Success Stories infrastructure advisory This series provides an overview of successful public-private partnerships in various infrastructure sectors, where IFC was the lead advisor. Infrastructure Advisory Services 2121 Pennsylvania Avenue NW Washington DC 20433 Water ifc.org/infrastructureadvisory 53172 Egypt: New Cairo Wastewater Egypt's first public-private partnership will have a major impact on the quality of basic services in a satellite city on the outskirts of Cairo. With IFC's help, the government has awarded a landmark concession for a wastewater treatment facility that will improve sanitation services in New Cairo, as well as accommodate projected population growth. The project was awarded in June 2009. A consortium of Egypt's Orascom Construction Industries and Spain's Aqualia (Orasqualia) won the bid for a public-private partnership (PPP) to build, operate and transfer (BOT) a 250,000 m³/day treatment plant, which is expected to mobilize private investments totaling US$150­200 million. The government has made the development of New Cairo's infrastructure a priority because the area's population is expected to jump from 550,000 to approximately 3 million over the next 20 years. The advisory work was supported by DevCo, a multi-donor program affiliated with the Private Infrastructure Development Group. DevCo is funded by the UK's Department for International Development, the Dutch Ministry of Foreign Affairs, the Swedish International Development Agency, and the Austrian Development Agency. Background and a commercial bid, which was limited to those bidders whose New Cairo City, a satellite town of Greater Cairo, is being technical offers had been accepted. promoted as one of the new centers to alleviate overcrowding The winning bidder was selected on the basis of the lowest Net in the city center. New Cairo's current population of 550,000 Present Value of the overall Sewage Treatment Charge throughout is expected to increase to approximately 3 million by 2029. the concession period. Since electricity costs are a pass through The rapid population growth and inadequate water sanitation item, bidders were asked to quote their projected electricity infrastructure are placing serious strains on the city's ability to consumption levels to ensure energy conservation. The estimated provide adequate services. electricity costs were added to the Sewage Treatment Charge to The Government has made the expansion and improvement of select the winning bidder. New Cairo's infrastructure a priority and sought IFC's help to The Egyptian-Spanish consortium submitted the lowest financial develop and implement a model PPP that can be replicated in bid and was awarded the contract in June 2009. other infrastructure projects. Public-private partnerships are at the heart of the Government's long-term economic development strategy, together with the mobilization of private sector finance expecTed posT-Tender resulTs and know-how. · First successful transaction under the Government's PPP program and model for future PPPs. IFc's role The Government appointed IFC as its lead advisor for the · Mobilization of US$150­200 million in private structuring of the New Cairo Wastewater Treatment Plant investment. transaction and international competitive tendering. IFC · New wastewater treatment plant will be completed supervised a team of specialized technical, environmental and legal experts who undertook technical, financial, and legal due by January 2012. diligence to recommend the most commercially and technically · Approximately three million people in New Cairo viable transaction structure. IFC also played a leading role in will benefit from improved infrastructure and bet- marketing the project, prequalifying potential investors according ter service quality over the life of the project. to established financial and technical criteria, drafting bidding documents, selecting the winning bidder, and overseeing the · Demonstration effect: Regional and international financial closure process. investors attracted to Egypt's PPP market. TransacTIon sTrucTure The selection process included an initial prequalification of prospective bidders based on financial and technical criteria, such as minimum net worth and experience with BOT projects, especially similar wastewater treatment plants. The government received 10 applications and seven bidders were prequalified. The transaction was structured as a 20-year PPP concession agreement. The private partner will design, finance, construct, operate, and maintain a new wastewater treatment plant with a capacity of 250,000 m³/day. In return, the government will pay a Sewage Treatment Charge that includes a fixed portion to cover the investor's fixed costs (such as debt servicing and return on equity) and a variable portion based on the actual volume of treated sewage, to cover the investor's variable costs. In addition, electricity costs will be paid by the New Urban Communities Authority (the offtaker) as a pass-through item. The credit of the New Urban Communities Authority is underpinned by the Photo by Noaman Ali Ministry of Finance. 10/2009 BIddIng The project attracted five bids from consortia comprised of local, regional, and international firms. Bidding was organized in two steps: a technical bid, which was evaluated on a "pass/fail" basis, Printed on 100% recycled, 100% post-consumer, chlorine-free paper.