African Ports and Maritime Conference – IFC Port Presentation November 28-30, 2011 Méhita F. Sylla IFC Infrastructure Advisory Services

Overview of IFC’s Advisory Services Agenda Overview of IFC’s Advisory Services Private Sector Participation in the Port Sector IFC Approach to PPP Transactions IFC Experience in Port Transactions

IFC is a Member of the World Bank Group IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency Est. 1945 Est. 1960 Est. 1956 Est. 1988 To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6,055. - Technical assistance - Loans - Policy Advice To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice Role: To promote private sector development Private companies and Governments in 179 member countries - Equity / Quasi-Equity - Long-term Loans - Risk Management - Advisory Services To reduce political investment risk Foreign investors in member countries - Political Risk Insurance Clients: Products: Shared Mission: To Promote Economic Development and Reduce Poverty

IFC’s Role Advisory Services and Financing IFC also provides advice to governments and businesses Environment & Social Sustainability Access to Finance Business Environment Public-Private Partnerships Enterprise Assistance Advisory services to governments and businesses World’s largest multilateral provider of financing for private enterprises $38+ billion in investment commitments

IFC’s Infrastructure Advisory Services Successful Mandates in Africa Public-Private Partnerships (PPPs) IFC helps governments to increase the quality and availability of public services and infrastructure using the PPP model IFC has global experience in PPPs for transport (roads, airports, rail, ports, etc.), water and sanitation, health and education, power, mining, and many other areas Governments rely on IFC to structure PPPs that cost-effectively meet public needs with well-qualified private partners. Private partners trust IFC to construct a balanced and bankable project Benin Port Cameroon: power Kenya Airways Kenya Safaricom Kenya Telecoms Kenya Uganda Railways Lesotho Hospital Madagascar Tamatave Port Mauritania Telecoms Mozambique Moatize South African National Parks Sierra Leone Hotel Uganda Telecom

Private Sector Participation in the Port Sector Agenda Overview of IFC’s Advisory Services Private Sector Participation in the Port Sector IFC Approach to PPP Transactions IFC Experience in Port Transactions

Private Sector Participation Overview Key factors defining type of private participation include: Port Ownership Role of Port Authorities Relationship between the public and private sectors and their respective roles Most port “privatizations” have tended towards transferring selected port services and/or assets to private or mixed economy companies by means of restrictive leasing, licensing or concessionary contracts.

Role of Port Authority after PSP – retains abilities to control property rights, planning & efficiency A modern Port Authority, acting in close cooperation with private sector companies, typically concentrates its efforts on the efficient performance of a number of fundamental functions, including: Landlord and performance monitoring function Policy-making, planning and development function Traffic control, regulatory and surveillance function Marketing, public relations and promotion function Governments (and port authorities) also retain the responsibility for formulating a policy and/or regulatory reform agenda to serve as an effective basis for private sector involvement, which have often included difficult and transforming legislative, institutional and procedural changes.

Governments benefit from Private Sector Participation Potential for new revenue streams for governments Access to private sector financing freeing Government budgets for social sectors Introduction of Experienced Management and International Trade Benefits Higher Efficiency through the involvement of the private sector Platform for Government Trade Strategies: Establishing a supportive environment and platform for an export-focused economy, and lowering the artificial costs of imported raw materials.

IFC Approach to PPP Transactions Agenda Overview of IFC’s Advisory Services Private Sector Participation in the Port Sector IFC Approach to PPP Transactions IFC Experience in Port Transactions

Full package of advisory services Development of Privatisation Strategy

OurApproach Phase I: Preparation Phase II: Implementation Scope Step 1 Scope Mandate Design Mandate TORs Work Plan Trust Funds Consultants Kick-off Step 2 Options Diagnostic Legal due diligence Technical diagnosis Market conditions Demand projections Capital investment Regulatory framework Potential investors Strategic options Step 3 Framework Enabling Reforms Legal (new laws) Regulatory (agency) Fiscal reforms Triage Retrenchment Inst. Reinforcement Communication Financing Step 4 Transaction Pre-qualification Info Memo Data Room Due diligence Draft Contracts Negotiations Call for tender Award Closing

IFC Experience in Port Transactions Agenda Overview of IFC’s Advisory Services Private Sector Participation in the Port Sector IFC Approach to PPP Transactions IFC Experience in Port Transactions

Concession of a Container Terminal Port of toamasina, Madagascar Case Study # 1 Concession of a Container Terminal Port of toamasina, Madagascar

Toamasina – Map and Location

Transaction Structure (Cont’d) Expected returns to Madagascar over the 20 years of the concession: efficiency gains, international best practices, investments Estimated financial returns to Madagascar: US$ 300 million in investments and concession fees. Tariff reduction: 20% (handling) and 10% for reception & delivery Obligation to keep 350 employees for 5 years Operator’s Obligations backed up by Performance Bond over the lifetime of the concession June 2005: ICTSI Wins Madagascar Port Bidding October 2005: Contract signing ceremony Upfront payment (including asset acquisition): €10 million US$36 million invested in container handling equipment

Toamasina – After Concession

Concession of a Container Terminal Port of Cotonou, Benin Case Study #2 Concession of a Container Terminal Port of Cotonou, Benin

Port of Cotonou - Benin Benin located to west of Nigeria. Small seacoast but road links to landlocked Mali, Niger, Burkina Faso Current throughput of 300,000 teu /6.05 million tons.

Port of Cotonou – PPP Timetable Nov 4, 2008 - IFC signed mandate with Government of Benin US$169 million grant by US Millennium Challenge Corp for port infrastructure required private operator for container terminal MCC grant included 550 meter wharf for 540,000 teu container terminal Nov 2008 - May 2009 - Market & technical studies, concession design May- June-July 2009 – Prequalification- Bid Preparation. Bid criteria published: Highest NPV for upfront payment and guaranteed annual throughput charges. August 2009 - Groupement Bollere awarded 25-year concession. September 2009 - Concession contract signed. Terms included: Upfront payment of US$33 million, $29/teu throughput charge Investments first 5 years: US$42 million civil works/US$70 million equipment Minimum volume guarantees (400,304 Year 1 to 723,056 Year 8) Minimal tariff regulation. Flexible labor policies. Government obligation to deepen and dredge channel

IFC Infrastructure Advisory Services – Port Projects Completed mandates 2009- Cotonou Port 2008 – Durres Port - Albania 2006- Toasmasina Port - Madagascar 2001 – Suape Port - Brazil On Going Mandates and 2011- Nouakchott Port- Mauritania 2010- Vinzhijam Port, kerala – India 2008- Port Louis- Ile Maurice Potential mandates Bulk Terminal- India Bar Port- Montenegro Central America - 2 Ports Caribbean

TO CONTACT US: THANK YOU!!! Afrique Sub-Saharienne 14 Fricker Road Illovo 2196 Johannesburg South Africa Tel: (27-11) 731-3000 Fax: (27-11) 325-0582 Siège 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 USA Tel: (202) 473-3800 Fax: (202) 974-4384 Emmanuel Nyirinkindi Manager Sub-Saharan Africa, Telephone: (27) 11 731 3068 E-mail: ENyirinkindi@ifc.org Méhita Sylla Fanny Senior Investment Officer Telephone: (27) 11 731 3180 E-mail: msylla@ifc.org Ramatou Magagi Senior Investment Officer Telephone: +1 202 473 3954 E-mail: rmagagi@ifc.org THANK YOU!!!