PPP IN RE / SE. Leo McKenna Chair, PPP Team of Specialists PPP INTERNATIONAL CENTRE OF EXCELLENCE UNECE BANGKOK NOVEMBER 2012

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1 PPP IN RE / SE Leo McKenna Chair, PPP Team of Specialists PPP INTERNATIONAL CENTRE OF EXCELLENCE UNECE BANGKOK NOVEMBER 2012

2 Pillars of sustainable development Economic Growth Employment Finance & Funding Social Gender responsiveness Education Religious tolerance Cultural diversity Environmental Global warming Resource distribution Natural barriers to development Basic needs Heat Light Security

3 Renewable options Solar Advantages: Energy can be generated off-grid, Offers modularity and scalability Disadvantages: High upfront capital costs, High risk of technological obsolescence, Requirement for water cooling, a major issue in arid rural regions Wind Advantages: The Energy source is free, Fully Sustainable once built Disadvantages: Wind volume fluctuates, and therefore requires a back-up, Potentially large areas are required, Visual pollution Biomass Advantages: Reasonable cost, An inexhaustible fuel source if harnessed properly Disadvantages: More expensive that traditional fossil fuels, a less concentrated form of energy, making it less efficient Water Advantages: Once constructed energy can be produced at a constant rate, More reliable than wind and solar Disadvantages: High upfront cost, Finding a suitable site can be difficult

4 Factors to consider when selecting an RE option* Resource availability, Ecological impact, Technical feasibility, Financial viability, Educational potential, Social and economic impacts * The appendices of the full report contains lists of detailed key questions for each of these areas

5 What is a PPP? Public private partnerships (PPPs) are arrangements between government and private sector entities for the purpose of providing public infrastructure, community facilities and related services. Such partnerships are characterised by the sharing of investment, risk, responsibility and reward between the partners. The most successful partnership arrangements draw on the strengths of both the public and private sector to establish a complementary relationship.

6 When to use PPP? Lack of public capital Lack of public sector development / commercial skills Transfer risk Political support exists Able to attract private capital project bankability Programme Level Delivery

7 Advantages of PPP Disadvantages of PPP Advantages and Disadvantages Contracts can be complicated Speed and scale of delivery versus public sector delivery Value for money Leverages the expertise of private enterprise for social good Accountability Access to additional capital Bidding costs can be high Legal costs can be high Contracts are complex Long-term commitment is required

8 PPP project cycle 1. Project identification 1.1 Project selection and definition 1.2 Assessment of the PPP option Identification Output specifications Affordability Risk allocation Bankability Value for money Project team Advisory team The PPP implementation model 2. Detailed preparation 3. Procurement 4. Project implementation 2.1 Getting organised 2.2 Before launching the tender 3.1 Bidding process 3.2 PPP contract and financial close 4.1 Contract management 4.2 Ex Post evaluation Plan and timetable Further studies Detailed PPP design Procurement method Bid evaluation criteria Draft PPP contract Notice and prequalification Invitation to tender Interaction with bidders Contract award Final PPP contract Financing agreements Financial close Management responsibilities Monitoring service outputs Changes to the PPP contract Dispute resolution PPP contract termination Institutional framework Analytical framework

9 Pro-Poor requires a different focus Assessment factor Weighting Power off take attractiveness 19% Tax climate 11% Grant or soft loan availability 9% Market growth potential 19% Current installed base 8% Resource quality 19% Project size 16% Assessment factor Weighting Power offtake attractiveness 8% Grant or soft loan availability 10% Market growth potential 9% Current installed base 8% Resource quality 15% 50% Citizens impacted 16% Gender rebalancing 18% Community engagement 16% In a traditional PPP the focus is on financial return..a profit making venture In a Pro-Poor PPP the focus is on community engagement, lives improved and gender inclusiveness..delivering a social good

10 A Global problem; requiring local solutions Governmental support for the long term no political interference Funding who pays? Central Government / User (political issue) Project Finance Viability Gap Funding ; subsidy/tariff/bankability Robust project identification and assessment Appropriate risk sharing Standardised Contracts Appropriate technology

11 A Global problem; requiring local solutions The importance of local engagement for sustainable success Learning by doing, continuous improvement Feed outcomes into future UN policy and programs Capacity Building Operational Guides UNECE PPP Toolkit Off Grid solutions Implementation Planning Delivery not Bureaucracy!!!

12 A Global problem; requiring local solutions Learn more about UNECE PPP Activity Mr. Geoffrey Hamilton, Chief of Cooperation and Partnerships Section, UNECE

13 Thank You for Listening Leo McKenna Chair, PPP Team of Specialists PPP INTERNATIONAL CENTRE OF EXCELLENCE UNECE BANGKOK NOVEMBER 2012