Transcript Slide 1

Partnership For Development
PPP PROJECTS IN SINDH
Public Private Partnership Unit
Finance Department
Government of Sindh
May, 2011
PPP Unit
PPP Unit comprises of Public and Private Sector specialists
having professional expertise and relevant certification
PPP Unit
DG
RMU
Director
Finance & Risk
Management
Assistant
Director -I
Assistant
Director - IV
Director
Corporate Affairs
Director
Project
Structuring
Director
Market
Development
Assistant
Director - V
Assistant
Director -II
Assistant
Director -III
Vision
 PPP Unit envisions that
with out private sector
participation, the public
sector can not bring about
efficiency in the Service
Delivery System.
Provision
of
private
finance
is
also
very
important and the vision is
to covert abundant public
sector
resources
into
commercial
assets
generating constant flow of
funds
Vision and Objectives
Objectives of PPP in Sindh
 Provision of infrastructure services
 Improve their reliability and quality
for accelerating economic growth
 Achieving the social objectives of the
government
 Mobilize private sector resources for
infrastructure projects;
 Incorporate principles of fairness,
competition and transparency in
public-private partnership projects;
What do we offer to private sector?
 These
contractual 
obligations form part
of RFP
 Well thought out
plan

 VGF Board has to
decide
about
the
project financing issue 
on the pattern of TIFU
*UK, *TIFIA USA and

*IIFCL India.
 The Risks of project
are well defined and
well quantified
Administrative support
 Licenses and clearances , Utility
connections for power, gas and water,
land or rights of way
Asset-based support
 leasing land and infrastructure facilities
Direct financial assistance
 Viability Gap Fund
Government guarantees
 Political risks ,delay of agreed user fee
adjustments,(MRG),
 Credit Enhancement, Force majeure
and Demand risk etc
KEENJHAR LAKE
World Travel & Tourism
Council (WTTC) research is
done in co-operation with
Oxford Economics
World
► Travel & Tourism (T&T)
contributes 9.2% to GDP
(US$5,751 bn) in 2010
► Real GDP growth for the T&T
Economy is expected to be
4.4% per annum over the
coming 10 years
Pakistan
► T&T contributed 2.0% to
GDP (US$ 9.1b) in 2009
► In 2007, Pakistanis have
spent amounts exceeding
US$ 2b on international
travel and tourism
Tourism Market Analysis
Outbound Tourism Expenditure by Pakistanis
►
2,500
USD Millions
2,000
1,500
1.60
2,043
CAGR
13.5%
1.40
1,753
1.20
1.00
0.80
1,000
500
0.60
446
0.40
0.20
0
0.00
1995
2005
Outbound Tourism Expenditures (USD Millions)
2007
%age of GDP
Percentage
Internationl Tourism Receipts as % of GDP
10
8
6
4
2
0
Source: WTTC
Percentage
Key Facts
1995
2007
Source: UNESCO
Statistical Report 2009
Key Facts
Karachi Economy
Household Income Distribution
►
►
►
Population is currently
estimated around 16 – 18
million
Average annual income
growth: 5.8%
40% of large scale manufacturing
Expected earnings top bracket
of 14% is now expected to be
PKR 47,000 per month
Commercial
►
►
►
FBR Yearbook 2006-07
40% of Financial activity
Most of the port related
activities through the two
ports at Karachi and Bin Qasim
Home to most of the
consumer products and
pharmaceutical companies.
Financial Services hub of
Pakistan
53% of total collection of FBR
Karachi
50% Bank Deposits
25% Federal Revenue
95% foreign trade passes through Karachi
Percentage Household Income Distribution
Earnings Top
Bracket
14%
20%
3%
7%
5000 or below
5000 to 10000
10000 to 15000
15000 to 20000
20000 to 25000
16%
40%
25000 and above
The Lake
►
Largest freshwater lake in
Pakistan (24 Km long, 8 Km
wide, 192 Km Periphery)
►
Wetland of international
importance (Ramsar Site)
►
Wildlife Sanctuary and home
to several species of local and
migrating birds
►
Major water reservoir
►
Perfect for short stay s away
from the busy routine of city
►
Proximity to Thatta City , with
its rich history and culture,
enhances tourism potential
►
An ideal location for ecofriendly tourism and nature
►
Resort development can be a
major economic stimulus
Historical places near Keenjhar Lake
Tourist sites in and around
Thatta having potential for
development and organized
tourism
► History of Thatta goes back
several millennia to the Indus
Valley civilization.
► Thatta Capital of Sindh and
seat of power for 400 years
for three Muslim dynasties
► Architecture continues to
inspire modern buildings
► Close to 1000 year old lost city
of Bhambhore
► Chawkandi tombs date back
over 1000 years
► The tombs at Makli necropolis
date back over 700 years
► Shah Jahan Mosque, built back
in 1647, one of the largest
mosques with 100 domes
►
Bhambore
Chawkandi Tombs
Makli
Shah Jahan Mosque
THE PROJECT
The Project Site
►
Located 10 Km from the
National Highway
►
Direct connection with the
Lake offering a 270 degree
view with 8km shoreline
►
Limited access provides
better Security
►
Maximized shoreline for
waterfront development.
►
Offers great flexibility for
articulation of various
Integrated Resort Facilities
►
Large untouched land (with
no existing man made
structures/ facilities)
►
A raised site with flat
terrain suitable for
infrastructure and other
development
N
W
Project Site
Project Site
E
The Visualization of the Project
FINANCIAL OVERVIEW
DEVELOPMENT
OUTLAYS
ESTIMATED PROJECT COSTS
Resort Zone
0%
25%
50%
75% 100%
Land Cost
Infrastructure
Resort and…
Golf Course
IDC
Figures in PKR Millions
2012
2013
2014
Recreation Zone
0%
25% 50% 75% 100%
Land Cost
Total
1,795
424
2,219
Resort and Hospitality
2,916
-
2,916
Entertainment District
-
2,586
2,586
940
-
940
Development Costs
5,651
3,010
8,661
IDC
1,021
307
1,328
Project Costs
6,672
3,317
9,989
Land cost represents only 5% of the estimated project costs
► 43% of the Resort Zone costs are estimated to be funded through
sale of farmhouse components
► 60% of the project finance is expected to be raised from Commercial
Debt carrying interest @ 15% - 16% p.a.
►
Infrastructure
Entertainme…
IDC
2011
Recreation
Zone
Infrastructure & Land
Golf Course
2011
Resort
Zone
2012
2013
2014
KEY RESULTS
Quantitative Aspects
► Resort Zone
o Equity IRR: 23%
o NPV @16%: PKR 1.3billion
INVESTMENT ANALYSIS
Resort Zone
2,500
1,500
Development
Period
Payback: Year 9
500
-500
-1,500
Free Cash Flow - Firm
2029
2028
2027
2026
2025
2024
2023
2022
2021
2019
2018
2017
2016
2015
2014
2013
2012
2011
2020
Operational Period
-2,500
Free Cash Flow - Equity
Recreation Zone
2,000
1,000
Development
Period
Payback: Year 9
0
-1,000
-2,000
Free Cash Flow - Equity
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2019
2018
2017
2016
2015
2014
2012
2013
Free Cash Flow - Firm
2020
Operational Period
-3,000
2011
Qualitative Aspects
► Flexibility in terms of
developing the project
► Reduced upfront investment
► Land price is payable on
deferred basis
► Land is available for
mortgage
► Extensive work already
undertaken
► Feasibility shows bankable
financial ratios
TRANSACTION STRUCTURE
STRUCTURE
The Concessionaire
shall have a 95 years
Lease on the Project
Land with a right to
mortgage subject to
the provisions of the
Concession
Agreement
Total Project
Cost inclusive of
Land
20% Upfront Bid
Amount to be paid on
or prior to signing of
concession agreement
GoS
Balance Bid Amount to be paid on or prior to
COD at 8% p.a. Interest. Payment of Balance
Bid Amount is a condition precedent to the
COD.
Debt
Commercial
Lenders
Project
Revenues
Equity
Under Escrow
Agreement
Private Party
Project Revenues shall be governed by the
Escrow Agreement whereby the proceeds
will be appropriated between the KPC
account, Lenders account and Project
Development account
Cash
Equity IRR: 23%
Payback: 8.4 years
(Yr 4 of operations)
OVERVIEW
Quoted Bid Amount (QBA) is
the price at which financial
bids are invited from
potential developers
► QBA shall be:
o Base land price; plus
o premium on land
► Developer can either be an
individual or a consortium
► Developer to incorporate a
Project SPV which shall sign
the Concession Agreement
with the Government
► GoS to implement project
through Keenjhar Project
Company, a wholly owned
project entity
CONTRACTUAL WEB
►
GOS
Tourism
Department
(DoT)
Transfer of Project Land under Master
Lease arrangement from DoT to KPC
KPC
Allocate Project
Land to the DoT
Master
Developer
Concession
Agreement
Escrow
Agreement
Shareholders
Agreement
Project SPV
Financing
Agreement
Sub-Lease/
Sub-Contract
Agreement
Sub-Lease/
Sub-Contract
Agreement
Sub-Lease/
Sub-Contract
Agreement
Private Party
1
Contractor/
Private Party
2
Contractor/
Private Party
3
Contractor
Commercial
Lenders
Hyderabad - Badin Road Project
Public sector partner
•
Government of Sindh
Economic significance of project location
•
6 major junctions at Siri, Tando Mohammad Khan - Sajawal, Tando
Mohammad Khan - Tando Allah Yar, Matli - Tando Ghulam Ali Digri, Talhar and Badin Cantt
•
Over 100 smaller link roads indicate mass-usage and importance
of the Road
•
Collects traffic from southern Sindh and connects to the N-5
National Highway towards the North
•
Connects Hyderabad with many important industrial and
commercial areas in the surroundings
•
Tharparkar District, with vast Coal reserves, is situated on the
Eastern side of the Project area
•
Type of industries: Rice Mills, Sugar Mills & Oil Mills
Project advisors
•
•
•
MM Pakistan (Pvt.) Ltd. (Technical and Lead Advisor)
KPMG Taseer Hadi & Co. (Financial Advisor)
Mandviwalla & Zafar (Legal Advisor
Procurement approach
GoS intends to award a Concession Agreement for the design, build,
finance, operation and transfer of a 98.5 km road connecting Hyderabad
to Badin through the towns of Tando Mohammad Khan, Matli and
Talhar. It is currently envisaged that the contract term will be for a
period of approximately 33 years. The Project (including the ownership
of the Project related assets) shall be handed over to GoS at the end of
the contract period.
Private partner’s role
The Service Provider will:
•
•
Finance the Project
•
•
Construct the Project
•
•
•
Operate the Project during the PPP Contract and collect tolls
Detailed designing of the Project based on conceptual designs
provided by the Contracting Authority
Satisfy all required tests on completion of construction of the
Project
Maintain and repair the Project during the PPP Contract period
Hand over the Project to the Contracting Authority at the end of
the PPP Contract period
Run-of-River Power Generation
 EOI for hiring Transaction Advisor floated on 3rd July, 2010
 Scope of work
 Identify the potential sites for ROR Power Generation in the
province particularly at Sukkur Barrage;
 Conduct Feasibility Study in respect of the top four promising sites
identified in the survey;
 Assist Government of Sindh in marketing the project to the relevant
mix of investors, and administering the bidding process for the
selected sites
 RFP issued to the 7 pre-qualified consulting consortia
 Transaction advisor likely to start work by June 2011
Gorakh Hill Resort Project
Gorakh Hills Background
Gorakh Hill Development project (GHDP)
►Gorakh Hill is located 450 km North of
Karachi, 300 Kms from Hyderabad, 93 Km in
Northwest of Dadu and 46 Km from Sehwan
Sharif
►Gorakh Hills development was initiated in
1998, with a plan to develop Gorakh Hills as a
resort on lines of hill stations in northern
Pakistan. A master plan was developed by
M/s Naqvi & Siddiqui Associates in
collaboration with M/s Shankland & Cox for
the hills covering an area of about 1,908
Acres which included residential, recreational
and hospitality components.
►PKR 198.269 million has been spent on
various development works which include
road from Wahi Pandi to Gorakh Hill summit,
water pumping stations and supply line to the
summit, electricity supply to the summit,
construction of police check posts along the
road to the summit, construction of bridges,
culverts etc. shades and fencing at the
summit and construction of contractors
cottage and residential quarters for workers.
►The road from Wahi pandi to Gorakh Hill top
has been prone to damage mainly due to
seasonal torrents which flow through the
numerous storm water drains that pass
through the road and land slides at Khanwal
Luk.
►The development of Gorakh Hills fall under the Gorakh Hills Development Authority formed
through an Act of Parliament in September 2008
►It was decided by the Government of Sindh in 2010 to develop Gorakh Hills under Public Private
Partnership and mandated Transaction Advisors Ernst & Young in consortium with Meinhardt
(Pakistan) Private Limited and Mohsin Tayebaly & Co to evaluate options for development of
Gorakh Hills under PPP.
►The initial studies suggested a need for development of better access road and development of
basic facilities for tourists visiting the hill top
►Detailed design of road that follows the existing route for most part that is reengineered to
provide better road access has been completed
►A conceptual design for the tourist facility at the hill top has also been completed.
Thank you