1. Public-Private Partnership for Clean Air Municipal Natural Gas Distribution Infrastructure Development Projects
Hisaka Kimura
Principal Investment Specialist
Head, East Asia Unit
Private Sector Infrastructure Division 2
Private Sector Operations Department
22 August 2013
Disclaimer:
The views expressed in this document are those of the author, and do not necessarily reflect the views and policies of the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this document, and accept no responsibility for any consequence of their use. By making any designation or reference to a particular territory or geographical area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

2. ADB PPP project on Clean Air
ADB PPP project on Clean Air. Air pollution, acid rain, GHG emissions, are amongst challenges and problem not in China but through out asia. Industrial foyer?, Car emittants of pollution. Natural Gas station (not gasoline), natural gas climate change smart option but approved capital investment is significant to the spider web like distribution network. Meaningful PPP arrangements, Based on concession agreement with municipal , China Gas private sector fore runner BOT natural gas pipeline networks, and replace coal and gasoline with natural gas- cleaner air, improved air quality. Adb provided 200 million dollar currency equivalent . Project selected and showcased in Clean energy forum. Show cased UN award. Work wth Legal council preparing to replicate this model in India, Indonesia, Thailand and Vietnam. 2

3. Dynamic PPP – “Domino Effect”
Build, own, operate based on concession agreement with the municipal government.
Successful operation and tangible benefit (such as clean air) became strong evidence to convince the neighboring municipal governments to launch PPP (“Domino Effect”).
PPP has been penetrating into smaller cities.
2013
196 cities
2005
50 cities
2003
8 cities
Unique feature is the dynamic PPP with domino effect –often ppp is a single project or plan. This influences political will amongst neighboring cities. Political will matters and not static. Adb supported system and generated PPP.
Continues growth of PPP in cities 8 cities on 2003, now with 196 cities in a span of 10 years. 27 million people connecting more household…..21 provinces, autonomous municipalities, investment. Clean energy solution. Capital market to fund 34 billion of natural gas requirements.
Politic and Political will. Successful operation. ADB support System to create Domino effect. 1 successful ppp will influnce
2. Finance – which made domino effect happen. Project to generate finance and make ppp happen.

4. How to support “Domino Effect”
Flexible financing structure
Minimize transaction costs of smaller projects
Equitable risk sharing : risk should reside with party most able to manage it. Commercial Issues such as tenure, termination regime and step-in rights.
Key items:
- Equitable tariff structure
- Model concession agreement
- Transparency
Project
Structure
Risk Allocation
Regulations
Economic Fundamentals
Key components for system generate PPP.
1. Regulations - foundation for community and private operator
2. Risk Allocation – often hidden dynamic negotiation
3. Structuring the project.
Dynamic Negotiation and structure finance. Program Design. Negotiation dynamic and structure finance.