Kingdom of Thailand: Mainstreaming Public Private Partnerships

Transcription

1 Technical Assistance Report Project Number: Policy and Advisory Technical Assistance (PATA) June 2010 Kingdom of Thailand: Mainstreaming Public Private Partnerships (Cofinanced by the Republic of Korea e-asia and Knowledge Partnership Fund) The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

2 CURRENCY EQUIVALENTS (as of 13 May 2010) Currency Unit baht (B) B1.00 = $ $1.00 = B32.28 ABBREVIATIONS ADB Asian Development Bank GDP gross domestic product MOF Ministry of Finance PPP public private partnership PPSU private participation in state undertaking TA technical assistance TECHNICAL ASSISTANCE CLASSIFICATION Type Policy and advisory technical assistance (PATA) Targeting classification General intervention Sector (subsectors) Multisector Themes (subthemes) Economic growth (promoting economic efficiency and enabling business environment); private sector development; capacity development ; sustainable economic development (public private partnerships; policy and institutional reforms) Location impact National (high) Partnership Republic of Korea e-asia and Knowledge Partnership Fund NOTE In this report, "$" refers to US dollars. Vice-President C. Lawrence Greenwood, Jr., Operations 2 Director General K. Senga, Southeast Asia Department (SERD) Country Director J.P. Verbiest, Thailand Resident Mission (TRM), SERD Director J. Ahmed, Financial Sector, Public Management and Trade Division, SERD Team leader Team members V.V. Subramanian, Lead Professional (Financial Sector Capital Markets), SERD L. Attapich, Regional Economics Officer, TRM, SERD O. Jetwattana, Private Sector Economics Officer, TRM, SERD N. Moller, Counsel, Office of the General Counsel S.N. Oh, Principal Country Economist, SERD L. Abenojar, Administrative Assistant, SERD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 I. INTRODUCTION 1. The Government of Thailand has asked the Asian Development Bank (ADB) to formulate technical assistance (TA) to support the government's core challenge and responsibility in implementing the medium-term infrastructure investment program through public private partnerships (PPPs). This would ensure that public resources are used efficiently and effectively. The country partnership strategy identifies infrastructure development as one of three core strategic areas considered essential for enhancing the competitiveness of Thailand s economy. 1 The overarching objectives of the strategy are to support Thailand s national economic and social development agenda; and to strengthen Thailand s role and capacity as a regional development partner. ADB would provide value addition in three core strategic areas essential for enhancing the competitiveness of Thailand s economy: infrastructure development, capital market development, and environmentally sustainable development. Since 2006, ADB TA projects have supported capital market development. During , ADB provided a series of TA projects 2 to prepare for expansion of the Bangkok mass rapid transit system; they are expected to lead to implementation of a mass rapid transit integrated ticketing project (in the 2010 loan pipeline for $10 million). Support for environmentally sustainable development includes TA 3 for mainstreaming energy efficiency in municipalities and a loan and partial credit guarantee for Biomass, a limited power project. 4 The government is also committed to applying best practices and innovative approaches in the planning, financing, and operation of new infrastructure and facilities. The government is now asking for TA support to develop an enabling PPP framework, to help structure priority projects, and to develop institutional capacity. The TA will ensure close coordination with regional ADB initiatives that may involve Thailand in PPPs. By seeking to maximize opportunities for private sector participation, the government aims to reduce its financial burden, promote technologically advanced designs and systems, ensure timely construction, and achieve operating efficiencies. Consultations were undertaken with the government during January 2010 and 3 4 March 2010 to reach an understanding on the overall objective, scope, and implementation arrangements for the TA. The design and monitoring framework is in Appendix 1. 5 II. ISSUES 2. Mixed success in public private partnerships. Thailand s experience with attracting private investments in infrastructure has been mixed, especially when compared with many of its neighbors. Only telecommunications and energy have experienced sustained investment. Telecommunications in Thailand has shown good progress in terms of increasing access and entry of new service providers backed by a strong regulator. An important step in PPPs in the country was the first round of independent power producers bidding in 1994 when six companies were awarded contracts to generate 3,870 megawatts of power. In the 1990s, limited private sector participation in water and sanitation included lease and management contracts with the metropolitan and provincial water authorities. 1 ADB Country Partnership Strategy: Thailand, Manila. 2 ADB Technical Assistance to the Kingdom of Thailand for Infrastructure Investment Advisory Assistance to the Public Debt Management Office. Manila; ADB Technical Assistance to the Kingdom of Thailand for Infrastructure Investment Advisory Support (Phase II). Manila; ADB Technical Assistance to the Kingdom of Thailand for Preparing the Bangkok Mass Rapid Transit Integrated Ticketing Project. Manila. 3 ADB Technical Assistance to the Kingdom of Thailand for Mainstreaming Energy Efficiency Measures in Thai Municipalities. Manila. 4 ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan and Partial Credit Guarantee for the Biomass Power Project in Thailand. Manila. 5 The TA first appeared in the business opportunities section of ADB s website on 12 May 2010.

4 2 3. Of the three concessions granted in the 1990s for mass transit projects in metropolitan Bangkok, only the Green Line concession was implemented. In 1992, the Mass Rapid Transit Authority was established to take over rail transit functions from the Expressway Transit Authority. In 2000, after the Asian financial crisis, a concession was granted for operation and maintenance of the Blue Line. Ridership for both mass transit projects has been below the forecasts, although this is not unusual for such projects. Ridership has been adversely impacted by lack of integration between the two systems both physical as well as ticketing and with the public bus network. Expressway projects in Bangkok have encountered problems with land acquisition and enforcement of contractually agreed tolls. The implementation of a port expansion plan by the Port Authority of Thailand with the private participation of Hutchinson Port Holdings on a build operate transfer basis to construct and operate six new berths can be considered a successful PPP venture. 4. Declining investments in infrastructure. Many factors account for a country s competitiveness in the global economy. In Thailand, deficient infrastructure is consistently cited as a principal constraint to private investment and productivity growth. 6 Thailand s infrastructure deficiencies can be traced to the significant decline in public investment since the Asian financial crisis in Immediately before the crisis, public investment was as high as 10% of gross domestic product (GDP), but it now has slipped to about 8%. Private investments in infrastructure projects have also been declining as a percentage of GDP. In comparison, countries such as India and Viet Nam have registered considerably more growth in private investment in infrastructure development over the last 10 years. 5. Need for public private partnerships. The 10th National Plan identifies infrastructure development as a national priority to enhance Thailand s competitiveness and support long-term growth. Thailand s medium-term infrastructure investment program represents a positive first step to close the widening gap in infrastructure investment. A major policy initiative under the Strong Thailand 2012 fiscal stimulus program is to promote economic growth through infrastructure development over the medium term. With the projected increase in public debt from about 45% of GDP in 2009 to about 59% by 2012 at the end of the stimulus program, the government is keen to consider alternate modes of financing infrastructure by inviting private participation under the PPP mode. Total infrastructure investment requirements are projected at B1.43 trillion under the stimulus program, of which B145 billion is proposed to be mobilized through PPPs. 6. Enabling provisions. Until the late 1980s, state-owned enterprises were the principal sources of financing for infrastructure and the provision of its services. To provide a framework for private participation, the Royal Act on Private Participation in State Undertaking was enacted in The act provides the approval and procurement processes for private participation in activities undertaken by the state that have an investment value of B1 billion or more. However, only 11 PPP projects have actually been implemented under the act a fraction of those proposed by the private sector. The act does not explicitly define a clear enabling framework from an investor s perspective. Specific drawbacks include (i) time-consuming and prescriptive procedures; (ii) lack of clear definition of the nature, scope, and sector of a project; (iii) lack of defined policy principles and procurement process to be followed, which can lead to potential subjectivity in decision-making; (iv) undefined provisions for government support or obligations; 6 Infrastructure, skill shortages, and heavy regulatory burdens are cited as three principal constraints to private investment and productivity growth in Thailand. World Bank Thailand: Investment Climate, Firm Competitiveness and Growth Study. Washington, DC.

5 3 and (v) absence of enabling provisions to facilitate private sector participation. Support is needed in drafting amendments for the act the responsibility of the Comptroller General's Department. 7. Independent regulators. Sector-specific independent regulators are in place only for telecommunications and energy. In all other sectors, the ministry or concerned agency acts as the regulatory body. The absence of an arms-length relationship between the regulatory and policy functions has constrained private sector participation in PPP projects. Sector-specific guidelines are required to delineate sector-specific project development requirements. This is important in the context of private participation in mega projects where output and performance criteria or specifications should be stated. 8. Public private partnership framework and policy. A clear policy for PPPs is necessary for the PPP program to gain momentum. National PPP policies, guidelines, and fiscal rules are needed, as well as coordination for sector PPP plans. A political champion is also needed. The government has made a good beginning by the setting up of a high-level committee chaired by the deputy prime minister and comprising the line ministries as members. The State Enterprise Policy Office is the committee secretary. A task force has been set up under the Ministry of Finance (MOF) with the permanent secretary (finance) as the chair and the director general of the Comptroller General's Department as the deputy chair. More recently, the finance minister announced that creating a new PPP framework is one of the key policy initiatives for A central PPP unit needs to be established with a clear mandate and mechanism for its operations. New PPP guidelines (the first draft) are posted on the MOF website ( Support will be required to finalize and implement these guidelines. Support will also be required for using the value-for-money concept, addressing possible viability gap funding issues, and providing templates for requests for proposals and standard contracts and guidelines for contract management. 9. Development of bankable projects for private sector participation. The absence of rigorous project development criteria and methodologies is the "missing link" in developing bankable PPP projects. Sound project preparation capacity is essential for addressing the wide range of complex economic, financial, technological, institutional, social, and environmental issues associated with large-scale infrastructure projects. For complex projects, especially those involving private sector participation, many of Thailand s line ministries and government agencies need additional technical expertise to (i) conduct detailed project appraisals and feasibility assessments; (ii) price and manage risks; (iii) institute transparent, conducive, and effective regulatory policies; and (iv) create institutional mechanisms for managing and monitoring project implementation. Community consultations and the application of safeguard mechanisms are also integral preparatory steps for projects with potential social and environmental impacts. Well-prepared projects can substantially reduce the risks of cost overruns and implementation delays, and offer greater prospects for private sector participation. The government should ideally provide funding for the required project development activities and set up a project development facility. The project development expenses could eventually be recovered from the successful bidder. 10. Capacity development. The capacity of national and line ministries needs to be developed. The views expressed The high-level herein are committee those of the and consultant PPP task and force, do not and necessarily future represent central PPP those unit of ADB s need assistance members, Board with of developing Directors, Management, PPP policies or and staff, guidelines. and may be Line preliminary ministries nature. require assistance in structuring and implementing PPPs (capacity to apply value-for-money principles, review requests for proposals and concession agreements, undertake project evaluation and negotiation, and monitor and manage project implementation).

6 4 11. Government stability. This represents a significant constraint. Since 2006, frequent changes in government have resulted in regular ministerial change. Recurrent political turmoil remains a key risk to the near-term outlook. However, notwithstanding this period of political uncertainty, the country partnership strategy remains aligned with the government s policies and action plans to promote long-term sustainable growth and social development, outlined in Thailand s National Economic and Social Development Plan. Despite the changes in government, continuity and stability in the core economic policy agenda supported by permanent staff of the concerned economic ministries has been remarkable. During recent political tension, major reforms have been undertaken and supported by successive governments of very different political orientations. Across all policy and political perspectives, the country is seen to be at a critical economic juncture, requiring a large-scale investment in infrastructure across a broad range of sectors. The thrust of policy discussion is how much will be financed by government and how much by the private sector. The general consensus is that private sector participation should be stronger to reduce the burden on the government in terms of debt financing. Limits to that burden are institutionalized in Thailand through debt ceilings in law, which reinforce the depth of commitment to PPPs and broad support across all policy and political participants. A breakdown in law and order during actual TA implementation could result in project delays, but political stability would ensure that this project receives highest priority over all other projects in Thailand. III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 12. The impact of the TA will be enhanced private sector investment in infrastructure during the medium term (starting from 2012) leading to improved availability and quality of infrastructure in Thailand and thus contributing to economic growth. The outcome will be an improved PPP-enabling environment with streamlined PPP processes and guidelines, as well as improved sector, legal, and regulatory frameworks for catalyzing PPP investments. The TA will result in strengthened capacity within the PPP unit, line ministries, and other agencies responsible for PPPs in Thailand. B. Methodology and Key Activities 13. The total cost of the TA is estimated at $2.1 million equivalent. The outputs include (i) development of an enabling framework for PPPs in Thailand development of a national PPP policy framework and a central PPP unit with a detailed mandate; identification of appropriate institutional, legal, and regulatory requirements; and recommendations for amendments to the Royal Act on Private Participation in State Undertaking Act, 1992, to facilitate private sector participation; (ii) development of bankable PPPs for private sector participation by helping structure a project development facility, identify the appropriate agency where it should be located, and assess the extent of initial resources required and the mechanism for its management and operation; (iii) support for pilot transactions in priority infrastructure sectors by developing terms of reference for transaction advisors (legal, technical, financial, and environmental) to assist the Mass Rapid Transit Authority in preparing bid documents, interfacing with potential bidders, evaluating bids, developing financial models, selecting project developers, and negotiating with selected private concessionaires (support will also be provided for developing a checklist for initial screening of projects); and (iv) development of institutional capacity.

7 5 14. Political stability and government commitment is required to catalyze private sector investments through PPP for infrastructure development, strengthen the enabling environment for PPPs, develop consensus among different government agencies and stakeholders, and develop appropriate incentives for private sector participation. Risks include lack of political will to promote and invite private sector participation through PPPs, delays in approval and implementation of legal and regulatory provisions, inadequate institutional capacity, and lack of bankable infrastructure projects. C. Cost and Financing 15. The cost of TA outputs 1 3 (para. 13) is estimated at $1.4 million equivalent, of which $1 million equivalent will be financed on a grant basis by ADB's Technical Assistance Special Fund (TASF-other sources). The government will finance the remaining $400,000 equivalent in kind. The cost for output 4, the capacity development component, is estimated at $700,000, of which $500,000 will be financed on a grant basis by the Republic of Korea e-asia and Knowledge Partnership Fund and administered by ADB. The government will finance the remaining $200,000 in kind. The detailed cost estimates and financing plan are provided in Appendix 2. D. Implementation Arrangements 16. MOF will be the executing agency. Offices under MOF (State Enterprise Policy Office, Comptroller General's Department, Public Debt Management Office), and the National Economic and Social Development Board, as well as offices under the Ministry of Transport (Office of Transport and Traffic Policy and Planning and Mass Rapid Transit Authority) will be the implementing agencies. The TA will be implemented from July 2010 March The TA will engage a combination of a consulting firm and individual consultants. Total consulting inputs will include 33.5 person-months for international and 25 person-months for national. The TA will use the consultants qualifications selection procedure for selection of the firm or institute to be separately engaged to develop institutional capacity. All consultants and resource persons will be hired according to ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). Disbursements under the TA will be made in accordance with ADB s Technical Assistance Disbursement Handbook (2008). The outline terms of reference for all consultants are in Appendix 3. IV. THE PRESIDENT'S DECISION 17. The President, acting under the authority delegated by the Board, has approved (i) ADB administering a portion of technical assistance not exceeding the equivalent of $500,000 to be financed on a grant basis by the Republic of Korea e-asia and Knowledge Partnership Fund, and (ii) ADB providing the balance not exceeding the equivalent of $1,000,000 on a grant basis, to the Kingdom of Thailand for Mainstreaming Public Private Partnerships, and hereby reports this action to the Board. The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

8 6 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Performance Targets/Indicators Data Sources/Reporting Mechanisms Assumptions and Risks Assumptions Enhanced private sector investment in infrastructure starting from 2012 Private investment as a percentage of overall infrastructure investment in the country increases by 2% every year post-ta completion, from a baseline of 5% in 2009 International and national business climate surveys Annual reports on infrastructure availability including MOF and line ministries websites and publications Political stability realized and government remains committed to catalyzing private sector investments for infrastructure development using PPP Enabling environment for PPP is strengthened Sufficient liquidity is available in the private sector Risks Government lacks political will to promote private sector participation and confidence in the investment climate Outcome Assumptions An improvement in the PPP-enabling environment with streamlined PPP processes and guidelines; sector, legal, and regulatory frameworks for catalyzing PPP investments; and strengthened institutional capacity At least four to five infrastructure projects ready for implementation using PPP by 2012, mainly in mass rapid transit, urban roads, education, and health Government reports including from MOF and other relevant line ministries Annual reports of project sponsors Annual reports of project financiers Government remains committed to developing a PPP policy and sector reform Approvals for the new central PPP entity, PPP manual, and PPP policy frameworks are granted without delays Government agencies and stakeholders develop a consensus Appropriate incentives for private sector participation are available Risks PPP project delays result from lack of consensus by state or local governments on adopting PPP policies or recommendations from the central PPP entity Emerging new legal and regulatory issues and financing constraints cause delays in uptake of PPP policies and projects Institutional capacity is not adequate Bankable infrastructure projects are not developed Outputs Assumptions 1. Appropriate policy, legal, regulatory and institutional provisions Central PPP unit established by 2010 Amendments to the PPSU Act, 1992 to enable private sector participation in infrastructure projects by MOF, State Enterprise Policy Office, Comptroller General's Department, Public Debt Management Office Relevant government agencies reach a consensus Review of draft documents is rigorous and timely

9 Appendix 1 7 Design Summary 2. Structured bankable infrastructure PPP projects 3. Support for pilot transactions Performance Targets/Indicators 2011 Required legal and regulatory provisions recommended by 2010 Four to five PPP projects structured by 2012 Project development facility established by Implementation of priority projects such as the mass rapid transit purple and blue line, and other priority projects by 2012 (expansion to existing mass rapid transit system) 4. Institutional capacity Institutional capacity in relevant government agencies strengthened on a continuing basis Data Sources/Reporting Mechanisms National Economic and Social Development Board reports Copies of amendments carried out to the PPSU Act, 1992 ADB mission Activities with Milestones 1.1 TA recommendations on setting up a central PPP unit with appropriate structure and mandate by September Central PPP unit established by the last quarter of Draft amendments to the PPSU Act, 1992 submitted by September Amendments submitted to the cabinet by end Required policy, legal, and regulatory provisions submitted by September Government and relevant sector agencies review and finalize provisions by end National policy framework for PPP prepared by end PPP manual and checklist developed by The government develops bankable PPPs by Recommendations on the location, structure, and resource requirements for establishing the project development facility submitted by September PDF established with required government budgetary allocation with appropriate operating and governance structure 3.1 All project documents reviewed and terms of reference for transaction advisors drafted for priority projects as required 4.1 Capacity-building initiatives provided on a continuing basis to relevant government agencies 4.2 In parallel, institutional capacity building sourced from the Republic of Korea e-asia and Knowledge Partnership Fund by June Capacity for applying value for money principles, reviewing requests for proposals and concession agreements, carrying out project evaluation and negotiation and thorough research on PPP policies and guidelines developed on a continuing basis until mid Capacity strengthened Assumptions and Risks Adequate political is available to carry out legislative changes Government funding is available for establishing the project development facility Risks Mandate is not accepted Capacity is inadequate Resources for setting up the project development facility are inadequate Inputs ADB: $1,000,000 Republic of Korea e-asia and Knowledge Partnership Fund: $500,000 Government: $600,000 ADB The views = Asian expressed Development herein Bank, are MOF those = Ministry of the consultant of Finance, and PPP do = public private not necessarily partnerships, represent PPSU those = of Royal ADB s Act on Private Participation in State Undertaking, TA = technical assistance members, Board of Directors, Management, or staff, and may be preliminary in nature. Source: Asian Development Bank.

10 8 Appendix 2 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank Financing a (outputs 1 3) 1. Consultants a. Remuneration and per diem i. International consultant ii. National consultants b. International and local travel 80.0 c. Reports and communications Miscellaneous administration and support costs Contingencies 80.0 Subtotal (A) 1,000.0 B. Government Financing (outputs 1 3) 1. Office accommodation and transport Remuneration and per diem of counterpart staff Subtotal (B) Subtotal (A+B) 1,400.0 C. Republic of Korea e-asia and Knowledge Partnership Fund b (output 4) 1. Consultants a. Remuneration and per diem i. International consultant ii. National consultants 36.0 b. International and local travel 30.0 c. Reports and publications Miscellaneous administration and support costs Training Contingencies c Subtotal (C) D. Government Financing (output 4) 1. Office, workshop venues, and local transport Remuneration and per diem of counterpart staff Miscellaneous administration and support costs Contingencies 30.0 Subtotal (D) Subtotal (C+D) Total (A+B+C+D) 2,100.0 a Financed by the Asian Development Bank's Technical Assistance Special Fund (TASF-other sources). b Administered by the Asian Development Bank. c Including provision for additional work (to be identified during implementation). Source: Asian Development Bank.

11 Appendix 3 9 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1. Consulting inputs will include national and international consultants (individuals and firms). Engagement under the indefinite delivery contract will be considered. Consultants recruited will include (i) expertise in the infrastructure sector with specific reference to public private partnership (PPP), PPP policy development, business planning, corporate governance and strategic management, and government infrastructure advisory; (ii) expertise in legal and regulatory provisions for infrastructure development; (iii) experience in developing training modules and workshops, and conducting road shows; (iv) experience in project management, PPP program management, and capacity building; (v) expertise in setting up a PPP project development facility, including its structure, resource requirements, and operating mechanisms to manage the facility; and (vi) transaction advisory skills for projects in mass rapid transport, health, and education. A. Public Private Partnership Policy Experts (two international, 4 person-months each; one national, 5 person-months) 2. The international PPP policy experts will have at least 10 years of experience in PPP policy; and in developing an enabling environment and PPP project development processes. They should have experience in developing PPP manuals and have built up a knowledge base in all aspects of the PPP project development cycle including financial and legal assessment, statutory project assessment, project management, stakeholder consultation, risk assessment and output specification, payment mechanisms, and contractual issues. The international experts, in coordination with the national experts, will be responsible for (i) (ii) (iii) (iv) (v) (vi) helping establish a central PPP unit with a clear mandate and effective operating mechanisms; analyzing existing PPP policy documents; reviewing national approaches on risk allocation and PPP project development and bid processes, which may involve review of documents and discussions with relevant government bodies to understand the rationale for the approaches to date; developing a draft set of principles for a national PPP policy; helping develop a PPP policy manual in the context of the legislative and regulatory process containing detailed instructions on processes and procedures to be followed during project identification, planning, procurement, implementation, and monitoring phases; and dispute resolution mechanisms and their dissemination on a website; and in coordination with other experts, helping prepare a checklist to identify potential projects for development using PPP. 3. Deliverables. One of the PPP policy experts will function as the team leader and help coordinate the outputs of all components. The experts will act as project coordinators and submit an inception report with detailed work plans within 3 weeks of commencement of work, draft interim report within 10 weeks from the start date, draft final report within 16 weeks from the The start views date, expressed and final herein report are those (after of incorporating the consultant all and comments) do not necessarily within 18 represent weeks those from of the ADB s start date. members, Workshops Board of and Directors, seminars Management, will be conducted or staff, and as may required. be preliminary in nature.

12 10 Appendix 3 B. Infrastructure Legal and Regulatory Experts (two international, 4 person-months each; one national, 4 person-months) 4. The international experts, in coordination with the national consultants, will provide inputs for developing the regulatory framework for PPP. They will have at least 10 years of international experience in infrastructure regulation in both developing and developed markets. They should have strong credentials in regulatory economics with regard to the interface between regulatory and commercial interests. The experts will be responsible for (i) (ii) (iii) (iv) thoroughly reviewing relevant government and sector legislation and regulatory arrangements; undertaking a review of the Royal Act on Private Participation in State Undertaking Act, 1992, and its suitability based on international best practices and a comparative analysis of PPP-related regulation in Thailand; drafting recommendations for suitable amendments to the Royal Act on Private Participation in State Undertaking Act, 1992, to facilitate private sector participation; and providing guidance on legislative and regulatory reforms based on a comparative analysis with international best practices and given the evolving PPP policy framework. 5. Deliverables. In coordination with the PPP policy experts, the infrastructure legal and regulatory experts will submit an inception report with detailed work plans within 2 weeks of commencement of work, draft interim report within 8 weeks of the start date, draft final report within 14 weeks of the start date, and final report (after incorporating all comments) within 16 weeks from the start date. Workshops and seminars will be conducted as required. C. Institutional Project Development Expert (international, 4 person-months; national, 4 person-months) 6. The international institutional project development expert (preferably a firm) will have at least 10 years of international experience in advising on setting up a project development facility, including institutional structure, operating mechanisms, and funding requirements. The selected firm should have worked in a variety of regions and developed a knowledge base in institutional development with reference to PPP project development and structuring. The responsibilities of the proposed institution are closely related to the development of the PPP policy and PPP manual. The international firm will be responsible for (i) (ii) (iii) (iv) (v) reviewing the need for a project development facility to help develop and structure projects for private participation; developing a business plan for the proposed body based on the needs of the sector; developing a revenue model based on market assessment of services to be offered by the proposed body; identifying funding requirements and appropriate agency to operate and manage the facility; and detailing the mechanism for operating such a facility. 7. Deliverables. The experts will be required to submit a detailed work plan with 3 weeks of commencement of work, interim report within 8 weeks, draft final report within 14 weeks from the start date, and final report not later than 16 weeks from the start date.

13 Appendix 3 11 D. Transaction Advisors (three international, 2.5 person-months each; three national, 2 person-months each) 8. The transaction advisors should have expertise in developing and structuring projects in urban mass rapid transport (technical, financial, and legal aspects) and have at least 10 years of experience in managing complex projects. 9. The advisors will be responsible for reviewing the feasibility studies and all relevant documents prepared by the government for the proposed Bangkok urban mass transit Purple Line extension project, and drafting suitable terms of reference for the eventual transaction advisors (legal, technical, financial, and environmental) who will assist the Mass Rapid Transit Authority in preparing the bid documents, interfacing with potential bidders, evaluating the bids, developing the financial model, selecting the project developer, and negotiating with the selected private sector developer. Transaction advisors are to be engaged for proper packaging, structuring, and implementation of the projects. Their services will be required intermittently until the signing of the concession agreement. The terms of reference are to be drafted keeping in mind that the transaction advisors will assist in all matters of the project including the warranties and undertakings to be obtained from project participants at various stages and carrying out due diligence on behalf of the Mass Rapid Transit Authority. The entire range of activities to be carried out by the transaction advisors includes providing financial advice, modeling, and structuring for implementation of each of the projects on a PPP basis. E. Capacity Building and Communications Consultant(s) (international, 6 personmonths; national, 6 person-months) 10. The capacity building consulting firm will be responsible for developing capacity of the high-level committee, PPP task force, and future central PPP unit in developing PPP policies and guidelines; as well as that of specified line ministries such as the Office of Transport and Traffic Policy and Planning, Mass Rapid Transit Authority, and the health and education ministries. The individual consultants will complement the institute engaged to provide needsbased specific capacity development services. 11. The TA will use the consultants qualifications selection procedure for selection of the firm or institute to develop capacity by (i) sharing knowledge of international best practices in PPP; (ii) applying value-for-money principles (including twinning of sample projects and on-the-job training); (iii) building capacity to review requests for proposals and concession agreements; (iv) building capacity to carry out project evaluation and negotiation; (v) building capacity to carry out monitoring and managing of project implementation; (vi) developing core learning program modules with multimedia learning products; (vii) conducting study tours; (viii) organizing knowledge-sharing workshops, seminars, and conferences on selected subjects; The views (ix) expressed publishing herein handbooks are those of on the value-for-money consultant and do tests not necessarily and PPP project represent implementation, those of ADB s members, Board and of Directors, hold a dissemination Management, seminar; or staff, and and may be preliminary in nature. (x) carrying out other related activities as identified during TA implementation.

14 12 Appendix The individual consultants will typically have more than 10 years of experience in such capacity building exercises and coordinate with the institute engaged to help organize the capacity building support as proposed. They will conduct study tours to the countries in the region and organize knowledge-sharing workshops. Capacity development activities will include disseminating the products of the proposed body as well as the policy and regulatory reforms.

15 PROPOSED COMPONENTS UNDER PATA WITH RESPECTIVE EXPECTED OUTPUTS ADB TA $1.5 million Component I Component II Component III Component IV Enabling Environment Help structure Project Development Facility to Develop Bankable Projects Support Pilot Transaction Institutional Capacity Building Help Establish central PPP unit National PPP Policy Framework Amendments to PPSU Act of 1992 Identify appropriate legal/regulatory/institutional requirement for developing PPPs PPP manual PPP Checklist Structure for PDF Funding Requirement Agency where PDF should be located Mechanism to operate Recovery mechanisms Governance TA Resource of $1 million Review all project documentation Help Develop TORs for transaction advisors PDF = Project Development Facility; PPP = Public-Private Partnerships; PPSU = Royal Act on Private Partnerships in State Undertaking; PIMAC = Public and Private Infrastructure Investment Management Center Source: Asian Development Bank. Through Republic of Korea e-asia and Knowledge Partnership Fund knowledge-sharing of international best practices in PPP, application of Value for Money principles (including twinning of sample projects and on-the-job training), reviewing RFPs and concession agreements, carrying out project evaluation and negotiation, carrying out, monitoring, and managing project implementation, developing core learning program modules with multimedia learning products, conducting study tours to PIMAC, organizing knowledge sharing workshops seminars, and conferences on selected subjects, publishing handbooks of Value for Money test and PPP project implementation, and others as identified during the TA implementation. Other capacity building resources to be identified during TA Implementation TA resource of $500,000 Appendix 4 13