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Development Bank of Southern Africa Funding Project Preparation Piet Viljoen

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Title: Development Bank of Southern Africa Funding Project Preparation Piet Viljoen


1
Development Bank of Southern AfricaFunding
Project PreparationPiet Viljoen
  • Joint Commonwealth Secretariat/SADC-DFRC Workshop
  • Harnessing Existing Facilities to Promote PPPs
    for Infrastructure Investment and Service
    Delivery in SADC
  • IDC
  • Sandton
  • 5-6 December

2
  • The Cambridge document finds
  • Availability of finance is not necessarily the
    main obstacle frustrating flows of commercial
    investment into infrastructure PPPs in PCCs.
    Indeed, the constraints often occur earlier in
    the project cycle. They are principally related
    to (i) a weak contractual environment in PCCs
    and (ii) a general paucity of well structured and
    economically robust infrastructure projects.

3
CONTENTS
  • The AfD/DBSA PPFS Facility
  • Lessons of Experience
  • AfD/DBSA/AfDB Cooperation
  • Significant developments
  • Tunnel of Funds Concept
  • ICA Channelling G8 Pledges
  • SADC ICP Forum
  • Planning Africas infrastructure needs
  • Conclusions
  • Annexure PPFS Projects

4
AFD/DBSA PPFS Facility
  • Background to the establishing of the Facility
    NEPAD support
  • OAU accepted NEPAD as Africas principal agenda
    for development (2001)
  • The lack of Infrastructure in Africa was
    identified as one of the main constraints that
    handicaps growth and economic development
  • The development of infrastructure projects to
    financial and legal closure is a major drawback
    in the implementation of the NEPAD Programme
  • The DBSA and AfD responded by establishing a
    joint PPFS Facility to assist with the project
    development work

5
OBJECTIVE of the PPFS
  • The PPFS focuses on the development of
    infrastructure projects by making grant funding
    available for the preparation and/or feasibility
    studies of such projects

6
MANAGEMENT / FUNDING ARRANGEMENT
  • A joint Facility (in respective currencies) on a
    5050 basis, to the equivalent of ZAR25 million
    over a 3 year period
  • A Steering Committee comprised of senior staff
    from DBSA AFD Regional Office SA
  • DBSA provides the secretariat function to the
    Facility
  • DBSA manages the projects according to DBSA
    policies, principles and processes

7
PROJECT SELECTION CRITERIA
  • Registered NEPAD project
  • REC/National priority
  • Regional impact/integration
  • PPP
  • Falls within priority infrastructure sectors
  • Transport (road, air, ports, rail)
  • Energy (generation, transmission, distribution
    renewable)
  • Water and Sanitation
  • Information and Communication Technologies (ICT)
  • Maximum contribution per project 300 000

8
LESSONS OF EXPERIENCE
  • At PPFS level
  • Substantial inputs required to produce bankable
    projects
  • Project preparation a stop-start process because
    of the lack and continuous funding of various
    elements of project preparation
  • Establishment of legal entities (SPVs) to manage
    regional projects is difficult (time delays up to
    more than a year)
  • Little capacity on continent to manage large
    scale regional projects
  • PPFS limit per project (currently 300 000) leads
    to time delays to source other financiers
  • Lack of capacity to bring projects to financial
    closure (PIM), therefore
  • Use of Transaction Advisors (solicitation
    process) which is expensive, plus clients require
    additional support/advice from financiers during
    this process

9
LESSONS OF EXPERIENCE (cont)
  • At project implementation level
  • Many facilities/funds available with diverse
    terms and conditions this further exhausts the
    limited capacity
  • Need more publicity and promotion of the PPFS
    Facility
  • Lack of coordinated information on what is
    available from where and for what

10
  • What other significant developments around
    funding mechanisms?

11
AfD/DBSA/AfDB Cooperation
  • AfDB/Canada Infrastructure Preparation Facility
  • March 2006 Cooperation agreement
  • Joint funding
  • Application formats
  • Appraisal processes
  • Procurement procedures
  • Project Pipeline Development
  • Joint Mission to establish top priority SAPP
    generation, transmission and reticulation

12
TUNNEL OF FUNDS
Private only
Japan (EPSA)
INFRACO 20m USD
PPP Private
PPIAF 6m USD/year
PPIAF
Japan (FAPA)
PPP only
DEVCO 25m USD
ADB - NEPAD IPPF 7m USD
IPPF
Public PPP
Japan (outside facilities)
Japan
ACGF WB 9m USD
Public only
Norway
Norway
All
EIB
EIB lt60 m EUR/2 yrs
AFD DBSA - NEPAD PPFS 25m ZAR
Project financing
Enabling Environ- ment
Pre- feasibility Studies
Feasibility Studies
Detailed design
Project Packaging Advisory Services
Assistance In Deal Making
Project Scoping/ Finding Owner
13
Infrastructure Consortium of Africa
  • Glen Eagles G8 Summit Pledges to double ODA by
    2013
  • ICA to facilitate IFI cooperation in regional
    infrastructure provision
  • ICA also to source and channel funding for
    infrastructure development
  • Forthcoming Berlin meeting to focus on
    cooperation, channeling of funding and project
    level development

14
SADC ICP Forum
  • Paris Declaration on Donor Harmonization
  • SADC International Cooperating Partner Forum
  • Windhoek Declaration on New partnership for SADC
    Regional Integration
  • Optimal allocation of donor support to SADC
    Secretariat
  • Needs assessment for capacity building

15
Planning Africas Infrastructure Requirements
  • Donors and IFIs need to read off the same book
  • NEPAD Medium to Long Term Strategic Framework
  • SAPP, WAPP, etc
  • SADC Infrastructure Master Plan
  • WESTCOR - Inga
  • SDI Programme Mtwara
  • Trans-frontier Parks

16
Conclusions
  • Legal and regulatory environment, political
    support and project specific SPVs
  • Project management capacity at Facility, REC and
    MS level
  • Focusing of funds to gaps in the Tunnel of Funds
  • Cooperation between Funds and Facilities to
    ensure smooth movement through tunnel of funds
  • ICA well placed to coordinate interventions

17

ANNEXURE 1LIST OF AFD/DBSA PPFS
FACILITY PROJECTS
  • Screening of NEPAD projects for the SADC RISDP
    (completed)
  • Scoping and profiling of SADC Projects and
    programmes
  • AFD/DBSA ZAR758 700
  • Kenya/Uganda Oil Pipeline (under implementation)
  • Total cost US1,7 m
  • EIA Transaction Advisor
  • AFD/DBSA US300 000
  • Co-funding with AfDB US500 000
  • Balance from sponsor
  • East Africa submarine cable systems (EASSy) (FS
    completed)
  • Total Cost US923 300
  • Feasibility Study plus Addendum for clarity on
    open club
  • AFD/DBSA US192 210
  • Co-funding with IFC (US231 090)
  • AfDB EIA Transaction Advisor 500 000

18
LIST OF AFD/DBSA PPFS FACILITY PROJECTS (cont)
  • Limpopo Transfrontier Park capability map for
    the support zone (under implementation)
  • AFD/DBSA Euro175 377
  • FS to determine feasible project for the support
    zone of the Park
  • Zambia/Tanzania Energy Interconnector (under
    implementation)
  • Total cost US1,7 m
  • Solicitation Process
  • AFD/DBSA US300 000
  • Co-funding with AfDB US500 000
  • Balance from PIAFF own sources

19
LIST OF AFD/DBSA PPFS FACILITY PROJECTS (cont)
  • Benin-Togo-Ghana Energy Interconnector (under
    impl)
  • Total cost US1,344 m
  • Feasibility Study
  • AFD/DBSA US300 000
  • Co-funding with AfDB US500 000
  • Balance from own resources
  • COMTEL
  • Total cost US1,879 m
  • Feasibility Study
  • AFD/DBSA 300 000
  • Co-funding with AfDB 500 000
  • Balance from own resources

20
LIST OF AFD/DBSA PPFS FACILITY PROJECTS (cont)
  • Eastern and Southern Africa Harmonisation
    workshop on ICT Programme
  • Rationalisation of ICT Programme
  • WB 15 000 AFD/DBSA 22 000 DBSA ZAR70 000
  • West and North Africa Harmonisation workshop on
    ICT Programme
  • Rationalisation of ICT Programme
  • AFD/DBSA 50 000

21
LIST OF AFD/DBSA PPFS FACILITY PROJECTS (cont)
  • Djibouti Yemen Electrical Interconnection
    Pre-feasibility Study (completed)
  • Pre-feasibility study
  • Euro 20 000
  • Energy Interconnector to Cabinda - Point Noire
    Inga (Prep)
  • Total cost US1 m
  • Feasibility and Design Studies
  • AFD/DBSA US300 000

22
LIST OF AFD/DBSA PPFS FACILITY PROJECTS (cont)
  • COM 7 (completed)
  • Total cost Euro 397 900
  • Feasibility Study
  • AFD/DBSA Euro 230 800
  • Balance from own resources
  • Eastern Africa NEPAD Infrastructure Programme
    (under impl)
  • Scoping Programming of Priority Projects
  • 120 000
  • COMESA NEPAD Infrastructure Programme (under
    impl)
  • Scoping Programming of Priority Projects
  • 200 000

23
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