1. A stock taking and future perspective
PUBLIC PRIVATE PARTNERSHIPS FOR CREATING AND MANAGING INFRASTRUCTURE AT SUB NATIONAL LEVEL
A stock taking and future perspective
Maniram Singh Mahat
Executive Director
Town Development Fund

2. PUBLIC PRIVATE PARTNERSHIPS AGENDA
Understanding PPP transactions
Feasibility Study: Project Description
Preconditions for Successful Tender under PPP
Environmental and Social Analysis
Financial and Economic Viability Check
Contract Documents
The way forward: Perspectives in Nepalese municipalities

3. PUBLIC PRIVATE PARTNERSHIPS What they are…
“A cooperative venture between the public and private sectors, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks and rewards.”
The Canadian Council for Public-Private Partnerships

4. Feasibility Study: Project Description
Physical Description of the Facility
Service Area
Estimated Project Costs
Project Implementation Schemes
Project Financing
Sources of Revenue
Performance Standards/Specifications

5. Successful PPPs require
Legal Instruments (PPP Policy, PPP Act, Guidelines, PPP focus SBD....)
good transaction skills on the part of the public sector partner (including legal, financial, negotiation and industry specific skills)
an experienced service provider from the private sector.
Political Commitment

6. Preconditions for Successful Tender
Available Site
Local Support
Adequate Consumer Base
Absence of Competitive Complexes
Favourable Market Conditions

7. Environmental and Social Analysis
General Environmental and Social Screening
IEE, EIA, EMP

8. We do need value for money.
Financial Model
Financial Analysis
Economic Analysis
Because
We do need value for money.

9. Standard Viability Indicators
Financial Internal Rate of Return (FIRR)
Weighted Average Cost of Capital (WACC)
Internal Rate of Return on Equity (IRR Equity)
Net Present Value on Project (NPV)
Net Present Value on Equity, after financing (NPV Equity)
Payback Period, after tax

10. Financing Conditions Debt ....% of cost including capitalized interest
Equity ....% of cost
Repayment Period ....years, ....year grace period on principal.
Interest is capitalized in the first year
Interest Rate ...% per Annum

11. Economic Viability Indicators
Economic Internal Rate of Return
Economic Net Present Value on the project
Benefit-Cost
Benefit Proxies:
Employment generation from the project
Income generation from the project
Increased land values around the project

12. CONTRACT DOCUMENTS
Annex A: Concept Design and Technical Specifications prepared by the LGU
Annex B: Proponent's Technical Proposal
Annex C: Proponent's Financial Proposal
Annex D: Project Construction and Implementation Schedule
Annex E: Obligation of parties

13. Some Key Provisions
General Provisions (effectivity, waiver, confidentiality
Managing Force Majeure Event
Default case of Proponent/s
Dispute resolution
Contract termination

14. The way forward: Perspectives in Nepalese municipalities
What could be the ideal project list to start...?
Urban Utilities: Water and Sanitation, Toll roads, Bus Terminals,

15. The way forward: Perspectives in Nepalese municipalities
Social services infrastructure
Basic urban services infrastructure
Revenue generating urban infrastructure
Drainage (Roads/Bridges/Culverts if part of drainage),
Public Toilets,
Slum Area Improvement (water, road, drainage, solid waste, and access roads to hamlets of the poor communities),
SWM (Collection, Transportation and Disposal including equipment),
Sanitation Programmes,
Pre-primary Schools,
Libraries/Reading Halls (book bank for poor children),
Health Centres/Health Posts,
Fire Station, Aged Rest-Houses/Orphanages,
Water Pollution (including Sewerage, Waste Water Treatment Plants etc.),
Social Housing,
School buildings (hostels for girls and physically challenged),
Green Zones/Parks/ Play Grounds,
Municipal Hospitals,
Aurvedic Hospitals, etc
Roads and Bridges,
Drinking Water,
Preservation of Natural/Cultural/Archaeological/Heritage Sites,
Slaughter House,
Street Lightings,
Municipal Buildings,
Community Buildings and Rest Houses,
Sports/Stadium,
Recreational Area,
Crematoriums,
Museums,
Protection of Natural resources ( Public Land Protection Works, River training for Soil Erosion Control, Preservation of Rivers/Streams/Ponds/Deep Water, Wells/Lakes/Stone Spouts)
Controlling Air and noise pollution
Plantation on Road sides etc.
Bus Parks and Parking lots (Trucks, taxi, motorbikes, Rickshaws/Horse Carts/etc.)
Cottage/Medium/ Small Industries,
Tourism development Projects,
Market development project (Haat Bazar/Market Fair Centres/ Exhibition Centres)
Communication Facilities,
Generation/Distribution of Electricity (hydropower Projects) etc.
Possible Finanicing: The TDF will revisit the above sectors on regular basis based on the government policy.

16. Capacity Gap at Municipal Level
P3 Program Management in Nutshell and Capacity Development
GENESIS
FEASIBILITY
PLAN
& TEST
PROCURE
IMPLEMENT
OPERATE
Startup
Monitoring
Assessment
Enhancement
Contract Mods
Contract Renegotiations
Preliminary Project Definition
Seed Funding
Objectives Register
Alternatives Index
Prelim Schedule/ Budget
Prelim Economic/ Financial Analysis
Qualitative Analysis
Fatal Flaw Analysis
Process Map & Strategy
Feasibility Report/ Project Approval
Asset/System Evaluation
Site Selection/ Analysis
Environmental/ Permitting Analysis
Final Project Definition
Master Schedule/ Budget
Political Climate Assessment
Procurement Strategy
Prelim Business Plan
Public/Vendor Outreach & Stakeholder Consultation
Business Plan
Risk Assessment/ Allocation
Delivery Methodology
Commercial Terms
/Contract Principles
Deal Structuring
Concept Design/ Performance Specs
Procurement Documents
Vendor Pre- Qualification
Vendor Proposal Evaluation
Contract Negotiations
Design Compliance
Construction Oversight
Commissioning Administration
Capacity Gap at Municipal Level

17. Issues Facing in Municipal PPPs Today
PPP Project Pipeline: Biggest current constraint to PPPs in urban infrastructure is no inadequate legal frameworks, but the limited number of candidate PPP projects being identified and prepared. Govts. should focus on building the PPP project pipeline.
Public Sector Risk-Sharing in PPPs: During past 1 year private urban infrastructure project developers (and lenders) are requiring more and clearer forms of public sector support, risk-sharing, and contingent liabilities than before. PPP Frameworks must be ready to manage these requests.