African Ports and Maritime Conference –
IFC Port Presentation
•November 28-30, 2011
•Méhita F. Sylla
•IFC Infrastructure Advisory Services
Agenda
Overview of IFC’s Advisory Services
Private Sector Participation in the Port Sector
IFC Approach to PPP Transactions
IFC Experience in Port Transactions
2
IFC is a Member of the World Bank Group
•Role:
•Clients:
•Products:
•IBRD
•IDA
•IFC
•MIGA
•International Bank
for Reconstruction
and Development
•International
Development
•International
Finance
Corporation
•Multilateral
Investment and
Guarantee Agency
•Association
•Est. 1945
•Est. 1960
•To promote
institutional, legal and
regulatory reform
•To promote
institutional, legal and
regulatory reform
•Governments of
member countries with
per capita income
between $1,025 and
$6,055.
•Governments of poorest
countries with per capita
income of less than
$1,025
•- Technical assistance
•- Technical assistance
•- Loans
•- Interest Free Loans
•- Long-term Loans
•- Policy Advice
•- Policy Advice
•- Risk Management
•Est. 1988
•Est. 1956
•To promote private
sector development
•Private companies and
Governments in 179
member countries
•- Equity / Quasi-Equity
•To reduce political
investment risk
•Foreign investors in
member countries
•- Political Risk
Insurance
•- Advisory Services
•Shared Mission: To Promote Economic Development and Reduce Poverty
3
IFC’s Role
Advisory Services and Financing
IFC also provides advice to governments
and businesses
Enterprise
Assistance
Advisory services to governments and
businesses
Public-Private
Partnerships
Environment
&
Business
World’s
largest multilateral
provider
Social
Sustainability
Environment
of financing for private enterprises
$38+ billion in investment
commitments
Access to
Finance
IFC’s Infrastructure Advisory Services
• Public-Private Partnerships (PPPs)
 IFC helps governments to increase the
quality and availability of public
services and infrastructure using the
PPP model
 IFC has global experience in PPPs for
transport (roads, airports, rail, ports,
etc.), water and sanitation, health and
education, power, mining, and many
other areas
• Governments rely on IFC to structure
PPPs that cost-effectively meet public
needs with well-qualified private
partners.
• Private partners trust IFC to construct a
balanced and bankable project
Successful Mandates
in Africa
Benin Port
Cameroon: power
Kenya Airways
Kenya Safaricom
Kenya Telecoms
Kenya Uganda Railways
Lesotho Hospital
Madagascar Tamatave Port
Mauritania Telecoms
Mozambique Moatize
South African National Parks
Sierra Leone Hotel
Uganda Telecom
Agenda
Overview of IFC’s Advisory Services
Private Sector Participation in the Port Sector
IFC Approach to PPP Transactions
IFC Experience in Port Transactions
6
Private Sector Participation Overview
• Key factors defining type of private participation include:
• Port Ownership
• Role of Port Authorities
• Relationship between the public and private sectors and their respective
roles
• Most port “privatizations” have tended towards transferring selected
port services and/or assets to private or mixed economy companies by
means of restrictive leasing, licensing or concessionary contracts.
7
Role of Port Authority after PSP – retains abilities to
control property rights, planning & efficiency
• A modern Port Authority, acting in close cooperation with private
sector companies, typically concentrates its efforts on the efficient
performance of a number of fundamental functions, including:
• Landlord and performance monitoring function
• Policy-making, planning and development function
• Traffic control, regulatory and surveillance function
• Marketing, public relations and promotion function
• Governments (and port authorities) also retain the responsibility for
formulating a policy and/or regulatory reform agenda to serve as an
effective basis for private sector involvement, which have often
included difficult and transforming legislative, institutional and
procedural changes.
8
Governments benefit from Private Sector Participation
• Potential for new revenue streams for governments
• Access to private sector financing freeing Government budgets for
social sectors
• Introduction of Experienced Management and International Trade
Benefits
• Higher Efficiency through the involvement of the private sector
• Platform for Government Trade Strategies: Establishing a supportive
environment and platform for an export-focused economy, and
lowering the artificial costs of imported raw materials.
9
Agenda
Overview of IFC’s Advisory Services
Private Sector Participation in the Port Sector
IFC Approach to PPP Transactions
IFC Experience in Port Transactions
10
Full package of advisory services
Development of Privatisation Strategy
Define Project
Scope
Project
Coordination
Implementation &
Closure of Strat. Inv.
Market
Opportunity
Lead
Advisor
Develop
Structuring
Plan
st
ecialiEnvironmental,
sp
Tech,
aLegal, Financial &
Regulatory Review
Financial
Analysis
Develop Strategic
Options
11
OurApproach
Phase I: Preparation
Step 1
Mandate Design
Mandate
TORs
Work Plan
Trust Funds
Consultants
Kick-off
Scope
Phase II: Implementation
Step 2
Step 3
Diagnostic
Enabling Reforms
Legal (new laws)
Regulatory (agency)
Fiscal reforms
Triage
Retrenchment
Inst. Reinforcement
Communication
Financing
Legal due diligence
Technical diagnosis
Market conditions
Demand projections
Capital investment
Regulatory framework
Potential investors
Strategic options
Options
Framework
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Step 4
Transaction
Pre-qualification
Info Memo
Data Room
Due diligence
Draft Contracts
Negotiations
Call for tender
Award
Closing
Transaction
Agenda
Overview of IFC’s Advisory Services
Private Sector Participation in the Port Sector
IFC Approach to PPP Transactions
IFC Experience in Port Transactions
13
Case Study # 1
Concession of a Container Terminal
Port of toamasina, Madagascar
14
Toamasina – Map and Location
15
Transaction Structure (Cont’d)
• Expected returns to Madagascar over the 20 years of the concession: efficiency
gains, international best practices, investments
• Estimated financial returns to Madagascar: US$ 300 million in investments and
concession fees.
• Tariff reduction: 20% (handling) and 10% for reception & delivery
• Obligation to keep 350 employees for 5 years
• Operator’s Obligations backed up by Performance Bond over the lifetime of the
concession
• June 2005: ICTSI Wins Madagascar Port Bidding
• October 2005: Contract signing ceremony
• Upfront payment (including asset acquisition): €10 million
• US$36 million invested in container handling equipment
16
Toamasina – After Concession
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Case Study #2
Concession of a Container Terminal
Port of Cotonou, Benin
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Port of Cotonou - Benin
• Benin located to west of Nigeria.
• Small seacoast but road links to
landlocked Mali, Niger, Burkina Faso
• Current throughput of 300,000 teu /6.05
million tons.
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Port of Cotonou – PPP Timetable
• Nov 4, 2008 - IFC signed mandate with Government of Benin

US$169 million grant by US Millennium Challenge Corp for port infrastructure
required private operator for container terminal

MCC grant included 550 meter wharf for 540,000 teu container terminal
• Nov 2008 - May 2009 - Market & technical studies, concession design
• May- June-July 2009 – Prequalification- Bid Preparation. Bid criteria published:
Highest NPV for upfront payment and guaranteed annual throughput charges.
• August 2009 - Groupement Bollere awarded 25-year concession.
• September 2009 - Concession contract signed. Terms included:
 Upfront payment of US$33 million, $29/teu throughput charge
 Investments first 5 years: US$42 million civil works/US$70 million equipment
 Minimum volume guarantees (400,304 Year 1 to 723,056 Year 8)
 Minimal tariff regulation. Flexible labor policies.
 Government obligation to deepen and dredge channel
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IFC Infrastructure Advisory Services
– Port Projects
Completed mandates
On Going Mandates and
• 2009- Cotonou Port
• 2011- Nouakchott PortMauritania
• 2008 – Durres Port - Albania
• 2006- Toasmasina Port Madagascar
• 2010- Vinzhijam Port, kerala
– India
• 2008- Port Louis- Ile Maurice
• Potential mandates
• Bulk Terminal- India
• 2001 – Suape Port - Brazil
• Bar Port- Montenegro
• Central America - 2 Ports
• Caribbean
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TO CONTACT US:
•Afrique Sub-Saharienne
14 Fricker Road
Illovo 2196
Johannesburg
South Africa
Tel: (27-11) 731-3000
Fax: (27-11) 325-0582
•Siège
2121 Pennsylvania
Avenue, N.W.
Washington, D.C. 20433
USA
Tel: (202) 473-3800
Fax: (202) 974-4384
•Emmanuel Nyirinkindi
Manager Sub-Saharan Africa,
Telephone: (27) 11 731 3068
E-mail: [email protected]
•Méhita Sylla Fanny
Senior Investment Officer
Telephone: (27) 11 731 3180
E-mail: [email protected]
•Ramatou Magagi
Senior Investment Officer
Telephone: +1 202 473 3954
E-mail: [email protected]
THANK YOU!!!