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Framework for and Available Opportunities in Public Private Partnerships towards Infrastructure Development in Ekiti State


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Framework for and Available Opportunities in Public Private Partnerships towards Infrastructure Development in Ekiti State

  1. 1. Framework for and available opportunities in Public Private Partnershiptowards Infrastructure Development in Ekiti State Ado-Ekiti 14 October 2011 Presentation by Dr. Ousmane Dore Resident Representative Nigeria Field OfficeWho We Are: • AfDB is the Pan-African Multilateral Development Bank • Infrastructure Finance, Private Sector Development, and Regional Integration are institutional top priorities • AfDB leverages its AAA balance sheet to support the economic development in its Regional Member Countries • AfDB has consistently been a major financier to the Energy Sector in Africa • Originator for Clean Technology Fund (CTF) Co-financings in Africa, along with World bank Group • One of the pioneer originators of PPP road concession project in Nigeria (Lekki Toll Road)Nigeria Field Office • ADB Group Funding Opportunities • The ADB Group has several financing Windows, the most important are: • i) ADF • ii) ADB • iii) NTF • iv) NEPAD IPPF • v) Bi-lateral Trust FundsBank Public Sector funding in Nigeria: African Development Fund (ADF).   1  
  2. 2. Funding Requests are passed through the Federal Ministry of Finance for duediligence; • Funds for Projects, Technical Assistance & Studies; • The ADF = concessionary window (interest free); • Beneficiaries contribute a minimum of 10%African Development Fund (ADF)Loans repayable over 50 years including 10 years grace period; • Service charge 0.75% per annum • Commitment charge 0.5% on the undisbursed portion of the loan; • ADF for low-income countriesThe NTF (Nigeria Trust Fund) – established by Government of Nigeria • To assist development of more disadvantaged member counties • Nigeria does not qualify to borrow from this Window; • Interest rate 4 %, repayable over 25 years; • Grace period 6 years;NEPAD-IPPFInfrastructure Project Preparation Facility: • Grants for studies • Applied to project/programme development and preparation activities ceiling of US$ 500,000 • Beneficiaries contribute a minimum of 5% • • Managed by Partnerships & Cooperation Dept. (ORRU) • Generally for studies and institutional support • Procurement of services often limited to firms originating from Trust Fund Donor Country • The AfDB’s private sector development strategy • Assist African governments to improve the enabling environment for the private sector: • Improve essential physical infrastructure (e.g. power, ICT, transport)   2  
  3. 3. • Improve “soft infrastructure” (e.g. regulatory and legal frameworks, tax reforms, trade liberalization) • Create a catalytic and demonstration effects by assisting entrepreneurs with specific transactions: • Private sector operations (e.g. corporations, banks, MFIs) • Public-Private partnerships (e.g. utilities, project finance)The AfDB can help investors achieve business successSources of Comparative Advantage • Project selection track record – low loss rate (<3%) • Packaging diverse resources – ADB, ADF, TA grants • Low cost – LIBOR + 65 to 450 basis points • Dialogue with governments – mitigate political risks • Increasingly responsive – private sector pace • Reliable – transactions get done; $1.4 billion in 2007 • Scale to handle big transactions – $0.5 to US$ 500 million • Strong risk management – fixed, floating, local currency • The AfDB adapts its instruments to meet its clients’ needs • Instruments • Senior Debt – Up to 20 years, foreign or local currencies • Guarantees – partial risk, partial credit • Subordinated Debt – local currency • Equity – direct, equity funds, up to 25% • Concessional Loans – can be combined with commercial resources in low income countries for PPPs • Technical Assistance – grants for studies, capacity buildingKey Private Investment Selection Criteria • Consistency with AfDB Strategy in the Regional Member Country • Commercial Viability • Expected Development Outcomes   3  
  4. 4. AfDB AdditionalityHighlights of some private sector projects across the continentUGANDA: Bujagali project – an excellent example of a public-privatepartnership Bujagali Hydro Power Project • Uganda • Investment USD 1.0 bn • ADB loan USD 110 mnADB roles • Economic analysis • Power & T-lines • ACFA co-financingBenefits • Power, jobs • EnvironmentalPrivate sector projects in Nigeria • Investment USD 1 bn • ADB loan USD 100 mnADB roles • Political risk mitigation • Environmental StandardsBenefits • Royalties • JobsOutline of private sector Approvals/ investments to commercial banks inNigeria: • Guaranty Trust Bank - LOC I & II – USD 140 million • Zenith Bank - LOC I & II – USD 150 million • United Bank of Africa - ELF & TFI – USD 150 million   4  
  5. 5. • Access Bank - LOC – USD 35 million • Microfinance Banks - AB Microfinance USD 1 million Grant • Insurance - Equity investment in Africa ReinsuranceTelecommunication Infrastructure Amount committed: USD 30 millionBy providing wireless operators with FULLY-MANAGED tower sites on aleased basis, we deliver the highest levels of QOS and the vast coverage thatour customers need to grow ROBUST and EFFICIENT networks.Main One cable system Amount committed: USD 66 millionFounded by privately owned Main Street Technologies, the dual fiber pair,1.92-Tbps, the project is expected to span 14,000 km and provide additionalcapacity for international and Internet connectivity to countries betweenPortugal and South Africa on the west coast of Africa. The submarine cableproject is designed in two phases, of which the first phase was commissionedin June 2010.Pioneer PPP Road Infrastructure Project in NigeriaThe Lekki Toll Road Project is the first transport PPP in Nigeria: Lekki Toll-Road Project • Nigeria • Cost: USD 430 mn • ADB loan: NGN 7.45 bnADB Roles: • Local currency lender • Long-term lenderBenefits: • Better road transportation • Journey time saving • Improved road safetyNIGERIA: PPP candidates: • ADF Public & ADB Private Sector: • Cable-Propelled Transport Project Lagos (ADB)   5  
  6. 6. • Nigeria Urban Transport Project (ADF/ADB/CTF) • The Lekki Toll Road Project is the first transport PPP in Nigeria • Cost: USD 430 mn • ADB loan: NGN 7.45 bn • ADB Roles: • Local currency lender • Long-term lender • Benefits: • Better road transportation • Journey time saving • Improved road safetyNIGERIA: Funding Requests Ekiti StateNigeria Rural Access & Renewable Energy ProjectFocus technologies: • Solar PV, in particular for water supply (“motorized boreholes”) and low-cost solar PV lighting (lanterns – see “Lighting Africa” initiative) • Hydro power, but tied to the availability of pre-feasibility studies • “Exotics” for exceptional conditions (wind, biofuels, biogas)NIGERIA: Funding Requests Ekiti StateNigeria Rural Access & Renewable Energy Project Lighting Africa Standardized Specification Sheets (SSS) are based oncomprehensive LA-QTM results. They include the most relevant productperformance metrics in an aggregate, easy to read format and are valid for up totwo years. Verification testing is based on random sampling in the market toensure continued quality and performance. All of the products with a SSS havemet minimum quality standards, which includes basic truth in advertising anddurability requirements.   6  
  7. 7. NIGERIA: Funding Requests Ekiti StateCapacity Building for Public Private Partnerships in Infrastructure (CB4PPPi) • Approved in 2011 • National Assemblies’ approval is outstanding • Loan signature is pending • 8-10 candidate States can request for support (if enabling PPP environment exists) • States to submit official funding requests to ICRC (implementation agency)NIGERIA: Funding Requests Ekiti StateCapacity Building for Public Private Partnerships in Infrastructure (CB4PPPi)– cont. • Pre-feasibility studies • Support to State PPP units • Training • Capacity Building • Transaction advisory services • Sectors: Energy/power & transportNIGERIA: Funding Requests Ekiti StateEro Dam Water Supply & Sanitation Scheme – Feasibility Study & DetailedDesign • State Govt to submit request for study to IERD FMF (incl. TOR & detailed budget) • FMF to vet & submit request to AfDB • Key Engagement: cost recovering tariffs • Possible funding sources: • PPF (Project Preparation Facility – ADF) • AWF (African Water Facility)In summary... • There are huge opportunities for profitable PPP investment in Nigeria.   7  
  8. 8. • Although the investment climate is improving, it is still quite challenging. • The AfDB knows Africa like no other institution. • The African Development Bank is partners that can help investors/project developers achieve business success.Principal contactOusmane Dore, Ph.DResident RepresentativeAfDB. Nigeria Field Office.8, Lake Chad Crescent, Maitama – Abuja.NigeriaE-mail:;Cell: +234 (0) 702 599 1239     8