by: shahid ahmed khan, managing partner anjum asim shahid rahman 17 may 2010 islamabad, pakistan...

By:

Shahid Ahmed Khan,Managing Partner Anjum Asim Shahid Rahman

17 May 2010Islamabad, Pakistan

1Anjum Asim Shahid Rahman

PRESENTATION ROADMAP

Presentation Objective

What is Public Private Partnership

Financing in PPP Transactions

Policy and regulation for PPP’s in Pakistan

Supporting Pakistanis development through Public Private Partnership

• Q&A


PRESENTATION OBJECTIVE

“TO DEFINE THE CONCEPT OF PUBLIC PRIVATE PARTNERSHIP AND THE WAYS BY WHICH CAN CREATE A MEANINGFUL IMPACT ON DEVELOPMENT IN PAKISTAN”


DEFINITION OF PPP

5

THE ARRANGEMENT IN WHICH PRIVATE SECTOR SUPPLIES “INFRASTRUCTURE ASSETS AND SERVICES” TRADITIONALLY PROVIDED BY THE GOVERNMENT (THROUGH USING EXTERNAL FINANCING ARRANGED BY THE PRIVATE SECTOR)

Anjum Asim Shahid Rahman

HISTORIC PROSPECTIVE

• Nationalization leading to concentration of business in the hands of the government

• Privatization and divestiture launched due to the weakening of the public sector ability to conduct business- this was the first step in the PPP arrangement.

• The realization that public sector is still involved in provision of service especially utilities and regulated sectors led to the introduction of the “ Build & Own” based regime- the second tier in development of the PPP framework. This further led to the regulatory bodies, concession based arrangements and limited recourse financing.

• Subsequent realization that many of the sectors such as social sectors and those which were not regulated continued to remain outside the scope of development through the prevailing regime of private participation – Therefore scope of Public Private Participation extended to cover lesser unregulated sectors such as health , education, water, sewage, solid waste management , urban transport, and roads through and all embracing concept of Public Private Partnership


• There are two parties- Public & Private and in this the public sector includes public sector of other countries as well multi laterals and bi laterals

• Typical commitment of each are as follows: • Public Sector provides

a) Enabling framework and b) Commitment to purchase output

• Private Sector providesa) Financingb) Performance

• Method of service delivery that involves the private sector in the provision of traditionally “public” services

• Emphasize service or capability that public sector requires instead of assets used to provide them

• Performance-based contracting in which the private sector accepts a level of performance risk

• PPP arrangements are typically long-term in nature

• There are two parties- Public & Private and in this the public sector includes public sector of other countries as well multi laterals and bi laterals

• Typical commitment of each are as follows: • Public Sector provides

a) Enabling framework and b) Commitment to purchase output

• Private Sector providesa) Financingb) Performance

• Method of service delivery that involves the private sector in the provision of traditionally “public” services

• Emphasize service or capability that public sector requires instead of assets used to provide them

• Performance-based contracting in which the private sector accepts a level of performance risk

• PPP arrangements are typically long-term in nature

DEFINING PPP


• Deliver value to the public through: Lower Cost Higher levels of service Reduced Risk

• Deliver value for money through synergies from combining private sector skills

• Creates long-term approach to provision of public services

• Quality of service maintained over life of project

• Flexibility of approach to allow consideration for all types of infrastructure and services

• Pricing and timing certainty - international benchmarks on average state Only 24% of PPPs late vs. 73% for Public projects Only 22% of PPPs over budget vs. 73% of public projects These risks borne largely by private sector

• Deliver value to the public through: Lower Cost Higher levels of service Reduced Risk

• Deliver value for money through synergies from combining private sector skills

• Creates long-term approach to provision of public services

• Quality of service maintained over life of project

• Flexibility of approach to allow consideration for all types of infrastructure and services

• Pricing and timing certainty - international benchmarks on average state Only 24% of PPPs late vs. 73% for Public projects Only 22% of PPPs over budget vs. 73% of public projects These risks borne largely by private sector

KEY ADVANTAGES OF PPP


WHEN ARE PPPs EFFECTIVE?

When?

Larger Projects Service

rather than just assets

Clear boundaries

Suitable Risk

allocation

New scheme or significant upgradePerformance

can be measured

Low technology

risk

Public sector procurement

skills

Private sector

expertise

Scope for innovation


MAJOR TYPES OF PPP1. Privatization / Divestiture of public sector assets: Partial or complete sale of Government

ownership to private sector2. Concession based regimes: ( right to us government assets is contracted to private sector

under a concession – based contractual arrangement defining sharing of risks and rewards• Operation and Maintenance Contract (O & M) - Contract O&M of business on a fee

basis• Lease- Develop- Operate (LDO) – Long lease of asset in which development and

operation by private sector• Licensing Arrangement – Such as telecom, radio, TV• Build- Own- Operate- Transfer (BOOT) – Examples are IPP’s Roads• Build- Own- Operate (BOO)• Design - Build – Finance - Own – Operate (DBFOO)

3. Public – Private Partnership• Social Private Partnership• Public Private Product Development Partnership• Public Public Partnership• Promoting private participation


PRINCIPALS OF FINANCING PPP TRANSACTION

Concession Based PPP:

• Senior Debt arranged by commercial banks

• Equity injected by private sector over construction period

• Greenfield project usually cover single asset

• Long term concession agreement is made with host government

• Regular payments from user agency against supply of service on availability basis


13

CommercialBank

Lenders

OperatorConstructionContractor

Sponsors

Loan Agreement

Operating Contracts

ConcessionaireSPV

Grantor

Equity

TYPICAL PPP FINANCING TRANSACTION STRUCTURE

TurnkeyConstruction

Contract

Grantor Agreement

Operator Agreement

Contractor Agreement

PPP (BOT) Contract

SO WHAT ARE FINANCING AGENCIES LOOKING FOR• Acceptable gearing levels (dependent on risk)• Adequate cover ratios

ADSCR: Annual Debt Service Cover Ratio: = Net cash flow available for debt service (i.e. revenues – O&M costs and taxes) in the next year / debt service falling due within next year

LLCR: Loan Life Cover Ratio: = NPV of net cash flow available for debt service during the loan period / amount of loan

PLCR: Project Life Cover Ratio: = NPV of net cash flow available for debt service during the PPP Contract period / amount of loan

• Secure repayment stream• Hedging for any open exchange or interest rate risk• Security package that is enforceable• Sponsors with expertise and financial strength• Experienced and capable contractor(s)• Experienced and capable operator(s)• Strong support from Government• Mitigation of key risks (e.g. technological, environmental)


POLICY & REGULATION FOR PPP IN PAKISTAN


Pakistan’s Experience with PPP Policy

• In the 1990s, Pakistan put in place PPP policies pertaining to the Telecom and Energy sectors

• Subsequently sector specific PPP policy has been developed for: Railways, Power and Highways

• These sectors have benefited greatly from the policy and regulatory frameworks, with private national and international investment burgeoning in these sectors

• Power policy provided confidence to the investors

• PPP Policy provides regulatory and operational framework for other (un-regulated) sectors such as transport, water supply, sanitation, healthcare, education


PPP Policy 2007 • Approved in Nov 2007 by ECC of the Cabinet

• Policy in line with deregulation & liberalization reforms of Government

• Sectors covered under PPP 2007 policy: Transport & Logistics, Mass Urban Transport, Municipal Services, Small Scale Energy Projects

• Institutional structure comprising the Task Force, IPDF, Viability Gap Fund (VGF)

• Infrastructure development described through a structured PPP Project life cycle

• Policy does not infringe on Provincial & Local Govt. autonomy: Provinces may develop their own legislation laying out their arrangements for procuring PPP projects- Sindh & Punjab now have their own PPP acts.

• Establishment of a facilitation unit at the Federal level: IPDF to act as market maker and facilitation unit for PPP projects

• Provides eligibility criteria for federal assistance through VGF

• Defines procedure for submission and evaluation of unsolicited proposals to promote innovation while maintaining competitive bidding and selection

• Provision of monitoring and evaluation mechanism for government to provide requisite administrative, institutional support to PPP projects


Issues Amended in 2009 Policy

• Roles of the public and private sectors clearly defined in a PPP arrangement

• Role of public institutions explicitly given

• Comprehensive Financial Framework: in addition to VGF, Project Development Fund (PDF), Infrastructure Development and Financial Institution (IDFI) and Risk Management Framework introduced

• Comprehensive Legal Framework introduced into the policy

• Risk framework; comprising the identification, allocation and mitigation of project risk is likewise added


OBJECTIVE OF THE PRESENT POLICY• Protect the interests of all stakeholders (users, private party, Government)

• Provide a comprehensive guideline to develop and implement infrastructure projects transparently under PPP modality

• Create an enabling economic environment to encourage private investment

• Sets up efficient and transparent institutional arrangements for identification and development of projects

• Provide risk management framework

• Provides mechanisms for various funding options available to pertinent infrastructure projects


PREVAILING PPP FRAMEWORK OF PAKISTAN • Presently lead managed by Ministry of Finance (MoF) . Implementation of Federal level

without infringing on Provincial and Local Governments• Policy & regulation being finalized, based on international best practices with enactment

of PPP law in process expected to be completed by end of 2010. Present Policy covers Transport, Municipal Service and Small Scale Energy Projects.

• Comprehensive Financial , Legal and Risk Framework defined• Framework implementation through various institutions under the MoF:

Infrastructure Project Development Facility (IPDF): generate, support and facilitate PPP projects including transaction structuring, feasibilities, implementation etc.

Infrastructure Project Development Facility (IPDF): provides long term, rupee based financing facility for the higher risk PPP Projects.

Guarantee Funds (GF): systematic mechanism for providing guarantees to infrastructure PPP projects and enabling the GOP to effectively manage fiscal risk (under implementation )

Viability Gap Funding (“VGF”): funded through government and donor funding to provide support funding for PPP projects that pass the test of economic viability but fail the financial feasibility test. Funding will be capital or revenue contributions to make the project output affordable for the institutions or the end users – this is under implementation


Financial & Institutional Framework

Stag

e I:

Proj

ect I

ncep

tion

PC

LM’s

SOE’

Stag

e II:

Pro

ject

Fea

sibi

lity

Asse

ssm

ent

VGFSt

age

III :

Proj

ect S

truc

turin

g

Project FlowFunds Flow

PPP IPDF

LM

Financially Feasible Project

Financially Non- Feasible

IPDF

Stag

e IV

: Fin

anci

al C

lose

Credit Enhancement

Monitor Contingent Liabilities

Project

Finalized


Legal and Regulatory Framework• The GoP is in process of introducing a robust legal framework; the ‘PPP Law which will:

– Establish the function of the Federal Government and responsibilities of the implementing agencies

– Provide legal protection to all stakeholders– Develop clear legal framework for PPP investment consistent with existing national

and international regulatory practices• Until the passage of the PPP Law, all PPP projects will be governed by contract law

(concession agreements and other related agreements), utilizing IPDF’s Standardized Provisions

• Also PPP law being revised so as to structure it as a over arching facility also connecting with provincial regulations on the same subject

• Guidelines available as standardized documents include (a) Project Inception Guidelines, (b) Project Feasibility and Preparation Guidelines, ( c) Procurement Guidelines for PPP Projects, (d) Viability Gap Fund Guidelines (e) Risk Management Framework (f) Standardized Contracts (user-based and annuity based)


EXAMPLES OF SUCESSFUL PPP’SSECTOR PROJECT BASIS OF PPP

Energy (Thermal Power ) Various IPP’s including HUBCO, and others

BOO, based on cost + tariff regime

Hydel Power New Bong hydro power BOO Basis

Telecom Various concessions to operators

License / Leased Build Operate

Renewable Energy Zorlu Energy License / BOO, with Govt. concessions

Health Harvard Medical Govt. Support through land and concessions

Education Foreign University Campus under PPP

Govt. Support through land and concessions

Agriculture Cool Chain Promoting Private Participation

Roads Lahore, Faisalabad dual carriage way project

BOT- Concession based with Prov. Govt.

Municipal Services Solid Waste Management and Composting Plant - Lahore

Concession based structure23

EXAMPLES OF FAILED PPP’SSECTOR PROJECT BASIS OF PPP

Water Karachi Wastewater Reuse Concession based

Culture / Sports Lahore Sports City Concession based

Roads Karachi / Hyderabad Concession based- BOT

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AREA’S OF DEVELOPMENT IMPACTED BY PPP There are various impediments in the process of development faced by Pakistan today. However most of it has to do with lack of (a)resources including our ability to generate resources, (b)our ability to use resources efficiently and with transparency and(c)a system which can best ensure the timely receipt of donor funding

With the above in mind our two greatest challenges which can be overcome by the induction of PPP as a means of affective participation are 1.The lack of an acceptable framework which can encourage donors to provide committed funding which presently is the main source of funding for Pakistan- donors collectively highlighted that using PPP would possible enable them to make the funding more effectively and timely as it covered many of the gaps in the present system. 2.The lack of funding for infrastructure development which over the next 5 years is estimated at around USD 110 billion- this could be better supported by involving execution through a PPP based initiative which could help to Therefore In addressing the above, what collectively emerged was the use of Public Private Partnership could provide the solution for addressing both the above.

Anjum Asim Shahid Rahman 26

NEED FOR PPP - DONORS CONFERENCE OF AUGUST 2009 ISTANBUL & JANUARY 2010 IN

DUBAI

27

Istanbul Donors conference – Aug 2009

Enabling Support by FoDP countries and donors through participation of the Private Sector (of Pakistan and the friends) involving initiatives such as PPP which ensures better implementation, greater impact and benefit to all under a fully transparent and participative process.

Anjum Asim Shahid Rahman

Dubai PPP conference – Jan 2010

Donors organized a conference for facilitating investment through PPP held in Dubai in January 2010, in which over 500 opportunities in which investment on PPP basis could be enabled with the support of donor funding to be carried out not as direct funding to the government but as a means of leveraging greater investment in various sectors.

DEVELOPMENT USING DONOR FUNDING FOR DIFFERENT PPP OPTIONS

• PPP options to support investment from bilateral and multi lateral for development , as follows: -

• 1. PROJECT BASED FINANCING SUPPORT FOR PPP PROJECTS

• 2. INVESTMENT SUPPORT FOR DEVELOPMENT FINANCING INSTITUTIONS

• 3. INCENTIVIZING / PROMOTING PRIVATE SECTOR PARTICIPATION


PROJECT BASED FINANCING SUPPORT FOR PPP PROJECTS

PROVISION OF EQUITY AND DEBT FINANCING FOR PPP PROJECTS –

Financing can be made available on soft terms for use for specific infrastructure projects undertaken by private sector. Such financing can either be project specific, sector specific or even area specific. For example financing facility placed with financial intermediary (selected by donor) for disbursement of financing support for Bhasha Dam construction (Project Specific), Mineral Development projects (sector specific) or Baluchistan Based Projects (area specific). In each of these the private sector is the implementer through use of such funds and funding is provided through above financing facility representing public sector participation.

Involves initiatives in which donor support is utilized for project funding involving substantial participation from the private sector


PROJECT BASED FINANCING SUPPORT FOR PPP PROJECTS

TIED FUNDING FOR PRIVATE PARTICIPATION IN PROJECTS: -

Project Specific Funding can be tied up with implementation support (supply of good and services) to be provided by the donor countries private sector players involving supply of technology, equipment and implementation contracting. For example funding provided for specific project identified for implementation by contractor of the donor country.

PROVISION OF FUNDING TO REPLACE GOP SHARE IN PPP TRANSACTION – Funding can be made available for enabling the public sector participation in a PPP transaction through which the GoP participation is supported through donor intervention. For example the Cool Chain project for implementation of food preservation infrastructure requires government support in some form – one possibility is for government to provide equipment. This can in turn be provided through donor support replacing GoP cost for such commitment .


INVESTMENT SUPPORT FOR DEVELOPMENT FINANCING INSTITUTIONS

CSF VENTURE CAPITAL FUND (VCF)

ALTERNATE ENERGY DEVELOPMENT FUND (AEDB)

INFRASTRUCTURE PROJECT FINANCING FUND (IPFF)

VIABILITY GAP FUND (VGF)

GUARANTEE FUND (GF)

Involves initiatives in which donor support can be utilized towards funding requirements for establishing development financing vehicles created for supporting development.Certain funds already existing and successfully operating such as the Pakistan Poverty Alleviation Fund or the Competitive Support Fund are not stated above since they are substantially covered


PPP TRANSACTION SUPPORT FUNDS

These include the following which have already been defined earlier in the definition of the PPP framework

INFRASTRUCTURE PROJECT FINANCING FUND (IPFF) VIABILITY GAP FUND (VGF)GUARANTEE FUND (GF)

Financing for the above could be provided and included in the funding package under consideration for each of the above institutions

Involves initiatives in which donor support can be utilized towards funding requirements for establishing development financing vehicles created for supporting PPP transactions.


INCENTIVIZING / PROMOTING PRIVATE SECTOR PARTICIPATION

FINANCING OF INVESTMENT CONSIDERATIONS/STUDIES:

Setting up of new funding or subsidizing existing facilities for funding which can be used for studies to undertake investment in Pakistan through financing project feasibility study, market studies, partnering J.V arrangements etc. for example such facility through OPIC or EU can be incentivized for Pakistan based investment.

PROVISION OF RISK COVER FOR BUSINESS / INVESTMENT IN PAKISTAN:

Provision of subsidized preferential rate and process risk coverage facility available through various risk agencies to cover business and country risk for investment and contract execution in Pakistan including coverage by OPIC, HERMES, COFAS at a country level coverage through etc.

Involves initiatives in which donor support can be obtained towards facilitating through incentivized or subsidized arrangements which promote foreign private sector participation.


POSSIBLE AVENUES FOR INVESTMENT UNDER PPPPOSSIBLE AVENUES FOR INVESTMENT UNDER PPP

Power

Alternate and renewable energy

Oil and gas

Agriculture

Transport, Communication and Logistics

Municipal Services / Mass Urban Public Transport

Education

Health


PAKISTAN’S GREATEST NEED – DEVELOPING ITS INFRASTRUCTURE

Pakistan’s Main Challenge for Economic Growth and Sustainability is development of its infrastructure requiring US$ 110 billion over the next five years (US$ 22 p.a.)

Infrastructure development impacted by terrorism, IDPs, resource shortage delayed projects and maintenance backlog of US$ 41 billion

Average annual requirement for infrastructure development is US$ 14 billion per annum for next five years equal to US$ 68 billion.

Resource availability per annum for infrastructure investment =Requirement as above per annum (US$ 8 billion + US$ 14 billion)= Shortfall expectation per annum =

US$ 5 billionUS$ 22 billion US$ 17 billion

• Throw-Forward $31 billion

• Maintenance backlog $10 billion

• Multipurpose Water Reservoirs $ 22 billion

• Other Energy Projects $18 billion

• Transport, Comm. & Logistics $16 billion

• Urban Mass Transport $ 4 billion

• Municipal Services $ 3 billion

• Health and Education Infrastructure $ 5 billion


Project Name

Capacity (MW)

Fuel Location Estimated Cost Project implementation

1200 MW Imported Coal Power Project

1200 MW Indigenous coal from Indonesia, Australia and South Africa

Gadani, Baluchistan orKhalifa Point, Baluchistan.

Total cost - US$ 2 billion

Initiation 2010Completion 2014

Proposed Partnership under PPP arrangement : A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft . Role of both entities is described below

• Public Entities: Power Purchaser (Port Authorities / PIDC for developing & operating the jetty) with

Up to 20% equity shareholdingArranging Land for the projectArranging consents from public sector entitiesResolving Environment and resettlement issues

• Private investor:

31% direct equity injection Raising remaining equity i.e. 49% either through partners or IPOsArranging loanDevelopment/Construction of projectOperation & Maintenance


Project Name

Capacity (MW)


Asrit-Kedam Hydropower Project

215 MW Hydel Project

In the vicinity of Swat Valley, NWFP,

Total Cost - US $ 405.60 million


Proposed Partnership under PPP arrangement : A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft loan. Role of both entities is described below:

• Public Entities: Power Purchaser and Provincial Government of NWFP with

20% equity shareholdingArranging Land for the projectArranging consentsResolving Environment and resettlement issues


80% equity Shareholding Arranging of equity (arranging of loan)Development/Construction of projectOperation & Maintenance


Project Name

Capacity (MW)


Madian Hydropower Project

157 MW Hydel Project

In the vicinity of Swat Valley, NWFP,

Total Cost - US $ 438.40 million


Proposed Partnership under PPP arrangement : A Special Purpose Vehicle (SPV) will be formed for the Project. SPV will comprise of shareholdings from public (20%) and private (80%) sectors. SPV will arrange 20% of the Project cost as the equity required under the provisions of 2002 Power Policy. The remaining 80% of the Project cost will be financed through the Grant/Soft loan. Role of both entities is described below:

• Public Entities: Power Purchaser and Provincial Government of NWFP with

20% equity shareholdingArranging Land for the projectArranging consentsResolving Environment and resettlement issues


80% equity Shareholding Arranging of equity (arranging of loan) Development/Construction of project Operation & Maintenance


Investment Opportunities in FuelsInvestment Opportunities in Fuels

• Oil Sector:– Exploration and Production,

Refineries, Pipelines, Distribution

• Gas Sector:– Exploration, Compression,

Transportation, Distribution, Storage

• Coal Mining:– Exploration, Extraction,

Gasification, Integrated Power Generation

PotentialPotential UntappedUntapped**

(%age)(%age)

Oil Oil

(M barrels)(M barrels)

933933 313313

(33.6%)(33.6%)

GasGas

(TCF)(TCF)

5353 3030

(56.6%)(56.6%)

CoalCoal

(Billion (Billion Tons)Tons)

187187 99.9%99.9%****

*Large Untapped Potential in Coal, Gas & Oil.** Single largest untapped coal reserve of 175.5 billion tons in Thar, Province of Sindh

Source: Pakistan Energy Yearbook

Investment Opportunities in EnergyInvestment Opportunities in Energy• Hydel:

– Water Storage / Irrigation Network – Conjunctive Hydro Power

Generation– Run of the River– Low Head Hydels

• Integrated CBM/Coal & Power Generation Project

• Renewable Energy Generation

• PPP on BOO & BOOT basis

• Incentivized Packages for Investment with Security / Protection Arrangements

Railways Investment ProposalsRailways Investment Proposals

1. Doubling 3002. Replacement 7003. Rehabilitation 5004. New tracks 8005. High speed train 1650 (Karachi-

Peshawar)6. Regional linkages 5-10,0007. Replacement of

obsolete signaling system

8. Proc / manu of HD wagons 3,5009. Proc / manu of DE locos 15010. Overhauling of locos 2711. Proc of DE multi train sets12. Workshop, plant & machinery

procurement13. Procurement of mechanized track

maintenance machinery

Track Kilometers

14. Private train sector operation under excess policy15. Private train operation16. Cargo development handling & development17. Privatization of PR manufacturing facilities18. Outsourcing of repair / maintenance of tracks, rolling stock and services

Project Name Connecting Cities Length Estimated Cost PPP Structure

M-3Pindi Bhattian – Faisalabad

53 km - Operating Concessions for 20 years

M-1Islamabad – Peshawar

155 km - Operating Concessions for 20 years

N-5 Sections (Grant Trunk Road)

Multan - Sukkur 208 km - Operating Concessions for 20 years

Peshawar - Lahore 440 km - Operating Concessions for 20 years

Lahore - Multan 330 km - Operating Concessions for 20 years

Port Qasim Shipyard

NA NA US $ 250.0 million

Management rights

Gwadar Shipyard Project

NA NA US $ 250.0 million

Management rights


Project Name Connecting Cities Length Estimated Cost PPP Structure

Karachi Northern Bypass (KNB)

Karachi - Hyderabad

52 km 7.5 billion PKR Toll collection and maintenance for a period of 5 years

National Highway (N-70)

Muzzaffargarh – D.G Khan

53 km 5.5 billion PKR Cross subsidy of Shershah Bridge and viability gap funding by GOP/ADB

Realignment of Salt Range (M-2)

Salt Range (Lahore -Islamabad Motorway)

15 km 12.7 billion PKR Concession of full motorway with revenue sharing formula

Karachi – Hyderabad Motorway (M-9)

Karachi – Hyderabad

135 km 13.0 billion PKR Concessionaire to finance and manage construction and then maintain and operate the facility


Airport InfrastructureAirport Infrastructure• Major airports: Karachi, Lahore & Islamabad

• Secondary airports: Peshawar, Quetta, Multan, Faisalabad, Sialkot & Sukkur

• Several regional airports

• Air craft movements at airports (000) 197,486• Passengers handled (million) 141.2• Cargo (million tonnes) 31.6• Mail (million tonnes) 5.3

• Investment Opportunities:– New airports / upgrading of existing airports– Cargo terminals / villages– Outsourced operations, facilities and services– MOB for aircrafts at Karachi

Ports & ShippingPorts & Shipping• Main ports: Karachi, Qasim and Gawadar

• Port entries: 3372 vessels with registered tonnage of 50 million tonnes

• Cargo handled 64.8 million tonnes

• Cargo in containers 5.9 million tonnes

Investment opportunities– Cargo villages & industrial parks– Container terminals– Outsourced operations, facilities and services– KPT enclave– Miscellaneous supporting infrastructure

Investment Opportunities in AgricultureInvestment Opportunities in Agriculture• Farm equipment / machinery &

pressurized irrigation systems

• Commercial production of olives, edible oil seeds, tea, herbs and cut flowers

• Certified seed incl. hybrid/BT seeds & Nursery Production

• Silos/Warehouse Storages (30-35 million tonnes)

• Absence of wholesale markets and commodity exchanges

HORTICULTURE INVESTMENTS

ProductionProduction• Hybrid seed & plant material• Vegetables under green houses /

plastic tunnels• Herbs & flori culture

ProcessingProcessing• Dehydrated fruits & vegetables• Juices, concentrates & pulps • Canning & frozen packaging• Tomato paste• Essential oils

InfrastructureInfrastructure• Cool chain systems• Export houses• Packaging technology

Investment Opportunities in LivestockInvestment Opportunities in LivestockProduct Production

Milk (b of Lts)Milk (b of Lts) 42.242.2

Beef Beef (m of mt) 1.61.6

MuttonMutton (m of mt) 0.60.6

Hide & SkinsHide & Skins (m of mt) 47.547.5

Poultry Meat Poultry Meat (m of mt) 0.60.6

Eggs (billion)Eggs (billion) 10.710.7

Source: Economic Survey 2008-09

LIVESTOCK INVESTMENTS• Commercial dairy farming

• Dedicated livestock farms and calf fattening for halal meat production

• Sheep goat rearing for Hajj

• Camel breeding farms

• Veterinary & lab services

• Feed mills & fodder prod.

• Silage facilities

• Cool chains

• Livestock product export $ 457 m (3.2%)

• 5 years avg. livestock growth 4.6%

•3rd largest milk producer

• Only 3-4% milk processing

•Demand increasing

• Milk 12-13%

• Red meat 2-5%

• Poultry meat 14-15%

Fisheries Investment OpportunitiesFisheries Investment OpportunitiesSALIENT FEATURES• Share in GDP 1%

• Production 565,000 tons (60% marine captured)

• Consumption per capita 1.8 kg per year

• Exports $ 160-200 million

• Export potential in value added form $ 1 billion

• Coastline 1,146 km’s

• Inland water bodies 4.5% of the total area

INVESTMENT POTENTIAL

• Coastal and inland aquaculture

• Hatcheries & fish breeding farms

• Exploitation of cold water fisheries

• Market & other infrastructure

•Promotion in domestic market

• Upgrading of Karachi/Korangi fish harbors & fishing fleet

• New fish harbors at Pasni & Gawadar

• Value addition and fish processing with compliance on international quality & health standards

Investment Opportunities in HealthInvestment Opportunities in HealthHEALTH OVERVIEW• Health care spending is US $ 3 billion

annually with US $ 2 billion in out of pocket payments

• Primary health indicators unsatisfactory

• High burden of infectious diseases resulting from poor sanitation and unsafe water 12%

• High burden of communicable and non-communicable diseases

• Inadequate public sector hospital infrastructure and human resources

• 70% health care in private domain albeit few standard quality health facilities

INVESTMENT POTENTIAL• State of the art private sector tertiary hospitals

and transplant facilities

• Private wings in public sector hospitals

• Trauma, burns and reconstructive surgery infrastructure and services

• Dental health infrastructure

• Medical education & training

• JV’s on education and training of public health managers, nurses, paramedics & other auxiliaries

• State of the art diagnostics facilities

• Vaccine production & Vaccinology center

• Pharmaceutical manufacturing including generics

• Contraceptive manufactureLiberal package for investment in health facilities under PPP available including land within public sector health facilities and elsewhere on discounted rates

Investment Opportunities in EducationInvestment Opportunities in EducationSALIENT FEATURES• Literacy rate 56%,female 42% & urban 71%

• Net primary enrollment rate 55% & female 52%

• Participation rate is skewed against the remoter provinces and areas

• Enrollment in universities and colleges is 1.3 m i.e. 5% of the 29 m person between 17-23 years of age

• Education is not demand based with professional education & technical/ vocational training opportunities limited

• Public sector infrastructure for education and its quality is limited

• Mushrooming private sector schools and professional education institutions

INVESTMENT POTENTIAL• To pursue the objectives of the development of a

knowledge based society in which competence exists to be internationally competitive, priority areas identified for PPP include:

– State of art universities and colleges

– Centers of excellence for natural & social sciences Infrastructure for demand driven vocational and technical training

– Establishment of campuses of foreign universities in Pakistan

– JV’s with public or private sector in upgrading existing higher education institutions or setting up new ones

– Publication of quality textbooks and other printed material

Cost Sharing Within the Framework of Public-Cost Sharing Within the Framework of Public-Private-Foreign ConceptPrivate-Foreign Concept

Item Public Sector Share Private- Sector Share

Foreign-Partners Share

Land Provide Land On lease Provide Land

Infrastructure - 100% -

Faculty and Staff Hiring

- - Responsibility of Foreign Universities

IT and Lab Equipment - 50% Cost Sharing 50% Cost Sharing

Faculty Development 50% 50%

Operational Expenses (Fee)

30% Cost Sharing 70% Cost Sharing

Quality Assurance and Accreditation

Responsibilities of Foreign Universities

Estimated total cost (excl. land cost) :Estimated total cost (excl. land cost) : $100.00 million$100.00 million

Project Name City Sector Estimated Cost PPP Structure

Charsaddah Solid Waste Management

Charsaddah Municipal Services US $ 8.00 million

To be decided

Faisalabad Solid Waste

Management

Faisalabad Municipal Services US $ 40.00 million

To be decided

Faisalabad WASA

Billing/Metering

Faisalabad Municipal Services - To be decided

Environment Friendly Public Transport (CNG

Buses)

Karachi Mass Urban Public Transport

US $ 50.00 million

To be decided

Islamabad-Rawalpindi

Mass Transit

Islamabad – Rawalpindi

Mass Urban Public Transport

US $ 400.00 million

To be decided


CONCLUSION / RECOMMENDATIONS

• Pakistan today needs all initiatives which can support and facilitate development in these extremely challenging circumstances. One initiative which clearly stands out is of Public Private Partnership – therefore its implementation must be fully supported in priority

• Developing PPP opportunities into a coherent opportunity database.

• Strengthening and finalizing the institutional and regulatory framework for PPP.

• Encouraging support to enable donor funding flow towards PPP in preference to public sector funding

• Facilitating the private sector with more support towards undertaking PPP transactions

• Facilitating information flow of all facilities and concession available in the PPP framework

• Providing full commitment at the govt. level for success of the PPP initiative.


by: shahid ahmed khan, managing partner anjum asim shahid rahman 17 may 2010 islamabad, pakistan...

Documents

parties public private

public sector ability

public projects

public private partnership

output private sector

private sector skills

provision of service

ppp framework