BUSINESS SEMINAR ON THE GLOBAL INFRASTRUCTURE FACILITY (GIF) Jordan Schwartz

Transcription

1 BUSIESS SEMIAR O THE GLOBAL IFRASTRUCTURE FACILITY (GIF) Jrdan Schwartz Head f the Glbal Infrastructure Facility (GIF) vember 10, 2014 Wrld Bank Tky Office 1

2 Cntext: Demand fr the GIF Gvernments eed lng-term finance fr mre infrastructure investment eed t diversify surces f financing Divestiture Telecms Over 80% f infrastructure purely public Over half f the private publicly financed PPP 28% 3% 69% Private vs. PPP Equity Insufficient leverage Debt 9% 21% 46% 24% Public Private Public Private Priv & Public Debt & Equity Private investrs Spnsrs need cmpetitive financing packages Banks need exit ptins Institutinal investrs seek lng-term investments with predictable cash flws Cmpatible demands What s nt wrking? pipeline f prjects that satisfy bth financial & plitical ecnmy questins 2

3 Challenge: Prject Preparatin & Structuring TA MDB Financing Credit Enhancement Identificatin Preparatin Transactin Transactin Transactin Financing Financing Driven by incumbent develper assessment f Value fr Mney r best prcurement apprach Large cntingencies remain Incmplete E&S assessments Inadequate due diligence Investment decisin Missing legislatin land registry pricing study Viability gap larger than expected Seek IDA fr VGF, IBRD r RDB fr lan fiscal analysis Prtracted pst bid negtiatins Resetting incumbent s equity share Bilateral agencies stepping in t ffer new tied structures and lending Gvernment cmmitments nt bankable clse Cmmercial clse

4 Challenge: What culd we d differently? Platfrm cnvened WBG RDB Gvernment Dmestic & Internatinal Financiers TA arranging instruments Identificatin Preparatin Transactin Financing Gvernment r private sectr identify investment need Gvernment takes prject t WBG r GIF partner Cmprehensive preparatry wrk culd require: : Engineering, E&S, and pricing studies Regulatry review and strengthening Investment appraisal, including cst-benefit and fiscal assessment Cmmercial viability assessment PPP structuring and decisins n best use f credit enhancements Investment Decisin PPP structure and bid parameters refined Bid Dcuments develped Credit enhancement package prepared Cmmercial clse structure finalized based n credit enhancement package clse

5 Ptential Impact: Mre efficient use f resurces + 30% + 20% Effects f Private Participatin and Regulatin 13% + 10% change 19% 18% 13.5% - 10% -20% -10% -17% - 19% - 17% - 5% - 30% -27% -32% 5 Surce: Andres, Schwartz, Guasch, Uncvering the Drivers f Utility Perfrmance, Wrld Bank (2013)

6 FC + 2 YRs FC + 4 YRs Mre efficient financing structures 300 MW Cmbined Cycle Gas-t-Pwer Plant Cnsumer Tariffs Base Case Prject Savings f an estimated 3% f a $2,000 annual grss incme; r 10% f incme at $2 per day 11 USc/kWh GIF-Structured Prject 9 USc/kWh clse Cmmercial Operatins Date 20 YRs 6

7 What is GIF: Partnership, Resurces, Fcus The Glbal Infrastructure Facility is an pen platfrm fr cllabratin between public and private partners t prepare and structure cmplex infrastructure prjects that are ptentially cmmercially viable 7

8 What GIF will d: Activities Activities Enabling Envirnment & Prject Definitin Prject Milestne End-t-end develpment and structuring fr cmplex private infrastructure prjects Prject Preparatin & Investment Feasibility Investment decisin Gap-filling supprt cmplements ther resurces Transactin Supprt & Structuring Cmmercial clse Partnership apprach t implementatin Leveraging WBG capacity Arranging & Credit Enhancement clse Revlving facility shares preparatin cst and risk

9 Hw GIF will wrk: Institutinal Optins Independent entity WBG Partnership Prgram Internal WBG mechanism Open structure cnducive t partnerships Less credibility and cnvening pwer Replicatin f skills required Capitalize n WBG skill, experience, and cnvening pwer Less cnducive t partnerships 9

10 Hw GIF will wrk: Prpsed Structure Gvernance Cuncil WBG Partnership Prgram Advisry Cuncil Funding Partners Technical Partners Advisry Partners Dnrs MDBs Institutinal Investrs Banks & Other Institutins Bilaterals, SDBs, ECAs Glbal Infrastructure Facility Management Unit 10

11 GIF Pilt Phase: Glbal Test f GIF Mdel Hydr generatin: Can BOO designed fr energy exprt be structured t prduce dmestic ecnmic returns? Rail t mines: Can multiple mines jintly cncessin a rail line? Water: Can desalinatin be structured fr eventual trade? Rail: Can rail extensins t agricultural regins be financed n back f mine-muth trunk line? Urban rail: Can prjects be structured s DBs cnvert their rle frm lender t backstpper? Pwer: Can transmissin lines be structured s that dmestic and internatinal institutinal investrs cme in with lng-term finance? What instruments can be used t lengthen lcal currency swap markets? Air transprt: Hw shuld a large set f prvincial airprts be packaged as PPPs? 11

12 GIF Pilt Phase: Glbal Test f GIF Mdel Multilateral Develpment Bank atinal Infra Fund r Develpment Bank Institutinal Investr Key: RDB D Dnr RDB WBG RDB D MDB RDB MDB RDB D D D 12

13 GIF Pilt Phase: ext Steps $80 - $100 millin target fr initial capitalizatin GIF Team t finalize partnership agreement with Funding, Technical, and Advisry partners and cmmence peratins Cnsultatins with Partners and EDs Bard Date Sept 11 Signing at WB Annual Meetings Oct 9 Prepare and finalize Partnership Agreements / define Pilt Prjects Start GIF Operatins August September Octber v - Feb March Review after 3-year pilt phase: structure, scpe, and scale f activities 13