A PPP Project Development Fund Initiative

1. PPP Project Development Fund
Initiative: Payment by Result

2. Presentation Outline
• What is PPP Project Development Fund?
• PPP Project Delivery Cycle
• Stakeholder Map
• Problem Statement
• Published PPP Pipeline Projects 2014
• What is Payment by Result?
• Candidate PPP Projects for Payment by Result
• Prison (Land Swap)
• Roads (Brownfield)
• Power (Brownfield)
• Conclusion

3. What is PPP Project Development Fund?
• PPP Project Development Fund is the financial resource required to
develop bankable projects that can be taken to the market. Activities
involved in project development includes but not limited to the
following:
• Project Design & Techno-Financial Feasibility
• Environmental, Social & Market Studies
• Establish Contractual Framework
• See next slide for the process in the Nigerian jurisdiction.

5. Stakeholders
Private Sector Banks
Implementing
Officials
Debt Financiers
Trainers
Developers/Equity
Investors
Civil Society
Media
Public Policy
Makers
Public Sector Banks
Equity Funds
Local Companies
MNCs
Think Tanks
Opinion Makers
Academia
CSOs
Print & Electronic
Three Arms
MDAs Top Bureaucracy
FEC Members
PPP Unit
MoF Staff
PPP Unit
ICRC & PIU Staff
Sub-national
government & entities
NGF, ALGON etc
Core Stakeholders in
RED FONT Colour
STAKEHOLDER MAP

6. Problem Statement
• Lack of Project Development Fund to develop the National Pipeline
projects or engage Transaction Advisory (TA) Services (See next
Slide for the Published PPP Pipeline Projects. Ref: www.icrc.gov.ng)
• The project pipeline shows projects at different stages and 80% are under
development. Most of the projects under development are technically at
concept stage due to lack of funds to engage a TA or carry out project
development activities.
• Nigeria is an emerging PPP markets with great potential. The social and
economic returns from upscaling infrastructure stock through PPPs is
highly desirable with invaluable development.
• It will therefore be desirable to initiate creative solutions to close the
funding gap required for project development which will stimulate the PPP
market and sustain investors appetitie.

8. Funding solution to close the funding
gap for project development
• Payment by Result or No Cure No Pay.
• This model is used to procure the services of TAs competitively to develop
PPP projects with very high economic potential for Bankability. (See next
slide for list of candidate projects)
• The framework is designed to engage the services of a TA whose payment is
subject to successfully procuring a PPP Partner and reaching financial close.
• The payment is generated from the entry fee paid by the PPP Partner
procured.
• The contract sum $X or 2% of entry fee is paid which ever is lower.
• Though its not completely new model

9. Candidate Projects for Payment by Result
• Land Swap Model for building new facilities like prison
• Consider a land swap deal for the redevelopment of Ikoyi Prison (Lagos Nigeria) now in the
heart of uptown Ikoyi-Lagos with high premium land value for…….

10. Candidate Projects for Payment by Result
• Brownfield Road projects with heavy traffic: Consider the Lagos-
Ibadan Road that conservatively could record over 200,000 ridership
daily.

11. • Brownfield Power projects with huge potential for growth
Candidate Projects for Payment by Result

12. Conclusion
• Payment by result has delivered a number of projects in Nigeria and
still considered a preferred intervention so far. However the Legal
Institutional and Regulatory framework for PPPs needs to be
strengthened to ensure confidence and comfort to attract best in class
TAs into the competition.
• Other initiatives like a Revolving PPP Project development fund and a
framework to enable entry and participation of Private Equity Fund
in project development may stimulate the PPP Project Pipeline and
build investor appetite.