Transcript Slide 1

REPUBLIC OF KENYA
THE NATIONAL TREASURY
OVERVIEW OF THE PPP PROGRAM IN
KENYA
KENYA – SPAIN MULTULATERAL
PARTNERSHIP MEETING, NAIROBI, DEC 8-11,
2013
PRESENTED BY:
ENG. STANLEY K. KAMAU
DIRECTOR – PPP UNIT
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KENYA
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
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Area:
583,000 sq. km
GDP:
USD 38 Billion
Population:
40 million
GDP per Capita:
USD 900 (USD 1700 in Purchasing Power Parity
terms)
 GDP % Growth:
4.6% in 2012; 5.7% projected in 2013
 Debt/GDP:
45%
 The Standard and Poor’s rating for Kenya is B+ stable
 Fitch rating is B+ positive.
 Gateway to:
 East Africa Community (Kenya, Tanzania, Uganda, Rwanda, Burundi):
 150 million people, among the fasted growing regions in the world (5.3%
growth GDP compared to 3.8% world growth) – 150 million addition (DRC,
Ethiopia, Southern Sudan, Somalia)
The discovery of Oil, Rare Earth, others: A game changer
Funding Gap of USD 2 - 3 Billion per Year
.
SOME KEY AREAS OF FOCUS BY GOK
1. Improve logistics of doing business – Transport
and Power
2. Agriculture and rural development
3. Business environment – administrative reforms,
taxation, security
4. Investments in social sector - Education,
Health
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5. Exports
Rationale for PPPs in Kenya
Vision 2030
aims to
transform
Kenya into a
middle income
country by
2030. Heavy
infrastructure
investment is
thus
paramount
Reduce
funding gap
-Additional
funding from
private
sector
Reduce
Government
sovereign
borrowings
Utilize
private
sector
efficiency &
innovation
to deliver
public
services
Increase
business
opportunitie
s for the
domestic
market
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Framework for PPPs in Kenya
 Kenya has a New Constitution (2010) that provide democratic
and governance institutions (stability, judiciary, etc.);
 Conducive Regulatory framework to facilitate PPPs (Energy,
Transport);
 There is a strong Contract law (contracts will be honoured);
 PPP Policy issued by Government in December, 2011;
 The Public Private Partnerships Act, No. 27 of 2013 (PPP Act);
 Draft Regulations for PPP Act, 2013;
 Reforms in the Capital Markets to support long term PPPs; and
 PPP Toolkit, Procedures and standard documents.
What Does the PPP Act provide?
PPP Act
2013:
Provide legal capacity for MDAs to enter into PPP contracts
Address legal gaps, remove conflicts and overlaps in law
Risk mitigation (Letters of Support, Guarantees
(Demand/Traffic Guarantee), subsidies etc.
Tariff setting framework
Direct Agreement and step-in rights to Lenders
Compensation for termination/ extra-ordinary events/ direct
impact of change of Laws/political event
Establishment of a Project Facilitation Fund (Viability Gap
Fund, PDF, subsidies)
A clear process for developing and procuring PPPs
A clear institutional framework
Minimum PPP contractual provisions
Preparation and Approval of a PPP Project
Selection of a Private Party
 PPP Projects can be initiated in two ways:
 Solicited bids; and
 Privately initiated proposal.
 Allowed only where:
 there is an urgent need for continuity;
 costs relating to intellectual property in relation to the project
design is substantial;
 there exists only one person capable of undertaking the
project; or
 there exists any of the circumstances as the Cabinet
Secretary may subscribe.
This ensures: Level Playing Ground
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….also Competition
Past PPP Projects in Kenya
1. Mtwapa and Nyali Bridges Concessions signed in 1959; Charges in
1984: Pedestrians (10cts), cattle head (20cts), motor cycle (50cts),salon
(sh.2.00), w/wagon (sh. 2.50), lorry (sh 4.00 -7.00), bulldozer (sh.10).
2. Westmount 46 MW (not active), Iberafrica 1997 (56MW and 53 thermal
power plant), the 74 MW Tsavo/Kipevu IPP, 2000, Orpower -Olkaria III
2000/2008 (48MW Geothermal Plant), Mumias (34MW power plant);
90 MW Rabai IPP in 2009, Mumias 26MW cogeneration.
3. KPLC, 2005, 2yr management contract;
4. Port of Mombasa Grain Terminal – BOO, 1998;
5. JKIA – Cargo Terminal, 1998;
6. Kenya – Uganda Railways 2006, Concession
7. Malindi water utility, 1999 – 5yr management contract
8. Nairobi Urban Toll Road, 2009 - Failed
Ongoing PPP Transactions
 Independent Power Producers (IPPs):
IPP Name
Type
Capacity MW
Remarks
Thika Power
Thermal
87
Financial Close
Triumph
Thermal
82
Financial Close
Gulf Power
Thermal
80
Financial Close
Orpower
Geothermal
52
Financial Close
Lake Turkana
Wind
300
Under negotiations
Longonot
Geothermal
140
Under negotiations
Kinangop
Wind
60
Under negotiations
TOTAL
750
PPP Pipeline – Transport Sector
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Conversion of Berth 11 -14 into
Container terminals; O&M for
2nd Container Terminal,
expansion of 2nd Container
Terminal
c) Seaports:
Kisumu Port
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d) Airports:
e) Rail:
O&M for Greenfield Terminal,
Terminal Building -Wilson
Airport, Flying School
O&M - Standard Gauge
Railway, Commuter Rail in
Nairobi, Mombasa and Kisumu
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PPP Pipeline – Energy Sector
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Independent Power Project (IPP) Structure
PPP Pipeline – Education Sector
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PPP Pipeline – Housing Sector
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Summary - PPP Project Pipeline
Project Title
Kenyatta University - Hostels
Sector
STATUS
Education
Tender Award (IFC)
2nd Nyali Bridge, Mombasa
Transport/Roads
Transaction Advisory
Nairobi - Thika Road ( O&M)
Transport/Roads
Tender/ ADB
Mombasa – Nairobi Road (400km)
Transport/Roads
Transaction
Transport
Transaction
Nairobi Commuter Rail
Kisumu Sea Port
Transport/ Airport
Transaction Advisory
Nairobi Jomo Kenyatta Airport Expansion
Transport/ Airport
Transaction Advisory
Transport/Ports
Transaction Advisory
2nd Container Terminal Mombasa
60 MW wind power in Ngong
Power
PPA Negotiations
Kinangop Wind Power project
Power
LoS Issued
700 MW LNG, Mombasa
Power
Transaction Advisory
960MW Coal (140MW RFP issued)
560MW Geothermal IPPs, Olkeria (140mw
Issued)
Power
Transaction Advisory
Power
Transaction/structuring
400 Geothermal IPPs, Menengai (90MW RfP
Issued)
Power
Transaction Advisory/AfDB
Cancer/Diagnostic Center
Health
Feasibility
Summary - PPP Project Pipeline
Project Title
ICT services at KNH
Shared Gov’t services
Solid waste management in Nairobi and other
cities
Low Cost Housing 100,000 Units
Parking silos
Embu Water Supply
Sector
STATUS
Health
ICT
Feasibility
Transaction Advisory
Environment
Feasibility
Housing
Feasibility
Urban Infrastructure Concept
Water
Feasibility
Nyayo Stadium
O&M
Feasibility
Southern bypass
O&M
Transaction
Several Irrigation schemes (value addition chain)
Agriculture
Concept
Mombasa Conventional Centre
Tourism
LAPSSET – OIL PIPELINE
Energy
Feasibility
Concept/negotiations with
GOSS
SEZ - Mombasa
Trade
Feasibility
Konza Techno city
CABLE CARS – Nyali, Nairobi, Mt Kenya
ICT
Tourism
Project Structuring
Concept
KENYA IFPPP PROJECT
 Kenya Infrastructure Finance and Public Private Partnership
(IFPPP) Project supported by the World Bank to provide a
bankable pipeline of PPP projects:
 USD 40 Million Credit approved in Dec 2012, effective Feb 2013
 Institutional support and regulatory reform:
• Institutions (PPPU, PPPC, Nodes)
• Legal and Regulatory reforms
• Institutional developments to financial products
• Debt yield curve, depth of domestic market, VGF, PRG,
Financial intermediary lending
 Support for Preparation of Individual PPPs
 Developing a Fiscal Commitment and Contingent Liability
Framework.
THANK
YOU!
Questions?