Aggressive Selection of Concessionaires Cesar Queiroz Roads and Infrastructure Consultant Riga, May 9, 2006

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Latvian MOT and World Bank Workshop on PPP in Highways Competitive Selection of Concessionaires Cesar Queiroz Roads and Infrastructure Consultant Riga, May 9, 2006

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Procurement and Public-Private Partnerships (PPP) Procurement courses of action ought to be embraced in an aggressive way PPP incorporates the full scope of concession sort game plans for the arrangement, overhauling, support, and operation of framework activities PPP additionally incorporates long haul benefit contracts, administration contracts, leases, and divestiture

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Definition of Public-Private Partnership A Public-Private Partnership (PPP) constitutes a managed community oriented exertion between people in general segment (government organizations) and private ventures to accomplish a typical target (e.g., a motorway or railroad extend) while they seek after their own particular individual premiums.

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Definition of Public-Private Partnership A Public-Private Partnership (PPP) constitutes a managed community oriented exertion between the general population area (government organizations) and private endeavors to accomplish a typical goal (e.g., a motorway or railroad extend) while they seek after their own individual advantages.

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Concessions Types of Concessions: Build, Operate, Transfer (BOT) Build, Own, Operate (BOO) Build, Own, Operate, Transfer (BOOT) In a BOOT plan the private administrator holds responsibility for office keeping in mind the end goal to ensure bank advances Concessions typically incorporate some administrative arrangements to set the costs to be charged and the quality to be given The advantages are come back to the state toward the end of the concession term (aside from BOO)

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Procurement under BOO/BOT/BOOT Concessions with the World Bank Participation an) If the concessionaire is chosen through ICB The concessionaire is allowed to get the products, works, and administrations required for the office utilizing its own particular methodology The Loan Agreement indicates the kind of consumptions brought about by the concessionaire to which World Bank financing will apply OR b) If the concessionaire is not ICB chose, the merchandise, works, or administrations required for the office and to be financed by the World Bank ought to be secured through ICB

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Evaluation Criteria for ICB Selection of Concessionaires Include The cost and size of the financing offered The execution determinations of the offices offered The cost charged to the client or buyer Other pay created for the Client by the office The time of the office's deterioration

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Preparation for Bidding Issuing a promotion as a GPN and a SPN and welcoming bidders to prequalify - UNDB and neighborhood and worldwide daily papers Adopting a technique to minimize the expenses to bidders of setting up their proposition Prepare a short rundown in light of the result of the prequalification (normally 3 to 6) Ensuring that the delicate procedure is attempted quickly and effectively

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Steps Before the Tendering Process Establishing a devoted venture group made up of experienced people Putting set up a proper legitimate and administrative system for the operation of the concession Establishing a reasonable meaning of what is required from the private division Launching a specialist audit of the budgetary practicality of the venture Deciding on the most proficient method to handle the financing crevice Developing a firm arrangement for the offering procedure (timetable, the quantity of stages, and the targets at every stage)

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Use of Consultants The Role of Consultants Providing governments with specialized help and counsel on acquisition and the monetary, administrative, lawful, money related and specialized issues Two Types of Consultant Contracts A consortium of firms under a solitary contract to manage every one of the issues May diminish the administration requests on the legislature May bring about more predictable exhortation … yet may not give adequate guidance on complex issues Separate counselors under individual contracts Contracting is clear The administration can facilitate them or dole out one of them to organize the others

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Consultants Can Support Government Activities Such As: Road Shows Visiting potential bidders and make presentations on the proposed concession Conferences Giving potential bidders data on the prequalification and offering forms Data Rooms Establishing an information room where all information pertinent to the concession are made accessible for potential bidders for a particular period Reviewing Suggestions from the Potential Bidders Allowing potential bidders to make proposals for the offering procedure can make the choice procedure more sensible

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Incentive Schemes How can the legislature give motivators to private area firms to take an interest? Fetched sharing and valuing game plans Incentive installments ( or punishments ) connected to execution gauges Insurance courses of action Support the arrangement of ensures (e.g., World Bank Partial Risk Guarantee)

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Cost and Risk Sharing PPP may include different dangers including business, political, swapping scale chances The concession contract ought to be planned in a way that dangers are apportioned to the gathering who can best deal with the hazard Consult with potential bidders in regions where there is vulnerability about the private segment's hunger for expecting diverse levels of hazard: Alternative plans Different levels of hazard exchange

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International Competitive Bidding (ICB) Advantages Ensures straightforwardness Provides a market instrument for selecting the best proposition Stimulates enthusiasm among an expansive scope of potential bidders Some Disadvantage Works best when yields are institutionalized and specialized parameters are obviously characterized

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Single versus Two Stage ICB Single Stage ICB The Client gets ready and issues the offer archives Bidders offer offers containing their last specialized proposition and a budgetary proposition The Client assesses the consolidated recommendations (specialized and money related)

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Single versus Two Stage ICB Two Stage ICB The First Stage The customer readies a first stage offering report with useful execution particulars (not point by point specialized details) Bidders offer unpriced specialized recommendations (i.e., no monetary proposition is submitted as of now) The customer surveys the bidders' capabilities, assesses the specialized recommendations, and shows what bidders ought to do to make their offer in fact responsive The Second Stage The customer readies the memoranda of changes for every bidder and may get ready addenda to the offer records, and starts the second stage Bidders offer revised offers containing their last specialized proposition and a budgetary proposition The Client assesses the consolidated recommendations (specialized and budgetary)

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The concession venture is not mind boggling and specialized and execution necessities are unmistakably characterized ➨ Single Stage ICB The concession venture is perplexing and both specialized and execution prerequisites are not plainly characterized ➨ Two Stage ICB Single versus Two Stage ICB

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Prequalification Process The goal Determine, among every single intrigued candidate, the individuals who are met all requirements for the principle offering process Required conditions Prequalification is strict so that the administration can make a satisfactory choice Applicants are furnished with adequate data on the concession For the situation of joint endeavors, qualified little administrators are permitted to join huge contractual workers or banks to rival customary concessionaires

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Prequalification Documents Information to Be Provided by the Client Demand conjectures with the evaluated income and request versatility Progress on different basic activities important to the venture Scope of the proposed concession A blueprint of offer choice and assessment criteria

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Main Requirements to Prequalify Candidates The monetary, specialized, and administrative limit Expertise to assemble, fund and work the office Experience of offering effectively for comparative concessions and preparing venture back Demonstrated duty and focused excitement to take an interest in the fundamental offering process Experience in the host nation

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Examples of Prequalification Criteria Source: Kerf and et al. (1998).

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Documents for Prequalification The Information to Be Provided by Applicants Experience on the outline, development, and operation of the venture Proposed business structure, if granted the concession Their comprehension of business issues Likely wellsprings of financing Proposed size of money related duty and, if important, the level of the budgetary duties of consortium individuals Likely level of monetary returns looked for

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Documents for Prequalification The Information to Be Provided by Applicants (Continued) The approach toward overseeing development contracts Experience in focused offering for activities including planning, fabricating and working concession The assention and association among accomplices if there should arise an occurrence of a joint wander Experience in real development and operational undertaking in the host nation Economic and monetary History of case or assertion

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Assessing the Financial Capabilities of Sponsors in the Prequalification Process Criteria The consolidated total assets of the candidates This ought to surpass the aggregate of the value and the measured estimation of any assurance like endeavors by an edge that is sufficiently agreeable for the backers to embrace their unique business responsibilities The source and utilization of the bidder's subsidizes The bidder's short and long haul obligation plan The bidder's pay articulations How well the bidder shows its comprehension of the key business and monetary issues Clients ought to demonstrate the base adequate value

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Designing Performance Indicators While in the Prequalification Process Clients ought to outline execution pointers th

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