesl/en/ Bank. http://documents.worldbank.org/curated/ Programmes/SLNP/about-slnp.html. en/912661468231538767/The-impact-of-private- sector-participation-in-infrastructure-lights- European Regulators Group. 2009. Report on shadows-and-the-road-ahead. Next Generation Access - Economic Analysis and Regulatory Principles. https://ppp.worldbank. Asian Development Bank and Government of India. org/public-private-partnership/library/report- 2011. Toolkit for Public-Private Partnerships in Urban next-generation-access-economic-analysis-and- Bus Transport - Maharashtra India. https://ppp. regulatory-principles. worldbank.org/public-private-partnership/library/ toolkit-public-private-partnerships-urban-bus- Gassner, Katharina, Alexander Popov, and Nataliya transport-maharashtra-india. Pushak. 2007. “An Empirical Assessment of Private Sector Participation in Electricity and Water Asian Development Bank. 2008. Bus Rapid Distribution in Developing and Transition Countries”. Transport: Toolkit for Feasibility Studies. https://ppp. World Bank. worldbank.org/public-private-partnership/library/ bus-rapid-transport-toolkit-feasibility-studies. Global Infrastructure Hub. 2016b. “Energy Sector”. Allocating Risks in Public-Private Partnership City of Liverpool. 2006. Public Private Partnership Contracts. https://ppp-risk.gihub.org/risk_category/ in Urban Regeneration. A Guide to Opportunities energy/. and Practice. https://urbact.eu/sites/default/files/ p4a-_final_english_060906.pdf. Global Infrastructure Hub. 2016c. “Solid Waste Collection, Disposal, Landfill and Recycling”. thegpsc.org Delmon, Jeffrey. 2001. Water Projects: A Allocating Risks in Public-Private Partnership Commercial and Contractual Guide. London: Kluwer Contracts. https://ppp-risk.gihub.org/risk_category/ Law International. solid-waste/. | The World Bank Delmon, Jeffrey. 2016. Private Sector Investment in Infrastructure: Project Finance, PPP Projects and PPP Frameworks. Third Edition. Wolters Kluwer. Module 15 : List of References 37 Sector Issues Global Infrastructure Hub. 2016d. “Transport https://www.portlandoregon.gov/transportation/ Sector”. Allocating Risks in Public-Private article/567030. Partnership Contracts. https://ppp-risk.gihub.org/ risk_category/transport/. LaRocque, Norman. 2008. Public-Private Partnerships in Basic Education: An International Global Infrastructure Hub. 2016e. “Water and Review. CfBT Education Trust. Waste Sector”. Allocating Risks in Public-Private Partnership Contracts. https://ppp-risk.gihub.org/ Macdonald, Susan, and Caroline Cheong. 2014. content/uploads/2016/07/160610-GIHub-Allocating- The Role of Public-Private Partnerships and the Risks-in-PPP-Contracts-2016-Edition.pdf. Third Sector in Conserving Heritage Buildings, Sites, and Historic Urban Areas. Getty Conservation Government of India. 2017. Guidance Notes Institute. for IT PPP Projects: Model RFP Templates for Public Private Partnership. https://meity.gov. Mandri-Perrot, Cledan, and Iain Menzies. 2010. in/writereaddata/files/public%20-private%20 Private Sector Participation in Light Rail - Light -partnerships%20.pdf. Train Metro, Transit Initiatives. Washington, DC: World Bank. http://documents.worldbank.org/ Hogan Lovells Lee & Lee. 2011. PPP Projects in the curated/en/355141468323976491/Private-sector- Education Sector - Key Principles. participation-in-light-rail-light-metro-transit- https://www.hoganlovells.com/~/media/hogan- initiatives. lovells/pdf/publication/pppprojectsintheeducation sectorkeyprinciplessept11_pdf.pdf. Marin, Philippe. 2009. Public Private Partnerships for Urban Water Utilities: A Review of Experiences in Hunt, Sally. 2002. Making Competition Work in Developing Countries. Washington, DC: World Bank. Electricity. New York: Jonh Wiley & Sons. Menzies, Iain, and Cledan Mandri-Perrott. 2010. ICT Regulation Toolkit. n.d. “ICT Regulation Private sector participation in urban rail: getting the Toolkit”. Accessed October 03, 2019. http://www. structure right (English). Gridlines (54). Washington, ictregulationtoolkit.org/index. DC: World Bank. http://documents.worldbank.org/ curated/en/906021468330931430/Private-sector- Infocomm Development Authority of Singapore. participation-in-urban-rail-getting-the-structure- 2012. “Next Generation Nationwide Broadband right. Network”. www.ida.gov.sg. Owens, Kate. 2016. “Constructing housing PPPs International Finance Corporation. 2012. to build trust”. World Bank Blogs. https://blogs. “Cities & PPPs”. Handshake (4). https://library. worldbank.org/ppps/constructing-housing-ppps- pppknowledgelab.org/documents/1947?ref_site=kl. build-trust. International Finance Corporation. 2014. “Waste PPIAF. 2007. The Urban Bus Toolkit. https://library. PPPs”. Handshake (12). pppknowledgelab.org/PPIAF/documents/2067. https://www.ifc.org/wps/wcm/connect/97a0af43- 441a-4528-bf39-9a7b1af1d7c7/Handshake12_ PPIAF. 2009. “Toolkit for Public-Private Partnerships WastePPPs.pdf?MOD=AJPERES&CVID=lKbDLHE. in Roads and Highways.” https://ppiaf.org/sites/ ppiaf.org/files/documents/toolkits/highwaystoolkit/ International Finance Corporation. 2015. Utility- index.html. Scale Solar Photovoltaic Power Plants: A Project Developer’s Guide. https://www.ifc.org/ PPIAF. 2017. Railway reform: Toolkit for improving wps/wcm/connect/a1b3dbd3-983e-4ee3-a67b- rail sector performance (English). Washington, DC: cdc29ef900cb/IFC+Solar+Report_Web+_08+05. World Bank Group. http://documents.worldbank.org/ pdf?MOD=AJPERES&CVID=kZePDPG. curated/en/529921469672181559/Railway-reform- Toolkit-for-improving-rail-sector-performance. Kim, Kang-Soo. 2013. Valuation of the Minimum Revenue Guarantee in the Urban Railway PPP Pulido, Daniel, Georges Bianco Darido, Ramon Project. Korea Development Institute. http://www. Munoz-Raskin, Joanna Charlotte Moody. kdi.re.kr/kdi_eng/publications/publication_view. 2018. The Urban Rail Development Handbook jsp?pub_no=13482. (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/ Kittelson & Associates Inc. 2016. Portland Parking en/583011538651181032/The-Urban-Rail- Analysis and Toolkit for Mixed-Use Centers and Development-Handbook. Corridors Parking Management Toolkit. Module 15 : List of References 38 Sector Issues PricewaterhouseCoopers (PwC). 2017. PPPs in World Bank. 2011. The Role and Impact of Public- Healthcare: Models, Lessons and Trends for The Private Partnerships in Education. Future. https://www.pwc.com/gx/en/healthcare/ assets/ppps-in-healthcare.pdf. World Bank. 2012. Developing Successful Public-Private Partnerships to Foster Investment Reuschke, Darja. “Public-Private Partnerships in in Universal Broadband Networks. https://ppp. Urban Development in the United States”. NEURUS worldbank.org/public-private-partnership/library/ Program, University of California in Irvine: 2001. developing-successful-public-private-partnerships- https://core.ac.uk/download/pdf/7035711.pdf. foster-investment-universal-broadband-netw. Ricover, Andy, and Jeffrey Delmon. 2020. Airport World Bank. 2014c. Rooftop Solar Public-Private Public Private Partnerships: A practical guide for Partnerships: Lessons from Gujarat Solar. https:// decision makers. Routledge. library.pppknowledgelab.org/attached_files/ documents/2408/original/PIQ_RooftopSolar_ SALGA. n.d. MUNICIPALITIES: Municipal Focus - INTERACTIVE.pdf?1438367268. Municipal Guidelines on Social & Rental Housing. https://www.salga.org.za/Municipalities%20F%20 World Bank. 2016a. “Chicago Metered Parking MGOSARH.html. System Concession of 2008”. Public-Private Partnership Legal Resource Center. https://ppp. Swiss Centre for Development Cooperation in worldbank.org/public-private-partnership/library/ Technology and Management. 2000. Private Sector chicago-metered-parking-system-concession- Participation in Municipal Solid Waste Management: of-2008. Guidance Pack (5 Volumes). https://ppp.worldbank. org/public-private-partnership/library/private-sector- World Bank. 2016c. “PPPs for Public Markets, participation-municipal-solid-waste-management- Malls and Slaughter Houses / Abattoirs”. Public- guidance-pack-5-volumes. Private Partnership Legal Resource Center. https:// ppp.worldbank.org/public-private-partnership/ The Ford Foundation. 2003. Public Markets as a ppps-public-markets-malls-and-slaughter-houses- Vehicle to Upward Mobility and Social Integration. abattoirs. https://s3.amazonaws.com/aws-website- ppsimages-na05y/pdf/Ford_Report.pdf. World Bank. 2016f. Port Reform Toolkit PPIAF, World Bank, 2nd Edition. https://ppp.worldbank. ULI Development Case Studies. 2015. James F. org/public-private-partnership/library/port-reform- Oyster Bilingual Elementary School and Henry toolkit-ppiaf-world-bank-2nd-edition. Adams House. World Bank. 2017b. Draft Concession Agreement: Um, Paul Noumba, Laurent Gille, Lucile Municipal Solid Waste Management, Delhi. https:// Simon, Christophe Rudelle. 2004. A Model ppp.worldbank.org/public-private-partnership/ for Calculating Interconnection Costs in library/draft-concession-agreement-municipal- Telecommunications. Washington, DC: World Bank solid-waste-management-delhi. and the Public–Private Infrastructure Advisory Facility. https://openknowledge.worldbank.org/ World Bank. 2019a. “Education”. PPP Knowledge handle/10986/15040. Lab. https://pppknowledgelab.org/sectors/ education. UNECE, WHO, ADB. 2012. “A Preliminary Reflection on the Best Practice in PPP in Healthcare World Bank. 2019b. “Energy and Power PPPs”. Sector: A Review of Different PPP Case Studies and Public-Private Partnership Legal Resource Experiences”. Paper prepared for the conference Center. https://ppp.worldbank.org/public-private- PPPs in Health Manila 2012: Developing Models, partnership/sector/energy. Ensuring Sustainability: Perspectives from Asia and Europe. https://www.unece.org/fileadmin/DAM/ceci/ World Bank. 2019c. “Health”. PPP Knowledge Lab. images/ICoE/PPPHealthcareSector_DiscPaper.pdf. https://pppknowledgelab.org/sectors/health. thegpsc.org United Nations Habitat. 2011. Public-Private World Bank. 2019d. “ICT”. PPP Knowledge Lab. Partnership in Housing and Urban Development. https://pppknowledgelab.org/sectors/ict. https://new.unhabitat.org/sites/default/files/ | download-manager-files/Public-Private%20 World Bank. 2019e. “Municipal Parking”. Public- The World Bank Partnership%20in%20Housing%20and%20 Private Partnerships Legal Resource Center. https:// Urban%20Development.pdf. ppp.worldbank.org/public-private-partnership/ municipal-parking. Module 15 : List of References 39 Sector Issues World Bank. 2019f. “Municipal Solid Waste (MSW) PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private- partnership/sector/transportation. World Bank. 2019g. “Power”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/power. World Bank. 2019h. “Public-Private Partnerships for Transport”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public- private-partnership/sector/transportation. World Bank. 2019i. “Public-Private Partnerships in E-Government”. PPP Knowledge Lab. https:// library.pppknowledgelab.org/documents/2938?ref_ site=kl&restrict_pages=1§or%5B%5D=ICT%20 %28Information%20and%20 Communications%20Technology%29&site_ source%5B%5D=Handshake%20Journal&site_ source%5B%5D=Knowledge%20Lab. World Bank. 2019j. “Sub-national and Municipal PPPs”. Public-Private Partnerships Legal Resource Center. https://ppp.worldbank.org/public-private- partnership/ppp-sector/sub-national-and- municipal-ppps/sub-national-and-municipal-ppps. World Bank. 2019k. “Transport”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/ transport. World Bank. 2019l. “Urban Revitalization”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/urban-revitalization. World Bank. 2019m. “Waste”. PPP Knowledge Lab. https://pppknowledgelab.org/sectors/waste. World Bank. 2019n. “Water and Sanitation PPPs”. Public-Private Partnership Legal Resource Center. https://ppp.worldbank.org/public-private- partnership/sector/water-sanitation. World Bank. 2019o. “Water and Sanitation”. PPP Knowledge Lab. https://pppknowledgelab.org/ sectors/water-sanitation. World Bank. n.d. “Public-Private Partnerships Legal Resource Center.” PPPLRC. Accessed July 19, 2019. https://ppp.worldbank.org/public-private- partnership/. World Bank. n.d. “PPP Knowledge Lab”. Accessed October 03, 2019. https://pppknowledgelab.org//. Module 15 : 40 Sector Issues thegpsc.org | The World Bank VALUE CAPTURE HARNESSING LAND Municipal 16 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of the Module 02 2.0 The Importance of Land for 03 Municipalities 3.0 Understanding Land Value 04 4.0 Instruments for Land Value 05 Capture Capture 5.0 List of References 07 Module 16 : Purpose of the Module 2 Harnessing Land Value Capture 1.0 Purpose of the Module This module introduces concepts of land value capture and describes a few of the key instruments that municipalities can use to capture land value.1 1 For a more complete discussion of this topic, see Amirtahmasebi, Rana, Mariana Orloff, Sameh Wahba, and Andrew Altman. Regenerating Urban Land: A Practitioner’s Guide to Leveraging Private Investment. 2016. Urban Development Series. Washington, thegpsc.org DC: World Bank. doi: 10.1596/978-1-4648- 0473-1; Smolka, Martim O. 2013. Implementing Value Capture in Latin | America: Policies The World Bank and Tools for Urban Development. Lincoln Institute of Land Policy. Module 16 : The Importance of Land for Municipalities 3 Harnessing Land Value Capture 2.0 The Importance of Land for Municipalities Land is the most valuable asset for municipal governments. The sale or lease of land may represent a significant potential revenue stream for the municipality. The city government of Istanbul, Turkey, auctioned and sold an old municipal bus station and administrative building in 2007 for US$1.5 billion. Comparing this with its total municipal capital spending of US$994 million, one can see the potential of land as an asset. Similarly, in Mumbai, India, the city earned US$1.2 billion from the sale of 13 ha of land in the city’s new financial center, totaling 10 times the city’s capital spending in 2005. But, land is a limited and non-renewable asset and urban land markets are extremely volatile. 2 2 For a more complete discussion of this topic, see Amirtahmasebi et al. 2016;. Smolka et al. 2013. Module 16 : Understanding Land Value Capture 4 Harnessing Land Value Capture 3.0 Understanding Land Value Capture The notion of ‘land value capture,’ is to mobilize some or all of the land value increases resulting from actions other than the landowner’s, such as public investments in infrastructure or administrative changes in land use norms and regulations, for the benefit of the community at large.3 Thus, the objective of land value capture is to draw on publicly generated land value increases to enable local administrations to improve their land use management practices, and to help them fund more urban infrastructure and service provision. A simple example is property tax, which requires landowners to share a percentage of land value with the municipality. The amount of property tax paid increases as the value of the land increases (no matter the cause of the increased value). In practice, successful implementation of land value capture demands management skills to deal with many complex factors and diverse stakeholders. In addition, it requires proper understanding of land market conditions; comprehensive property monitoring systems; a fluid dialogue among fiscal, planning, and judicial entities; and the political resolve of local government leaders.4 Land value increases are captured more successfully from landowners and other stakeholders who perceive they are receiving greater benefits from a public intervention than those accruing from business as usual and are more likely to succeed when used to solve a locally recognized problem.5 3 For example, the principle may exist at law that no citizen should accumulate thegpsc.org wealth that does not result from his or her own efforts, known as ‘unjust enrichment’ in both civil and common | law traditions. Smolka et The World Bank al. 2013. 4 Smolka et al. 2013. 5 Smolka et al. 2013. Module 16 : Instruments for Land Value Capture 5 Harnessing Land Value Capture 4.0 Instruments for Land Value Capture Key instruments available to a municipality (3) Betterment levies - a form of tax or a fee to implement land value capture include the levied on land that has gained in value following:6 because of public infrastructure investments. For example, in Johannesburg, South Africa, (1) Land as public contribution - when a city improvement districts (CIDs) are defined municipality uses the value of its land as an geographic areas in which property owners equity contribution toward a PPP. In this scenario, agree to pay for supplementary services and a public entity might enter into a partnership with improvements in their urban environment. a PSP for redeveloping a targeted urban area. These services can include security measures, The public sector ‘invests’ the value of its land urban area upgrades, litter collection, and assets and the PSP invests cash. design and upkeep of public spaces. A CID can be formed when a petition is filed by at (2) Developer exactions and impact fees - the least 51 percent of the property owners in developer is required to contribute to public the geographic area and then approved by services as a precondition to developing a the municipality. The CID levy is compulsory plot of land, as compensation for the cost of and is calculated based on the value of the additional public infrastructure and services. individual property and applied pro rata. While For example, developer exactions may include it is considered one of the most direct forms the following: of value capture, the cost of administering • Dedication of land for public use, for parcel-by-parcel betterment levies can be high example, reserving a certain percentage of compared to the collected revenue. land for parks, public space. • Construction of public improvements, for (4) Tax increment financing (TIF) - the example, the developer constructs a public municipality issues a bond on the capital road to connect the proposed development markets to borrow against forthcoming increases with the existing public road network. in tax receipts that accompany successful • Funding, for example, the developer urban redevelopment. The tax revenues yielded, provides a financial contribution toward the which exceed the taxes that would have been cost of a new bus stop or LRT station collected without the redevelopment, constitute the ‘tax increment’ and the TIF captures that Among the disadvantages of this financing gain to pay the bond holders. A TIF allows the tool is that it can be technically cumbersome municipality to invest in public infrastructure to estimate appropriate costs. Any government and other improvements by borrowing against discretion regarding assessment amounts the future anticipated increase in tax revenues can create perceptions of corruption. Also, generated by the project. A TIF can facilitate the with the exception of some robust real estate self-financing of a project with minimal negative markets (for example, Hong Kong, SAR, China), fiscal impact. This tool is less appropriate for imposing an extra levy can at times have the less developed financial markets or for funding effect of discouraging, rather than incentivizing, smaller projects. private sector investment. 6  mirtahmasebi et al. A 2016. Module 16 : Instruments for Land Value Capture 6 Harnessing Land Value Capture Figure 1. The Basic TIF Model Incremental Tax revenue New tax base post TIF - reverts to taxing Annual taxes generated in (Used to finance debt service) TIF district authority Existing tax base (frozen at start of project, althought can be kept constant in real terms and continues to curent taxing authority) Year 1 of TIF Year 1 of TIF (5) Density bonus - a municipality may permit a developer to increase the maximum allowable development on a site in exchange for either funds or in-kind support. For example, the municipality may allow landowners near the new infrastructure to increase the type of development allowed, permitting the developer to earn more from the land. In exchange, the landowner must pay a fee for the development rights. This fee is used to fund infrastructure. This tool works best in cities in which market demand is strong and land availability is limited, or for projects or sites in which the developer’s financial incentives outweigh alternative development options. (6) Up-zoning - changing the zoning to allow for higher value (for example, from industrial to residential) or more dense use (for example, increasing allowable floor area ratio). As with density bonuses, up-zoning can be successfully deployed as a kind of financing tool for urban regeneration only when sufficient market demand exists. thegpsc.org | The World Bank Module 16 : List of References 7 Harnessing Land Value Capture 5.0 List of References Amirtahmasebi, Rana, Mariana Orloff, Sameh Wahba, and Andrew Altman. Regenerating Urban Land: A Practitioner’s Guide to Leveraging Private Investment. 2016. Urban Development Series. Washington, DC: World Bank. doi: 10.1596/978-1- 4648-0473-1 Smolka, Martim O. 2013. Implementing Value Capture in Latin America: Policies and Tools for Urban Development. Lincoln Institute of Land Policy. Module 16 : 8 Harnessing Land Value Capture thegpsc.org | The World Bank COMMERCIAL VALUE CAPTURING Municipal 17 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of the Module 02 2.0 Commercial Activities Under, 03 Above, or Around the Project Facilities 3.0 Commercial Activities Delivered 04 4.0 Ensure Public Service Take 05 From the Project Facilities Priority 5.0 Commercial Value Capture in 06 6.0 List of References 08 Different Sectors 5.1 Transport-oriented Development 06 5.2 Urban Services 06 5.3 Historic and Cultural Sites 07 5.4 Historic Ports 07 5.5 Tourism 07 Module 17 : Purpose of this Module 2 Capturing Commercial Value 1.0 Purpose of this Module Municipalities often perceive investment needs, activities to the development to generate in particular infrastructure, solely as a public needed revenues and offer additional services, service, a cost center for the municipality. In fact, for example, residential or office space (see such investments may also create commercial project summary - Mandaluyong City Market, opportunities. Philippines, project summary No. 38) • Bus or truck terminals provide an opportunity Commercial activities around municipal for retail activities, selling goods and services investments often result in significant profits for to passengers and passersby (see project the private sector, in some cases creating an summary - Modern Bus Terminal and Municipal increase in land value adjacent to the investment Market, Danli Honduras, project summary No. 5). (see Module 16: Harnessing Land Value Capture), • Government offices can be developed with in others, providing opportunities for higher commercial office space and mixed-use facilities value, more or new commercial activities (the to reduce costs to government (see project term ‘Commercial Value Capture’ will be used in summary - Tlajomulco Administrative Center, this module). For example, BRT systems result in Mexico project summary No. 49). increased land values and commercial revenues • Convention centers are often developed with for those located near access points, such as bus hotels because revenues from convention stations. A share of this increased value can be centers are generally insufficient to cover costs. captured by the government, for example through property taxes. The operator of the BRT system When considering a municipal PPP, the municipality can be allowed to develop space in, around, and may want to assess the possibility of commercial above bus stations for retail letting, office setup, or value capture, by considering: other commercial activities to generate income and (1) Commercial activities under, above, or around improve project revenues. This module provides a the project facilities; and brief introduction to commercial value capture by (2) Commercial activities delivered from the project PPP projects. The project summaries provide facilities; but a number of examples of innovative commercial (3) Should always ensure that the project focuses value capture in different countries and sectors. on the public services that form the core of the PPP. PPP can provide a useful mechanism to mobilize commercial revenues to fund public services.1 This module will then describe commercial To replace some or all of the public funding that value capture in a few sectors, as an example of would otherwise be needed to make a project some approaches adopted globally. viable, the project can generate commercial revenues. Such commercial revenues can be mobilized for many PPP projects, alongside or linked to public services. Some examples are the following: • A public market project that may not be able to attract sufficient revenues to cover operating costs, much less depreciation, or initial thegpsc.org 1 Delmon, Jeffrey. 2017. Public-Private capital investment may link other commercial Partnership Projects in Infrastructure: An Essential Guide for | Policy Makers. Second The World Bank Edition. New York: Cambridge University Press. Module 17 : Commercial Activities Under, Above, or Around the Project Facilities 3 Capturing Commercial Value 2.0 Commercial Activities Under, Above, or Around the Project Facilities Where property prices are high, air rights over The Revolutionary Government of Zanzibar issued a public asset can have significant value. For a concession to CICP to develop eco-friendly example, Washington, D.C., needed to develop bungalows and a visitors’ center on a 5.9-acre low-cost housing and refurbish a library and a island, including a marine park and a forest reserve. fire station that were almost obsolete and whose The revenues generated from ecotourism cover renovations would be costly. The municipality operational expenses, park management, and awarded a PPP to a developer to provide a state-of- environmental education. CICP has a 33-year lease the-art library, a fire station, and low-cost housing and a 10-year management contract. The PSP in exchange for the right to build condominiums had to work with seven government departments above the public facilities (see Project Summary and gain the support of area fishermen and local 73). The same approach can be used for other communities before the project was approved (see developments, for example, parking garages or project summary 60). bus terminals. Also in Washington, D.C., a stretch of highway that runs through the center of the city was built over with residential, office, retail, and parking facilities, including public spaces. This project revitalized a large area of the downtown (see project summary 75). Space under the public facility may also provide opportunities for commercial activities. An example would be the parking area under Rivera Navarrete Avenue in San Isidro, Peru. The municipal government wanted to address the constant congestion problems of Lima’s financial center and, at the same time, to reduce the estimated deficit of 10,600 parking spaces in the area. A three-story parking facility was developed underground, under the main avenue (see project summary 46). The space around a public asset may also provide opportunities for new revenue streams. As an example, the Oyster School in Washington, D.C., suffered from out-of-date and dilapidated facilities. The cost of refurbishment far exceeded available budget. Instead, the municipality contracted with a private party to refurbish the school and develop part of the land commercially. The revenues from the commercial development (an apartment building) paid for the cost of the school refurbishment, creating one of the top schools in the city with the latest facilities and equipment (see project summary 88). Module 17 : Commercial Activities Delivered From the Project Facilities 4 Capturing Commercial Value 3.0 Commercial Activities Delivered From the Project Facilities Sometimes the project facility itself can be used for commercial purposes as well as public services. For example, when redeveloping the Mandaluyong City Market in the Philippines, the usual subsidized space for low-cost vendors was blended with higher-value business and entertainment space, that is, department stores, a bowling alley, and a movie theater. The high-value space produces sufficient revenue to subsidize the low-cost vendor facilities (see project summary 38). In Danlí, Honduras, the municipality built a modern bus terminal to replace its outdated and disorganized bus terminal. The new bus terminal provided retail facilities, warehousing, and meeting rooms within the bus terminal (as well as around and above) (see project summary 5). These facilities provide additional commercial services to passengers/residents and create a new revenue stream to fund the bus terminal. thegpsc.org | The World Bank Module 17 : Ensure Public Service Take Priority 5 Capturing Commercial Value 4.0 Ensure Public Service Take Priority The focus on commercial revenues must never take the focus off the public facility. For example, a public market looking for higher-value commercial space might be tempted to reduce the space made available for low-cost vendor space. A low-cost housing project looking to mobilize commercial revenues through mixed-use space might be tempted to reduce the number of low-cost units developed. In some cases, this loss of focus results from overly ambitious municipal staff and in some cases it results from PSPs whose primary line of business is commercial profitability. In some cases, increasing commercial activities also increases requirements of the public services. For example, a parking garage with office space developed above it will need to provide additional parking to address the needs of the tenants of the office space. A bus terminal offering additional commercial services might need to be designed for a larger foot traffic, as passengers remain in the terminal longer than normal to benefit from the commercial services and other customers come to the terminal who are not otherwise bus passengers. For example, the Moncloa Transportation Exchanger in Madrid, Spain, an integrated multimodal transportation terminal equipped with commercial and office areas, was expanded and improved in 2009 to cater for the increasing number of passengers. As a result, it was able to cater for 110,000 passengers in 2011, up from only 44,000 in 1995 (see project summary 1). Module 17 : Commercial Value Capture in Different Sectors 6 Capturing Commercial Value 5.0 Commercial Value Capture in Different Sectors The nature of commercial value capture available from different PPP projects also reflects the project sector.  ransport-oriented Development 5.1 T The movement of people through mass transit further improve convenience for passengers. provides an opportunity to deliver commercial This ‘transit-oriented development’ will be relevant services to those users, improving their transport for a number of municipal projects, including bus experience and earning additional revenues for the and truck terminals, LRT systems, and BRT projects. project. 2 Where the municipality sees passengers, The opportunity for transit-oriented development the PSP sees customers. By providing commercial is exemplified by the Hong Kong Mass Transit services to users, the project not only mobilizes Railway Corporation (MTRC) where residential new sources of revenues but also improves the user and commercial properties are built above and experience, by allowing users to meet their retail around the railway stations and depots, improving needs during their commute. the convenience for passengers and increasing revenues for the MTRC as well as the Hong Kong The municipality may want to consider what public Government (see project summary 2). services may also be provided in transit hubs to  rban Services 5.2 U In addition to transport, other urban services provide project in Turin, Italy, to support disadvantaged opportunities for commercial revenue generation. For population groups also provides ancillary services example, public markets create an opportunity for for the residents and the surrounding neighborhood low-income vendors to have access to retail space. such as a hotel, bars, restaurants, a laundry, a But these sa me public markets can be used to grocery store, medical and dental clinics, an make space available for middle- and high-income employment office, after-school activity center, and vendors, and thereby mobilize more customers for a car/bike-sharing system (see project summary 81). low-income vendors and more revenues for the These services increase social inclusion within the project. Equally, the land used to develop affordable neighborhood among low-, middle-, and high-income housing for low-income families can also provide residents; provide more revenue for the project; and mixed-use space, with middle- and high-income create economic opportunities for residents of the 2 For further discussion housing, commercial and office space, and parking. low-income housing. of transit-oriented For example, the affordable temporary social housing development, see Salat, Serge, and Gerald Paul Ollivier. 2017. Transforming the urban Historic and Cultural Sites 5.3  space through transit- oriented development: the 3V approach PPP can bring private investments to refurbish that allowed them to redevelop the properties for (English). Washington, thegpsc.org and maintain historic and cultural assets and, in commercial purposes, in many cases resorts and D.C: World Bank Group. http://documents the process, create an investment opportunity. An hotels. The investors have clear obligations to worldbank.org/curated/ example would be PPP projects for the development develop the properties on time, maintain their historic en/64735149064830 of historic palaces in Rajasthan, India, that were properties, and provide access to the public. | 6084/Transforming- falling to ruins due to lack of investment and The World Bank the-urban-space- through-transit-oriented- maintenance. These historic properties were leased Similarly, in Jaipur, India, an 18th century pleasure development-the-3V- to private investors through a competitive process palace called Jal Mahal is located in the middle of a approach. Module 17 : Commercial Value Capture in Different Sectors 7 Capturing Commercial Value 300-acre lake. The lake was an ecological disaster, Another example is the Akaretler Row House, a with the dumping of untreated sewage and poor historic structure located in Istanbul, Turkey. In upkeep. After several failed attempts at restoration exchange of restoring the historic structure, the through other means, the Government of Rajasthan municipality awarded a PPP to the private developer awarded a PPP to use part of the site for private to build office, retail spaces, hotel, residential units, commercial development, and for the restoration and parking spaces above and around the site (see and maintenance of the public space. Unfortunately, project summary 56). this PPP has since been suspended for political reasons (see project summary 57).  istoric Ports 5.4 H As cities grow and shipping transport increases restaurants, pedestrian space, and residential and modernizes, ports are being moved out of city space. This has been done successfully in centers to areas more appropriate for industrial a number of cities, including Rotterdam, the development. The historic port can be redeveloped Netherlands; Sydney, Australia; Buenos Aires, to provide passenger terminal facilities (for both Argentina; Baltimore, Maryland, USA and Cape private craft and ferry/cruise liner traffic) surrounded Town, South Africa, to name but a few. 3 by commercial space, for example hotels, 5.5 Tourism To attract investment, and to ensure that tourism PPPs can create a contractual arrangement more investment benefits local communities, protects conducive and enforceable than would be the natural resources, and fits with government strategy, legal and/or regulatory system of the country. For PPPs can help create a clear agreement and example, in some developing countries, the tourism partnership between the public and private sector sector is the target of rent seeking at different levels with incentives in-built to protect investors, enable of national and local government. Investors find local staff and skill development, benefit local themselves faced with serial requests for payment communities, and protect natural resources. and delays linked to permits, licenses, and other bureaucratic processes, whether or not fictional, In 2001, SANParks signed a concession with a without transparency or clarity. If well designed, PSP to outsource management of 11 restaurants, a PPP regime can reduce or eliminate such rent 2 shops, and 3 picnic sites in the Kruger National seeking and reduce the risk premium investors Park game reserve against a monthly concession would normally apply. fee of approximately 13 percent of its turnover. The PPP has resulted in a significant increase in The Turkish Government sought to refurbish the SANParks’ profit, an upgrading of restaurants and Akaretler Row Houses, originally built as housing for shops, improvement in service and quality, skills palace workers in the 19th century. Strict regulations development and an incentives programme for staff. for the preservation of historical buildings made The concession has not been without its challenges, this redevelopment particularly complicated. A including staff resistance, due to new conditions of PPP arrangement was used to coordinate different service (improved performance and strict control of government stakeholders and enable the PSP stock) (See project summary 61). to redevelop the site, including a luxury hotel, shops, offices, cafes, restaurants, the Atatürk The Jozini Tiger Lodge, in South Africa, is Museum, and a car park. The PSP also helped a partnership between the community, the market the area and assumed the management government, and a PSP, which is responsible for of surrounding public spaces (including a local the day-to-day management of the lodge. The park). It has contributed to the creation of new jobs government funded the initial working capital to in the area and a rising number of tourists. The ensure 80 percent of local staff. The community PPP arrangement helped address the complex 3 Wikipedia. 2019. “Redeveloped Ports made land available. Mobilization of community requirements of the legal and regulatory regime And Waterfronts”. partnerships is key to rural tourism (see project applicable to redevelopment of historic properties Wikipedia. https:// summary 62). (see project summary 56). en.wikipedia.org/wiki/ Category:Redeveloped_ ports_and_waterfronts. Module 17 : List of References 8 Capturing Commercial Value 6.0 List of References Delmon, Jeffrey. 2017. Public-Private Partnership Projects in Infrastructure: An Essential Guide for Policy Makers. Second Edition. New York: Cambridge University Press. Salat, Serge, and Gerald Paul Ollivier. 2017. Transforming the urban space through transit- oriented development : the 3V approach (English). Washington, D.C: World Bank Group. http://documents.worldbank.org/curated/ en/647351490648306084/Transforming-the-urban- space-through-transit-oriented-development-the- 3V-approach Wikipedia. 2019. “Redeveloped Ports And Waterfronts”. Wikipedia. https://en.wikipedia.org/ wiki/Category:Redeveloped_ports_and_waterfronts. thegpsc.org | The World Bank COMMUNITY ENGAGEMENT Municipal 18 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 Community Engagement 03  hy is Community Engagement Important 2.1 W 03 in PPP Projects? 2.2 S ix-Step Community Engagement Process 04  apping Community Engagement 2.3 M 05 Reporting, Evaluating, and Monitoring 2.4  05 3.0 Making PPPs More Pro-Poor and 06 4.0 List of References 16 Gender Inclusive What is the Context of Women and 3.1  06 the Poor? How to Design the Project for the Benefit 3.2  09 of Women and the Poor? What Additional Benefits Might the Project 3.3  11 Provide to Women and the Poor? How Can the Poor Communicate with 3.4  13 the Project? How Can the Project Communicate with 3.5  14 Women and the Poor?  hat Incentives Should Be Placed on the 3.6 W 15 Project Participants to Protect the Interests of Women and the Poor? Module 18 : Purpose of this Module 2 Community Engagement 1.0 Purpose of this Module This module sets out different tools to be used throughout the PPP project cycle to engage with the communities affected by and associated with the project, with a special focus on women and the poor. thegpsc.org | The World Bank Module 18 : Community Engagement 3 Community Engagement 2.0 Community Engagement Community engagement provides critical information just as important to listen to and consider community for PPP project design, to ensure services are input, as it is to share information or inform delivered in the right way, to the right people. communities about PPP project activities—for project Community engagement can also help create proponents to address issues and concerns and local community buy-in to the project and facilitate provide feedback to each other. This module outlines adaptation to change. Municipal PPP projects should a basic approach to community engagement using systematically implement community engagement a six-step process, which will need to be adapted to programs. Engagement is a two-way process. It is the specific needs of the municipality. 2.1 Why is Community Engagement Important in PPP Projects? Municipalities should design and resource in circumstances over time, and therefore to community engagement activities from the earliest attract private sector investment. For example, phase as projects are being identified and then an international study indicated that PPP projects continue to engage the community through that engage with local communities have rates of construction and operation of PPP projects. While economic returns that were more than twice as this may involve initial costs for the municipality, high as projects that did not engage the local a PPP that has good community engagement is community well.1 more likely to be profitable, to survive changes Figure 1: Commonly Recognized Benefits of Community Engagement Strengthens community commitment to, and ownership of, the PPP Project and leads to Community Buy-In increased uptake and support of project services. Greater community input from the start improves PPP project design and performance and Improved Design ensures that designs accurately reflect community priorities and needs, the quality of decisions and the quality and sustainibility of public and private-sector services. Engagement processes provide a means for the PPP Project to continuously verifying the Flexible Design relevance and appropriateness of their project and make adjustments to the design as needed. Engagement processes provide an opportunity to foresee and resolve potential obstacles before Manage Risk making a decision. PPP proponents can mitigate risk by disseminating project information, learn about potential community issues and establishing a dialogue with the community stakeholders. Community engagement has the potential to prevents delays and avoid unforeseen costs in Prevent Delays the implementation phase. The Community and PPP Proponents learn from each other by exchanging information Exchange Information and experiences increasing understanding of the objectives of PPP Project and the issues and Experiences surrounding them. Engagement can help build local capacity of PPP Proponents, including their capacity to Build Capacity analyze problems and initiate other development activities. 1  ottak, Conrad K Phillip. 1991. Cultural PPP Projects are supposed to provide value to the Public. The information from community Measure Value Anthropology. 5th ed. engagement can confirm or identify the need to reassess whether a project will deliver value of Project McGraw-Hill. to the Community. Module 18 : Community Engagement 4 Community Engagement Figure 2 Community Define Select method Issues tracking Decide whom engagement Reporting and purpose of of engagement and grievance to engage ranking Monitoring engagement and implement process assessment 2.2 Six-Step Community Engagement Process Step 1 - Define the purpose of engagement: Step 4 - Develop engagement plan: Being clear about the purpose of the engagement Different techniques and tools can be used by and key issues to address will set the context for the municipalities to engage the community. community interactions and manage expectations Municipalities should develop a project-specific of those participating in the process. To define the engagement plan which should describe proposed purpose, project proponents must first agree on engagement strategies, tools, and schedule for what can be accomplished with the engagement. engagement during each phase of a PPP, Once the purpose of engagement has been including transparency mechanisms (see Module defined, municipalities should agree on what level 3: Sample Project Concept Note and Module 4: of participation is actually being sought, which Feasibility Study) depends on the phase of the PPP and the type of project being proposed. Step 5 - Tracking and complaints management process: Municipalities will need to track issues, Step 2 - Decide the parts of the community to questions, and concerns raised by the community engage: Create a list of ‘with whom to engage’— in an organized and consistent way. An issue with individuals, groups, and organizations that tracking table should be created to document ideas, could have an interest in the PPP or have some concerns, or questions, including a systematic way influence over the success of the PPP. The list is a of managing complaints and grievances. living document and will evolve over time. Step 6 - Reporting and monitoring: Accurately Step 3 - Community engagement ranking recording community feedback, sharing it with assessment: Not all parts of the community key stakeholders for planning and project design, will receive the same level of engagement. The is critical to build trust and support among municipality will need to rank the level of interest participants. Monitoring the effectiveness of the and influence that the different individuals, groups, engagement process is essential to ensuring a and organizations have in the PPP project. This successful process (see Module 12: ranking process should be done at the beginning of Contract Management). the PPP process, and then reviewed and adjusted as necessary at each phase of the PPP project. thegpsc.org | The World Bank Module 18 : Community Engagement 5 Community Engagement 2.3 Mapping Community Engagement The municipality should use this six-step process Steps 2 and 3 identify individuals, groups, and for all phases of PPP project development. The organizations ranked according to their level of PPP identification phase may rely more on the interest in the project and influence on the project. knowledge of municipal staff to begin to identify key Figure 3 shows a sample ranking matrix. community members and groups, but as the PPP moves into the feasibility and procurement phases, it will require more intensive engagement directly with the community, using a variety of engagement tools and techniques. Figure 3: Sample Ranking Matrix High Influence Medium Low Interest Low Medium High 2.4 Reporting, Evaluating, and Monitoring Municipalities should track issues, questions, and A municipality will need to monitor progress to concerns raised by the community in an organized ensure all sub-groups of the community are and consistent way, including a grievance and engaged, determine if the methods and tools they complaints management process. This process have selected are effective (or not), and identify must be documented. Poor documentation of where effort and resources will need to be allocated community engagement work is the biggest to keep the project moving forward. weakness of most municipal processes. Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 6 Community Engagement 3.0 Making PPPs More Pro-Poor and Gender Inclusive PPPs often fail to recognize the issues relevant to Is good business: Women and the poor are •  the poor and to women. Private investors often rely consumers; they may form a key part of the labor on the government to consider and address issues pool, business owners, or service providers; they relevant to women and to the poor. The government are key community and political stakeholders. often relies on the private sector to address these A project that proactively seeks the interests of issues as fundamental to service delivery of the women and the poor is more resilient and more project. A PPP project provides an opportunity to robust in times of change, particularly in times join public and private capacities to focus on issues of political change where new policies might relevant to women and the poor.2 suggest a change in support for the project. It is harder to undermine a project when it clearly This section provides a framework to help make PPP serves the needs of the local community. If projects more pro-women and pro-poor. the project supports the community, in times of change the community is far more likely to A project that considers issues relevant to women support the project. A pro-poor, gender-inclusive and the poor has the following: project can also avoid public relations and stakeholder conflict issues and reinforces its Reflects good governance: Well-managed •  marketing strategy. infrastructure considers the interests of the entire community. The project prefeasibility/feasibility study or outline/full business case should address the Contributes to the developmental goals of the •  questions set out in this section. Equally, bidders government, development partners (like the World and financiers should ask these questions in their Bank), and private investors: Seeking to address due diligence processes to make sure they are the needs of women and the poor will help meet adequately addressed. During implementation, 2 nternational Finance I the government’s development goals, the UN the questions should be revisited periodically to Corporation, World Bank, Sustainable Development Goals, and other ensure that the project is still adequately addressing PPIAF, Government national and regional priorities. It can also help relevant issues. of Canada. 2019. Gender Equality, the project access support from different sources Infrastructure and PPPs: of funding and financing, as and when needed— For further discussion of these issues, see the pro- A Primer. https://library. for example to the extent bilateral or multilateral poor and gender pages of the World Bank’s Public- pppknowledgelab. org/documents/5720. investment is sought. Private Partnership Legal Resource Center http://ppp.worldbank.org/public-private-partnership 3.1 What is the Context of Women and the Poor? (1) Is there a practical method of identifying housing, for example, anyone whose residence the poor? Do applicable laws, regulations, and has a dirt floor. In others, a national database is practices, nationally or at the level of the state/ available to identify the poor, for example, the province/county provide a definition of the poor? poverty identification system and database (the thegpsc.org Is there more than one category of the poor that is Sistema Nacional de Selección de Beneficiarios relevant for these purposes? or SISBEN) of Colombia. This database is used to target subsidies and other benefits designed to A simple, specific definition of ‘poor’, based on support the poor. | cultural and social context, can be challenging to The World Bank achieve. Some projects define the poor based on Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 7 Community Engagement (2) Are there local cultural, social, or religious (4) Are there power structures in local communities practices that could impede service provision affecting women or the poor, or certain groups to women or the poor, or access to economic among the poor, which will influence the location or opportunities from the project? design of the project and the ability of the poor to benefit from the project? The cultural, social, and religious context of women and the poor will have an important influence on the Local power structures may be well placed to issues more relevant to them. Certain members of manage services or subsidies for the poor, being the community may be excluded from opportunities selected by and having key connections with poor or services or may be segregated from other communities. But in some cases, those local power aspects of the community. This may result in their structures are ill equipped to do so. The project poverty or may be caused by their poverty. For design needs to understand the context of these example, poor communities often include refugee power structures. For example, an NGO in Mexico and immigrant communities (legal or illegal), who provided boreholes for villages with mechanical may not benefit from the support of local political pumps to reduce the time needed to draw water elites, tribal communities, religious groups, or social and therefore allow more time for education and groups. They may be excluded from the protections other activities. However, the NGO failed to engage afforded by political structures to the extent they with the local power structure. As soon as the NGO are focused on citizens or only people from certain had installed the pump, the local mayor removed countries, religions, or cultural groups. the handle and would not allow access unless he was paid a fee by each user, eliminating the benefit (3) Are there legal constraints that could impede for the poor. women or the poor, for example, does one need to have land tenancy, a registered address, or (5) Are there factors within the communities such as identity card, before accessing services, seeking high violence rates that are specific to women or employment, starting a business, receiving the poor? compensation (for example, resettlement), or engaging in other activities associated with In some cases, the poor live in informal settlements the project? and other areas with specific characteristics that limit the ability of the poor to access services. For Women and the poor may not have certain legal example, some poor communities suffer from high standing; in some cases, services cannot be rates of violence, in particular at night. Toilet and provided to those without a legal right to property (a washing facilities designed to be available at night registered address linked to property ownership or may be effectively inaccessible due to the level leasehold/rental agreement). Many live in informal of crime and violence that will be attracted by a settlements or as squatters and it may be difficult well-lit area at night. Women may need access to for the government to allow public services to be special entrances, improved lighting, or heightened provided to illegal residents. That was the case security, to protect them from potential violence. in Côte d’Ivoire where the social water tariff and social connection of water services offered to poor (6) Do women or the poor receive subsidies that households were offered only in legal settlements. might help access benefits from the project? As an estimated 70 percent of the unserved population was non-Ivoirian, and living in illegal The poor may receive support from the government settlements, they could not benefit from the policy. or other sources. The project will need to understand the nature of such support and any Some utilities have found ways to provide relevant terms and conditions to ensure that the services in such circumstances, for example the services are designed to work well with such condominial model developed for the Manila Water support. For example, the poor may receive free Concessions, where the utility delivers bulk water to access to primary education, but may be required the boundary of the illegal settlement. Community to meet certain criteria, for example, they are organizations purchase the bulk water and manage required to provide books or school uniforms. While the distribution system within the illegal settlement, the free access to education is a clear benefit, collecting fees from residents to pay for the bulk the other conditions may be unaffordable for the water and for the distribution network. poor. Women may be given access to training or other learning opportunities. The project will need to understand the context of women to help them access these opportunities. Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 8 Community Engagement (7) To what extent can women and the poor receive bridges, or tunnels. Security in such areas can be and pay bills (for example, are there requirements of more difficult to ensure, requiring close engagement land tenancy, registered address, identification card, with community groups and special facilities such or otherwise)? as women-only space on bus platforms, special entrances, lighting or security support. Women and the poor may not have access to the same financial services as the better off, The last mile connections—for example, for water, for example, there may be some initial deposit power, or telecoms—can be a particular challenge limits, identification, registered address, or for poor neighborhoods in urban areas that are other requirements that prevent elements of crowded, with narrow streets and with only informal the community from having bank accounts or utility facilities, where access may be difficult and credit cards. Therefore, they may use barter land ownership unclear. PPP operators can be arrangements, cash, or mobile money for financial required to deliver last mile, but funding will need transactions. Billing may, thus, need to adopt to be found, either through cross-subsidy from more flexible arrangements. Some systems allow other users or from government subsidies. In many cash payments to be made locally, for example, cases, last mile infrastructure for the poor is publicly at post offices or mobile phone outlets. The Côte funded and is a key focus for development d’Ivoire SODECI concession instituted quarterly finance institutions. billing by the operator. The poor could not meet the requirements of such infrequent billing, and many PPP projects, in particular during construction were disconnected. Local billing centers, more stage, often involve an influx of goods and workers flexible payment methods, and schemes to pay off into a vulnerable community (for example, rural, arrears have been established, and the situation small, and remote), transport of materials, and other has improved.3 In Bangalore, the Bangalore Water changes to the rhythm of the community that can Supply and Sewerage Board allows consumers to create additional risk. An influx of outside goods and pay bills through a variety of options such as water workers often brings an increased risk of squeezing 3 F  all, Matar, Philipp kiosks, electronic clearing service systems, and out local businesses, increased demand for goods Marin, Alian Locussol, household e-banking facilities.4 and services that raises prices and crowds out local and Richard Verspyck. 2009. Reforming Urban consumers. It may result in increased traffic and Water Utilities in Western (8) Where are the poor located as compared to the road accidents. Bringing transient workers into a and Central Africa: existing service network? Are there technical/cost community can result in expansion of prostitution, Experiences with Public- Private Partnerships, complexities of serving poor areas? Are the poor increase in sexually transmitted diseases, sexual Vol. 1, Impact and located in areas likely to be vulnerable to disasters? harassment, gender-based violence, sex trafficking Lessons Learned. Water How does the location/alignment of the project and child abuse, hostile work environments, and Sector Board Discussion Paper Series. http:// affect potential benefits to, and participation by exposure to health risks (such as HIV/AIDS and documents.worldbank. women and the poor, for example travel commuting water-borne illnesses). To ensure project activities org/curated/en/35615146 patterns, location of employment, education and and guard against potential risks related to sexual 8236368922/pdf/48730 0NWP0v10B1P131 social focal points? exploitation and abuse and other forms of gender- PPPWestAfrica1v1.pdf. based violence, the Vanuatu Aviation Investment 4 Water and Sanitation  The location of the poor can have a significant Project stipulates contractor responsibility for the Program. 2008. Performance impact on the ability to provide services or to ensure implementation, enforcement, and monitoring of a Improvement Planning: that they receive specific benefits. For example, the code of conduct covering gender-based violence. Developing Effective poor may be located far from the existing facility, Contractors are also responsible for development Billing and Collection Practices. http:// requiring special connections or facilities. Where and implementation of a complementary action plan documents.worldbank. a BRT line is located in a corridor that is difficult to provide awareness and ensure that any such org/curated/en/71357146 to access for the poor, other transit facilities may violation is addressed efficiently. 8138288578/pdf/44119 0WSP0IN0P1ive0 need to be developed to connect the poor with billing01PUBLIC1.pdf the BRT, for example, feeder buses, pedestrian thegpsc.org | The World Bank Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 9 Community Engagement 3.2 How to Design the Project for the Benefit of Women and the Poor? (1) Are complementary arrangements/inputs (2) Do women and the poor receive services needed to ensure that women and the poor can through alternative providers or systems (for use the services optimally (for example, information/ example, off grid)? What are the technical and education, lighting, security, and low-cost methods financial implications of such alternative services to access services)? Can women and the poor (for example, cost per unit, health implications)? provide labor or other in-kind contributions to Can/should the project be incentivized to facilitate implement the project and thereby reduce the cost such provision? What would be the implication if of services? the informal supply networks were formalized? Or removed in favor of a formal system? How could any The project may need to offer additional support negative impact be minimized? or services to maximize benefits for women and the poor. Women may not be able to use new or Part of the community may currently receive upgraded infrastructure services in the same way as services from informal providers such as water men due to safety and security issues: vendors, or through localized infrastructure such • Better lighting (for example, at bus stops) for as mini-grids for electricity. Providing new services access during the night. may squeeze out informal services, which are • Step-free access to public transport for women themselves often delivered by the poor. This may with young children and the elderly. result in lost jobs and economic opportunities for • Separate male and female facilities (for the poor. example, female-only cars for transit projects, female-only waiting areas, separate female The project may intend to replace such service public toilets/washing facilities). providers, in which case the transition will need • Additional facilities to ensure discretion, for to be carefully planned to mitigate impact on example, around the entrance to female toilets. consumers and to help the informal service • Selection of locations for water stand posts and providers to find other opportunities. In other electricity supply where women congregate. cases, the project may absorb such alternative • Pedestrian crossings, with speed bumps, and service providers, possibly by bringing them into so on to ensure the security of pedestrians, the project to help deliver services and engage where women with young children or the elderly with the community using the experience they have may be less mobile. developed as alternative providers. The latter may involve the alternative service providers becoming Such additional support or services should form ‘last mile’ providers for the project. In Kisumu, part of the project obligations and should be Kenya, the utility Kisumu Water and Sewerage included in the key performance indicators to Company (KIWASCO) sells bulk water to service ensure the benefits are hardwired into the project. providers contracted to operate and manage parts For example, services such as electricity and of the network in an informal settlement. KIWASCO telecommunications only benefit communities to selects and recruits these service providers through the extent that the community understands their a publicly advertised and competitive process. use and potential benefits. The project may include These service providers can either be private training for poor communities or for women, and entrepreneurs or CBOs. programs to make available the tools that will ensure benefits are made accessible. (3) How should the project be designed to enhance any subsidies that women or the poor receive, In some cases, women and the poor can and to maximize benefits obtained through those provide support, for example physical labor to subsidies? deliver services at a lower cost. In some cases, communities are located in informal settlements There may be other externalities that can be where space is constrained, footpaths are not harnessed to support women and the poor improved, and installing equipment can be through the project such as subsidies or other challenging for outside contractors. The community benefits provided by the government, civil society, can help install pipes, cables, or other equipment in or otherwise. The project may be able to help the settlement, for example excavation services, that communities utilize such benefits to greater effect will reduce the cost of construction and therefore and leverage greater investment and advantage. For the cost of services. example, the poor may have access to grants if their children attend school, or if they visit health clinics periodically. A PPP project can take such programs into consideration when providing services, helping Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 10 Community Engagement the poor to access such grant funds more easily or they lack input into decision processes or are not use such funds more efficiently. able to raise their concerns. The processes need to take capacity differences into account regarding (4) Can third parties (for example, the community, land or assets access, control and use, and the NGOs) help provide services to women or the poor resulting losses. Compensation may be provided to reduce cost of delivery, for example, through bulk primarily to landowners, excluding those living on supply? the land or relying on that land to earn their living. Failure to consider the interests of these poor, Providing benefits to women and the poor may disenfranchised, and possibly informal communities involve the project partnering with third parties, can create social and civil friction which has for example NGOs, who may help deliver services undermined many a PPP project. or may provide an additional conduit for those services. The project will need to create a protocol (7) To what extent will tariffs on consumers be for working with the relevant third parties and affordable to the poor? Are the poor willing to pay agreements with those third parties to ensure that such tariffs? How much subsidy/cross-subsidy the solution is well designed and sustainable. will be needed by the government or other users Under the Bayan Tubig (Water for the Community) to make tariffs affordable for the number of poor initiative in Manila, the Philippines, CBOs and local consumers that need access? Would such cross- and international NGOs intermediate by providing subsidy be affordable to other users? financial, logistic, and technical support to the initiative, even training on hygiene and environment The government may choose to include subsidy awareness. They also create links between the or cross-subsidy mechanisms to make services formal network that delivers water to the perimeter affordable for the poor, and/or to finance connection of the informal settlement and community groups or other large periodic payments to allow the poor extending connections to public taps and to pay over time. The project may seek to leverage household connections.5 funding from other sources, such as government grants, donor support, or other third-party funding (5) How does the location/alignment of the project sources to provide access to services and to affect potential benefits to and participation by maintain their affordability over the course of their women and the poor, for example, travel commuting supply. The project may also be designed to work patterns, location of employment, education and alongside other entities implementing such pro-poor social focal points? funding mechanisms. In Côte d’Ivoire, the SODECI concession provides for a social tariff, coupled The location of project assets can have a specific with a social connection fee, financed by a charge impact on the benefits and advantages that a project collected from water customers, in addition to the can provide to women and the poor. Assets often water tariff. connect locations of importance to the wealthy and the middle class, and to the often predominately To preserve incentives for rational economic male decision makers. Transport infrastructure and behavior, subsidies should only cover a proportion the location of water points, electricity connections, of the total costs of the service and should ideally and sanitation facilities needs to reflect economic be contingent on beneficiaries paying their share of opportunities, employment, education, social the bill. Under this same logic, subsidies should not purposes, travel patterns, and security concerns of be paid for consumption beyond the subsistence women and the poor. level, and given for a long enough period to avoid the effects of the ‘poverty trap’. The World Bank (6) Does the project lead to displacement, Group supported North Luzon Expressway in the resettlement, and/or livelihood loss of the poor Philippines. To improve access by the poor to disproportionately? What strategies can be the highway, the project designed the toll for mini developed to minimize or avoid these risks? Do passenger buses (called jeepneys) at a flat daily anticipated compensation measures (for example, rate, instead of the per-entry toll used for other 5 nocencio, Arlene B., I and Cristina B David. for loss of assets, usage rights, or crops) lead to vehicles, to allow them to get on and off the highway 2001. “Public-Private equal results for women and the poor? and to pick up and drop off passengers at no Community Partnerships additional cost. thegpsc.org in Management and Delivery of Water to Infrastructure development often requires land Urban Poor: The Case acquisition, leading to involuntary resettlement (8) Is tariff setting and imposition appropriate to the of Metro Manila.” or causing losses of assets or loss of access to context of women and the poor? What billing and | Discussion Paper Series livelihoods or assets and resources. Women and payment technology would be most appropriate The World Bank No. 2001-18. Philippine Institute for Development the poor are often vulnerable to the processes of given location, access to payment systems, access Studies. allocating compensation and/or resettlement, where to cash, and other context of women and the poor, Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 11 Community Engagement for example, mobile-phone based mechanisms, In addition to tariff levels and how they are payment offices located near poor neighborhoods, calculated, the billing and payment system itself access for illiterate and multilingual facilities? needs to be designed to meet the needs of women and the poor. Frequently, women and the poor do In some cases, the tariffs themselves are not as not have access to credit cards or bank accounts. much of a challenge as is the method of imposition They may receive income only gradually over of tariffs. Those tariffs need to be set and charged time—not in weekly or monthly payments, as those in a way appropriate to women and the poor. For formally employed. Therefore, the project may need example, rising block tariffs involve an increase in to adapt the billing and payment mechanisms to per unit tariffs the more total units a user consumes allow consumers to pay as and when they can. in a given period. Thus, a consumer using a large In the Rural Electrification Extension Program amount of service each month (for example, in Thailand, respected local representatives, for industrial and other large-scale [wealthy] users) example school teachers, are appointed to act should pay a higher per unit tariff. In the energy as collection agents.6 The agent represents the sector, this can be an effective way to shift higher community and ensures collection. The agent is costs on larger users of services. Though, often, paid a fair salary. The project saw collection costs the inverse is true, commercial and industrial users drop significantly. pay lower prices to encourage industrial growth and investment in the community. In the water sector, The project may need to develop more flexible in some communities the poor group together to billing and payment mechanisms, including: pay for a water connection due to the high cost of • Mobile money accounts; connection; this means that several families may • Pay-as-you-go models; and share a single connection. Also, the poor may use •  Cash payments at local agents, for example at larger amounts of water for economic purposes, for post offices, mobile phone outlets, local billing instance to provide laundry services; but this means centers, and water kiosks. that a single connection in a poor community may have a higher total usage per month, therefore a higher block tariff will be applied with subsequently a higher tariff paid by poor families.  hat Additional Benefits Might the Project Provide to Women and 3.3 W the Poor? A project is likely to provide a number of benefits A gender-responsive project will encourage and opportunities for the poor in addition to the employment of women during all stages of the services provided through the project, including project, require contractors to pay equal wages to 6  rovincial Electricity P jobs, economic opportunities, access to different men and women for equal work, provide training on Authority. 2014. Rural economic resources, and attraction of investment, sexual harassment, provide separate sanitary and Electrification in Thailand: Policy and among others. Sometimes indirect benefits can be other facilities, and ensure protective clothing and Implementation. https:// even more important to the poor than direct benefits. safety equipment for both male and female workers. www.iitk.ac.in/ime/ For example, the Yunnan Integrated Road Network anoops/for14/PPTs/ Day%20-%205%20 (1) What opportunities are there for jobs to be filled Development Project in China, integrated gender- Bangkok/RE%20 and/or created for women and the poor? Are there specific actions, including:7 in%20Thailand%20 key constraints to accessing these jobs? What • Recruiting women in construction and -Policy%20and%20 Implementation%20-%20 support could be provided to help them access maintenance work of the subproject (during Mr.%20Reungvith%20 better job opportunities? the construction, women were recruited for pit Vechasart.pdf. repairing; cleaning the road, ditches, and culverts; 7 Asian Development  Bank. 2016. Social PPP projects often create jobs, an important collecting wasted materials and planting trees Monitoring Report – GAP opportunity to cement a project to the interests of and grass on roadsides to prevent soil erosion); Implementation, PRC: the local community, but sometimes women and • Giving priority to people from poor families and Yunnan Integrated Road Network Development the poor may be at a disadvantage when trying women when employing the local people; Project. https://www.adb. to access jobs. This may relate to skill levels, Paying men and women equally according to •  org/sites/default/files/ access to information, connections needed to domestic law and international conventions; project-document/ 216316/40626-013-smr- apply, interviewing skills, or other gaps that can be • Providing a safe working environment for 18.pdf. addressed through the project. all employees; Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 12 Community Engagement Providing technical training on road maintenance •  to power and transport)? Will the project provide, techniques and use of equipment for female directly or indirectly, new access to markets, employees as well as safety training; and for example, through improved transportation, Providing safety and health training courses for •  information, or education? How might the design of workers to raise their awareness on safety and the project further magnify these indirect benefits? prevention of sexually transmitted diseases. The economic benefits may not come from the (2) What opportunities are there for local, small project but rather may be made available by the businesses to provide services to the project? Which project. For example, transport projects may of those services might be provided by businesses provide the poor with access to new markets, new owned by women or the poor or employing women or services (such as education and health care), or the poor? What support could be provided to those new opportunities (whether by improved access to companies to access these opportunities? transport, lower costs, higher cargo capacity, and so on). The design of the project should consider In addition to employment by the project, there the nature of these economic benefits and should may be opportunities for services to be provided focus on maximizing these benefits and ensuring to the project. Businesses of women or the poor their sustainability. To improve the affordability of may be unprepared or ill adapted to the needs of public transport for the poorest, Bogotá rolled out the project. For example, small businesses such in early 2014 a ‘pro-poor’ public transit subsidy, as local convenience stores can serve as payment through a personalized smartcard. The construction collection points. Local suppliers can provide of feeder lines and bike lanes provided improved many needs of the project during construction and accessibility to public transport for populations implementation. In mining projects, local suppliers living in the low-income periphery of the city. are often excluded from opportunities to supply goods and services to the mining operations, as (4) Are there facilities being developed for the they cannot guarantee to the mining company that project that might also provide benefits to the poor, they can provide the volume and quality of supply for example, water treatment, electricity generation, demanded. A large mine requires huge volumes of solid waste management? Can the project be used food, security services, housing, and so on. to provide other services to the poor? Is there an If local suppliers are not able to provide the opportunity for cross-selling or other public required level of services, they will miss out on service delivery? opportunities. Some effort could be made by the project to help poor businesses to deliver the In some cases, the infrastructure developed by a relevant services and win bids (individually or in project might be extended or expanded to provide consortia). The project may include support to services to the poor. For example, infrastructure poor communities to understand and prepare for tourism facilities can be expanded to provide for the opportunities that will be created by the services to the local community. Tourists will want to project and where they are best placed to take see the local community well supported, may want 8 nternational Finance I advantage of those opportunities. The project may to be part of an outreach to local poor communities, Corporation. 2012c. Gender Impact of Public set performance-based indicators linked to services and may be willing to pay extra to provide such Private Partnerships provided by businesses owned or operated by support. As another example, special economic – Literature Review women or the poor.8 zone (SEZ) projects also generally include the Synthesis Report. https://ppp.worldbank. development of infrastructure to service tenants org/public-private- (3) What are the potential indirect economic benefits of the SEZ. These facilities may be expanded partnership/library/ of the project for women and the poor (for example, to provide services to the local community, in gender-impact-public- private-partnerships- more economic activity leading to greater supply of particular poor communities. %E2%80%93-literature- jobs, more employment opportunities due to higher review-synthesis-report. commuting ability, more skills transfer due to access thegpsc.org | The World Bank Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 13 Community Engagement 3.4 How Can the Poor Communicate with the Project? It is important for the project to benefit from advice the poor may not be entitled to be represented and feedback from the poor. in community organizations (for example. where membership is linked to land ownership). (1) How does the political context of women and the poor allow them to communicate with the project? (3) Are there civil organizations/NGOs that reflect Does local government represent women and the the interests and concerns of women and the poor? poor well? Can these groups be used as intermediaries/support mechanisms to ensure protection and communication Women and the poor may have ‘voice’ (the ability of the interests of women and the poor? to makes one’s ideas and concerns heard) through established political representatives, who may Civil organizations such as NGOs may be able to be well attuned to the interests of women and the provide voice or support to the poor to allow them poor, and may be able to act as a conduit for their to express their views and provide feedback on the views for the project. Local political structures may project. Such organizations are often focused on even have agencies or task forces designed to the interests and context of the poor. In Tangerang, support women or poor communities, which may Indonesia, only 22 percent of the population had be well placed to provide voice where the project access to clean water provided by the utility. A local is concerned. However, it may be that while women NGO constructed a series of centers to provide and the poor are an important concern for local water and sanitation in these areas, maintained political structures, the capacity of such structures and operated by local families who run them as to engage with these communities or provide them concessions. They sell water and provide toilet, with voice where the project is concerned might be shower, and washing facilities.10 limited. In these cases, other mechanisms may be needed to provide voice to women and the poor. (4) How do women express opinions and priorities in For example, the project may engage with local decision making in the family and in the community? community bodies or NGOs; or it may create a How are men and women organized and separate community engagement body, represented in these decision-making structures? specifically for the project. Such engagement committees can be critical to project success, In many cultures, social norms or laws may ensuring good communication and avoiding prevent women from standing up, speaking, and misunderstandings. The National Transmission being heard during community discussions and Modernization Project in Pakistan showed that decisions, for example, at community meetings. women are particularly vulnerable in rural areas, Staff need training to reach out effectively to local with no recognized role in the authority structure women and to create an environment that enables of the villages despite representing 46 percent women to participate in community meetings, for of the population. Only around 2—3 percent of example organizing meetings at a time and location women participate in business activities or formal that allows women to participate, the provision employment, and only 30 percent participate in of transport or child care, or the organization of 9  orld Bank. 2017d. W Project Appraisal local representation or political gatherings. Women separate meetings for women and men. Women Document on a Proposed are rarely engaged in community consultations and may also be more comfortable talking with other Loan in the Amount compensation matters.9 women. Culturally sensitive survey teams and of US$425 Million to the Islamic Republic community liaison staff should therefore also of Pakistan for the (2) How does the cultural context of women and the include female members who can conduct National Transmission poor allow them to communicate with the project? discussions or lead interviews, if needed. Modernization I Project. http://documents. Are there community groups that reflect the interests The project team for the National Transmission worldbank.org/curated/ and concerns of women or the poor? Modernization Project in Pakistan uncovered a en/3450915139 lack of voice and agency of women, and proposed 11668260/pdf/ Pakistan-Transmission- Cultural context may create challenges for the project staff trained in effectively reaching out to the PAD2036-PAD- voice of the poor, for example where the poor are communities, and especially women, seeking their updated2-11302017.pdf. not allowed to express concerns or raise issues involvement in its consultations, development, and 10  United Nations ESCAP. 2009. Community Toilets in public forums. Community groups may provide implementation, and a conducive environment for in Tangerang, Indonesia. voice to the poor and may have better connection all women through gender-sensitive consultations to https://www.unescap. to their interests, for example village or township assist with consultations, eligibilities, entitlements, org/sites/default/files/ Tangerang_ES.pdf. councils may represent the interests of the poor well and management of grievances in a gender- and may provide an opportunity for voice. However, informed manner. Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 14 Community Engagement 3.5 How Can the Project Communicate with Women and the Poor? Just as it is important for women and the poor to This process will include formal communication communicate with the project, it is also important for arrangements to collect qualitative and quantitative the project to be able to communicate with women information to address specific performance criteria and the poor. and data points required for project operation. It will also include informal consultations to allow (1) How do women and the poor access information the poor community and women to raise issues, (print media, radio, television, informal networks, ask questions, and help the project identify gaps, meetings)? What are literacy levels? Are there needs, and changes in context. established mechanisms for communicating with the illiterate population, for example, familiar access (3) How can the project ensure that women are technologies? What languages are used as common represented throughout the consultation process (for communication in the community? example, timing of meetings, women-only meetings)? Communication with women and the poor can Project information must be understandable and raise specific challenges, especially in the face accessible for those affected by or benefiting from 11 N  ieto, Daniel Ortega, of low levels of literacy. The languages spoken the project (for example, translations into local and Camila Alva Estabridis. 2015. among the poor may be different from those in languages, audio recordings) or involving women’s How to Overcome other parts of the community. In particular, the poor representatives to provide support. For example, Communication and community may not be as familiar with the common the Trung Son Hydropower Project in Vietnam made Cultural Barriers to Improve Service language, which may disadvantage the poor when extra efforts to ensure that community members, in Provision to Indigenous faced with economic opportunities or commercial particular women, would participate in stakeholder Populations. engagements. Some mechanisms can help address consultations and that potential language barriers Global Delivery Initiative. http://www. language and literacy challenges. The community were addressed:14 globaldeliveryinitiative. itself may have developed coping mechanisms, for At least three weeks before the consultation •  org/sites/default/ example civil society groups may provide support meeting, information of appropriate form and files/case-studies/ k8437_how_to_ for literacy and translation. In some cases, a service in local languages was provided at district, overcome_cultural_ industry develops around these support functions. commune, village, and household level. barriers_indigenous_ The project may need to provide local offices for Audio recordings of the project information, •  people_cs_p8.pdf. 12 GSMA. 2018. The  support, for instance to provide written documents frequently asked questions, and contact Mobile Gender Gap and services in other local languages. Mexico’s information, with a machine on which they could Report 2018. https:// Oportunidades Program (now Prospera Program of be played, were provided at the village level. www.gsma.com/ mobilefordevelopment/ Social Inclusion) found that out of the 110 bilingual Recordings were in four languages: Vietnamese, wp-content/ personnel working for them in 2010, 79 percent of Thai, Muong, and H’Mong. uploads/2018/04/ them were not assigned to areas where they could Consideration was given to having separate •  GSMA_The_Mobile_ Gender_Gap_ communicate in their mother tongue. They therefore meetings with any group that was reluctant to Report_2018_32pp_ renewed efforts to hire bilingual promoters and attend the village meetings to encourage women WEBv7.pdf. relocate existing ones to match linguistic demands.11 and other vulnerable groups to participate. 13  See in Question 1 – Sub question a) for instance, A short oral summary of the project, its impacts, •  the legal obligation in Women in low- and middle-income countries are, and proposed mitigation measures was presented Paraguay of including on average, 10 percent less likely to own a mobile in the meeting. All questions/feedback, requests, in the prefeasibility studies of PPP projects phone than men, in South Asia this number climbs and responses were properly recorded. the project’s impact on to 26 percent. Women are 26 percent less likely to Group discussions were held if needed. In •  the population and the use mobile Internet than men, and 70 percent less addition to Vietnamese, translation of the inclusion of specific groups in situation of likely in South Asia. Among mobile owners, women discussions into local languages was provided vulnerability. are 18 percent less likely to use mobile Internet than as necessary. 14  World Bank. 2017e. men.12 Closing this gap would create a substantial Results of Collaboration for Social Inclusion in commercial opportunity for mobile operators. (4) How can the project provide expedited dispute the Trung Son Hydro resolution that is accessible to women and the poor, Power Project, Vietnam. (2) How can the project engage with women and for example, complaint mechanisms, mechanisms Washington, D.C.: World Bank Group. the poor, in particular in designing the project, and for communications, access to the regulator, thegpsc.org http://documents. in monitoring the project? To what extent are poor representative located on site, tele kiosks? In the worldbank.org/curated/ and female beneficiaries consulted when monitoring event of renegotiation or modification of the project, en/9035114962 19887678/Results-of- performance of the project? to what extent can the project consult with women collaboration-for-social- and the poor? | The World Bank inclusion-in-the-Trung- As a fundamental part of the project design,13 a Son-Hydro-Power- Project-Vietnam. communication mechanism should provide for The project needs to ensure that the poor engagement with women and the poor. community is able to access conflict resolution Module 18 : Making PPPs More Pro-Poor and Gender Inclusive 15 Community Engagement mechanisms where project performance does not and concerns. For example, the Transmission meet expectations. These procedures will allow Efficiency Project in Vietnam provides for dedicated resolution of conflicts before they grow into disputes. staff to receive and address complaints and Poor communities often do not have access to the grievances. Local organizations, such as the resources needed to manage conflicts well with Women’s Union, participate actively in the process.15 sophisticated counterparts such as the investors Expedited conflict resolution will help raise issues in the project. Gender-sensitive conflict resolution with the project more quickly, and allow the project mechanisms may include community meetings, to address challenges early, when they are easier through women’s representatives to ensure that and cheaper to address. women feel comfortable submitting their complaints What Incentives Should Be Placed on the Project Participants to 3.6  Protect the Interests of Women and the Poor? (1) What bidding criteria should be imposed to • Number of poor consumers using the service ensure that the successful bidder knows how to • Number of new connections to the poor work with issues of women and the poor, and can • Volume of service provided to the poor demonstrate a history of doing so? • Number, salary level, and seniority of project- related jobs awarded to women as compared The bidding process should help identify a private to male staff partner that has the expertise and experience in • Relative number and value of service implementing pro-poor and pro-women solutions  contracts awarded to women owned or in other projects. The bidding process can also be operated businesses used to raise some of the issues identified and ask bidders for creative solutions to address the issues Depending on the risk allocation, there may be raised. This will test the ability of bidders to develop performance penalties, for example, if the financing effective solutions for issues associated with the mechanisms for poor consumers is not used constraints in question, and can also evaluate the enough or a bonus paid if a certain proportion of extent to which said bidders have implemented employees are female. There may be a financial such solutions in other projects. penalty if complaints are not resolved within a certain time frame, or bonus payments for each (2) What specific pro-poor and pro-women poor consumer newly connected to the services. obligations should be placed on the project (for example, consultations, capacity building, (4) What is the best way to monitor those KPIs and infrastructure, and financing mechanisms for ensure compliance with obligations? connection costs)? Both parties should be encouraged and incentivized The project needs to place a clear set of obligations to monitor implementation of the contract, including on the government authority, on the private investor compliance with obligations and fulfilment of KPIs. and on other project parties—things that parties A robust monitoring and (preferably) third-party must do and things that they must not do or must validation mechanism is needed to monitor the only do at certain times and in certain ways. performance indicators. The poor can often be victims of collusion between private providers (3) What key performance indicators (KPIs) should and government monitors. The monitoring should the PPP agreement include, for example, number of include project implementation related indicators, as poor consumers, number of female employees? well as outcome indicators that can help assess the 15 W  orld Bank. 2014b. net welfare gains or losses among women and the Project Appraisal Document on a In addition to obligations placed on project parties, poor from the project, differentiating between direct Proposed Loan in the incentives should be designed to encourage the and indirect (or second order) impacts. During Amount of US$500 project parties to comply with those obligations implementation, the monitoring system should aim Million to the Socialist Republic of Vietnam and otherwise achieve specific outputs. These to provide timely and periodic feedback on (1) the for a Transmission incentives are often implemented through the status of implementation of the pro-poor and gender Efficiency Project (TEP). establishment of KPIs, which if breached can inclusive elements in the contract and (2) whether http://documents. banquemondiale.org/ result in financial penalties and possibly project the incentives to encourage inclusion of women and curated/fr/5668 termination. Pro-poor and gender-inclusive KPIs the poor as project beneficiaries are working—so 21468177570152/pdf/ should be included based on the issues identified that course corrections can be adopted as needed. PAD7660PAD0P 1300OUO0900R above. Possible KPIs might include the following: 20140017101.pdf. Module 18 : List of References 16 Community Engagement 4.0 List of References Asian Development Bank. 2016. Social Monitoring http://www.globaldeliveryinitiative.org/sites/default/ Report – GAP Implementation, PRC: Yunnan files/case-studies/k8437_how_to_overcome_ Integrated Road Network Development Project. cultural_barriers_indigenous_people_cs_p8.pdf. https://www.adb.org/sites/default/files/project- document/216316/40626-013-smr-18.pdf. Provincial Electricity Authority. 2014. Rural Electrification in Thailand: Policy and Fall, Matar, Philipp Marin, Alian Locussol, and Implementation. https://www.iitk.ac.in/ime/ Richard Verspyck. 2009. Reforming Urban anoops/for14/PPTs/Day%20-%205%20Bangkok/ Water Utilities in Western and Central Africa: RE%20in%20Thailand%20-Policy%20and%20 Experiences with Public-Private Partnerships, Vol. Implementation%20-%20Mr.%20Reungvith%20 1, Impact and Lessons Learned. Water Sector Vechasart.pdf. Board Discussion Paper Series. http://documents. worldbank.org/curated/en/356151468236368922/ United Nations ESCAP. 2009. Community Toilets in pdf/487300NWP0v10B1P131PPPWestAfrica1v1.pdf. Tangerang, Indonesia. https://www.unescap.org/ sites/default/files/Tangerang_ES.pdf. GSMA. 2018. The Mobile Gender Gap Report 2018. https://www.gsma.com/mobilefordevelopment/ Water and Sanitation Program. 2008. Performance wp-content/uploads/2018/04/GSMA_The_Mobile_ Improvement Planning: Developing Effective Gender_Gap_Report_2018_32pp_WEBv7.pdf. Billing and Collection Practices. http://documents. worldbank.org/curated/en/713571468138288578/ International Finance Corporation, World Bank, pdf/441190WSP0IN0P1ive0billing01PUBLIC1.pdf. PPIAF, Government of Canada. 2019. Gender Equality, Infrastructure and PPPs: A Primer. https:// World Bank. 2014b. Project Appraisal library.pppknowledgelab.org/documents/5720. Document on a Proposed Loan in the Amount of US$500 Million to the Socialist Republic of International Finance Corporation. 2012c. Gender Vietnam for a Transmission Efficiency Project Impact of Public Private Partnerships – Literature (TEP). http://documents.banquemondiale. Review Synthesis Report. https://ppp.worldbank.org/ org/curated/fr/566821468177570152/pdf/ public-private-partnership/library/gender-impact- PAD7660PAD0P1300OUO0900R20140017101.pdf. public-private-partnerships-%E2%80%93-literature- review-synthesis-report. World Bank. 2017d. Project Appraisal Document on a Proposed Loan in the Amount of US$425 Inocencio, Arlene B., and Cristina B David. Million to the Islamic Republic of Pakistan 2001. “Public-Private Community Partnerships in for the National Transmission Modernization Management and Delivery of Water to Urban Poor: I Project. http://documents.worldbank.org/ The Case of Metro Manila.” Discussion Paper Series curated/en/345091513911668260/pdf/Pakistan- No. 2001-18. Philippine Institute for Development Transmission-PAD2036-PAD-updated2-11302017. Studies. pdf. Kottak, Conrad Phillip. 1991. Cultural Anthropology. World Bank. 2017e. Results of Collaboration for 5th ed. McGraw-Hill. Social Inclusion in the Trung Son Hydro Power thegpsc.org Project, Vietnam. Washington, D.C.: World Bank Nieto, Daniel Ortega, and Camila Alva Estabridis. Group. http://documents.worldbank.org/curated/ 2015. How to Overcome Communication and en/903511496219887678/Results-of-collaboration- | Cultural Barriers to Improve Service Provision to for-social-inclusion-in-the-Trung-Son-Hydro-Power- The World Bank Indigenous Populations. Global Delivery Initiative. Project-Vietnam. CONTEXT PRIVATE SECTOR Municipal 19 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Purpose of this Module 02 2.0 Private Context 03 2.1 Is This Project Important? 03 Are Potential Employees With Requisite 2.12   oes the Project Have a ‘Champion’ within 2.2 D 03 Skills Available? 06 the Municipal, Provincial, or National What Is the Risk That Costs Go Up or 2.13  Government? Revenues Go Down? 06  hat Are the Regulatory or Legal Approvals 2.3 W 03 2.14 Is the Security Structure Available to the Project Requires? Lenders Adequate? 07 2.4 Is Demand Real, or Just Hopeful? 04 How Will Foreign Exchange Risk Be 2.15  2.5 What is the Source of the Demand? 04 Managed? 07 2.6 Are Revenues Real or Just Hopeful? 04 What Are the Expected Minimum Service- 2.16  s the Municipality Creditworthy? 2.7 I 05 Level Obligations and Are They Realistic? 07 Is the Project Configuration Best Suited 2.8  2.17 Will Municipality Fulfill its Obligations? 08 to Deliver the Service Standards and Can the Courts Be Trusted to Be Fair and to 2.18  Profitability of the Project? 05 Enforce Arbitral or Other Awards? 08 Is the Project Engineering Design Best Suited 2.9  Is the Project Part of a Larger PPP Program/ 2.19  to Deliver the Desired Service Levels? 05 Pipeline? 08 2.10 Is the Project Construction/Implementation 2.20 Will the Bidding Process be Open, Time Line Adequate? 05 Transparent, and Fair? 08 2.11 A re all the Materials/Inputs Available and What Are the Associated Costs and Lead Times? 06 Module 19 : Purpose of this Module 2 Private Sector Context 1.0 Purpose of this Module When a PSP considers a municipal PPP, it will perform due diligence and test whether the risks and investment potential merit investment of time and money for due diligence. The PSP approaches this task in a way often very different from municipal staff. The following sets out a few issues that are critically important to the PSP to help the municipality understand the kind of issues that are important for the PSP and the due diligence it will perform. The feasibility study1 and the PPP agreement 2 should address these issues. Municipalities should review their projects from the perspective of the PSP to understand better the PSP’s perspective and priorities in advance of the bidding process and to prepare for the kind of questions and concerns that the PSP will likely raise. thegpsc.org 1  ee Module 4: Feasibility S | Study. The World Bank 2  ee Module 11: S Sample Municipal PPP Agreement. Module 19 : Private Context 3 Private Sector Context 2.0 Private Context The key concerns of the PSP will be discussed here around a series of key questions that potential investors will ask when considering a project. This is not an exhaustive discussion, rather it is meant to help municipalities understand some of the key issues relevant to private investors. 2.1 Is This Project Important? PSPs know that projects that are important to the government, the assessment of economic impact municipality and to the people have a better chance that the project will have on the local community and of closing, and of succeeding. Projects that are on the country at large, and the level of engagement only important to a particular municipal official or with the local community (in the identification and political party are probably less likely to succeed. design of the project as well as its implementation). Indications of the importance of a project include the project’s presence on the priority list of the  oes the Project Have a ‘Champion’ within the Municipal, Provincial, 2.2 D or National Government? PSPs realize that projects will require someone the bid documents or other documents shared by influential enough to coordinate different the municipality; this is research that the PSP will government entities and identify solutions for undertake on its own. This assessment will include the project through the various obstacles that the context of the ‘champion’, including timing of the projects are bound to face through the process next election, and the likelihood of the champion of development and bidding. The identity of the remaining in power. government champion is not generally disclosed in 2.3 What Are the Regulatory or Legal Approvals the Project Requires? The PSP will need to understand all of the permits required approvals and the likely time-frame for the and licenses that need to be obtained at different same. The PSP will assess the risks and associated stages of the project, before implementation, during costs of waiting to commence construction or implementation, and throughout operation. Which commence operations after construction, due to approvals the municipality will secure and which delays in securing approvals. The PPP agreements ones the PSP has to secure, and which of these will need to explain how and under what conditions, approvals are sensitive or difficult/time-consuming if at all, the municipality will compensate the to secure. Even though the municipality may take PSP for any delays in securing these approvals or on the responsibility of securing key regulatory where the approvals require different performance and legal approvals, the PSP will need a solid obligations or investments than are anticipated in understanding of the probability of getting all the PPP agreement. Module 19 : Private Context 4 Private Sector Context 2.4 Is Demand Real, or Just Hopeful? There is a tendency for demand assessments to of any optimism bias. Potential investors often suffer from optimism bias (see Guidance Note undertake their own demand assessment. Even if section 2.2), in particular where the assessment they do not undertake a comprehensive assessment is performed by a party incentivized to implement (for example, if the municipality has undertaken a the project. A municipality, for example, is likely comprehensive study through a reputable expert), to assume a much higher level of demand for a PSPs would undertake a quick assessment of project than might other project parties. Studies demand to validate the municipality’s study and of traffic forecasts and similar demand forecasts to determine how much they should discount it show a consistent overestimation of demand by or possibly apply a more optimistic assessment governments, investors, and lenders, with lenders than that of the municipality. More often than not, a being the most conservative. population growth-driven assessment of demand is not adequate for PSPs; they typically need more Potential investors will discount any demand granularity with respect to demand projections. forecast provided by the municipality (even if produced by an expert), to address the impact 2.5 What is the Source of the Demand? Potential investors need to understand the sources plan operation of the project to fit actual needs. of demand. Are the high-demand segments located Potential investors take seasonal variations in in some specific geographical areas within the demand into account because it directly affects municipality or is it based on some demographic cash flows of a project and consequently debt parameters, such as age or income? For example, servicing and other payout obligations. Also, for a water supply distribution PPP, potential if the seasonality is high enough, PSPs also look at investors would need a detailed breakdown of seasonality of labor demands and operating costs demand across the service area to assess the across different seasons. This can help design robustness of the demand from various segments operating cost efficiencies. and also its likely projected growth. This information is also used to design the project better and also 2.6 Are Revenues Real or Just Hopeful? Just as demand forecasts are often optimistic, so the project will have a tendency to interpret data to too are revenue forecasts. Potential investors would show more healthy revenues than might be merited, like to understand the basis for determination of the whether this optimism is conscious or unconscious. tariff for the services being provided by the project, how the tariff is regulated, any administrative or PSPs would like to understand how tariff revisions bureaucratic approvals required, and whether will take place. The PPP agreement will establish a users/people are likely to pay the proposed tariff baseline tariff and generally an agreed formula for (affordability and willingness to pay). Investors will tariff increases. Where there is a regulator (whether compare proposed tariffs with similar services or not independent), the parties will need to agree offered in neighboring municipalities and countries. how to resolve situations where the regulator sets They will also make an assessment of how strong a tariff that is inconsistent with the PPP agreement. the municipality and the provincial/national If tariff revisions for the entire period of the PSP government are, and whether they would be able contract are already set by regulation, and that to withstand any resistance against tariffs from regulation cannot be modified, the PPP agreement citizens/users. will use this as its baseline. Potential investors will assess the risk that tariffs are not increased, or that thegpsc.org The potential investor will assess carefully all those increases do not meet expectations. PSP revenue forecasts and will question all assumptions financial models will likely test for scenarios where and discount forecasts provided by the municipality. tariffs do not meet agreed levels and the impact this | Just like demand forecasts, revenue forecasts are will have on project financial viability. The World Bank subject to optimism bias –that is, those promoting Module 19 : Private Context 5 Private Sector Context Is the Municipality Creditworthy? 2.7  Particularly for projects where the municipality pays investors understand the risk involved and create for the service—for example, supply of treated confidence among potential investors. Investors bulk water to the municipality or operation and will make higher provisions for working capital maintenance of the municipality’s sanitary landfill (assuming delayed payments) and for operating site—investors need to understand the credit costs for any perceived risk associated with the position of the municipality, its history of paying bills municipality fulfilling its financial obligations. on time, its management of its finances, and so on. Where possible, the municipality should share whatever financial information it can to help potential s the Project Configuration Best Suited to Deliver the Service 2.8 I Standards and Profitability of the Project? PSPs would like to explore different project Use of space outside of operating hours can also configurations to maximize revenue while still provide some interesting opportunities, for example delivering the specified service levels. For example, using the bus terminal as a parking facility for buses in a bus terminal, while maintaining basic standards as well as other vehicles at night. Can the facilities of making a bus bay available within, for example, include a hotel or other associated facilities? Any two minutes of a bus arriving, the potential investor limitations on the use of the facilities will be carefully will want the flexibility to ensure maximized space analysed by the PSP. for retail outlets, restaurants, office space, etc. s the Project Engineering Design Best Suited to Deliver the Desired 2.9 I Service Levels? Potential investors would typically undertake of the engineering design are appropriate given a thorough investigation into the proposed the specific project site conditions and service engineering design, in particular where the design requirements. Investors also prefer to have the has been mandated or only some elements of the opportunity to propose value additions or cost basic project engineering design are mandated reductions, to establish their competitive advantage by the municipality or at law. The due diligence and also maximize investor returns. process will assess whether the mandated elements 2.10 Is the Project Construction/implementation Time Line Adequate? Potential investors are keen to complete project will review, test, and approve, and the likelihood construction/implementation as early as possible of delays in approvals. Municipalities need to to commence operations and start revenue flows. think through which stages are really critical from However, the time allowed for construction, testing, a technical point of view and how to monitor and and commissioning needs to provide sufficient approve in the most efficient manner possible—the space for the construction to be delivered to the ‘must haves’ rather than the ‘good to haves’. quality desired. The investor will also need to understand the process for approval at different stages of construction, who within the municipality Module 19 : Private Context 6 Private Sector Context Are All Materials/Inputs Available and What Are the Associated 2.11  Costs and Lead Times? The potential investor will perform extensive due actual project implementation (which generally diligence on project construction/implementation involve a delay of as much as three years, which costs and the time required for completion of makes an accurate calculation almost impossible). construction/implementation. Potential investors Lead times required for material availability will will be concerned about an underestimation of affect the inventory of materials that the construction construction costs and therefore undertake their contractor needs to carry and consequently the own detailed assessment. Usually as part of the working capital requirement, which also add to feasibility study, even when undertaken by reputed construction cost. Some construction requires experts, detailed engineering design is not done long lead items which must be ordered long before and construction costs are arrived at based on delivery (for example, specialized steel, tunnel quick and rough engineering design and estimation boring machines, and turbines). The procurement of bills of quantities. Material costs need to be process and construction milestones should provide based on competitive market rates, providing for for such time constraints. inflation in material costs between estimation and Are Potential Employees With Requisite Skills Available? 2.12  The PSP will need access to skilled labor. It is mobilization, they typically recruit project-specific advantageous to the municipality, and generally implementation and operations teams and appoint to the PSP, to source such labor locally. However, a senior manager with project management and such skilled labor may not be available, or may be operations experience, from their headquarters, to more expensive locally. Potential investors want to lead that team. understand the availability and costs of relevant skilled labor in the vicinity of the project. Finding The PSP will need to understand the implications of the right people for each project is absolutely local content rules, and what local content is most critical to the PSP’s ability to implement and operate appropriate to include in project planning. projects. While potential investors typically have a centralized team for engineering and project finance 2.13 What Is the Risk That Costs Go Up or Revenues Go Down? Once costs, revenues, and demand are forecast, to go up? How easy is it to access labor with the the potential investor will assess what might happen requisite skills and experience? Are income taxes to cause costs to go up, revenues to go down, or likely to increase? Might tariffs for project services otherwise undermine the financial projects for the be reduced by law? By considering these risks project. The investors will assess the likelihood in advance, the municipality can address them in of such events and potential impact and apply advance to reduce their impact on potential bids, sensitivity analysis to the project financials, to for example the municipality may want to set up an assess the impact on the project if the event or experienced, independent regulator with the power series of events occurs. For example, where will the to set tariffs and impose performance standards. project source cement, is the cost of cement likely s the Security Structure Available to Lenders Adequate? 2.14 I Where the PSP needs to mobilize debt from banks comfortably, and also whether the lenders have thegpsc.org or financial institutions (often 70–80 percent of the a security structure that enables them to ensure total investment), it will be critical that the project recovery of their loan. is bankable, that is, that lenders are willing to lend to the project based primarily on the project’s Because assets typically cannot be repossessed | The World Bank financials and structure. Lenders will test whether in case of default of the loan and are often the project financials are adequate to enable debt immoveable (such as a road or a bus terminal) or servicing (interest and repayment of principal) have limited value when moved away from their Module 19 : Private Context 7 Private Sector Context location, the lenders will want security over the project financials. The municipality (or the national project cash inflows. Lenders often ask the PSP government) may offer guarantees or other credit to create an escrow account where all project enhancement to protect the lenders in the event of revenues flow. Lenders also seek, in addition to certain risks (such as demand shortfall) to make the the escrow account, the creation of a debt service project less risky. reserve account with cash equivalent to say three months of forecast revenues. Such security structures enhance the potential investors’ and lenders’ confidence in the project and Lenders will also want step-in rights; where the PSP result in securing competitive bids. If municipalities is not performing its obligations, the lender has offer this in their bid documents, it bolsters the the right to replace the PSP with another PSP with PSP’s ability to find a good lender and loans at similar or better technical and financial credentials. more competitive rates, which in turn makes bids better VFM. The municipality can offer different forms of support, for example the municipality may contribute capital to the project as a subsidy or as equity to reinforce 2.15 How Will Foreign Exchange Risk Be Managed? Revenues from municipal services are generally changes, this may limit the ability of the project denominated in local currency. Financing available to repay debt. Local currency debt mitigates the for PPPs is more often foreign sourced. In many foreign exchange risk, but generally offers a shorter cases, foreign financing offers longer tenor and a tenor, a higher interest rate, and lower amounts of lower interest rate. But, if the exchange rate between borrowing available. the local currency and the currency of financing  hat Are the Expected Minimum Service-Level Obligations and 2.16 W Are They Realistic? PSPs are keen to understand how service levels The desired service levels need to be realistic given will be monitored and measured, for example, the other supporting infrastructure and in line with with support from an independent engineering the typical levels of operation and maintenance in consulting company or by municipal staff. The other municipal infrastructure. Finally, the penalties identity of the monitoring official, their compensation to be levied for non-achievement of service levels arrangements and terms of reference will create need to be specified and realistic, that is, in line specific incentives, which the PSP will want to with the project revenues. Overly strict penalties will understand. The bid documents need to outline result in over-designing of facilities with associated the required service levels, how they will be costs and maintenance inefficiencies (and less measured, and what penalties will be imposed for advantageous bid prices). non-achievement, in as much detail as possible. 2.17 Will Municipality Fulfill its Obligations? The municipality may decide not to comply with its Potential investors will review the municipality’s obligations, may change rules or regulations, may history of respecting contracts, using its power to impose new permits or licenses, or create other deprive investors of assets or opportunities, and the constraints, in particular in the event of a change in frequency and transparency of the regulatory and government or after an election. The PSP will have permitting authority wielded by the municipality. little power to resist such changes, even where they are fundamental to the success of the project. Module 19 : Private Context 8 Private Sector Context Can the Courts Be Trusted to Be Fair and to Enforce Arbitral or 2.18  Other Awards? Even if the project provides protection to the private Once the dispute is resolved, that award must be investor, those protections are legal and contractual enforced. Local court decisions or local arbitration in nature. Local courts may not be perceived as will need to be enforced based on local laws. trustworthy. In some countries, the courts are International arbitration in many countries is viewed as likely to take the side of the government enforced in accordance with international treaties, over the private sector, or of local investors over and is therefore preferred by most foreign investors. foreign investors. Arbitration can be perceived as a more independent way to resolve disputes. 2.19 Is the Project Part of a Larger PPP Program/Pipeline? A large program of PPP projects offers better win one of the projects when deciding whether opportunities for potential bidders. Bids are to bid. The potential bidder can justify the cost expensive to develop. A potential bidder will assess of bidding for one project against the likelihood its likelihood of winning the bid before incurring of winning one or more of multiple projects. This the expense of bidding. If there is a large program will result in more and better bidders entering the of PPP projects that will be let over the short to market and pursuing individual projects. medium term by the municipality or in the country, then the potential bidder will assess whether it might 2.20 Will the Bidding Process be Open, Transparent, and Fair? The PSP will be concerned to know if the investment required to develop a bid and perform due diligence on a project will provide a fair opportunity to win the project. A bidder may not choose to bid if another bidder has an unfair advantage, including right to match or the ability to cancel the bid process and have the project awarded directly. thegpsc.org | The World Bank FOR DECISION MAKERS SUMMARY PRACTICAL ADVICE Municipal 20 Public-Private Partnership Framework TABLE OF CONTENTS 1.0 Introduction 02 2.0 Selection 03 3.0 Funding 05 4.0 Preparation 07 5.0 Procurement 11 6.0 Implementation 12 Module 20 : Introduction 2 Summary Practical Advice for Decision Makers 1.0 Introduction The following summarizes the key messages for policymakers and practitioners provided in this framework. They are organized around five main concepts related to PPP project delivery: selection, funding, preparation, procurement, and implementation. Where relevant, reference is made to case summaries that help to show the relevance of these messages in the context of actual municipal PPP projects. thegpsc.org | The World Bank Module 20 : Selection 3 Summary Practical Advice for Decision Makers 2.0 Selection Select projects purposefully. Understand exactly those performing them to emphasize benefits what you want from the project (more access, and de-emphasize costs, whether consciously investment, lower prices, etc.), and select or not. Be mindful of optimism bias.1 accordingly (See Module 2: Project Concept PPP is by nature flexible. Look first at what you •  Assessment Tool). need, then design your approach based on • Caution: Planning and forecasting need to those needs. Do not look first at what others reflect benefit to the government, through have done, as your context may be very cost-benefit or VfM assessments. But such different. That said, learn from the experiences assessments tend to involve incentives for of others. Case Examples Water and Sanitation System, Bucharest, Romania: PPP project designed and structured specifically •  to accomplish the municipality’s three distinct aims: (i) improving the consumer service level with minimal tariff increases; (ii) making the system as self- sufficient as possible by transferring most of the investment responsibilities to the private sector; and (iii) avoiding a private monopoly. (Project Summary No. 18) Municipal Waste Thermal Treatment Plant, Poznań, Poland: In response to new European Union •  regulations on waste management, municipality decides to pursue a PPP for a waste-to-energy power plant due to its lack of experience in developing this type of project and related interest in having a seasoned partner manage the operation of the plant. (Project Summary No. 27) Qiaoxi District Central Heating, Zhangjiakou, China: PPP for central heating infrastructure developed to •  address poor performance of state-owned heating company, including inefficiencies resulting from poor maintenance and monitoring as well as poor collection rates for installation fees and usage tariffs. Project is structured as a joint venture between the municipality and the private partner, to help ensure knowledge and technology transfer. (Project Summary No. 63) Select good projects for PPP. Ensure there is a clear on political priorities, rather than economic and objective rationale for using a PPP approach. or commercial. Projects selected for political Garbage-in-garbage-out; just say reasons or priorities will create a perception of “no” to bad projects. increased political risk amongst investors. Or, • A good selection process will maximize it might be a project that could not be financed infrastructure development, by allocating in any other way and was allocated to PPP as a projects with a high likelihood of success to PPP last resort. Projects suffering from bad design, and thereby freeing up limited public resources dubious demand, or weak fundamentals are for projects that need them. Select robust, more likely to fail and may weaken the entire viable projects for PPP, these are more likely PPP program in the process. See Module 5: Managing 1 Consultants, Section 2.2, to be financed on a competitive basis and are box on “Optimism Bias therefore more likely to provide value for money. Avoid narrow focus on new build. Do not overlook or Bad Incentives - How • A poor selection process is likely to lead to opportunities for PPPs to expand, refurbish, or Planning Goes Wrong.” failure. A project might be selected based better manage existing assets. Module 20 : Selection 4 Summary Practical Advice for Decision Makers Case Examples Moncloa Transportation Exchanger, Madrid, Spain: PPP used to significantly expand and renovate •  exchange facility that integrates different public transit systems (i.e., railway, bus, and metro), more than doubling the number of users. (Project Summary No. 1) Qiaoxi District Central Heating, Zhangjiakou, China: Responsibility for the operation, maintenance, •  and expansion of existing central heating infrastructure transferred to private company, resulting in significant improvements in efficiency, quality of service, collection rates, and user satisfaction, in addition to expanding the service coverage area and freeing up public capital for other projects. (Project Summary No. 63) Consider bundling small projects. Small projects economies of scale to reduce total cost and speed present a number of disadvantages for delivery development, while also making the investment as PPPs. Aggregating small projects (i.e., pooling larger and more attractive for more experienced or bundling them into one project), can leverage investors and lenders. Case Examples Bundled Bridge Replacement, Pennsylvania, United States: Repair and maintenance of more than •  500 bridges bundled into a single PPP project. (Project Summary No. 15). IT Network Integration, Barcelona, Spain: Bundling a variety of information technology network •  infrastructure and services results in viable PPP for expanded and improved connectivity. (Project Summary No. 31) Bundled State Parks, California, United States: Bundling three parks into one project results in a viable •  PPP for park operations. (Project Summary No. 59) Varaždin County School Program, Croatia: Construction or refurbishment and maintenance of 22 •  schools and 10 gymnasiums bundled into eight PPPs executed with three SPVs. (Project Summary No. 89) Public School, Belo Horizonte, Minas Gerais, Brazil: Construction and provision of non-educational •  services (e.g., maintenance, utility management) for 32 preschools and five primary schools bundled into one PPP project. (Project Summary No. 90) Confirm project viability periodically to avoid losing Continually ask, throughout the development focus. First decide you want PPP on a rational, process: fundamentally sound basis, then keep reminding • Is the project a good deal for the municipality? yourself why you chose PPP, as its implementation • Does the project provide better services, thegpsc.org can be challenging, and periodically verify that the  VfM, economic growth, jobs, benefits, etc. to project is meeting those objectives (See Module 4: the community? Feasibility Study). | The World Bank Module 20 : Funding 5 Summary Practical Advice for Decision Makers 3.0 Funding PPPs are not ‘free money’. PPP always includes a Consider all the possible revenue streams and source of revenue sufficient to cover all operating focus on maximizing revenues from beneficiaries costs and bank loans, and a reasonable return on of the project – direct and indirect. This includes the investor’s equity. An adequate and predictable considering the use of space within, above, below, revenue stream is the lifeblood of a PPP project. and around the project site for additional, revenue- This revenue will come from some combination generating activities (See Module 16: Harnessing of payments from (a) users of the service, (b) Land Value Capture and Module 17: Capturing commercial revenues generated by the project, and Commercial Value). Only after all options for (c) public sector. Understanding who will pay, and deriving sustainable revenues from beneficiaries how much they must pay, is an essential step for the should the use of public money or guarantees municipality before undertaking a PPP. Therefore, be considered. municipalities must always account for the fiscal risks arising from PPP Case Examples Hong Kong Mass Transit Railway Corporation, Hong Kong SAR, China: Municipal-owned mass •  transit corporation leverages real estate developments around transit stops and lines to fund infrastructure investments. (Project Summary No. 2) City Bus Terminal, Sheberghan, Afghanistan: Private developer constructs and leases retail space •  adjacent to bus terminal to recover its investment in the new terminal. (Project Summary No. 4) Commercial and Landside Operations of I Gusti Ngurah Rai International Airport, Bali, Indonesia: •  Incentive-based fee mechanism for private operation of airport’s landside facilities significantly increases non-aeronautical revenues and the quality of service delivery. (Project Summary No. 12) Underground Parking and Commercial Services Center, San Borja, Peru: Parking facility to be built •  below a public park includes commercial space to increase project revenues. (Project Summary No. 45) Parking Area Under Rivera Navarrete Avenue, San Isidro, Peru: Tariff for parking at facility built •  beneath a major thoroughfare with the municipality entitled to a share in the project’s monthly gross revenue. (Project Summary No. 46) Street Lighting Project, Nasik, Maharashtra, India: Private partner is paid a share of the municipality’s •  energy cost-savings resulting from the project. (Project Summary No. 67) City Improvement Districts, Johannesburg, South Africa: Private property owners may vote to •  establish City Improvement Districts, which then apportion the cost of urban improvement investments across the property owners in proportion to the value of each owner’s property. (Project Summary No. 70) Module 20 : Funding 6 Summary Practical Advice for Decision Makers Redevelopment of Library and Fire Station, Washington, District of Columbia, United States: •  Rights to commercially develop above properties funds private developer’s construction of a fire station and public library. (Project Summary No. 73) Sustainable Housing Project, Turin, Italy: Energy efficient capital investments allow private developer •  to maximize rental income from affordable housing units while still keeping prices below market rates. (Project Summary No. 81) James F. Oyster Bilingual Elementary School, Washington, District of Columbia, United States: •  Private developer granted right to commercially develop a portion of the project site to fund construction of a new public school. (Project Summary No. 88) thegpsc.org | The World Bank Module 20 : Preparation 7 Summary Practical Advice for Decision Makers 4.0 Preparation Prepare well. Proper preparation of a PPP project the municipality will often undermine the entire requires time and money to prepare well project and contribute to its failure. (See Module 3: Sample Project Concept Note). Get help. Where internal resources are limited, •  This investment will reap benefits in terms of look to national or state-level PPP units and likelihood of success of the project, lower cost of other government departments and entities at private investment due to reduced project risk and the local or national level with PPP experience attracting better, more effective private partners. A that can provide hands-on support. National failed project costs everyone time and money; it is PPP or state-level PPP units may also be able generally worth the extra money and effort to make to provide funding to procure external advisers, the project a bit more robust, obtaining information, in addition to other funding sources, such improving planning, managing risk and considering as technical assistance from development options. The municipality needs to allocate sufficient partners and special funds created for such staff and resources to deliver a quality project. purpose at the national or state-level. • PPP is not ‘easy’. PPP is expensive to prepare,  requiring upfront investment of staff and money Be sure to adequately address the to develop projects well, in particular to pay for following questions: expensive external advisers. The benefit of this • Is the project site and necessary rights of up-front investment is obtained over time, since way available and free of encumbrances? If PPP provides for management and funding not, what is the time-frame to do so and the for the whole life of the assets and therefore likelihood of success? addresses project risks early. If the municipality • Is the project likely to earn a reasonable profit does not set aside sufficient budget to prepare for the private partner? Are the revenues the project well, it is more likely to fail. sufficiently certain, the costs manageable and •  Be patient. PPP is not a quick fix; it takes time demand robust? to develop and implement properly. Generally, • Is the private market interested in the project? more time spent in advance of procurement Are there enough good, experienced potential to prepare the project properly will save much bidders showing sufficient interest in the more time and frustration later. Think through project to suggest that the tender process will contingencies in advance, and make sure be competitive? you are happy with the project structure and specification before going to procurement. Be cautious of overly optimistic forecasts, •  Be wary of succumbing to time pressures. particularly with regard to demand and revenue Allow for careful selection, good preparation, projections. If a project seems too good to be true and thorough market engagement. By trying (for the municipality or the private partner), then it is to be too quick to take the project to market, probably too good to be true. Case Examples Yongin Everline Light Rail Transit, Seoul, Republic of Korea: During construction, an independent •  demand assessment determined that the estimated passenger volume was less than one-fourth of the original estimate, due to competing transit options. Actual demand on commencement of operations proved to be even lower, resulting in significant financial liabilities for the municipal authority. (Project Summary No. 3) Bus Terminal-cum-Commercial Complex, Mohali, India: Actual demand for use of the terminal fell far •  short of the forecasted amount, due to users and drivers continuing to use a pre-existing bus stand and thereby avoid the usage fee charged by the new terminal. (Project Summary No. 6) Module 20 : Preparation 8 Summary Practical Advice for Decision Makers Consider all stakeholders. PPP will have a direct Engage and communicate with all stakeholders, influence on some (in particular employees and including to dispel common myths surrounding management) and may raise political or ethical PPPs, such as: concerns amongst many more (See Module • PPPs are not anti-labor. A PPP will provide more 14: Communication Strategy and Module 18: opportunities, better training, and a performance- Community Engagement). While absolute based employment regime. For those with vested consensus will never be reached, the municipality interests in avoiding change, a PPP can be needs to understand fundamental concerns and designed to provide a special regime for these address them. Ask: staff and their representatives. • Is there broad-based support and consensus PPP is not privatization. The project assets •  among local, provincial, and national authorities  either remain under government ownership or will for the project? revert to government ownership at the end of the • Does the public believe that the project is a good project period. deal for the community/users? Is the project information made transparent to the community? Has the community been engaged in project selection and development? Has it “bought-in” to the project? Case Examples Wastewater Treatment Plant, Udaipur, India: Problems related to identifying a viable project site, land •  acquisition, and laying pipe in busy areas only overcome through continued efforts to engage closely with local communities and reach agreement on marginal modifications to technical aspects of the project. (Project Summary No. 24) Marine Sanctuary and Forest Preserve, Chumbe Island, Tanzania: Garnering support from local •  fishermen and communities proved instrumental in developing and delivering a marine sanctuary and forest preserve project. (Project Summary No. 60) Kruger National Park, South Africa: Government agency’s intervention to resolve conflict between •  private operator and workers over employment conditions is key to preserving an otherwise successful PPP. (Project Summary No. 61) Jal Mahal Palace, Jaipur, India: PPP for restoration and development of tourism site suspended due to •  political disagreements over a 99-year lease provided to the private partner as part of the PPP. (Project Summary No. 57) Be flexible when considering sources of financing. Be ready to mix public and private money, to improve value for money, especially in the early days of PPP or when private markets are weak. Public money also helps worthwhile projects, that are not necessarily financially viable, become more robust projects, increasing the opportunities for PPP. thegpsc.org • Efficiency of financing is key. There is no free ride, someone will have to pay (consumers and/ or taxpayers), so make sure you get the best | value for money. The World Bank Module 20 : Preparation 9 Summary Practical Advice for Decision Makers Case Examples Mandaluyong City Market, Manila, Philippines: Blended financing, including a concessional loan •  from a subsidiary of the Asian Development Bank, private equity, advances from shop-owners, and commercial borrowing, used to construct a public market and adjacent commercial complex. (Project Summary No. 38) Pulkovo Airport, St. Petersburg, Russian Federation: Long-term debt financing for a major airport •  PPP provided by a commercial syndicate and international financial institutions, including the International Finance Corporation and European Bank for Reconstruction and Development, with debt raised in three different currencies. (Project Summary No. 11) Small Scale Water Infrastructure, Busembatia, Uganda: Performance-based grants, with phased •  disbursement and subject to verification of output requirements, used to leverage private financing from a local bank for water supply PPP project. (Project Summary No. 19) Marine Sanctuary and Forest Preserve, Chumbe Island, Tanzania: Mixture of private equity and •  environmental-minded donors provides capital investment for marine sanctuary and forest preserve development project. (Project Summary No. 60) Regent Park Affordable Housing Project, Toronto, Canada: Different financing schemes deployed •  at different phases of the project, permitting a phased transfer of risk from the municipal authority to the private partner. (Project Summary No. 80) Government money can be used effectively to is not enough; the project must deliver and improve PPP projects. Government is a key partner provide VfM. in PPP and government support a key element in Use public support efficiently, in a targeted •  successful PPP. manner, to ensure government goals • Government support can improve financial are achieved. viability and make a project more attractive for Ensure funding mechanisms are properly •  investors, but should not be used to try to turn resourced and incentivized to avoid political a bad project into a good one. Financial close capture or inertia. Case Examples Municipal Waste Thermal Treatment Plant, Poznań, Poland: Amount payable by the municipality to •  the private partner for operation of a waste-to-energy plant is reduced by the actual revenue the private operator receives from the sale of electrical power and heat. (Project Summary No. 27) Municipal Solid Waste Treatment Project, Wenzhou, China: PPP for solid waste-to-energy plant made •  feasible by publicly payable fee for disposal of solid waste, limited-term exemption from corporate income taxes, and permitting an immediate VAT refund. (Project Summary No. 28) Administrative Center, Tlajomulco Municipality, Jalisco, Mexico: PPP for new administrative center •  funded by fixed, monthly lease payments agreed to and payable by the municipality and capped in accordance with local law. Municipality improved its creditworthiness by establishing a trust account and opening a contingent line of credit for the lease payments, guaranteed by federal funds. (Project Summary No. 49) Module 20 : Preparation 10 Summary Practical Advice for Decision Makers Aquanova America, Saint-Dié-des-Vosges, France: After a year of considering a basic concession •  model to finance the project, a performance-based availability payment scheme was designed to deliver viable PPP for an aquatic center. (Project Summary No. 54) Roof-top Solar Program, Gujarat, Gandhinagar, India: Solar power generation PPP made feasible with •  a very minimal public subsidy of the tariff charged to the power purchaser. (Project Summary No. 64) Croydon Council Urban Regeneration Vehicle, London Borough of Croydon, United Kingdom: •  Innovative joint venture that uses public land contributions to leverage private capital and expertise for urban redevelopment projects. (Project Summary No. 72) Varaždin County School Program, Croatia: Availability payments, shared by the county and •  municipalities, used to fund PPP for the construction and refurbishment of educational facilities. (Project Summary No. 89) Inkosi Albert Luthuli Hopsital, KwaZulu-Natal, South Africa: Mixture of public capital contribution and •  availability payments used to structure PPP for the provision of medical equipment and all non-clinical hospital services. (Project Summary No. 93) •  Hemodialysis Center at the National Kidney and Transplant Institute, Quezon City, Manila, Philippines: Increase in revenues from expansion of clinical services provides public authority with revenues in excess of lease payments owed to private partner for providing and maintaining equipment and supplies. (Project Summary No. 97) Queen Elizabeth II Medical Center Car Parking Project, Western Australia: Delays in the •  government’s completion of construction works related to the project (in-kind contribution) negatively impacts private partner’s revenues and contributes to fiscal liabilities due from the public authority under the contract. (Project Summary No. 47) Be ready for challenges. In any long-term Prepare for the future. Decide up front relationship, change happens. PPP is above what happens later in the project, deferred all a partnership, it needs to be designed with decisions only become more expensive and challenges, changes and resolution in mind. contentious. Decisions to make changes need to Problems need to be elevated to appropriate levels be made in advance, such decisions later in the of management before they become disputes or process, during implementation, can be expensive worse. As much as possible, potential challenges and time-consuming. should be preempted and addressed in the contract. Ask: Risk transfer and risk sharing are essential elements •  Is the partnership solid – are risks shared in a of a PPP. An appropriate allocation of risks between reasonable manner, and the parties mutually the parties is key to a successful PPP project. Don’t incentivized to make the project a success? cram risk on the private sector, it usually is not •  Are municipality and private sector liabilities efficient, is expensive and makes the project overly affordable and manageable? vulnerable to change and crises. thegpsc.org | The World Bank Module 20 : Procurement 11 Summary Practical Advice for Decision Makers 5.0 Procurement Do not cut corners on procurement. It may seem generally for the private partner, a failed easier to enter into direct negotiations instead of project will cause significant challenges using competitive procurement, but it is not. In and possibly costs for the municipality. The general, it takes longer and costs more money. municipality should do its own analysis, Maximizing competition through good, transparent, replicating a reasonable bid (these are public procurement is one of the most important sometimes called shadow bids) to understand benefits of a PPP (See Module 7: Procurement). better the kind of bids it is likely to receive, but • Be clear to bidders about what you want. also to identify any overly aggressive bids. The Indicate clearly what results, milestones and municipality should exclude any such overly indicators you want the investor to achieve. optimistic bids. Help bidders to give you what you want, don’t make them guess. Listen to lender concerns. Focus on the lenders’ key •  Be open to discuss your expectations, bidders needs and perceived risks, but don’t let them drive might have some useful suggestions. Take the agenda; make sure to protect the municipality’s the time to discuss with bidders, use the interests. Take the time and effort to make life a little competitive dialogue to improve the project. easier for the lenders. It is likely to make your life easier in the long run. Be cautious when selecting the winning bid. If a bid seems too good to be true (financially, technically or otherwise), then it probably is. Look carefully at the detail, whether it is a fixed and complete bid; if anything looks unconvincing it may be wise to reject it. • Private investors may become overly  competitive. A well-run tender process can be used to get the best possible bid, and the best deal for the municipality. But an overly- competitive process can result in an unrealistic bid and a project vulnerable to changing circumstances. More generally, private bidders make mistakes, and may submit unrealistic bids. While the risk of an overly optimistic bid is Module 20 : Implementation 12 Summary Practical Advice for Decision Makers 6.0 Implementation The municipality must regulate and monitor PPP. This must be an integral part of project design. PPP or not, the public sector is always the final authority, and will be ultimately responsible for the provision of public services (See Module 12: Contract Management). • Put in place the right contract management team. The project will not manage itself, failure to assign a sufficiently expert team to manage project implementation (i.e. after financial close), with necessary funding, can turn the best project into a failure. Case Examples Kruger National Park, South Africa: Public partner must intervene to address staff dissatisfaction and •  poor quality of customer service by instructing the private partner to find a new technical partner, produce an operation manual, improve skills development, and implement an incentive program for the staff. (Project Summary No. 61) •  Reconstruction, Management, and Maintenance of Street Lighting and Other Public Facilities, Juvignac, France: Municipality must monitor private partner’s street lighting failure rate, which per the PPP agreement is not to exceed 0.5 percent with outages to be remedied in less than one hour. (Project Summary No. 69) Amritsar Intercity Bus Terminal, Punjab, India: Actual demand for new bus terminal falls far below the •  forecasted amount, due in part to municipality’s failure to enforce requirement that all intercity buses use the terminal, rather than operating outside the terminal to avoid paying the usage fee. (Project Summary No. 7) Urban Transport Services, Peja, Kosovo: PPP agreement suspended after municipality failed to enforce •  exclusivity provision by ending the operations of informal, illegal bus and taxi services that competed with the project. (Project Summary No. 9) thegpsc.org Prepare for change during the project. It is not Stability is the goal, prepare for every •  possible to anticipate or make every risk decision eventuality, but realize it is impossible in advance, mechanisms will be needed to to anticipate every eventuality. | address change and other challenges. A proactive, •  Ensure a practical fallback position that The World Bank collaborative framework must provide partners with protects consumers. Make sure that if all else the platform for resolution. fails, the public is in the position to take Module 20 : Implementation 13 Summary Practical Advice for Decision Makers the infrastructure and services back quickly to •  Facilitation can help. Softer processes are ensure continuity. designed to use and develop relationships Keep the revenue stream as certain, •  as the basis for finding mutually satisfactory foreseeable and ring fenced as possible. It is solutions and can work better than more the lifeblood of the project. formal processes. Be flexible and prepare for conflict resolution. No Crisis does not change the fundamentals of PPP, contract can contemplate every eventuality, so and PPP is sufficiently flexible to be adjusted to expect to need to resolve challenges collaboratively market conditions. Be willing to reconsider each - i.e. it should be managed like a partnership. aspect of the PPP, to find the best solution. E.g. •  Renegotiation should be approached carefully, phase or scale down investment to fit accessible to respect the spirit of the partnership, to finance and reduced demand, and consider improve the PPP arrangements and protect the replacing some of the desired private financing most vulnerable. with public funding (to the extent public funding is • Be proactive. Establish mechanisms intended available) until such time as market conditions make to catch disputes as early as possible. private financing better value. Early in the process, options are varied, relative cost is low, and the likelihood of immediate value-added resolution is higher. Later in the process, options are fewer, more costly, and less likely to work. Case Examples Moncloa Transportation Exchanger, Madrid, Spain: In response to a new regulation that significantly •  increased the project cost and differences between expected and actual passenger demand, partners and stakeholders successfully worked together to modify the project’s design to ensure its continued viability. (Project Summary No. 1) Qiaoxi District Central Heating, Zhangjiakou, China: Public and private partners successfully work •  together to overcome challenges that arose concerning the transfer of staff to the private project company and community opposition to paying new pipeline installation fees. (Project Summary No. 63) Bus Terminal and Commercial Complex, Dehradun, India: Halfway through the concession period, •  there were claims that the private operator had not properly maintained the facility and a protracted dispute over maintenance and lease payments has delayed the second phase of the project. The PPP agreement remains in place because the municipal authority is unwilling to assume liability for the senior debt for the first phase of the project. (Project Summary No. 8) Queen Elizabeth II Medical Center Car Parking Project, Western Australia: Government policy on •  parking fees results in claim for compensation by the project company, in turn prompting a public inquiry aimed at reviewing and amending the PPP agreement in relation to policy changes that may trigger compensation. (Project Summary No. 47) Multi-level Car Parks, Thimphu City, Bhutan: Private partner requested the extension of key contract •  dates (i.e., construction and concession periods) due to changes in the project design and increases in the scope of work, which nearly doubled the project cost. (Project Summary No. 48) Drinking Water Supply, Jakarta, Indonesia: Occurrence of the Asian Financial crisis necessitates •  revisions to PPP agreements. (Project Summary No. 20) Module 20 : The Municipal Readiness Tool 14 Summary Practical Advice for Decision Makers thegpsc.org | The World Bank