14/04/2016 EBRD Business and Procurement Opportunities Business Outreach Workshop on Procurement Foreign Trade Chamber of B&H Sarajevo, 18 April 2016 Veljko Sikirica Associate Director, Procurement Policy Department Project Procurement Policies & Rules Opening - Welcoming Remarks EBRD SESSION: ONE Part 1 Introduction & Objectives Part 2 Business Opportunities - EBRD public sector projects Part 3 Procurement and EBRD EBRD SESSION: TWO Part 4 How to win contracts - Public sector tender opportunities Part 5 Right to Complain Part 6 Strategy for Business How to win contracts 1
14/04/2016 EBRD Session One Business procurement opportunities on Public Sector investment projects Part 1: EBRD Introduction & Objectives 2
Billion 14/04/2016 What is the EBRD? 100 90 Cumulative Annual Bank Investments 80 70 60 50 40 30 20 10 0 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 2015 Cumulative business volume: 107.2 billion International financial institution, promotes transition to market economies in 36 countries (central Europe to central Asia) & (Cyprus, Egypt, Morocco, Tunisia & Jordan) EBRD intends to invest in Greece until 2020 Invested nearly 100 billion in more than 4,000 projects since 1991 8.85 billion in 377 projects in 2014 Capital base of 30 billion* Owned by 67 countries and two inter-governmental institutions EBRD: Shareholding Structure and triple-a rating The EBRD has a triple-a rating from all three main rating agencies (S&P, Moody s and Fitch) Shareholding Structure Japan 9% USA 10% EU 27 Countries 63% (1) Others 11% EBRD region excluding EU 7% (2) As at 13th July 2012 (1) Includes European Community and European Investment Bank (EIB) each at 3%. Among other EU countries: France, Germany, Italy, and the UK each holds 8.6% (2) Russia at 4% 14 April, 2016 6 3
14/04/2016 What are the EBRD s objectives? To promote transition to market economies by investing mainly in the private sector To mobilise significant foreign direct investment To support privatisation, restructuring and better municipal services to improve people s lives To encourage environmentally sound and sustainable development EBRD in 2014 Private vs Public 10,000 450 Triple-A rated multilateral development bank 9,000 400 8,000 350 Invested nearly 100 billion in more than 4,000 projects since 1991 In 2014: 8.85 billion invested in 377 projects Private sector ~ 70% of EBRD finance Public sector ~ 30% of EBRD finance 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 300 250 200 150 100 50 0 ABI (reported rate) Number of operations (#) July 2015 4
14/04/2016 Foundations of EBRD operations Apply sound banking principles to every project Support but not replace private investors Advance the transition to a full market economy Catalyst for change Every Euro of EBRD investment mobilises a total of 3 Euros for the project EBRD investments have attracted an additional 114.6 billion from domestic and foreign investors The EBRD uses funding donated by member governments and institutions to assist project preparation and catalyse foreign investment 5
14/04/2016 EBRD finances diverse range of enterprises Energy 19% Power and energy, Natural resources Financial Institutions 32% Bank lending, Bank equity, Small business finance, Insurance and financial services Infrastructure 23% Municipal and environmental infrastructure, Transport Corporate 26% Manufacturing and services, Agribusiness, Equity Funds, Property and tourism, Information and communication technologies Note: as at 31 December 2014 14 April, 2016 11 Where we invest 14 April, 2016 12 6
14/04/2016 Country group portfolio distribution Cyprus Southern and eastern Mediterranean 4% Turkey 11% 0% Russia 18% South-eastern Europe 22% Central Asia 8% Central Europe 16% Eastern Europe & Caucasus 21% Note: Unaudited as at 31 December 2013 14 April, 2016 13 How does the EBRD finance? Loans of varying maturities at floating or fixed rates Equity investments, including equity funds Guarantees to help borrowers gain access to financing 7
14/04/2016 Sound banking principles applied to projects Each project requires: Careful assessment of risk/rewards for all parties Commercial viability Good prospect of returns Advancing transition to market economies EBRD projects should promote: Expansion of competitive markets, including private ownership Stronger institutional and legal framework Sound corporate governance Structural reforms Respect for people and environment 8
14/04/2016 Environmental mandate EBRD takes account of the environment in all its operations Every project is screened for environmental impact Around 17% of total commitments are designed to make environmental improvements Part 2 Business Opportunities in EBRD Financed Projects in the Region 9
14/04/2016 Project examples (Public Sector) Hungary: Budapest Automated Fare Collection The EBRD finance development of an automated fare collection system for public transport in the City of Budapest. Tender for the installation of the complete system and its operation is in progress Similar projects are under implementation in the City of Sofia, Bulgaria, and under preparation in the City of Vynnitsia, Ukraine A project for modernisation of current traffic control system, through the installation of intelligent transportation system measures in the City of Zagreb, Croatia, is currently under preparation 10
14/04/2016 Romania: Pitesti Urban Public Transport The project of up to EUR 16 million with S.C. Publitrans 2000 SA, a joint-stock company whollyowned by the municipality of Pitesti, which provides public transport services, is under preparation The project is part of the City s plan to improve the public transport system by reducing air pollution in the city centre and by facilitating access to new business/industrial areas The EBRD loan will finance part of the company s fleet renewal, which consists of 70 new EURO-6 buses Ukraine: Rivne-Kyiv High Voltage Line Project The project, estimated to be around EUR 450 million, consists of construction of a new 750 kv power transmission line. EBRD financing of EUR 1250 million will contribute to construction and operation of two new transmission lines: the 750 kv Rivne NPP Kyiv transmission line of the total length 353 km and the 135 km 750 kv Khmelnytsk NPP - Chernobyl NPP line diversion to Kyiv substation. Works include inter alia: construction of two new 750 kv power transmission lines; installation of a second 1000MVA autotransformer in Kyiv substation; construction of 60km of 330kV double circuit line from Kyiv substation to the city transmission network 11
14/04/2016 2015 Procurement Statistics General procurement statistics Note: Excludes contracts placed under the Nuclear Sector Funds and TC funded contracts. 12
14/04/2016 General procurement statistics Note: Excludes contracts placed under the Nuclear Sector Funds and TC funded contracts. General procurement statistics Note: Excluding Nuclear Safety contracts and TC funded consultancy. 13
14/04/2016 General procurement statistics Note: Excluding Nuclear safety and TC funded contracts. 2015 preliminary figures Nuclear safety The EBRD manages six nuclear safety Funds with over 4 billion in pledged contributions. Each Fund is governed by specific provisions as set out in the Rules of the Fund approved by the respective Assembly of Contributors and by the EBRD Board of Directors. Procurement under the Funds must follow the EBRD s PP&R for public sector projects with the limitation that eligibility is restricted to entities from member countries of the respective Funds, the EU member states and the EBRD s countries of operation. 14
14/04/2016 Nuclear Safety 29 Bosnia and Herzegovina results 2011 2015 Bank funded Goods, Work and Services Number of tenders submitted by firms = 56 Number of contracts won = 46 Value of contracts won by firms = 340 million Rate of success = 82 % 30 15
14/04/2016 Part 3: PROCUREMENT and EBRD : General Considerations Public Procurement Principles EBRD shares same principles as other IFIs Aligned to principles of WTO Government Procurement to make purchases or investment Public sector procurement rules follow principles for transparency, efficiency, economy and accountability in the use of public funds 16
14/04/2016 Public Procurement Principles (cont.) Best public sector procurement procedure to select suppliers and contractors is open competitive tender In the economies in transition open tender rules are in a teething period EBRD procurement rules are consistent with best international practices and will replace government rules in projects financed by EBRD loans EBRD Specific Procurement Principles Eligibility to participate is open to firms from all countries Specific rules for subsovereign clients Only restriction is capability to fulfil the contract No domestic preference 17
14/04/2016 General Objectives of the EBRD Procurement Policies & Rules (PP&R) The overall objective of the procurement policy is set forth in Article 13 of the Agreement Establishing the EBRD The Bank shall take the necessary measures to ensure that the proceeds of any loan made, guaranteed or participated in by the Bank, or any equity investment, are used for the purpose for which the loan or equity investment was granted and with due attention to considerations of economy and efficiency EBRD PP&R * Detailed rules for public sector Open Tender is the norm * Policies and objectives for private sector Follow normal commercial practices * Consultant Services * Guidance to Tenders 18
14/04/2016 Specific objectives of PP&R Achieve economy and efficiency in both public and private sector operations The specific objectives of the procurement policies and rules of the Bank contribute to: Achieve transparency and accountability in public administration Ensure that public sector contracts should be normally awarded on the basis of open competitive tenders Apply laws and practices for procurement which do not discriminate between foreign and local products, suppliers or contractors Apply procedures which are transparent and fairly applied Energy Goods What can go wrong in a Procurement Process Case # 1 Veljko Sikirica Senior Procurement Specialist EBRD Procurement Department 19
14/04/2016 Principles, project cycle, procurement relations, inputs RESPONSIBILITIES IN TENDER PROCESS What is Procurement? A process that involves policies and procedures to acquire goods, works and consulting services A key activity in the Project Cycle It has a major impact on the successful implementation of Bank projects 20
14/04/2016 Procurement Principles Transparency Efficiency Economy Fairness (Equity) Competition Due Process Accountability Bank, Client, Contractors/Suppliers and Consultants Responsibilities 21
14/04/2016 Responsibilities of the Bank Assists in procurement planning Reviews notifications and advertising Ensures that process is consistent with agreements Reviews procurement actions Responsibilities of the Bank continued Reviews request for proposals and short lists of consultants Reviews prequalification and tender documents Reviews tender and proposal evaluation reports Reviews contracts Verifies withdrawal applications before disbursement Reviews contract modifications 22
14/04/2016 Responsibilities of Client Agency Appoints project unit Performs planning activities Notifies prospective tenderers of tender opportunities Prepares prequalification and tender documents, and request for proposals Receives and evaluates tenders and proposals Awards contracts Manages contracts Responsibilities of contractor, supplier or consultant Obtain tender documents or accept invitation to submit proposals for consultant services Submit tenders or proposals in accordance with the requirements set forth in the tender documents or request for proposals Supplies goods or deliver services in accordance to the terms and conditions of the contract 23
14/04/2016 Bank s input at different stages of Project Implementation Procurement Plan Tender documentation Open tendering Tender evaluation and contract Procurement monitoring and Bank review Procurement queries and complaints Relationship in the procurement process Supplier Contractor Tender documents, purchase order or contract PQ or Tender documents, contract Client Consultant Loan agreement RFP, proposal and contract 24
14/04/2016 10 Questions and answers 25