47502 2008 Annual Report Helping to eliminate poverty and achieve sustainable development through public-private partnerships in infrastructure 2008 Annual Report | i Contents PPIAF at a glance3 Message from the program manager6 1. Emerging trends9 Growing diversification in private participation9 The role of PPIAF11 2. Program operations and outcomes14 Distribution of program activities in fiscal 200814 Outcomes of PPIAF-funded activities17 3. Regional and global activities in 200819 Sub-Saharan Africa19 East Asia and Pacific25 South Asia29 Middle East and North Africa33 Central Asia and Europe34 Latin America and the Caribbean37 Global knowledge management40 Outreach and dissemination43 4. Program finances45 Finances and resource mobilization45 Single audit process49 Annex 1Governance structure50 Annex 2Activities funded in fiscal 200854 Acronyms and abbreviations69 ii | 2008 Annual Report 2008 Annual Report Helping to eliminate poverty and achieve sustainable development through public-private partnerships in infrastructure © 2009 The International Bank for Reconstruction and Development / The World Bank All rights reserved. The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Public-Private Infrastructure Advisory Facility (PPIAF) or the Board of Executive Directors of the World Bank or the governments they represent. Neither PPIAF nor the World Bank guarantees the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of PPIAF or the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this work is copyrighted. Copyright is held by the World Bank on behalf of both the World Bank and PPIAF. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including copy- ing, recording, or inclusion in any information storage and retrieval system, without the prior written permission of the World Bank. The World Bank encourages dissemination of its work and will normally grant permission promptly. For all other queries on rights and licenses, including subsidiary rights, please contact the Office of the Publisher, World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. Photo credits: ©World Bank 2 | 2008 Annual Report PPIAF at a glance T he Public-Private Infrastructure Advisory · Itidentifies,disseminates,andpromotesbest Facility (PPIAF) is a multidonor technical practices in matters relating to public-private assistance facility that helps developing coun- partnerships in infrastructure and subna- tries in using public-private partnerships to im- tional borrowing. prove the quality of their infrastructure and thereby reduce poverty. Launched in July 1999, PPIAF was developed as a joint initiative of the What support is available? governments of Japan and the United King- dom, working closely with the World Bank. It PPIAF can finance a range of advisory and was built on the World Bank Group's Infra- related activities in a single country or across structure Action Program and designed to rein- multiple countries. These activities include the force the actions of all participating donors. following: PPIAF's membership today includes bilater- al and multilateral development agencies and · Framinginfrastructuredevelopmentstrate- international financial institutions. Owned and gies to take full advantage of the potential directed by its participating donors, PPIAF is for private involvement governed by a Program Council made up of · Building consensus on appropriate policy, representatives of these donors, and managed regulatory, and institutional reforms by the World Bank through a Program Man- agement Unit. · Designingandimplementingspecificpolicy, regulatory, and institutional reforms · Supportingthedesignandimplementation How PPIAF pursues its mission of pioneering projects and transactions PPIAF helps developing countries improve · Buildinggovernmentcapacitytodesignand their infrastructure through three main mecha- execute private infrastructure arrangements nisms: and regulate private service providers · It offers governments technical assistance · Buildingcreditworthinesstoaccessfinanc- on strategies and measures they can use to ing without sovereign guarantees tap the full potential of public-private part- PPIAF support can facilitate public-private part- nerships in infrastructure. nerships for financing, owning, operating, reha- · Itprovidestechnicalassistancegrantstosub- bilitating, maintaining, or managing eligible national entities to help them improve their infrastructure services in a variety of sectors: creditworthiness and mobilize financing. roads, ports, airports, railways, electricity, tele- 2008 Annual Report | 3 communications, solid waste, water and sewer- An application form for PPIAF support can age, and gas transmission and distribution. be downloaded from the PPIAF Web site Countries eligible for PPIAF-financed assis- (http://www.ppiaf.org) or requested from the tance are developing and transition economies Program Management Unit. Proposals are as- as classified by the Development Assistance sessed against the criteria specified in PPIAF's Committee of the Organisation for Economic charter, available on the PPIAF Web site or on Co-operation and Development. Entities eli- request from the Program Management Unit. gible for PPIAF's Sub-National Technical Assistance Program include municipal, state, provincial, and other local and regional au- How PPIAF delivers services thorities as well as publicly owned utilities and boards, funds, agencies, and authorities re- PPIAF-financed activities make extensive use sponsible for providing infrastructure services. of consultants, with procurement governed by World Bank guidelines. More information about procurement arrangements and consul- How to apply for PPIAF support tancy opportunities is available on the PPIAF Web site at http://www.ppiaf.org. Applications for PPIAF support may come from any source. For country-specific activi- ties, however, the beneficiary government How PPIAF ensures must approve all requests for support. For consistency with its mission multicountry activities designed to directly benefit a small number of easily identifiable PPIAF requires that all activities it finances be countries, the relevant governments must give consistent with its overarching objective of written approval. helping to mobilize public-private partnerships to reduce poverty and achieve sustainable development. 4 | 2008 Annual Report How to contact PPIAF PROGRAM MANAGEMENT UNIT WEST AND CENTRAL AFRICA c/o The World Bank MIDDLE EAST AND NORTH AFRICA 1818 H Street NW REGIONAL COORDINATION OFFICE Washington, DC 20433 Corniche Ouest X Leon Gontran Damas USA BP 3296 Tel: (+1) 202 458 5588 Dakar, Senegal Fax: (+1) 202 522 7466 Tel: (+221) 33 859 4100 E-mail: ppiaf@ppiaf.org or snta@ppiaf.org Fax: (+221) 33 825 1518 E-mail: dakarrco@ppiaf.org EAST AND SOUTHERN AFRICA REGIONAL COORDINATION OFFICE SOUTH ASIA Kenya Re Towers CENTRAL ASIA AND EUROPE Upper Hill, P.O. Box 30577 REGIONAL COORDINATION OFFICE Nairobi, Kenya 50M, Shantipath Tel: (+254 20) 271 4095 Chanakyapuri Fax: (+254 20) 271 4275 New Delhi 110 021 E-mail: nairobirco@ppiaf.org India Tel: (+91 11) 411 77 801 EAST ASIA AND PACIFIC (+91 11) 411 77 850 REGIONAL COORDINATION OFFICE Fax: (+91 11) 411 77 849 Floor 23 Taipan Place E-mail: delhirco@ppiaf.org F. Ortigas Jr. Rd., Ortigas Center Pasig City, Metro Manila Philippines Tel: (+63 2) 637 5855 (+63 2) 917 3000 Fax: (+63 2) 637 5870 E-mail: manilarco@ppiaf.org 2008 Annual Report | 5 Message from the program manager T oday's global economic turmoil presents efficiently, nor barriers to knowledge be elimi- new challenges that make PPIAF's mission nated, without modern telecommunications more relevant every day: to equip developing networks. countries with the tools to improve and expand A new set of challenges calls for new ways of access to infrastructure. partnering with the private sector, and PPIAF is The months ahead promise to be trying ones responding. A new Non-Core Fund window for infrastructure projects in developing coun- will be aimed at supporting activities that have tries. Existing projects may undergo a period of climate change impacts. Another major new stress as the economic climate changes assump- PPIAF initiative, the Sub-National Technical tions about costs and revenues. New projects Assistance (SNTA) Program, offers assistance to will find it more difficult to obtain financing as subnational entities to increase their direct ac- private partners shy away from risk and govern- cess to financing from private sources such as ments face new budget constraints. And govern- capital markets, banks, and other commercial ments will be forced to rethink economic regula- lenders (box 1). SNTA Program grants are help- tion across the board. ing subnationals achieve credit ratings, improve As existing projects are tested by the stress of their creditworthiness, and conclude financing changing market conditions, new importance transactions. PPIAF will also remain in close will be placed on post-transaction support. And communication with donors and international as new projects deal with tightened credit mar- financial institutions about changes in technical kets, there will be a need for innovative project assistance priorities that may result as the global models and financing arrangements. Financing economic crisis begins to affect private partici- new projects may mean greater engagement pation in infrastructure. with nontraditional financiers: non-OECD in- Both the SNTA Program and the traditional vestors, private equity partners, or sovereign PPIAF activities focus heavily on upstream work wealth funds. PPIAF can provide the resources to strengthen enabling environments for private to help governments cope with the changing participation and to demonstrate the bankabili- landscape of infrastructure finance and evolving ty of projects through early-stage preparation. regulatory needs. Sub-Saharan Africa is one region where up- Even in the face of rapidly shifting priorities, stream work is critically needed. Because of its infrastructure remains the basis for any develop- many small, poor countries, large regional infra- ment agenda. High food prices cannot be allevi- structure projects make financial and economic ated without good roads, efficient ports, and sense. But such projects are difficult to prepare, effective irrigation systems. The adverse effects especially when legal and regulatory frame- of climate change cannot be reduced or miti- works have not been harmonized across coun- gated without new ways to meet energy and tries. PPIAF's work in Africa has systematically transport needs. And markets cannot function supported transnational projects, including 6 | 2008 Annual Report through activities aimed at harmonizing regula- supported a groundbreaking research program, tion and strengthening regional project prepara- the Africa Infrastructure Country Diagnostic, tion facilities, drawing on experience from simi- the first comprehensive review of infrastructure lar efforts around the globe. financing needs in the region. To help counter- PPIAF concentrates about half its technical part governments meet their information needs, assistance activities in Africa, but demand for PPIAF has worked with partners such as the In- PPIAF services has boomed in other regions as frastructure Consortium for Africa to put to- well. In South Asia, India has emerged as the gether a series of basic guides and manuals on leading recipient worldwide of private invest- preparing and financing public-private projects. ment in infrastructure, largely because of its And it has supported pioneering research on the strong economic growth and supportive govern- role in Africa of emerging financiers such as ment policies. In middle-income regions such as China and India. Latin America, where many countries already Assessing the outcomes of technical assis- have well-developed capacity to prepare and tance grants is a critical part of PPIAF's mission. manage public-private partnerships in infra- This past year the Program Management Unit structure, technical assistance needs have shifted undertook a full review of outcomes from all more to the SNTA Program side. In all regions activities, finding that 83 percent had achieved the global financial crisis is likely to mean more their intended result. PPIAF also stepped up its PPIAF work to help governments understand outreach efforts by launching a new Web site the contingent liabilities they face on existing and expanding the Gridlines series of four-page infrastructure projects, assist with the restruc- technical notes. Another important develop- turing and renegotiation of projects in distress, ment this past year was implementation of the and maintain the momentum of project prepa- Program Council's decision to commission a ration pipelines. strategic review of the PPIAF program, which Filling gaps in information is often a neces- will produce recommendations to help shape sary first step toward filling gaps in infrastruc- the program's future directions. ture. This past year PPIAF has given particular PPIAF is celebrating its 10th anniversary in attention to its knowledge management priori- 2009. The program's challenges today seem just ties, which include gathering data on public- as dramatic as they did 10 years ago in the wake private partnerships, disseminating best prac- of the Asian financial crisis. In the years ahead tices, and analyzing factors critical to the success PPIAF will continue to help developing coun- of infrastructure finance. In Africa PPIAF has tries meet new challenges as they arise. PPIAF Program Manager Jyoti Shukla Before joining PPIAF in January 2004, Jyoti built up extensive experience at the World Bank in in- frastructure strategies, regulatory reform, and private sector development and worked in Chi- na, India, and many countries of Latin America and the Caribbean. 2008 Annual Report | 7 Box 1 The Sub-National Technical Assistance Program-- PPIAF's newest major initiative PPIAF launched the Sub-National Technical As- Building viable development finance institutions in sistance (SNTA) Program in July 2007 to help southern Africa subnational government entities improve their Development finance institutions in Africa have gener- creditworthiness so that they can access market- ally played a minor role in mobilizing finance for infra- structure projects. To strengthen the viability of devel- based financing for infrastructure directly--with- opment finance facilities in southern Africa, an SNTA out sovereign guarantees. The three-year pilot Program activity has helped a select group of these program offers technical assistance to a wide va- facilities improve their creditworthiness and credit riety of subnational government entities, includ- ratings by restoring sound management and lending ing municipal, state, provincial, and other local principles. and regional authorities as well as publicly owned Helping Karnataka access finance for new highways utilities and boards, funds, agencies, and other In India the Karnataka state government launched a special-purpose government bodies responsible massive road improvement program in 2000 that is for providing infrastructure services. The aim is well beyond its ability to finance from budgetary or do- to help such entities mobilize capital for improve- nor resources. The SNTA Program is helping state offi- ments in infrastructure services and promote the cials explore market-based financing options to supple- development of local financial markets. ment existing sources. Initial funding for the program was provided Strengthening creditworthiness in Ukraine to by the U.K. Department for International Devel- improve heating services opment, the International Finance Corporation, Ukraine is one of the least energy-efficient countries in and the World Bank (through its Development the world and has one of the highest carbon dioxide Grant Facility). Additional resources have been emission levels relative to GDP. In an effort to modern- pledged by other donors. ize and improve the efficiency of their heating utilities, two cities in Ukraine are looking to use subnational fi- By working with government clients to help nance. The SNTA Program is working with the two cit- them access infrastructure finance directly, rath- ies to help strengthen their ability to guarantee borrow- er than indirectly through public-private part- ing by their heating utilities, opening the way to improve nerships, the SNTA Program adds a second im- heating services in the cities. portant set of infrastructure financing options to those provided by PPIAF. With two sets of op- Helping low-income communities access credit In Guatemala some commercial banks have begun lend- tions to choose from, PPIAF clients have a com- ing to community-based organizations for improved in- prehensive and balanced way of finding optimal frastructure services. But the perceived risks limit the solutions to infrastructure finance problems. amount of capital that banks are willing to make avail- As these examples show, SNTA Program ac- able. The SNTA Program is helping the government de- tivities approved for funding in fiscal 2008 cover sign a guarantee facility to ensure continued lines of microcredit for basic infrastructure and housing. a range of needs. Supporting a water utility bond issue in Uganda The SNTA Program has helped the National Water and James Leigland Sewerage Corporation of Uganda prepare a municipal bond issue for sale in the domestic capital market. The Team Leader for the Sub-National bond issue is designed to support much-needed new Technical Assistance Program infrastructure investments and expand the financing options available to the utility in the long term. 8 | 2008 Annual Report 1. Emerging trends B efore the financial market turmoil in the Low-income regions playing fall of 2008 and the growing prospects for stronger roles a sharp economic slowdown in developing Low-income countries attracted a growing countries, private investment in infrastructure in share of investment commitments in the devel- thedevelopingworldhadbeenslowlyapproach- oping world, rising from 7 percent in 1996­ ing the peak levels of the mid-1990s. Investment 2000 to more than 23 percent in 2004­06. In- commitments to infrastructure projects with dia, a low-income country, led the developing private participation grew for the fourth con- world in investment commitments to infra- secutive year in 2007, reaching US$158 bil- structure projects with private participation. It lion--almost 10 percent higher than the levels attracted 19 percent of such commitments in achieved before the Asian financial crisis in 2007, up from 13 percent in 2001­06 and 5 1997, according to the PPI Project Database percent in 1996­2000. Telecommunications (box 2). Investment levels are likely to fall start- was a big driver of the investment growth in ing in 2009. PPIAF will continue to offer assis- India, as was transport, with new toll road tance tailored to clients' emerging needs. projects and airport concessions. Africa was also attracting much more pri- vate investment, with the region's investment Growing diversification in commitments in 2001­06 almost three times private participation those in 1995­2000. While telecommunica- tions accounted for much of this growth, in- A particularly encouraging feature of the 2005­ vestment commitments also increased in such 07 data showing growth in new investment sectors as transport. commitments was the diversification across a wider range of countries and investment sourc- Changing profile of risk allocation es. By the end of 2007 investment was more The growth in investment commitments was evenly spread across regions than ever before, driven by a changing mix of risk allocation with South Asia and the Middle East and North mechanisms. The recovery in private investment Africa becoming new leaders in attracting in- in infrastructure was concentrated in relatively vestment and Sub-Saharan Africa seeing its low-risk activities. Investment grew in areas share of investment grow. New financiers con- with booming demand--in competitive markets tinued to expand their presence in infrastruc- (telecommunications) and in sectors crucial ture sectors, with the number of infrastructure to competitiveness (transport). Investors also financing facilities increasing and investment favored activities in which revenues could be by non-OECD financiers such as China and In- secured through long-term wholesale contracts dia growing rapidly, especially in Africa. (electricity generation or water treatment plants) 2008 Annual Report | 9 Box 2 Continued growth in private participation in infrastructure in 2007 The growth in investment commitments to infra- of this growth was related to India's program of public- structure projects with private participation for private partnerships in transport, which reached clo- the fourth consecutive year in 2007 confirmed sure on 31 projects (mostly for highways) in 2007, and to Mexico's new road concession and public-private a market rebound after several years. The 2007 partnership programs. data from the PPI Project Database indicate that investment commitments grew by 24 percent in Energy recovered strongly real terms, reaching a new peak at US$158 bil- Energy investment doubled in 2007, with new com- lion. This growth was fueled largely by a reas- mitments reaching about US$50 billion. Independent sessment of risks in infrastructure projects and, power producer (IPP) projects drove this impressive growth, accounting for 80 percent of the total for the in many cases, a reallocation of those risks be- sector. This trend reflected the private sector's interest tween the public and private partners. in new wholesale facilities, with projects secured by risk mitigation mechanisms such as guaranteed off-take Telecommunications again the strongest sector agreements. Telecommunications continued to dominate recorded investment commitments, with US$75 billion in 2007, Water and sanitation projects continued to grow or 47 percent of the total. This share was smaller than The number of water projects with private participation those of previous years, however, and new investment reached an all-time high of 62 in 2007. These projects commitments became more widely dispersed across accounted for investment of more than US$3.2 billion, regions and countries. Investors in the sector faced rela- 18 percent higher than the level in 2006. Even so, this tively low risks because the lumpy investments were rel- sector continued to attract less private investment than atively inexpensive and full cost recovery was the norm, any other infrastructure sector, and private partners re- leading to robust cash flows and adequate profits. mained highly selective in their choice of countries and projects. Two-thirds of the projects counted in 2007 in- Transport investment remained stable volved the construction or operation (or both) of bulk Transport investment stayed at peak levels, with new treatment facilities. commitments of almost US$30 billion in 2007. Much rather than by retail payments from end users. increase in use after more than a decade in de- In contrast, investment remained limited where cline. Management contracts were increasingly social and political difficulties hampered the in- being used as a way to involve private partners troduction of cost-recovery tariffs (water and without the investment risks that they normally electricity distribution). face in long-term public-private partnerships. Management contracts were also being used as a Greater pragmatism in partnership mechanism for technical assistance to help public arrangements providers learn how to improve service through Through 2007 and early 2008 public-private commercial and managerial innovation. partnership arrangements continued to rely on a wide array of options, including many hybrid so- Changing mix of sponsors and lutions. Besides greenfield options such as build- operators operate-transfer and build-own-operate con- The 2007 data from the PPI Project Database tracts, brownfield concessions also showed some confirm a diversification of private sponsors and 10 | 2008 Annual Report operators, with private participation in infra- structure no longer dominated by large compa- nies from developed countries. Among the top 10 sponsors in 2001­06, only 3 were holdovers from the top 10 list in 1990­2000, and 4 were developing country investors. At the other end of the scale, small domestic operators also were playing a larger role. Tens of thousands of small- scale private service providers were active in the developing world by mid-2008, often serving low-income households in slums and periurban and rural areas. Non-OECD financiers playing a larger role By 2007 non-OECD financiers such as China, India, the Russian Federation, and the Arab states were also contributing to a changed land- scape of infrastructure finance in the developing world, especially in Africa. China, India, and the Arab states committed more than US$8 bil- lion to infrastructure and related projects in Af- rica in 2006, the latest year for which data are well as public-private partnerships. The turbu- available. In addition, growing anecdotal evi- lence in international financial markets is likely dence suggests that philanthropic organizations to make solutions to this problem even more were playing a larger role in infrastructure ser- challenging. vice improvements and investment. By early 2008 such organizations were estimated to be spending US$8.3 billion a year on international The role of PPIAF development work of all kinds. PPIAF has traditionally taken an active role in Growing decentralization helping developing countries improve their Increasing decentralization in the developing enabling environment for sustainable public- world has meant that subnational entities have private partnerships and design and monitor taken on greater responsibility for the delivery the sustainability of emerging public-private of infrastructure services. Decentralization has transactions. Through its new SNTA Program, been an important trend in middle-income PPIAF now also offers technical assistance to countries in Eastern Europe and Latin America help public utilities and subnational govern- and by 2007 was also beginning to play a role in ments with responsibility for infrastructure to Africa and East and South Asia. But subnational improve their creditworthiness. entities often lack the access to financial resourc- es or the capacity needed to carry out these Developing the enabling policy responsibilities effectively. Thus the trend to- environment ward greater decentralization has led to a ma- Whatever the institutional arrangement chosen jor subnational funding gap that needs to be for delivering infrastructure services, and what- addressed through subnational borrowing as ever the changing reality of global finance, an 2008 Annual Report | 11 appropriate policy, regulatory, and institution- be considered--from traditional public sector al framework and adequate capacity are criti- approaches to the full range of public-private cal for governments as they prepare to meet partnership arrangements. The global financial future infrastructure financing needs. PPIAF crisis may mean that more government or do- technical assistance helps governments evalu- nor money will be needed to help public- ate their policy frameworks for infrastructure private partnerships in infrastructure remain service delivery and for private participation to viable. PPIAF helps government clients explore allow effective public-private partnerships. In the ever-growing list of options to find the ar- all such activities PPIAF ensures that policy, rangements that are best and most sustainable regulatory, and institutional reforms maintain in their situation. a strong pro-poor focus on improving access, affordability, and inclusion. Helping public utilities access financing While public-private partnerships may be Offering a broad range of options appropriate in many cases, some public utili- To be effective, contractual solutions for pri- ties may choose not to enter into such arrange- vate participation in infrastructure must be tai- ments. When such utilities demonstrate lored to the circumstances and policy choices commercially oriented financial performance, of a country. Thus all contracting options must PPIAF offers help, through its SNTA Program, 12 | 2008 Annual Report in improving creditworthiness and accessing this often means helping governments develop market-based financing. Rising interest rates capacity to evaluate the contingent liabilities and declining government revenues may mean associated with these projects and monitor that borrowing programs should be delayed contract implementation. In addition, if exist- or restructured. The SNTA window allows ing contractual arrangements come under PPIAF to support the full range of financing stress and begin to need adjustment or renego- options for sustainable infrastructure. tiation, governments can ask PPIAF for assis- tance to evaluate and, if necessary, update risk Building government capacity sharing arrangements based on experience in PPIAF has continued to help clients develop other countries. their capacity to anchor project preparation in enhanced legal and regulatory environments. Sharing knowledge and experience In Africa much of this assistance has focused An important part of PPIAF's contribution to on helping to create or strengthen public- promoting public-private partnerships has private partnership units in such countries as been to gather and share global knowledge on Kenya, Malawi, Mauritius, Mozambique, emerging experience in key infrastructure sec- Nigeria, South Africa, and Uganda. If the glob- tors. As part of this effort, PPIAF sponsors the al financial crisis begins to threaten the viability PPI Project Database, one of the most widely of existing projects, and slow the preparation used sources of information on emerging trends of new projects, these centers of expertise in public-private infrastructure investment should help governments lessen the negative commitments, and has produced toolkits on consequences for infrastructure development public-private partnerships in different infra- in their country. structure sectors. PPIAF's robust global knowl- edge management portfolio also includes im- Providing post-transaction support portant analytical work on the impact of While PPIAF has traditionally been associated private participation in infrastructure, on the with upstream support for future contracts, emergence of non-OECD financiers, and on economic turmoil is forcing governments to options for improving infrastructure services in shift their focus somewhat toward ensuring the Africa. sustainability of existing contracts. For PPIAF, 2008 Annual Report | 13 2. Program operations and outcomes N ew funding commitments in fiscal 2008 While Africa's share of the SNTA Program amounted to US$23.3 million: US$17.9 funding, at 32 percent, was smaller than its million for PPIAF activities and US$5.3 million share of PPIAF support, it was still the largest for SNTA Program activities. Overall, 121 ac- regional share. Given the SNTA Program's focus tivities were approved in 50 economies: 97 un- on market-based financing, new commitments der PPIAF and 24 under the SNTA Program. are likely to be more evenly distributed across The grants averaged US$192,232 (US$184,951 regions and between low- and middle-income for PPIAF and US$221,661 for the SNTA Pro- countries. Within middle-income countries, gram). In addition, this past year the Program however, SNTA Program activities will focus on Management Unit analyzed the outcomes of all lower-income regions and activities with signifi- completed activities, finding that 83 percent of cant poverty reduction implications. activities aiming for measurable outcomes had achieved at least one outcome. Distribution by country income group A large share of PPIAF funding was again di- rected to poor countries in fiscal 2008, reflecting Distribution of program the continuing focus on Africa. About 59 per- activities in fiscal 2008 cent of PPIAF's country-specific grants were allocated to countries eligible to borrow from Distribution by region the International Development Association--or Funding to Sub-Saharan Africa accounted for IDA countries. This share is smaller than in pre- 45 percent of combined new country-specific vious years. But the reason for that is the large commitments from PPIAF and the SNTA Pro- number of regional and transnational activi- gram. From PPIAF 49 percent of new country- ties (not picked up in the country-specific specific support went to Africa, compared to funding numbers), most of which involve IDA 32 percent from the SNTA Program, which countries. tends to focus on middle-income countries. Some 24 percent of total PPIAF funding was This funding picture is reversed in regions directed to regional activities. More than half with a greater share of middle-income coun- those activities--53 percent, accounting for tries. Latin America received 27 percent of total US$2.3 million in funding--are Africa-specific SNTA Program support but only 8 percent of projects with large impacts on IDA countries. total PPIAF support (figure 1). The Middle These include support to develop regional East and North Africa received 9 percent of power pools, transport corridors, and, in Cen- PPIAF support, but has not yet received any tral Africa, a telecommunications backbone. SNTA support. For other regions the SNTA These regional activities also include support and PPIAF shares were about the same size. to a groundbreaking knowledge program in 14 | 2008 Annual Report Figure 1Distribution of PPIAF and SNTA Program portfolios by region, fiscal 2008 9 8 7 PPIAF 6 SNTA 5 millions 4 US$ 3 2 1 0 Sub- East Asia Central South Global Latin Middle Saharan and Asia Asia America East Africa Pacific and and the and Europe Caribbean North Africa Africa, including the Africa Infrastructure Figure 2Distribution of PPIAF and SNTA Program Country Diagnostic and a report on emerging portfolios by sector, fiscal 2008 financiers active in Africa, Building Bridges: China's Growing Role as Infrastructure Finan- 7 cier for Africa. 6 PPIAF From the SNTA Program, about US$3.2 mil- SNTA lion(60percent)wasallocatedtomiddle-income 5 countries eligible to borrow from the Interna- 4 millions tional Bank for Reconstruction and Develop- 3 ment (IBRD countries), while about US$1.1 US$ 2 million (20 percent) went to poorer IDA and IDA-blend countries. About US$1 million went 1 to regional and transnational activities (19 per- 0 cent). The smaller share of SNTA Program fund- or gy ing going to poor countries reflects the types of Ener Transport sanitation challenges the governments of these countries Multisect are expected to face as well as guidance from ommunicationsand PPIAF's Program Council to work toward a Telec Water 70/30 split between middle-income and low-in- come countries. Distribution by sector Multisector activities accounted for the larg- est share of the combined PPIAF and SNTA Program portfolio in fiscal 2008, at 44 per- 2008 Annual Report | 15 cent of funding (figure 2). This share reflects Telecommunications activities accounted for PPIAF's continuing focus on activities that about 5 percent of the combined PPIAF and generate infrastructure development strate- SNTA Program portfolio. These activities have gies and policy frameworks that cut across been centered largely on expanding rural access sectors. It also reflects the frequently multi- to services and creating appropriate policy sector nature of subnational borrowing, par- frameworks for private involvement in postcon- ticularly for municipalities. Many knowledge flict and very poor countries. products also fall into this category. Transport accounted for the next largest Distribution by type of activity share of funding (21 percent), followed by en- From PPIAF, about two-thirds of funding in ergy (18 percent), reflecting the rising trends in fiscal 2008 supported upstream infrastructure private investment commitments in these sec- development strategies (42 percent) and policy, tors in recent years. Relatively downstream regulatory, and institutional reforms (21 per- support in the energy sector is helping to bridge cent; figure 3). Activities in these two catego- Africa's massive energy deficit, and similar ries often overlap. About 12 percent of PPIAF work continues in East and South Asia. PPIAF funding was allocated to the broad theme of also maintains a priority focus on energy dis- capacity building (10 percent) and stakeholder tribution in the gas and electricity subsectors, consultations (2 percent). where projects tend to be high risk and thus The small amount of funding allocated to difficult to conclude. stakeholderconsultationactivitieslargelyreflects The water and sanitation sector received 12 PPIAF's decision to incorporate more of such ac- percent of funding, similar to its share in fiscal tivities into its support to infrastructure strategy 2007. Activities in the sector tended to focus and policy development rather than implement on urban water and solid waste management. them as stand-alone activities. It also reflects a 16 | 2008 Annual Report Figure 3Distribution of PPIAF portfolio by type of activity, fiscal 2008 8 7 6 5 millions 4 US$3 2 1 0 Infrastructure Policy, Capacity Pioneering Emerging Stakeholder development regulatory, and building transactions best consultations strategies institutional practices reforms conscious decision over the past two to three Outcomes of PPIAF-funded years to move away from larger advocacy events activities requiring expensive regional or global confer- ences. PPIAF has instead preferred to fund small- PPIAF has always maintained a special empha- er and much less expensive local conferences and sis on monitoring the emerging outcomes of its workshops as a way of promoting overall reform activities even after they have been completed. efforts. Smaller events are usually more effective Virtually all PPIAF activities produce defined in attracting key stakeholders and focusing de- outputs, such as reports or training materials bate on country-specific policy issues. used in workshops. But each activity is also in- Pioneering transactions, supported on an tended to achieve more meaningful outcomes exceptional basis, accounted for about 12 per- with significant long-term value to clients, such cent of PPIAF funding in fiscal 2008. Finally, as laws, transactions, new institutions, and for- PPIAF continues to allocate about 10 percent mally adopted strategies. of its resources to its knowledge management PPIAF's Program Council has authorized portfolio, for activities that document and five indicators for outcomes achieved by PPIAF disseminate emerging knowledge on public- activities: transactions facilitated, PPI laws and private partnerships. regulations, infrastructure strategies, institu- In the SNTA Program four activities sup- tions created or strengthened, and training ported improvements to creditworthiness in events. These indicators reflect the small size of fiscal 2008, while another four supported ef- PPIAF grants and the relatively upstream na- forts to facilitate credit ratings. Thirteen activi- ture of the activities financed. ties supported the appraisal or structuring of In fiscal 2008 the Program Management Unit transactions. And three activities encompassed analyzed the outcomes of 379 activities, ac- all three categories. counting for about US$80 million in funding, 2008 Annual Report | 17 Table 1 Outcomes achieved by PPIAF activities by region through fiscal 2008 Activities achieving at Activities completed least one measurable outcome With no With Share measurable measurable of Outcomes Region Total outcome outcomes Total total (%) achieved Sub-Saharan Africa 112 33 79 63 80 125 Central Asia and Europe 59 7 52 47 90 67 Latin America and the Caribbean 58 11 47 36 77 63 East Asia and Pacific 76 19 57 44 77 50 South Asia 52 18 34 33 97 37 Middle East and North Africa 22 5 17 14 82 22 Total 379 93 286 237 83 364 that have been implemented since PPIAF's in- Table 2Outcomes of PPIAF activities by ception. Ninety-three of these--about 25 per- type through fiscal 2008 cent of the activities, accounting for about 13 Type of outcome Total percent of funding--targeted outputs such as Transactions facilitated 82a training programs, stakeholder consultation ac- PPI laws and regulations 51 tivities, or global or regional knowledge man- Infrastructure strategies 146 Institutions created or strengthened 74 agement studies. These activities typically have Training events 338 diffuse impacts that are difficult to quantify and Training participants 24,274 thus did not have measurable outcomes. a. The number of transactions facilitated is lower than reported in previous years because of a reclassifica- The other 286 activities--three-quarters of tion of some outcomes, in which activities resulting all activities, accounting for about 87 percent in multiple transactions were counted as a single transaction. of funding--did aim for measurable outcomes. About 83 percent of these (237 activities) achieved at least one outcome: a law passed, a PPIAF is able to achieve such strong results strategy adopted, an institution established, or in activity outcomes because of its focus on ini- a transaction facilitated. Nine of the projects tial review of project proposals and its network aiming for measurable outcomes could not be of field-based staff and task managers, who evaluated because of a lack of historical data. work closely with client countries during both The 237 activities together accounted for 364 the design of an activity and the implementa- outcomes, averaging more than 1.5 distinct tion of the technical assistance. The Program outcomes per activity (table 1). Management Unit reinforces this continual at- As a result, PPIAF is proud to report that tention to the quality of implementation and since its inception PPIAF activities have facili- focus on development outcomes with a strong tated 82 transactions, supported 51 laws and emphasis on portfolio management, which in- regulations, created or strengthened 74 institu- cludes semiannual portfolio reviews to moni- tions, and assisted in the formulation of 146 tor the implementation of all ongoing activities strategies (table 2). In addition, 24,274 partici- as well as annual reviews of the outcomes of all pants have benefited from 338 PPIAF-funded closed activities. conferences and training activities from pro- gram inception through fiscal 2008. 18 | 2008 Annual Report 3. Regional and global activities in 2008 C onsistent with Program Council guidance, Emerging findings from the Africa Infra- PPIAF directed nearly half of new commit- structure Country Diagnostic, a major knowl- ments to Sub-Saharan Africa: 45 percent of edge program designed to improve our under- new country-specific commitments from the standing of infrastructure sectors in Africa, combined PPIAF and SNTA Program portfo- suggest that infrastructure needs in the region-- lio, and 49 percent of such commitments from for new investment and for operation and the PPIAF portfolio, went to Africa in fiscal maintenance--will amount to an estimated 2008. East Asia continued to show strong de- US$75 billion a year in 2006­15. At current mand, accounting for about 13 percent of new spending levels, that would leave the region with commitments from the total combined portfo- a funding gap of US$35 billion a year. More lio. Central Asia and Europe followed with than half this gap is associated with the power about 12 percent. The Middle East and North sector, which will require US$43 billion a year. Africa and Latin America and the Caribbean re- Transport accounts for the next largest share, ceived larger shares of PPIAF funding than in US$21 billion, or 3.3 percent of regional GDP. fiscal 2007 (between 8 and 9 percent each), Most of the funding burden will fall on gov- while South Asia's share dropped somewhat (to ernments, which remain the main source of about 7 percent), largely because of the political funding for infrastructure despite the broaden- uncertainty in parts of the region. ing array of infrastructure financiers in the re- For a full list of all PPIAF and SNTA Pro- gion. But many governments are also seeking gram activities approved in fiscal 2008, see to meet the challenge by engaging with third- annex 2. party financiers and implementing public- private partnerships. Governments are increas- ingly interested in improving the policy Sub-Saharan Africa environment for such partnerships and in cre- ating public-private partnership units to facili- Sub-Saharan Africa lags well behind other de- tate their development. veloping regions in access to modern infrastruc- While private investment remains relatively ture services, including piped water, flush toilets, low, encouraging trends in the business and sec- electricity, fixed-line and mobile telephones, and tor policy environments are leading to growing formal waste disposal facilities. Despite limited private sector interest. Africa had commitments gains in the 1990s and early 2000s, many coun- to private infrastructure projects amounting to tries are not expanding services fast enough to US$11 billion in 2007, with roughly half going keep up with population growth and urbaniza- to new investment in physical infrastructure. tion. On present trends Africa is likely to fall There is also growing evidence that public and even further behind. private financiers alike are allocating more funding to infrastructure in the region. 2008 Annual Report | 19 Regional overview tors most critical for economic development and Africa continues to be a priority area for PPIAF: also those in which the greatest needs arise. in fiscal 2008 it directed 49 percent of country- specific funding from the PPIAF portfolio, and Supporting energy--from large scale to small US$9.7 million in total, to the region. The con- Energy is the infrastructure sector in the most tinued growth in the Africa portfolio has been urgent need of new investment in Africa. Dis- facilitated by PPIAF's regional coordination of- ruptive power outages routinely plague 35 of fices in Nairobi, Kenya, and in Dakar, Senegal. Africa's 53 countries. Even South Africa, the re- The role of PPIAF in Africa is becoming more gion's economic powerhouse, is not immune to important as private participation in infrastruc- power problems. Its energy challenges have had ture has increased in the region. African govern- a profound impact on the economy, particularly ments and private entities have shown renewed the mining sector, and government officials de- interest in engaging with PPIAF on key infra- scribe the situation as "critical." structure projects. PPIAF is frequently asked Regional solutions are key in tackling Afri- for technical assistance activities that identify ca's energy problems. In support of broader investment opportunities for private sector in- regional development, PPIAF is funding a volvement and create strong institutional and number of transnational energy activities. regulatory frameworks to ensure the sustain- These include continued support to the West ability of infrastructure projects. The major- African Power Pool and assistance to the ity of activities funded by PPIAF in the region Southern Africa Power Pool through support include a capacity building component to for an investor outreach program. strengthen the capacities of actors in the pub- PPIAF is also supporting sector and utility lic sector, especially those involved in public- reform in a range of countries. In Nigeria private partnerships. An emerging trend in PPIAF is helping the government with capacity African infrastructure is the increasing im- building to support the development of public- portance of China, India, and a few Arab private partnerships. In Mozambique it is help- states. ing the state electricity company, EDM, devel- The SNTA Program had an important first op a north-south transmission backbone. year in Africa, which received 32 percent of the Looking beyond large projects, PPIAF is program's funding in fiscal 2008. While Afri- also supporting activities aimed at reaching ru- can credit markets are less developed than ral and more remote areas. Its contribution to those in other regions, there has been strong the Lighting Africa program supports innova- interest in SNTA Program support as state- tive off-grid solutions that harness the poten- owned enterprises and local authorities seek to tial of local small-scale entrepreneurs and tap local markets to close the infrastructure major international players (box 3). And in financing gap. Senegal PPIAF is providing upstream support to a transaction that will advance rural electri- PPIAF activities fication in the country. Multisector activities attracted the highest share of PPIAF funding in fiscal 2008 (43 percent), Helping to build transport links with upstream capacity building and public-pri- The transport sector is an area where public and vate partnership units forming an important private sector interests are beginning to con- part of PPIAF's strategy in the region. Following verge in Africa. New kinds of contracts and multisector activities, energy and transport both better regulation are leading to more--and received more than 20 percent of assistance in increasingly sustainable--projects with private the region. Energy and transport are the two sec- participation, and public and private partners 20 | 2008 Annual Report are recognizing the need to update and strength- en existing contracts. Box 3 PPIAF support in transport ranged from ur- ban transport to ports and regional transport Lighting Africa--fostering solutions corridors. A grant in Botswana is helping the for off-grid energy government determine its options for establish- More than 500 million Africans lack access to ing rail corridors to link the country with key modern energy and are forced to rely instead on regional economic centers. Another is support- costly, inefficient, and often hazardous fuel-based ing a major study examining the core transport products such as kerosene lamps and candles. networks in East and southern Africa, includ- The Lighting Africa initiative seeks to change this ing road, rail, port, and airport facilities, and a through a range of programs aimed at extending related public-private partnership investment and improving off-grid lighting products. It in- strategy to improve service, reduce costs, and cludes programs of market research, business de- increase efficiencies along the major routes. velopment, knowledge sharing, and policy work, Among other new projects, a study of post- including the design and implementation of new contract management in Zambia is aimed at product standards and certifications. PPIAF is one helping the government put the Zambia Rail of eight sponsors of the initiative, having made a Concession on a more sustainable footing. A commitment of US$1 million. new activity in Tanzania continues PPIAF's em- One focus is catalyzing private sector efforts to phasis on bus rapid transit. And two activities make solutions more widely available. The Lighting will study options for private participation-- Africa initiative seeks to strengthen ties between in seaports in Guinea-Bissau and an airport in the international lighting industry, local suppliers, Sierra Leone. and service providers to get lower-cost solutions to market. It also aims to reduce technical, policy, Breaking new ground in multisector activities financial, tariff, and information barriers to a rap- Multisector activities remain the largest catego- id scale-up of high-quality lighting products. And ry of funding, accounting for a third of PPIAF a Development Marketplace competition aims to funding in Africa. Much of this support has spur innovation in off-grid lighting for Africa by been aimed at helping governments implement offering grant awards for the most promising new and scale up public-private partnership units. lighting technologies. These units, which give governments an institu- tional mechanism for preparing and managing a pipeline of public-private partnership projects, remain a key focus of PPIAF's work to develop capacity. In fiscal 2008 new grants to support such units were approved for Mozambique, Ni- geria, and South Africa. PPIAF's multisector activities in Africa also support a groundbreaking research program. An important part of this is the Africa Infra- structure Country Diagnostic, for which PPIAF is among the original funders. Sponsored by the African Union, this large, multiyear, multi- donor initiative is undertaking original analyti- cal work to understand Africa's infrastructure financing needs and how they can be most ef- 2008 Annual Report | 21 fectively addressed. The study is producing Another effort along these lines is a regional data on basic sector performance indicators survey of infrastructure investment funds in for 24 African countries as well as a series of Africa, which aims to increase knowledge analytical studies building on the data to shed about the scale of private finance available in light on a wide range of infrastructure policy the region and on the needs for it. In collabora- issues in the region. tion with the Infrastructure Consortium for Preliminary findings were presented at Africa Secretariat, PPIAF also has financed a PPIAF's annual meeting in June 2008 and have guide to infrastructure financing in the region, since been shared with donors, development Survey of Private Partner Project Bankability agencies, and regional African organizations at Information Requirements. several international events, including the World Bank and International Monetary Fund Continuing support to other sectors annual meetings. Most recently, findings were PPIAF focuses its limited support to the tele- presented at the African Union Heads of State communications sector in Africa largely in meeting in January 2009. (All findings will be postconflict and fragile states or on regional made available on the Web at http://www infrastructure with a strong development im- .infrastructureafrica.org.) pact. In fiscal 2008 PPIAF approved four new Another important PPIAF knowledge pro- PPIAF activities for telecommunications in duct has been the Building Bridges report on Africa. These include activities to strengthen the non-OECD financiers active in Africa. The re- legal and regulatory environment in Guinea port documents the role of emerging finan- and Liberia. PPIAF is also supporting the de- ciers such as China and India and sheds light velopment of a fiber-optic backbone in Central on the financing mechanisms they use. Work Africa to expand access to faster and more af- such as this aims to help African governments fordable data services. better manage new flows of funding for infra- PPIAF funding for the traditional water util- structure. ity sector in Africa has been relatively limited. In fiscal 2008 support went to a review of an on- 22 | 2008 Annual Report going water utility concession in South Africa. can development finance institutions use credit Other activities are supporting the development ratings to identify organizational reforms, im- of management contract arrangements in the prove regulatory oversight, and enhance their Democratic Republic of Congo and the ongoing access to finance. The grant will fund credit as- urban water sector reforms in Malawi and Mo- sessments and a regional workshop on issues zambique. A significant share of activities in the relating to the creditworthiness of development water sector have been undertaken with public finance institutions. utilities through the SNTA Program. Outcomes SNTA Program activities The PPIAF portfolio in Africa has produced The SNTA Program has provided PPIAF with strong outcomes. Since inception, more than an important new development tool for use in 80 percent of activities in the region have re- Africa. The program is particularly useful in sulted in at least one measurable outcome. the water sector, where private participation These activities, representing more than US$20 has been limited. The SNTA Program collabo- million in funding, have produced a total of rated with the Water and Sanitation Program 125 outcomes. to support shadow credit rating exercises for At the transaction level, activities have seven African water utilities. This activity, helped produce a number of innovative con- which followed from a stakeholder consulta- tractual approaches to public-private partner- tion exercise supported by PPIAF, supported ships. One activity was aimed at improving assessments of creditworthiness for these utili- water service delivery in the Democratic Re- ties. The findings of this activity were presented public of Congo. The country's government is at a regional conference held in Dakar, Senegal, exploring the option of setting up a manage- on November 24­25, 2008. ment contract over a five-year period that Another interesting SNTA Program activity, would restore the utility (Regideso) to sound also in collaboration with the Water and Sani- financial footing and make a significant im- tation Program, involves support to the Ugan- provement in its operations. da National Water and Sewerage Corporation In capacity building, PPIAF's work with for a bond issue in the local markets to raise governments on public-private partnership domestic resources for capital investments. If units is helping countries manage a pipeline of successful, this would be the first bond issue by projects and work with municipalities to fa- an African water utility (see box 1). cilitate public-private partnerships at the local In Swaziland an SNTA Program grant is level. As a result of PPIAF support in South facilitating the entry of creditworthy cities Africa, several municipalities are now work- into the municipal finance market. The grant ing toward specific transactions involving supports efforts aimed at increasing the public-private partnerships. In Mozambique, knowledge of policy makers and examining PPIAF's support to the Maputo public-private specific strategies for improving the cities' partnership unit has also led to the initiation creditworthiness and ability to raise domestic of new transactions (box 4). private finance. A similar activity in southern In the policy sphere, PPIAF consultations Africa is supporting efforts by the South Afri- have helped improve the regulatory environ- can Cities Network to facilitate borrowing by ment and facilitate downstream transactions. In local governments. Ghana, for example, PPIAF support has resulted Governments and utilities are not the only in revised legislation and regulation needed to entities to benefit from SNTA Program grants in establish an appropriate institutional frame- fiscal 2008. The program is helping three Afri- work for a bus rapid transit program. In Burki- 2008 Annual Report | 23 Box 4 Support in Mozambique leads to more than 36 new projects Mozambique has emerged from one of Africa's er private participation might be an option. The longest-running conflicts. While the war de- PPIAF-funded study recommended that the city stroyed nearly all the country's major infrastruc- council form a public-private partnership unit. ture, the government has made great strides in The results have been impressive. The City of introducing improvements. Still, much remains to Maputo now has a pipeline of more than 36 proj- be done. ects, with an estimated value of US$65 million. The City of Maputo, Mozambique's capital, Twenty-two have already been awarded, and the wanted to explore possibilities for private par- rest are under negotiation, in preparation, or at ticipation as a way to increase investment in in- the bidding stage. The projects include the con- frastructure and improve services. It requested struction of an international bus terminal and the support from PPIAF to help in evaluating its le- rehabilitation or construction of housing, markets, gal and institutional environment, to see wheth- parking, health kiosks, and government buildings. na Faso a PPIAF grant supported the creation of Power Pool has been formally endorsed, help- a legal framework for the energy sector that ing to ensure the long-term sustainability of calls for the establishment of an electricity regu- the organization. Officials of the power pool lator. This framework has paved the way for the and the Economic Community of West African preparation of an affermage contract for the States (ECOWAS) also endorsed PPIAF-funded state-owned electricity utility, SONABEL. templates for public-private partnership trans- PPIAF is also seeing progress in its portfolio actions related to priority cross-border power of cross-border activities in Africa. A PPIAF- transmission projects. funded business plan for the West African East and Southern Africa Team (Nairobi, Kenya) from left to right--Njeri Gicheru (Program Assistant), Francis Karuu (Driver/Messenger), Joel Kolker (Regional Team Leader), and Serah Njoroge (Program Officer and Deputy Team Leader) West and Central Africa, and Middle East and North Africa Team (Dakar, Senegal) from left to right--Lorenzo Bertolini (Regional Team Leader) and Alassane Wade (Operations Analyst) 24 | 2008 Annual Report East Asia and Pacific Infrastructure investment in East Asia and Pa- cific has been stretched by the demands of con- tinued economic growth in many countries, es- peciallyIndonesia,thePhilippines,andVietnam. Governments confront the twin challenges of aging infrastructure assets and growing demand for new infrastructure even as they continue to deal with fiscal management issues. In the face of these challenges, governments increasingly recognize the role of, and opportu- nities for, private participation. Yet the environ- ment for private investment in infrastructure has been affected both by macroeconomic fac- tors, such as rising inflation in a number of countries, and by wider global financial events. At the subnational level, local governments and government enterprises are seeking to strengthen their ability to borrow from capital markets for vital infrastructure investments as national governments increasingly decentralize infrastructure service provision. Much needs to be done not only in developing the capacity of subnational entities but also in implementing policies and strategies that will further develop local capital markets for subnational finance. taking reforms. One is assisting the Mongolian Regional overview government in preparing an infrastructure strat- In fiscal 2008 PPIAF committed US$3 million egy for the South Gobi Desert region, to help for 15 activities, 5 of them SNTA Program ac- ensure that the development of major mineral tivities, in East Asia and Pacific. Support for the resources is integrated with broader infrastruc- region accounted for 12 percent of PPIAF com- ture development. The other, in Indonesia, is as- mitments and 17 percent of SNTA Program sisting in setting up an infrastructure guarantee commitments.Nearly58percentofPPIAFfund- fund to help attract private finance for much- ing in the region went to multisector projects-- needed infrastructure projects. in Indonesia, Mongolia, and the Philippines. In the Philippines PPIAF supported the Philip- pine Development Forum's infrastructure work- PPIAF activities shop, which provided valuable consensus build- Upstream work to support the enabling envi- ing around the government's infrastructure ronment for private participation in infrastruc- priorities. Further downstream, PPIAF provided ture continued to be the main focus of PPIAF support to the Philippine government for an in- activity in the region. The two largest activities dependent assessment of a concession agreement approved in fiscal 2008 support governments in aspartofthebiddingprocessforthestate-owned strengthening infrastructure policies and under- electricity transmission company, Transco. 2008 Annual Report | 25 Box 5 Reducing nonrevenue water losses in Ho Chi Minh City Ho Chi Minh City, Vietnam, faces critical losses capacity and provide staff training in contract in its water supply system. In 2005 a PPIAF monitoring. grant supported a review of international prac- In early July 2008 Ho Chi Minh City award- tices in reducing nonrevenue water through ed a five-year, performance-based, nonrevenue performance-based contracts with the private water contract to the Philippines-based Manila sector. The city used the report to help the wa- Water Company, which had teamed up with the ter utility Saigon Water Corporation (SAWACO) Vietnam-based Construction Technology Devel- develop a contract to address the city's water opment JS Company to win the US$15 million losses. Bidding documents for the nonrevenue contract. The two PPIAF-funded activities were water contract were prepared, and a competi- essential in ensuring the quality and success of tive tender held. the transaction. Besides PPIAF, sources of sup- SAWACO, recognizing that it lacked the ca- port for the activity aimed at reducing non- pacity and experience to evaluate the bids re- revenue water included Ho Chi Minh City itself, ceived from the private sector, requested follow- the Finnish government, and the World Bank­ on assistance. PPIAF responded, launching an funded Vietnam Urban Water Supply Develop- activity in September 2007 to build SAWACO's ment Project. In Vietnam PPIAF provided support for de- ing a strategy to finance a public-private re- signing a competitive market for generation as newable energy project. a growing number of private sector power pro- viders work to meet the increasing demand for SNTA Program activities electricity. PPIAF has also provided training In the Philippines three SNTA Program for the Saigon Water Company as it evaluates grants approved in fiscal 2008 are aimed at private sector bids for a performance-based helping to mobilize financing from capital contract to reduce nonrevenue water (box 5). markets. The first supports the national gov- Another PPIAF activity in Vietnam has sup- ernment's efforts (through the Department ported the government in examining options of Finance) to improve local government fi- for private participation in a rail mass rapid nancing, particularly in raising capital from transit system for Ho Chi Minh City, the coun- local financial markets. This activity is fo- try's largest city and its economic hub. cused on obtaining credit ratings for at least PPIAF also increased its outreach to the Pa- 10 local government units, developing a cific Islands, approving two new activities to framework for monitoring and regulating support infrastructure development efforts in the borrowing activities of local government this part of the region. A regional study will units, and sharing knowledge through a help Pacific Island governments examine op- workshop to discuss the role of credit ratings tions for developing a telecommunications and in local government finance. A second, small information and communication technology SNTA Program grant is helping the Marikina resource center. Another activity will assist the city government explore its financing options government of the Solomon Islands in design- for projects to upgrade services for poor 26 | 2008 Annual Report communities, including determining which viewed international and Chinese experience in projects would be best suited for market- debt management and financial intermediation. based financing. A third SNTA Program activity is supporting Outcomes a larger initiative of the Water and Sanitation In fiscal 2008 PPIAF saw important results Program in the Philippines, the Small Water from activities initiated in previous years. In Utilities Improvement and Financing Project, Vanuatu the government formally adopted leg- which seeks to improve the performance and islation establishing a multisector utilities regu- financial viability of small utilities. The SNTA lator, a process many years in the making. In Program is supporting the efforts of 11 water Vietnam the City of Hanoi is following up on a utilities to improve their access to finance-- PPIAF-funded study to develop a performance- an approach in line with the Philippine water based approach to reducing nonrevenue water. sector financing policy--including through an The Hanoi activity is based on PPIAF-funded assessment of financing needs and possible assistance to the state-owned Hanoi Water commercial financing. Business Company to identify options for re- The SNTA Program has also been active in ducing water losses. China as that country begins to experiment Also in Vietnam, the national government with subnational borrowing. The program is issued a decree establishing guidelines for the providing support to help reform China's urban operations of local development investment development investment companies. Wholly funds, the investment vehicles through which owned by municipal governments, these mu- subnational governments will engage with the nicipal corporations were established during private sector for the development of infra- the early 1990s, when local governments were structure. This decree came as a result of a under great pressure to both build municipal PPIAF activity that provided specific advice to infrastructure and reform the role of govern- the funds on investment policy, including in- ment in managing infrastructure services. The vestment appraisal procedures, investment eli- SNTA Program's support will help urban devel- gibility criteria, risk exposure policy, and port- opment investment companies obtain a credit folio monitoring. rating and a financial management assessment In the Philippines just-in-time support from aimed at helping to transform them into finan- a small PPIAF grant of US$75,000 to Transco, cially viable utilities. the state-owned transmission company, also Another SNTA Program grant supported a produced results. The grant assisted with an in- workshop on debt financing for municipal de- dependent assessment of a proposed concession velopment in Ningbo, China. The workshop, contract, a transaction that yielded investment held in Ningbo at the end of January 2008, re- commitments of US$3.95 billion (box 6). East Asia and Pacific Team (Manila, Philippines) Paul Reddel (Regional Team Leader) and Hope Gerochi (Program Officer) 2008 Annual Report | 27 Box 6 Helping to seal the deal in the Philippines The transmission system in the Philippines needs of the concession agreement. PPIAF-funded more than US$850 million in investments to ex- consultants brought international experience pand and improve the delivery of electricity in and technical expertise, providing support to the the country. The government, as part of its over- government throughout the new bidding pro- all development strategy, planned to privatize cess to help ensure its success. the state-owned National Transmission Corpora- The Transco concession was successfully tion (Transco) through a concession. But the bid- awarded to a private operator in December 2007 ding process for the concession failed. for US$3.95 billion. As part of the agreement, the The government, seeking to attract bidders private operator will finance, operate, maintain, while also protecting its interests, requested rehabilitate, and manage Transco for the 25-year PPIAF support for an independent assessment concession period. 28 | 2008 Annual Report South Asia cess market-based finance to scale up infra- structure services. South Asia has emerged as one of the develop- ing world's leading recipients of private invest- Regional overview ment in infrastructure, in large part because of PPIAF approved 15 new activities in South continued investments in India's telecommuni- Asia in fiscal 2008, including one SNTA Pro- cations, energy, and transport sectors. The re- gram activity, with aggregate funding of about gion attracted 13 percent of investment commit- US$1.6 million, or about 7 percent of the com- ments to infrastructure projects with private bined portfolio. Support for this region ac- participation in developing countries in 2001­ counted for 7 percent of PPIAF commitments 06, up from just 5 percent in 1995­2000. and 7 percent of SNTA Program commitments. Yet the region continues to face a large in- This funding level is low compared with that in frastructure deficit--stemming from both too previous years, largely because challenging po- few new projects and poor maintenance of ex- litical environments in Bangladesh, Nepal, isting assets--and an urgent need to scale up Pakistan, and Sri Lanka distracted government investments. Estimates from a World Bank attention from infrastructure issues. study suggest that sustaining annual GDP growth of 7.5 percent in South Asia would re- Activities in India quire annual investments of about 5 percent of PPIAF's support to India in fiscal 2008 was GDP to meet the increased demand for infra- strategically focused--aimed at providing structure services along with another 2 percent technical assistance and knowledge support, of GDP for capital replacement.1 at state and national levels, in sectors for Raising investment to this level will be a big which opportunities for public-private part- challenge, and South Asian governments will nerships are being considered for the first need to look to the private sector and the capi- time, such as railways, urban transport, and tal markets. Annual investment commitments power transmission. PPIAF has customized its to infrastructure projects with private partici- approach to India's diverse regions. In some pation, averaging only around 0.9 percent of of the poorer states, such as Bihar, PPIAF has regional GDP in 2001­06, will need to increase supported upstream policy and institutional in the coming years to eliminate the region's reforms, while in higher-growth states with infrastructure deficit. large demand for infrastructure, such as Ma- Market borrowings by subnational entities harashtra and Andhra Pradesh, it has provid- to finance and expand infrastructure services ed downstream assistance to develop business have been limited mostly to India, where about strategies and identify public-private partner- 10 local bodies have accessed capital markets ship projects. in the past decade. More than 100 parastatals In Bihar, working alongside a broader re- in India have financed capital investments in form program supported by the U.K. Depart- infrastructure from local commercial banks ment for International Development and the and are open to foreign currency loans. The World Bank, PPIAF is helping to develop an government of India, through an ongoing pro- enabling legal and institutional framework for gram, is encouraging urban local bodies to ac- public-private partnerships. With PPIAF's sup- port, the government is assessing the potential 1Isabel Chatterton and Olga Susana Puerto, "Estimation of of such partnerships to ease financial distress, Infrastructure Investment Needs in the South Asia Region" (Sustainable Development Network, World Bank, Washington, improve efficiencies in project management, DC, 2006), http://go.worldbank.org/0ZFY0DMTI0. and foster better accountability. 2008 Annual Report | 29 ing programs across sectors to scale up infra- structure through public-private partnership models. For example, PPIAF is assisting a new- ly established bus company in the city of Pune in developing a business plan and strategy for a public-private partnership to improve city bus services. An SNTA Program activity approved in fiscal 2008 will help the Karnataka state government raise investment finance for a US$1.2 billion state highway development program. The grant will help the government examine options for leveraging additional fi- nancing from the private sector and local financial institutions to close the large fi- nancing gap for its road network. Funding also will be provided to conduct workshops In Maharashtra PPIAF, along with the Inter- and training for Karnataka officials on the national Finance Corporation, is helping the financing of infrastructure projects and the state government set up a special institution to strengthening of creditworthiness to raise develop urban infrastructure projects through finance from the market. public-private partnerships and support capac- ity building by municipalities. PPIAF is also Other activities in the region helping the power distribution company in In Bangladesh PPIAF provided support, in part- Maharashtra build the institutional capacity to nership with the International Finance Corpo- manage and monitor distribution franchisee ration, to help the government create a trans- contracts with private operators. These con- parent and competitive bidding process for a tracts are designed to reduce power losses and gas-based independent power producer (IPP) secure much-needed investments in the sector, project. PPIAF also provided assistance in orga- improving service to customers. nizing road shows for the IPP transaction. In Andhra Pradesh PPIAF is helping the In Bhutan a new PPIAF activity is assisting government assess strategic options for devel- the government in designing policy, regula- oping infrastructure in a sustainable manner in tions, and business options for developing the coastal growth corridor. This work includes backbone infrastructure, broadband, and val- extensive stakeholder consultations to incor- ue added services. Consultations involving the porate local priorities and concerns. government and telecommunications opera- At the national level PPIAF is supporting tors and investors are expected to lead to a the Indian government's initiatives to develop new policy for developing communications policy, legal, and regulatory frameworks for infrastructure. public-private partnerships in new sectors. Ac- In Maldives, following on an earlier activity tivities include developing a model concession that looked at the feasibility of, and explored agreement for the modernization of railway strategic options for, public-private partner- stations, assessing potential areas for partner- ships in the port sector, PPIAF is now helping ing with the private sector for railway reforms, to design a legal framework for developing ef- and developing comprehensive capacity build- ficient ports. The enabling framework is aimed 30 | 2008 Annual Report at establishing an autonomous port authority public-private partnership project, will aid to regulate, monitor, and maintain ports. In trade and economic development for Nepal. this country of 192 inhabited islands, maritime In Pakistan, where the political turmoil has development is important for equitable eco- meant a weak environment for public-private nomic growth and poverty reduction. partnerships and infrastructure development, In Nepal a new activity is assisting the gov- PPIAF approved only one new activity in fiscal ernment in assessing the feasibility of public- 2008. Support was provided to the government's private partnerships for developing a highway Infrastructure Project Development Facility to project. The first major road link connecting organize stakeholder consultations on options this landlocked country to India, proposed as a and challenges in delivering water supply, sani- Box 7 Central and South Asia move forward on electricity trade Electricity shortages in Afghanistan and Pakistan tive aimed at enabling electricity trade between have prompted these South Asian countries to the two regions. look to electricity imports to help meet demand. PPIAF provided support early on, helping a Meanwhile, the neighboring countries of Cen- multicountry working group and intergovern- tral Asia have surplus electricity and have been mental council assess the financial feasibility of looking for export markets. In mid-2008 gov- the project and develop a legal structure and in- ernment representatives from Afghanistan, the stitutional framework. PPIAF funding also helped Kyrgyz Republic, Pakistan, and Tajikistan signed the working group evaluate risks and options for an intergovernmental agreement on the devel- public-private partnerships to help support the opment of a Central Asia­South Asia regional agreement. Other partners included the World electricity forum--the first cross-border initia- Bank and the Asian Development Bank. 2008 Annual Report | 31 a license to operate as a nonbank financial in- termediary with a focus on infrastructure de- velopment and private financing. In addition, PPIAF funding has supported the government's efforts to launch a universal service fund to ex- pand telecommunications services in rural ar- eas. Following up on a first pilot, developed with assistance from PPIAF, the government has scaled up this initiative and conducted ad- ditional rounds of bidding. Five service licenses were awarded in 2008. In Sri Lanka the telecommunications regula- tation, and waste management services through tor has issued a discussion paper on options public-private partnerships. for developing a telecommunications backbone PPIAF also supported regional cross-border with substantial input from a PPIAF-supported activities in the past year, including a work- study. The study provided potential business shop on strategic communication for private models for developing a nationwide high-speed participation, held in April 2008. Eighty offi- telecommunications backbone network. The cials from eight countries across Asia listened government is already engaging a transaction to communication experts and participated in advisor for implementation of the network. hands-on exercises to learn how to better inte- In the Indian state of Maharashtra an elec- grate consultations and communication pro- tricity transmission company, with support grams into their reform efforts. Another re- from PPIAF, has finalized its business plan and gional activity helped facilitate cross-border public-private partnership strategy after exten- electricity trade between Central and South sive review by utility management and staff. Asia (box 7). The company has launched the strategy to seek strategic alliances with the private sector to de- Outcomes velop electricity transmission infrastructure. PPIAF activities in South Asia have led to im- India's Ministry of Finance has used PPIAF portant outcomes. In Kabul, Afghanistan, a support in appointing a panel of transaction corporatized urban water and sanitation com- advisors to help ministries and state govern- pany has been established, and a pilot for ments expedite the development of transac- community-based solid waste collection is tions involving public-private partnerships. now under way. With support from this panel, more than 40 In Pakistan the government's new Infra- new projects have reached varying stages of structure Project Finance Facility has received development. South Asia, and Central Asia and Europe Team (New Delhi, India) from left to right--Bernadette Nogueiro (Program Assistant), Bhavna Bhatia (Regional Team Leader), and Tarun Shankar (Infrastructure Specialist) 32 | 2008 Annual Report Middle East and North Africa Water Council to develop new partnerships and the establishment of a regional infrastructure The Middle East and North Africa has had one regulators forum. of the fastest regional growth rates in private participation in infrastructure, with annual in- Outcomes vestment commitments in 2004­08 three times Past PPIAF activities in the region are yielding en- those in 1996­2000. The substantial demand couraging outcomes. An important outcome has for infrastructure and good expectations for come out of support to help develop the transac- cost recovery in the region are attracting grow- tion model and regulatory framework for the ing attention from development finance institu- West Delta irrigation project in Egypt. The gov- tions and private investors. While most of the ernment is tendering a design-build-lease contract recent growth in private participation has been for the project, which will require no budgetary in telecommunications, activity is also increas- subsidies. Many companies have signaled an in- ing in energy, transport, irrigation, and solid terest in bidding on the project, including Chi- waste management. nese, European, and local Egyptian operators. Construction is slated to begin by 2010. Regional overview In Tunisia a PPIAF technical assistance grant PPIAF's challenge in the Middle East and to help prepare a strategy for private participa- North Africa has been to keep pace with the tion in infrastructure has also led to a promis- rapidly increasing demand for its support as ing outcome: a new concession law, approved the region experiences a boom in private par- in April 2008 (box 8). ticipation in infrastructure. The region ac- counts for a small but growing part of PPIAF's portfolio: the region's share of the fiscal 2008 Box 8 portfolio was just over 9 percent. A key focus of PPIAF's activities in the region is develop- PPIAF support leads to a new ing new partnerships and facilitating dialogue concession law in Tunisia among policy makers, regulators, investors, and other stakeholders. Crucial to overcoming poverty in Tunisia is access to good-quality infrastructure services at an afford- PPIAF activities able price. Seeking to bring new investment to the In fiscal 2008 PPIAF funded six new activities in country's infrastructure sectors, the government the region, accounting for US$1.7 million in asked PPIAF for help in developing a comprehen- commitments. In the Republic of Yemen PPIAF sive strategy for increasing the private provision of approved a grant to study financing options for infrastructure and updating the legal, regulatory, a gas pipeline. In Morocco, where only about and institutional framework to support sustainable 70 percent of the waste in urban areas is being public-private partnerships in infrastructure. collected, PPIAF supported an effort to evaluate The government has taken significant steps to how private operators can help better manage promote public-private partnerships since the activ- solid waste. New activities in the Arab Republic ity was completed. In 2006 it divested 35 percent of Egypt this past year have focused on mobiliz- of its controlling stake in Tunisie Telecom, the in- ing assistance for the country's public-private cumbent national fixed-line and mobile operator, for partnership unit, for the design of energy sector US$2.25 billion. And in April 2008 the government reforms, and for the implementation of pilot adopted a framework law on concessions, making performance-basedroadmaintenancecontracts. the country more attractive to private operators. PPIAF also funded an initiative by the Arab 2008 Annual Report | 33 Central Asia and Europe ture development. That will require putting into place enabling legal and policy frameworks and Central Asia and Europe attracted greater in- taking measures to improve the creditworthi- vestment commitments to infrastructure proj- ness of subnational entities and parastatals. ects with private participation than any other developing region in 2007. A key factor in the Regional overview region's attractiveness to investors has been its In fiscal 2008 PPIAF approved 12 new activities regulatory and market structure reforms, driv- in Central Asia and Europe--including 3 SNTA en by the process of accession to the European Program grants--for total funding of US$2.8 Union. million, about 12 percent of the combined Telecommunications has seen the most pri- PPIAF and SNTA Program portfolio. Support vate investment, followed by the energy sector. for activities in the region accounted for 11 In the water sector there has been a shift from percent of PPIAF commitments and 15 percent concessions to management and lease con- of SNTA Program commitments for the year. A tracts, which involve a greater reliance on pub- substantial share of the support was directed lic funding for capital expenditure. Interest in to the Balkans. developing highways through private partici- The distribution across energy, water supply pation is picking up. and sanitation, and multisector activities was Many governments also are interested in ac- fairly even, with each sector receiving about 30 cessing capital market financing for infrastruc- percent of the assistance. In the energy sector 34 | 2008 Annual Report the support was focused on facilitating renew- able energy projects, competition and market development, regulatory frameworks, and stakeholder consultations. Activities relating to urban infrastructure--such as water, solid waste, and urban transport--accounted for the largest share of grant support provided across all sectors in the region. Activities in the Balkans PPIAF support to Central Asia and Europe in fiscal 2008 was concentrated in the Balkans. In technicalassistancetotwoUkrainiancitiesaimed Kosovo funding was approved to support the at improving their creditworthiness so that they energy regulator in facilitating the development can guarantee the borrowing of their heating of renewable energy projects with private par- companies for infrastructure investment. ticipation. The aim is to assist the regulator in In Armenia PPIAF is funding an activity to developing a framework for secondary legisla- improve management of solid waste in Yere- tion and regulations that can help in meeting van, including an assessment of options for its targets for reducing electricity consumption. public-private partnership and the develop- In the former Yugoslav Republic of Macedonia ment of an enabling policy, regulatory, and in- PPIAF is providing support to the government, stitutional framework. The capital city gener- the transmission utility, and the energy regula- ates about 40­50 percent of the country's tor in introducing competition and market re- waste, and environmental and safety concerns forms. In Croatia a PPIAF activity is helping to make waste management a priority for the city structure public-private partnerships for a new government. waste management facility. In Serbia PPIAF awarded the government a Outcomes grant to help public utility companies in a Past activities supported by PPIAF in the region range of sectors develop detailed strategies for have resulted in a number of transactions. In increasing their efficiency and financial viabili- FYR Macedonia PPIAF support led to the ten- ty. In Bosnia and Herzegovina PPIAF support dering of 60 mini-hydropower sites to private helped the government conduct a series of developers (box 9). stakeholder consultations aimed at building PPIAF support to the government of Arme- consensus on energy reforms and the role of nia helped lay the groundwork for the award of the private sector. And in Montenegro an a railway concession contract in early 2008. SNTA Program grant is helping the city of Several PPIAF grants helped the government or- Podgorica upgrade its water system. ganize road shows, market the transaction, draft requests for proposals, design commercial con- Activities elsewhere in the region tracts, and manage the bidding process. Elsewhere in the region, PPIAF awarded three PPIAF support to nine countries in south- grants in Ukraine during fiscal 2008. One SNTA eastern Europe helped governments assess the Program grant is helping the government assess feasibility of developing regional gas infra- constraints to market-based financing for subna- structure. Extensive consultations were carried tional entities and solicit recommendations for out to foster support and engage stakeholders facilitating such financing. Another is supporting in the process (box 10). 2008 Annual Report | 35 Box 9 FYR Macedonia tenders 60 mini-hydropower plants When the government of FYR Macedonia de- framework for private power development and vised its energy strategy, it gave high prior- a prefeasibility cost analysis. The PPIAF-funded ity to developing mini-hydropower plants with activity also included helping the government private participation as a way to diversify the identify sites for new plants, developing the pilot country's energy supply and increase the use of bid packages, and supporting the tendering and local resources. Recognizing that pilots could award of mini-hydropower sites. serve as models for future hydropower privati- The PPIAF activity produced a recommended zation in the region, it sought PPIAF support to tariff methodology that was adopted by the reg- help develop its plans. ulator, and 60 hydropower sites have been ten- PPIAF supported an in-depth review of the dered to private developers. country's legal, regulatory, and institutional Box 10 Gasification study fosters cooperation in southeast Europe The countries of southeast Europe rely mostly and assessed the economics of bringing natural on diesel, heavy fuel oil, coal, wood, and elec- gas into the region's major cities. A comparative tricity to meet their energy needs. Natural gas, analysis assessed potential sources of natural a relatively clean fuel that is often cheaper than gas, including piped gas from the Russian Federa- other sources of energy, has had a very small tion and the Caspian region, as well as liquefied role in the region's energy mix. natural gas. Finally, the study investigated the role Could natural gas potentially play a larger and viability of national and regional gas storage role? PPIAF helped fund a study that analyzed to increase security of supply. the economics of greater use of natural gas in The study led to the concept of the European the region. The study compared the economics Community Gas Ring, which would connect up of natural gas with those of other energy sourc- to seven countries in the region, allowing anchor es, examined the feasibility of constructing customers to switch to natural gas. regional and cross-border gas infrastructure, 36 | 2008 Annual Report Latin America and PPIAF activities the Caribbean In Brazil PPIAF is supporting two pilot projects in municipal solid waste management to help In 2007 Latin America and the Caribbean regis- the government explore its options for private tered its highest level of private participation in participation, including by assessing local condi- infrastructure since 2003, with US$38.3 billion tions and identifying risk mitigation tools. In in investment commitments, most of it in tele- Colombia PPIAF awarded the government a communications, energy, and transport. This grant for traffic studies to help structure and was the fourth consecutive year of growth, tender the Ruta del Sol road concession. The marking a resurgence in private participation transaction, which will involve up to US$2.5 after the sharp downturn of the 1990s. Though billion in investment, will be the largest infra- declines in investment are expected in 2008 and structure project in Colombia and one of the 2009 as a result of the credit crisis, the region largest in the region. continues to provide lessons and best practices as other regions increase their level of private participation. Regional overview In past years PPIAF has allocated relatively low levels of funding to activities in Latin America, following Program Council guidance to direct more support to low-income and African coun- tries. But support to the region increased in fis- cal 2008: PPIAF approved 17 new activities for about US$2.9 million in funding, accounting for 13 percent of the combined PPIAF and SNTA Program portfolio, up from only 4 activities in fiscal 2007. Latin America is a strong focus for the SNTA Program, receiving 27 percent of its new commitments in fiscal 2008. As municipalities and other subnational entities in the region's middle-income countries become more finan- cially viable, they are looking to capital mar- kets for investment finance. That has led to a strong demand from governments for support to strengthen their creditworthiness and man- age transactions, and the SNTA Program re- sponded in fiscal 2008 with technical assistance in this area. Latin America is expected to spear- head the subnational financing activities of the program by piloting cutting-edge interventions and consolidating know-how that will benefit activities worldwide. 2008 Annual Report | 37 PPIAF is also supporting efforts to fill the posed for Bucaramanga to link this city with information gap on private participation in the outlying poor areas. If these cable car lines region. To help evaluate the impact of private prove to be feasible, the activity will also de- participation in infrastructure, PPIAF has co- fine a strategy for financing them. The third funded a publication, The Impact of Private grant is aimed at helping to improve the risk Sector Participation in Infrastructure: Lights, management practices of La Promotora de Shadows, and the Road Ahead. Another re- Pereira, the city of Pereira's development fi- gional initiative will gather data on the opera- nance institution, to strengthen its ability to tional and financial performance of private access financing for sustainable infrastructure participation in Latin American airports over projects from capital markets. the past decade and make policy recommenda- In Brazil an SNTA Program grant is assist- tions for improving the sector's performance. ing with the preparation of an initial public of- fering of ownership shares for the water utility SNTA Program activities Compesa. The utility is wholly owned by the Nearly half the support to Latin America in state of Pernambuco, which is expected to sell fiscal 2008 went to seven new SNTA Program 30­40 percent of its shares. activities. In Colombia PPIAF awarded three In Guatemala the SNTA Program is sup- SNTA Program grants to support subnational porting an activity to help bring in commercial borrowing. The first will help develop a plan financing for basic infrastructure services for for improving the creditworthiness of Barran- the poor. The activity will produce an operat- quilla's TransMetro, which includes the city's ing manual for a proposed guarantee fund bus rapid transit system. The second is sup- (FOGA) to support private banks investing in porting a study to evaluate the financial feasi- basic community infrastructure. Through sem- bility of two commuter cable car lines pro- inars and training sessions, the activity will 38 | 2008 Annual Report also promote the FOGA concept among pri- Outcomes vate banks, communities, and microfinance Many earlier PPIAF activities in Latin America institutions interested in financing local infra- and the Caribbean are yielding positive out- structure projects. comes. In Peru work funded by PPIAF underlies In Peru an SNTA Program grant is helping alegalframeworkforruralelectrification,which subnational governments gain access to com- has been approved by the country's parliament, mercial bank and capital market financing, and a national ports law, which has led to the with the aim of complementing their existing award of a contract to Dubai Ports to operate a transfers and own revenues, diversifying new container terminal. their funding sources, creating a credit his- In Panama City the government is imple- tory, and introducing financial discipline. menting a bus rapid transit system based on This activity includes help in preparing an the findings of a PPIAF-funded urban transport information package--including financial in- study. In Colombia a PPIAF grant to help the formation, investment plans, investment government facilitate private investment in project documents, and institutional infor- ports resulted in three seaport and two airport mation--that will facilitate access to com- concessions, expected to generate substantial mercial financing. investment. In Honduras an SNTA Program grant is In Costa Rica, where PPIAF funded the de- supporting the efforts of three municipal gov- velopment of a draft general telecommunica- ernments that would like market-based financ- tions law and legislation and regulation for li- ing for infrastructure projects, including a re- censing, interconnection, and the functioning gional waste facility and two toll roads. The of the regulatory authority, the congress has grant is supporting assessment of the legal and approved the two key pieces of telecommuni- regulatory environment for subnational bor- cations legislation: the General Telecoms Law rowing in Honduras and the appraisal of sev- and the Law on Public Institutions of the Tele- eral municipal borrowing transactions. com Sector. Latin America and the Caribbean (Washington, DC) Joshua Gallo (Regional Program Leader) 2008 Annual Report | 39 Global knowledge management ogy of the database to adapt to the changing landscape of private participation. This past PPIAF supports a robust global knowledge year PPIAF and the World Bank also developed management agenda to supplement its grant- partnerships with overseas data collection funded technical assistance with information agencies in China and India to improve the on best practices and lessons learned across the comprehensiveness of data from these two developing world. In fiscal 2008 it approved emerging economies. 14 new global knowledge management activi- In addition, PPIAF finalized a report, The ties for just over US$1.5 million in funding, Role of Developing Country Firms in Infra- about 7 percent of the combined PPIAF and structure, that provides a first glimpse, through SNTA Program commitments. surveys and interviews, of how local and re- gional firms have become important players in PPIAF activities infrastructure in many developing countries. PPIAF's ongoing knowledge management ac- The full report, with interviews, is available on tivities can be broadly grouped in three catego- the PPIAF Web site. ries: gathering and analyzing data on the PPIAF also is funding regional studies in Af- changing roles and incentives of private play- rica on the emergence of new financiers such as ers in infrastructure, providing operational in- China and India. A similar regional study was formation for clients, and analyzing factors undertaken for South Asia to explore the financ- that drive infrastructure service performance. ing mechanisms used in this region's booming infrastructure market. The results will be forth- Gathering and analyzing data coming in PPIAF's Gridlines series. Reports like PPIAF funds a number of data gathering ac- these are designed to expand the frame of refer- tivities to foster greater understanding of pri- ence for players in infrastructure finance and in- vate participation in infrastructure across clude them in the broader development debate. countries and sectors. In fiscal 2008 PPIAF continued its support to the PPI Project Data- Providing operational information for clients base, cofunded with the World Bank. PPIAF A second set of activities focuses on providing continues to refine and improve the methodol- operational knowledge for policy makers and regulators. Building on the success of the Tool- kit on Market-Based Approaches in Private Sector Provision of Bus Services, PPIAF has funded a series of two-day conferences on pub- lic transport planning (box 11). The course and part of the toolkit have been translated into Chinese. In addition, the toolkit Public- Private Options for Developing, Operating, and Maintaining Highways is being revised and expanded to incorporate new topics, case studies, and lessons learned since the first edi- tion was prepared in 2002. A major report published in fiscal 2008 is Public-Private Partnership Units: Lessons for Their Design and Use in Infrastructure, a prod- uct that complements PPIAF's effort to scale 40 | 2008 Annual Report up government PPP units for managing project ries of three were prepared in collaboration pipelines. This report has been one of the most with the Infrastructure Consortium for Africa. popular products on the PPIAF Web site. One publication, Donor Debt and Equity Fi- Another flagship product launched in fiscal nancing for Infrastructure, covers donor fi- 2008 is the Infrastructure and Law Web site. nancing facilities active in African infrastruc- This site serves as an important resource for ture. The other, a guide to project information policy makers and regulators on the contrac- requirements of private investors, was released tual and legal aspects of infrastructure projects in October 2008 in both English and French. (box 12). This user's guide is being expanded to provide Continuing to update and expand existing global application. knowledge has been an important part of PPIAF's global knowledge management strate- Analyzing factors driving infrastructure gy. As part of this, PPIAF is supporting work to service performance update the Body of Knowledge on Utility Regu- Finally, PPIAF continues to sponsor analytical lation in partnership with the Public Utility pieces assessing the impacts of different institu- Research Center at the University of Florida. tional arrangements on infrastructure service This Web-based compendium of information performance as part of its efforts to advance complements forthcoming PPIAF publications knowledge. The most recent such publication, on practical regulatory issues, such as low- Does Private Sector Participation Improve discretion rules for regulators in the water sector Performance in Electricity and Water Distribu- and a technical guide on setting tariffs. tion? undertakes an econometric analysis of In addition, two more user's guides in a se- 300 water and electricity sector projects with Box 11 Global training program in urban transport The launch of the Toolkit on Market-Based Ap- proaches in Private Sector Provision of Bus Ser- vices in fiscal 2008 has been followed by an ex- tensively prepared outreach strategy and series of events to make the toolkit accessible to policy makers in different parts of the world. As part of this, PPIAF has funded a series of workshops on strategic policy and planning for the transport sector. The workshops are tailored to the region in which they are held. Each one uses regional case studies, and special efforts are made to at- tract participants from different countries across the region. So far workshops have been held in such topics as reforming the bus industry, de- Colombia, Ghana, Morocco, the Philippines, and signing networks and routes, and carrying out Washington, DC. Those attending learn about cost analyses and financial planning. 2008 Annual Report | 41 Box 12 New Web site to aid with transactions The Infrastructure and Law Web site was created for transactions in power, transport, telecommu- by the World Bank and PPIAF to help develop- nications, and water and sanitation. Annotated ment specialists and government officials better comments prepared by legal experts in the dif- manage the complex legal and contractual issues ferent sectors provide guidance to users and associated with infrastructure projects. Drawing make the site an interactive learning tool. The on years of World Bank experience, the user- Web site was launched internally at the World friendly site features checklists, model bidding Bank in spring 2008 and externally in November documents, terms of reference, sample laws and 2008, at http://www.worldbank.org/inflaw. regulations, and clauses from contracts designed private participation and a control group of Program's first global knowledge products is a 900 without private participation. Another survey of market-based lending to subnational report uses a case study approach to draw les- governments to finance infrastructure in devel- sons from the past decade of private participa- oping countries. The study, slated for publica- tion in the water sector in developing coun- tion in early 2009, assesses trends in such lend- tries. And a new study funded by PPIAF is ing and analyzes the principal obstacles to assessing the impact of governance on the per- growth in private participation in the munici- formance of state-owned enterprises and lim- pal credit markets of developing countries. In ited forms of private participation. addition, notes in the Gridlines series have cov- ered such topics as municipal bonds and credit SNTA Program activities enhancements for municipal borrowing. And The SNTA Program is moving forward to several knowledge products are being devel- bring together expertise on financing at the oped on credit ratings and subnational insol- subnational level and assess the potential for vency frameworks. increasing such financing. One of the SNTA Global Knowledge Management Clemencia Torres de Mästle (Senior Regulatory Economist) 42 | 2008 Annual Report Outreach and dissemination sites on infrastructure at the World Bank. Pro- motional efforts such as directory registrations PPIAF continues to scale up its marketing ef- and Google advertising campaigns for different forts to increase the visibility of PPIAF, its ac- products have helped increase the number of tivities, and its knowledge products. visits. Personal outreach efforts E-newsletter PPIAF staff, from the field offices as well as PPIAF's quarterly newsletter has seen its read- headquarters, together attended more than 100 ership nearly double since January 2007, with workshops, conferences, and outreach events a subscriber base at the end of fiscal 2008 of during fiscal 2008. These included investor fo- nearly 6,000 and growing. PPIAF continues to rums, government workshops and meetings, increase efforts to expand the readership, par- and outreach events targeted to the private sec- ticularly among governments, through more tor, civil society, and donors. Some of these targeted outreach efforts. The newsletter is outreach efforts were at the global level, but now sent through a service company, Vertical most of the contacts were at the national level, Response, to get more data on readers' top in recipient countries where PPIAF representa- picks and on bounce rates. tives participate actively in dialogues on sector reforms and development priorities. Publications In fiscal 2008 PPIAF published a short, four- Web site page brochure providing a brief overview of its PPIAF launched its new Web site in February activities and an accompanying two-page bro- 2008, at http://www.ppiaf.org. The updated chure on the SNTA Program. The short bro- site provides a much more user-friendly inter- chure on PPIAF, together with the related ap- face, allowing visitors to find material by sec- plication forms, is now available in English, tor, theme, and region as well as by type of French, and Spanish. knowledge product. Each month the site fea- PPIAF has continued to expand its Gridlines tures new stories highlighting the development series of four-page notes as its primary dissemi- impact of PPIAF activities, reporting on indus- nation product, using the series to summarize try trends and events, and profiling infrastruc- lessons learned from innovative projects and ture specialists. knowledge management work. Nine new notes In addition, the site now provides more de- were published in fiscal 2008, bringing the to- tailed descriptions of PPIAF activities approved tal to 38. PPIAF also continues to publish re- in the past three years, with updates on the sta- ports as part of its own branded series of Trends tus of both those being implemented and those and Policy Options publications and Working that have been closed. This information will be Papers (box 13). updated twice a year to give users current in- Working closely with the World Bank's formation on PPIAF's work. External Affairs Office of the Publisher PPIAF's Web site has proved to be an effec- (EXTOP), PPIAF is extending its outreach tive means for disseminating knowledge prod- through World Bank country offices and more ucts. The site received visits from 147 countries than 250 World Bank InfoShops and deposi- and territories in the first few months after its tory libraries throughout the world. launch, and it remains one of the most popular 2008 Annual Report | 43 Box 13 PPIAF products and publications launched in fiscal 2008 PPIAF produces several flagship products each · RecentTrendsinPrivateActivityinInfrastructure: year as part of its global knowledge management What the Shift Away from Risk Means for Policy portfolio. In addition, it features three publications · AreBrownfieldConcessionsPoisedforaCome- series that draw on local, regional, and global part- back? New Signs of Life after a Decade in Decline · AskingtheRightQuestions:Johannesburg ners. Gridlines are four-page notes that focus on Completes a Groundbreaking Municipal Bond Issue emerging trends in public-private partnerships. · ProtectingElectricityRetailersagainstPrice Trends and Policy Options publications are de- Volatility: The Electricity Tariff Equalization Fund in rived from broad research underlying both PPIAF New South Wales and non-PPIAF activities. Working Papers include · DoesthePrivateSectorDeliveronItsPromises? case studies, conference papers, and other infor- Evidence from a Global Study in Water and Electricity mal products of research. For a full list of PPIAF · WorldwideTrendsinPrivateParticipationinRoads: publications, go to http://www.ppiaf.org. Growing Activity, Growing Government Support FLAGSHIP PRODUCTS · ADemand-DrivenDesignforIrrigationinEgypt:Mini- · BodyofKnowledgeonUtilityRegulation-- mizing Risks for Both Farmers and Private Investors an online learning module providing essential TRENDS AND POLICY OPTIONS SERIES information on utility regulation · BuildingBridges:China'sGrowingRoleas · PrivateParticipationinInfrastructure(PPI)Project Infrastructure Financier for Africa Database--the leading source for PPI trends in the COSPONSORED PUBLICATIONS developing world, covering energy, telecommunica- · Public-PrivatePartnershipUnits:LessonsforTheir tions, transport, and water and sanitation projects Design and Use in Infrastructure · ToolkitonMarket-BasedApproachesinPrivate · SolidWasteinLatinAmericaandtheCaribbean Sector Provision of Bus Services and Global Train- · DonorDebtandEquityFinancingforInfrastructure: ing Program--a global toolkit serving as a teaching User Guide for Africa resource on urban transport for policy makers and · IndiaRiverBasinDevelopmentOptimizationStudy professionals · FoundationforSustainableDevelopment:Rethink- · InfrastructureandLawWebsite--ausefulresource ing the Delivery of Infrastructure Services in for policy makers and regulators on the contractual Mongolia and legal aspects of infrastructure projects · TheImpactofPrivateSectorParticipationinInfra- GRIDLINES structure: Lights, Shadows, and the Road Ahead · HelpingaNewBreedofPrivateWaterOperators WORKING PAPERS Access Infrastructure Finance: Microfinance for · TheRiseandFallofBrownfieldConcessions:But Community Water Schemes in Kenya Some Signs of Recovery after a Decade of Decline · IndiaLeadsDevelopingNationsinPrivateSector Investment: But the Region Needs More Investment to Meet Demands Outreach and Dissemination from left to right--Herb Ladley (Junior Professional Associate), Janique Racine (Communications Officer), and Amsale Bumbaugh (Information Specialist) 44 | 2008 Annual Report 4. Program finances A focused governance structure helps PPIAF tions are in cash, though PPIAF may consider channel resources to beneficiary govern- accepting contributions in kind in limited cases. ments in response to demand. These resources Non-Core Funds are subject to donor restric- are used to help the beneficiaries design pro- tions relating to themes, regions, or activities. grams of public-private partnerships. PPIAF's A donor may set up a Non-Core Fund after innovative financing structure supports this making the minimum Core Fund contribution demand-responsive approach. and with the consent of the Program Manage- ment Unit and the Program Council. Each donor enters into a trust fund agree- Finances and resource ment with the World Bank Group for its con- mobilization tributions to PPIAF. The World Bank Group recovers a small charge for costs associated PPIAF has a two-tier financial structure: a Core with administering the trust funds. Fund and Non-Core Funds. The Core Fund con- sists of funds that are not subject to prior restric- Contributions received tions on the choice of country or sector. Contri- In the 12 months ending July 1, 2008, PPIAF butionstotheCoreFundbyregionaldevelopment had a total of US$27.3 million in cash receipts, banks, however, are limited to eligible countries including those for the SNTA Program as well and consultants as defined by the charter of the as US$2.1 million in net investment income contributing regional development bank. (table 3). In addition, at the close of the fiscal The Core Fund is used for all activities fall- year, residuals from closed and canceled activi- ing within PPIAF's approved work program ties totaling US$2.167 million were rechanneled and may be applied to governance costs as well to finance new requests for technical assistance. as program activities. All donor contributions Contributions in fiscal 2008 brought the to- are designated for the Core Fund unless other- tal cash receipts since PPIAF's inception to al- wise indicated. most US$175 million, US$166.1 million for Core Fund contributions by eligible organi- PPIAF and US$8.6 million for the SNTA Pro- zations start at US$250,000 a year. All contribu- gram (table 4). Table 3 Member contributions, fiscal 2007 and 2008 (US$ thousands) Receipts in fiscal 2007 Receipts in fiscal 2008 Type of funding PPIAF SNTA Program Total PPIAF SNTA Program Total Core 21,512 n.a. 21,512 16,605 8,574 25,179 Non-Core 2,789 n.a. 2,789 0 0 0 Net investment income 1,533 n.a. 1,533 2,024 58 2,082 Total funding 25,834 n.a. 25,834 18,629 8,632 27,261 Note: n.a. = not applicable. 2008 Annual Report | 45 Table 4 Member contributions: confirmed receipts as of July 1, 2008 (US$ thousands) Summary Type of funding PPIAF SNTA Program Total Core 124,531 n.a. 124,531 Non-Core 35,905 8,574 44,479 Net investment incomea 5,700 58 5,758 Total funding 166,136 8,632 174,768 Member Durationb Receipts PPIAF Core funding Asian Development Bank January 2001­June 2008 1,750 Australia July 2007­June 2008 1,170 Canada July 1999­June 2008 2,134 European Commission July 2005­June 2007 1,118 France July 2000­June 2008 2,768 Germany January 2001­June 2008 2,064 International Finance Corporation July 2006­June 2008 250 Italy July 2003­June 2004 250 Japan July 1999­June 2006 10,435c Netherlands July 2001­June 2008 3,750 Norway July 1999­June 2007 2,850 Sweden July 2000­June 2008 2,222 Switzerland July 1999­June 2008 9,554 United Kingdom July 1999­June 2008 65,710 United States July 2003­June 2005 750 World Bank July 1999­June 2008 17,756 Total 124,531 PPIAF Non-Core funding Japan March 2001­June 2006 5,608d Sweden July 2002­June 2007 7,539e Switzerland July 1999­June 2005 3,082f United Kingdom July 1999­June 2005 19,676g Total 35,905 SNTA Program Non-Core funding International Finance Corporation July 2007­June 2008 4,100 United Kingdom July 2007­June 2008 2,474 World Bank July 2007­June 2008 2,000 Total 8,574 Note: The figures in the table may differ slightly from those reported in previous annual reports because amounts are pledged in own currency and then converted to U.S. dollars at the time of transfer. n.a. = not applicable. a. Pursuant to annex 1, paragraph 4, of the trust fund agreements. This amount supersedes earlier references to net investment income in other reports. b. Refers to the period for which the received amount is allocated. c. Includes US$1.4 million in unallocated cash from the Infrastructure Action Program. d. Targeted to countries in East Asia. e. Targeted to countries in Sub-Saharan Africa. The Swedish Non-Core Trust Fund under Multi-Donor Trust Fund I was fully disbursed on June 30, 2007. A new Swedish Non-Core Trust Fund exists under Multi-Donor Trust Fund II. f. Targeted to countries in Eastern Europe and Central Asia. The Swiss Non-Core Trust Fund was fully disbursed on June 30, 2007. g. Targeted to selected low-income countries in Asia and Sub-Saharan Africa. The U.K. Non-Core Trust Fund was fully disbursed on June 30, 2005. 46 | 2008 Annual Report Expenditures Expenditures fall into two main categories: program activities and program management and administration. In fiscal 2008 (July 1, 2007­June 30, 2008) total expenditures for PPIAF and the SNTA Program amounted to US$18.9 million (table 5). Of this amount, US$15.5 million went to program activities, down slightly from the US$16.7 million in fiscal 2007 (table 6). Table 5 Expenditures for program activities and administration, fiscal 2007 and 2008 (US$ thousands) 2007 2008 Expense category PPIAF SNTA Program Total PPIAF SNTA Program Total Program activities 16,748 n.a. 16,748 13,200 2,259 15,459 Program administration 2,798 n.a. 2,798 2,934 511 3,445 Program Management 2,414 n.a. 2,414 2,554 466 3,020 Unita Regional coordination 1,450 n.a. 1,450 1,362 74 1,436 offices Other program 384 n.a. 384 380 45 425 administration expenditures Dissemination and 194 n.a. 194 157 0 157 outreachb Technical Advisory 149 n.a. 149 117 0 117 Panelc Annual meeting costsd 26 n.a. 26 59 9 68 One-off special projectse 0 n.a. 0 23 30 53 Technical assessments 15 n.a. 15 24 6 30 of activitiesf Total program activities 19,546 n.a. 19,546 16,134 2,770 18,904 and administration expenditures Note: n.a. = not applicable. a. Includes staff salaries (headquarters and regional coordination offices), benefits, overhead, travel, office space, administration, evaluation of proposals, and governance and coordination of donor relations. b. Includes activities related to the marketing and branding of PPIAF and its products (such as annual reports, brochures, Gridlines, the newsletter, and the Web site). c. Includes fees paid to Technical Advisory Panel members for their time in reviewing PPIAF activities, their travel to Washington, and their participation in the annual meeting of donors. d. Includes travel and per diem expenses of speakers and invited participants and beneficiaries and other costs related to the annual meeting (food and conference services). e. Includes fees paid to professionals and consultants undertaking nonadministrative projects relevant to PPIAF's mission. f. Includes fees paid to professionals to assess the technical feasibility of proposals. 2008 Annual Report | 47 Table 6 Program activity expenditures, fiscal 2007 and 2008 (US$ thousands) 2007 2008 Expense category PPIAF SNTA Program Total PPIAF SNTA Program Total Staff costs 750 n.a. 750 871 2 873 Travel 1,190 n.a. 1,190 939 40 980 Consultant fees and 14,805 n.a. 14,805 11,155 2,216 13,371 contractual services Other activity 3 n.a. 3 235 1 236 expenditures Total program activity 16,748 n.a. 16,748 13,200 2,259 15,459 expenditures Note: n.a. = not applicable. Sources and uses of funds Of the US$175 million PPIAF has received since inception (US$166.1 million for PPIAF and US$8.6 million for the SNTA Program), US$152 million has been allocated to activities (table 7). Almost US$22.5 million, or 13 percent of the total cash receipts, has been allocated to program administration, including Program Management Unit and regional coordination office costs as well as expenses relating to the Technical Advisory Panel and all outreach activities. Table 7 Sources and uses of funds as of June 30, 2008 (US$ thousands) Item PPIAF SNTA Program Total Receipts 166,136 8,632 174,768 Less approved activities 146,227 5,320 151,547 Less Program Management Unit and regional coordination offices 21,947 511 22,458 Plus confirmed fiscal 2009 pledges 4,605 7,400 12,005 Plus residuals from closed and 10,431 0 10,431 canceled activities Total expected funds 12,998 10,201 23,199 Program management costs Despite the launch of the SNTA Program, program management costs increased only marginally in fiscal 2008 while declining significantly as a percentage of the now higher level of commitments. The Program Management Unit has managed the launch of the SNTA Program with the addition of only two staff members--a senior staff member (the SNTA Program leader) and a mid-level staff member who serves on a part-time basis as program leader for Latin America and the Caribbean, a position reinstated because of the considerable interest in the region in the SNTA Program. Program Management Unit costs totaled US$3.0 million for the fiscal year, or about 11 percent of the total program size of US$23.3 million. Total Program Management Unit costs were 16 per- cent of actual disbursements, which lagged behind commitments--higher as a result of the addition of the SNTA Program (table 8). 48 | 2008 Annual Report Table 8 Activity commitments and expenditures, fiscal 2008 (US$ thousands, except where otherwise specified) Expense category PPIAF SNTA Program Total Program activity commitments 17,940 5,320 23,260 Program activity expenditures 13,200 2,259 15,459 Program administration 3,445 Program Management Unit 3,020 Other program administration expenditures 425 Total program activity and administration 18,904 expenditures Program Management Unit costs As percentage of actual program activity and administration expenditures 16 As percentage of program activity commitments 13 Total program administration costs As percentage of actual program activity and administration expenditures 18 As percentage of program activity commitments 15 Single audit process The World Bank Group has instituted an annual "single audit" exercise for all trust funds. As part of this exercise the PPIAF program manager signs a trust fund representation letter attesting to the correctness and completeness of the financial process for all PPIAF trust funds. The task manager for each approved activity is required to confirm to the program manager that he or she has complied with all the terms set forth in the PPIAF award letter; has exercised due diligence with respect to the administration, management, and monitoring of the funds awarded for the activity; and has ensured that all expenses and disbursements accord with World Bank procurement and administrative guidelines. Program Finances and Administration Team from left to right--Patricia Roldan (Resource Management Assistant) and Claire Markgraf (Junior Professional Associate) Maria Anton Butler (Program Assistant) and Katia Nemes (Senior Program Assistant) 2008 Annual Report | 49 Annex 1 Governance structure P PIAF has a governance structure designed sory Panel, whose members are leading inter- to ensure the quality of its activities and national experts in different aspects of public- its accountability to participating donors. At private partnerships in infrastructure. PPIAF is the top of this structure is the Program Coun- managed by the Program Management Unit in cil, made up of representatives of contributing accordance with a general strategy laid out in donors (figure A1.1). The Program Council is PPIAF's charter and in the annual work pro- supported by the independent Technical Advi- grams approved by the Program Council. Figure A1.1 Organizational structure of PPIAF Technical Program Advisory Panel Council PPIAF HQ (Washington, DC) Program management Latin America and the Caribbean Global knowledge management Outreach and dissemination Administration Dakar o ce Nairobi o ce New Delhi o ce Manila o ce West and Central Africa East and southern South Asia East Asia and Middle East and Africa Central Asia Pacific North Africa and Europe 50 | 2008 Annual Report The Program Council Table A1.1 Members of the PPIAF Program As provided in PPIAF's charter of July 1999, amended in Council as of July 1, 2008 July 2000 and May 2001, membership in the Program Bilateral Council remains open to eligible organizations contribut- Australia (Australian Agency for International ing a minimum of US$250,000 a year to PPIAF's Core Development, or AusAID) Fund (table A1.1). Members may also contribute to Non- Canada (Canadian International Development Agency) Core Funds, whose use is restricted to particular themes, France (Ministry of Foreign Affairs) regions, or activities. The Program Council meets once a Germany (Federal Ministry for Economic year to review the strategic direction of the PPIAF pro- Cooperation and Development, or BMZ) gram, its achievements, and its financing requirements. Italy (Ministry of Foreign Affairs) Japan (Ministry of Finance) Chaired by a designated representative of the World Netherlands (Ministry of Foreign Affairs) Bank, the Program Council is responsible for: Norway (Norwegian Agency for Development Cooperation) · Consideringanddefiningthepoliciesandstrategiesof Sweden (Swedish International Development PPIAF Cooperation Agency) · Approving the annual work program and financial Switzerland (State Secretariat for Economic Affairs) plan United Kingdom (Department for International · Reviewing PPIAF's performance, including selecting Development) activities for ex post evaluation by the Technical Advi- United States (U.S. Agency for International sory Panel Development) · OverseeingtheTechnicalAdvisoryPanelandthePro- Multilateral gram Management Unit Asian Development Bank European Commission In fiscal 2008 the Program Council conducted its ninth International Finance Corporation of the World annual meeting since PPIAF's launch in July 1999. Held in Bank Group United Nations Development Programme June 2008, the meeting was hosted by the African Devel- (observer status) opment Bank in Tunis, Tunisia. The first day of the meet- World Bank ing featured presentations by specialists, on emerging themes related to emerging financiers in Africa and subna- tional borrowing, along with case studies of PPIAF activi- · Providingadvice,attherequestoftheProgramCoun- ties. The second day focused on PPIAF's progress and gave cil, on issues relating to private involvement in infra- the Program Council an opportunity to give PPIAF feed- structure in developing countries back. Donors agreed to move forward with the planning · ReviewingandcommentingonthePPIAFstrategyas for the next evaluation of PPIAF, which will be completed reflected in draft annual work programs prepared by in time for the 10th annual meeting, in 2009. the Program Management Unit · EvaluatingtheimpactofthePPIAFannualworkpro- The Technical Advisory Panel gram through ex post evaluation of selected activities The panel met twice in fiscal 2008. It held its 13th Members of the Technical Advisory Panel are selected on meeting in Washington, DC, in January 2008. Panel the basis of their expertise in matters relating to public- members also participated in the Program Council's an- private partnerships in infrastructure in developing coun- nual meeting. The panel conducted an ex post review of tries. They are appointed by the chair of the Program selected activities as part of its regular responsibility for Council after consultation with its members. independent evaluation of the impact of PPIAF's pro- The Technical Advisory Panel is responsible for: gram. The six members reviewed 22 completed and on- 2008 Annual Report | 51 going activities from fiscal 2008 as well as the business ly in the areas of macroeconomics, public finance, and plan for the SNTA Program. regulation. He was awarded the Econometric Society's The panel's review focused on three areas: PPIAF's 2002 Frisch Medal for the best applied article (empirical support for stakeholder consultations; its global outreach, or theoretical) published in Econometrica in the previous including research on trends and cutting-edge themes; five years. His current research interests include dynamic and the challenges of private participation. The review macroeconomic models and private participation in in- confirmed earlier assessments of the high quality of the frastructure. work being generated by PPIAF and concluded that in nearly all instances the work is being done cost-effectively. Nasser Munjee, Chairman, The panel also found that PPIAF has taken significant Development Credit Bank, India steps to address many of the strategic suggestions made in Building on years of experience in infrastructure devel- earlier reviews. The panel commented that many of the opment and finance, Nasser Munjee serves as an advisor activities reviewed illustrate the unique opportunity that to governments in South Asia in the area of public- PPIAF, with its global portfolio of projects, has to reflect private partnerships. He was managing director of In- on the frontiers of knowledge and experience relating to dia's Infrastructure Development Finance Company and private participation in infrastructure projects and to dis- executive director of the Housing Development Finance seminate this knowledge to a wide audience of practi- Corporation. tioners in the field. There was only one change in the membership of the Dianne Rudo, President, Technical Advisory Panel in fiscal 2008: Valentine Chita- Rudo International Advisors lu, unable to continue serving, resigned from the panel as Dianne Rudo is a senior investment banker and finan- of June 30, 2008. cial consultant with more than 25 years of international The membership of the Technical Advisory Panel is as and domestic project and corporate finance transaction- follows. al experience with both the public and the private sector. She heads her own financial services company special- Anton Eberhard, Director, izing in policy development and training on internation- Management Program in Infrastructure Reform al project and corporate finance issues and transactions. and Regulation, University of Cape Town, Previously she was the vice president and head of the South Africa Project Finance Division at the Export-Import Bank of Anton Eberhard is a professor at the University of Cape the United States. Dianne was new to the Technical Ad- Town, where he directs the Management Program in In- visory Panel in fiscal 2008. frastructure Reform and Regulation at the Graduate School of Business. His research and teaching focus on Robin Simpson, Independent Consultant the restructuring and regulation of the electricity and wa- With global expertise in policy development for infrastruc- ter sectors, investment challenges, and links to sustain- ture provision, Robin Simpson is a consultant and senior able development, including widened access to affordable policy advisor for Consumers International (based in the services and programs in renewable energy and energy United Kingdom) as well as the European Commission, efficiency. He has worked in the energy sector for more World Bank, and Wateraid. He has written numerous pa- than 25 years and was the founding director of the Ener- pers, participated in many international symposia relating gy and Development Research Centre in South Africa. to infrastructure, and worked on regional programs in Africa, Latin America, and Central and Eastern Europe. Eduardo M. Engel, Professor of Economics, Areas of particular interest include utility regulation and Yale University (Chair of the panel) pricing, private participation, and the development of con- Eduardo Engel came to Yale in 2001 after a decade on the sumer rights institutions. Robin has been with the Techni- faculty at the University of Chile. He has published wide- cal Advisory Panel since the beginning of 2007. 52 | 2008 Annual Report Valentine Chitalu, Former Head, · Maintainingeffectiverelationshipswithcontributors, Zambia Privatization Agency recipient governments, the private sector, and other Valentine Chitalu is an entrepreneur in Zambia and stakeholders southern Africa specializing in private equity and local · ProposingandadministeringthePPIAFworkplanand private sector development. Until December 2003 he budget and managing the disbursement of funds worked for CDC/Actis in London and Lusaka specializ- · Overseeingtheoperationsofthefield-basedregional ing in deals origination throughout southern Africa and coordination offices portfolio management in Zambia and Malawi. Valentine was previously chief executive officer at the Zambia Privatization Agency, where he was responsible for dives- The Regional Coordination Offices titure of more than 240 companies. Valentine holds sev- eral board positions in Zambia, Australia, South Africa, PPIAF has four regional offices: and the United Kingdom and is chairman of Zambia · EastandsouthernAfrica,inNairobi Breweries, MTN (Zambia) Limited, Stanbic Bank (Zam- · WestandCentralAfrica,andMiddleEastandNorth bia), and ALBIDON (Zambia) Limited. Africa, in Dakar · EastAsiaandPacific,inManila · South Asia, and Central Asia and Europe, in New The Program Management Unit Delhi Oversight of PPIAF activities in Latin America and the The Program Management Unit is responsible for the Caribbean is managed out of PPIAF's headquarters in day-to-day management of PPIAF in accordance with the Washington, DC. general strategy and the annual work program approved The regional coordination offices have the following by the Program Council. key responsibilities: The unit is small, focusing on administering the PPIAF program rather than delivering activities. PPIAF relies ex- · Identifying opportunities for PPIAF assistance, sup- tensively on external consultants to deliver activities, fol- porting local requests for PPIAF interventions, and tai- lowing World Bank guidelines on procurement. loring assistance strategies to local priorities and con- The Program Management Unit's key responsibilities ditions include: · Workingwithrecipientgovernmentsandcontributors, international financial institutions, and other official · Reviewing proposals for PPIAF assistance in accor- agencies to promote effective coordination of advisory dance with the criteria and process approved by the activities Program Council (for activities funded from the Core · Consultingwithprivatesectorrepresentativestoen- Fund) or by relevant contributors (for activities funded sure that their perspectives are reflected in PPIAF ad- from Non-Core Funds) vice and activities · ArrangingfordeliveryofPPIAFprogramsandactivi- · AssistinginthesupervisionofPPIAFactivities ties · Fostering contacts and good working relationships · ProvidingsecretariatservicestotheProgramCouncil with key government officials and representatives of and Technical Advisory Panel the donor, multilateral, and investor communities 2008 Annual Report | 53 Annex 2 Activities funded in fiscal 2008 Table A2.1 PPIAF and SNTA Program activities and funding by region and sector, fiscal 2008 Share of Share of Number of activities funding Region activities Funding (US$) (%) (%) Sub-Saharan Africa 42 9,689,951 35 41 East Asia and Pacific 15 2,995,758 12 13 Latin America and the Caribbean 17 2,942,159 14 13 Central Asia and Europe 12 2,793,107 10 12 Middle East and North Africa 6 1,664,000 5 7 South Asia 15 1,649,610 12 7 Global 14 1,525,520 12 7 Total 121 23,260,105 100 100 Sector Multisector 52 9,974,389 43 44 Transport 25 4,985,544 21 21 Energy 19 4,228,392 16 18 Water and sanitation 19 2,885,530 16 12 Telecommunications 6 1,186,250 5 5 Total 121 23,260,105 100 100 54 | 2008 Annual Report Table A2.2 PPIAF and SNTA Program activities by region, fiscal 2008 Economy Activity Description Funding (US$) Type of activity Sub-Saharan Africa PPIAF Botswana Prefeasibility Study Conducting a prefeasibility study on 540,000 Infrastructure for New Rail Link establishing additional rail corridors to development link Botswana to key regional seaports strategies and provide an alternative trade corridor allowing access to emerging regional trade partners Congo, Dem. Road Show for Conducting a road show--to help facilitate 89,700 Pioneering Rep. of Water Management a public-private partnership (PPP) for the transactions Contract national public water utility, Regideso--in cities in which there are operators with significant experience in the sector, such as Paris, London, Madrid, Rotterdam, Lisbon, Rabat, Tunis, Kinshasa, Durban, and Cape Town Gabon Telecom Supporting a fair, efficient, and sound 261,700 Policy, regulatory, Interconnection interconnection regime in Gabon by assisting and institutional Support the telecommunications regulator (ARTEL) reforms in designing and implementing such a regime Guinea Telecom Sector Assisting in creating an effective regulatory 245,000 Policy, regulatory, Reform environment for the telecommunications and institutional sector, conducive to private investment, in- reforms cluding through the provision of institutional support for the creation of a sector regulator and targeted support for the development of a pro-competitive interconnection framework Guinea-Bissau Port Sector Reform Studying the feasibility of involving the 251,850 Infrastructure Study private sector in port operations and provid- development ing a detailed action plan for implementing strategies key reform proposals Liberia Telecom Sector Supporting the regulator in finalizing a 75,000 Stakeholder Licensing licensing regime by facilitating consensus consultations building through industry consultations and facilitating regular discussions between the industry and public sector stakeholders Madagascar Capacity Building Supporting a capacity-building program for 75,000 Capacity building on Public-Private the preparation and delivery of high-level Partnership for training and a workshop on PPPs in Decision Makers in Antananarivo, with about 200 decision the Public and makers from the government and the public Private Sectors and private sectors Malawi Public-Private Developing guidelines, procedures, and 251,500 Policy, regulatory, Partnership Imple- model contracts to kick-start and provide and institutional mentation: Develop- guidance for the implementation of PPPs reforms ment of Regulations in Malawi and Procedures Malawi Urban Water Sector Consulting stakeholders on the government's 74,500 Stakeholder Reform, Phase 2 sector reform program, conducting consultations workshops on private participation in the urban water sector, and providing advisory support to urban water sector reform activities, including organizational management and strategy development Mauritania Electricity Sector Assisting SOMELEC, the public electricity 305,000 Policy, regulatory, Reform company of Mauritania, in restoring its and institutional financial, technical, and operational viability reforms and identifying options for sector reform measures that would lead to enhanced private sector involvement in the power sector 2008 Annual Report | 55 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Sub-Saharan Africa, PPIAF, continued Mozambique City of Maputo Supporting Maputo's PPP unit in strengthen- 321,740 Infrastructure Public-Private ing its organization and increasing its development Partnership effectiveness in formulating and managing strategies Unit Support its growing portfolio of PPP projects; and providing technical training for its staff Mozambique Legal and Financial Helping to develop the first private-sector- 782,000 Pioneering Advisory Services for led generation hub in Africa through a transactions Power Transmission pioneering form of build-own-operate- System transfer contract Nigeria Public-Private Providing funding and support to facilitate 75,000 Capacity building Partnerships in consensus and capacity building in the Infrastructure infrastructure sectors and develop an Development action plan for PPPs in support of key infrastructure development initiatives Senegal Rural Electrification Preparing a market survey and prefeasibility 350,000 Infrastructure Concessions study for the Matam-Bakel-Kanel-Ranérou development rural electrification concession, taking into strategies account different options for structuring the proposed concession Sierra Leone Sierra Leone Airports Developing a matrix of options for reform 230,250 Infrastructure Authority Private of the Sierra Leone Airports Authority to development Sector Participation enhance the airport's efficiency and safety strategies Options Study and ensure its compliance with international codes and standards South Africa Capacity Building Scaling up knowledge and capacity among 364,950 Capacity building Support to the local authorities and in the private sector National Treasury relating to the municipal PPP guidelines, Public-Private the Municipal Financial Management Act, Partnership Unit, sector-specific guidelines on the preparation Municipal Desk of municipal PPPs, and the market develop- ment assistance funds available from the national PPP unit South Africa Public-Private Assisting the Sedibeng District Municipality 250,000 Capacity building Partnership in establishing a PPP capacity building Implementation program to strengthen the compliance Unit for the with and execution of the municipal PPP Sedibeng District guidelines and methodology for the delivery Municipality of infrastructure and municipal services, including in local economic development, transport, property development, energy efficiency, and solid waste management South Africa Review of Mbombela Documenting lessons learned from the 120,000 Capacity building (Nelspruit) Water Mbombela water concession, filling the Concession information vacuum on PPP experience in South Africa, and contributing to policy discussions on the appropriate role of the private sector in the country's water sector Sudan Improved Legal Assisting the government in establishing 75,000 Infrastructure Frameworks for an improved institutional and legal frame- development Enhanced Private work for enhanced private participation strategies Sector Participation in the rail sector, with the aim of improving in the Rail Sector the sector's sustainability Tanzania Dar es Salaam Developing model bidding and contract 74,800 Infrastructure Bus Rapid Transit documents for a bus concession and fare development collector and providing a strategy for strategies their implementation under the Dar es Salaam bus rapid transit system 56 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Sub-Saharan Africa, PPIAF, continued Tanzania Legal Advisors for Hiring legal advisors to prepare high-quality 460,000 Pioneering the Ruhudji Hydro- documents ensuring that the Ruhudji transactions power Project Hydropower Project is structured as a bankable program and according to the highest market standards Tanzania Public-Private Providing training to officials in Tanzania's 70,000 Capacity building Partnership Awareness power utility and the Tanzanian government in the Power Sector on energy infrastructure finance, the structuring of new energy projects, and implementation options for private financing for key projects Zambia Public-Private Assisting the government in implementing 123,400 Pioneering Partnerships in an irrigation development scheme by transactions Irrigation assessing the institutional framework; Infrastructure developing a transaction model for public- Development and private partnerships involving smallholders Management and commercial farmers; building the capacity of government bodies; establishing standard contractual arrangements for the design, construction, management, and financing of new irrigation schemes; and developing a conflict resolution mechanism Zambia Review and Undertaking an independent technical and 288,000 Infrastructure Restructuring of financial review of the existing Zambia development Existing Railway Railway Concession; conducting a stake- strategies Concession in holders' seminar to disseminate information Zambia on the performance of the concession; and preparing a long-term railway development strategy based on projected economic growth and railway transport capacity requirements Regional Africa Infrastructure Funding phase 2 of the Africa Infrastructure 480,000 Emerging best Country Diagnostic Country Diagnostic study, a multidonor practices Study, Phase 2 initiative to improve the knowledge base on infrastructure sectors in Africa and define a baseline against which the renewed efforts of the international community to promote the development of African infrastructure can be assessed. (Phase 1 covered 24 countries in Africa; phase 2 will extend coverage to the remaining countries in the region.) Regional Capacity Building Building the capacity of the regional 75,000 Policy, regulatory, Support for the regulatory body to establish appropriate and institutional West African rules and standards for the efficient and reforms Electricity Sector effective management of the electricity Regional Regulatory network, ensure regulation of regional Body electricity exchanges, and supervise regional market operation Regional Central African Preparing model bidding documents to 460,000 Infrastructure Backbone select an international consortium for development managing and maintaining the Central strategies African backbone; studying resale and lease prices for access to international and global backbones and bandwidth to route the backbone's international traffic; coordinating and monitoring inputs from the environmental study; and performing liaison with legal consultants and providing the technical inputs needed 2008 Annual Report | 57 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Sub-Saharan Africa, PPIAF, continued Regional Core Strategic Examining core strategic transport networks 600,000 Infrastructure Transport and and a PPP investment strategy to improve development Public-Private service, reduce costs, and increase efficiency strategies Investment for along the major transport corridors in East East and Southern and southern Africa Africa Regional Dissemination of Disseminating the results of a knowledge 60,030 Capacity building Innovative Regula- building activity undertaken under a tory Approaches previous PPIAF grant, "Improving Regulation of Water and Sanitation Services" Regional Grant Extension: Updating and disseminating the PPIAF 64,986 Emerging best Role of China in study that resulted in the report Building practices Sub-Saharan Africa's Bridges: China's Growing Role as Infrastructure Infrastructure Financier in Africa Development, Dissemination Regional Kazungula Bridge Determining the appropriate legal and 36,500 Infrastructure Project and Border institutional organization and optimum development Facilities financing and operating arrangements strategies (loan, build-operate-transfer, toll concession) for the Kazungula Bridge and advising the governments concerned on setting up the institution and finalizing the financing arrangements Regional Poverty and Infra- Preparing a comparative analysis of two 74,175 Infrastructure structure Services unique, large-scale, representative, and development in the Slums of Dakar comparable data sets on 1,960 slum strategies and Nairobi households surveyed in Dakar and 1,755 surveyed in Nairobi Regional Private Investors' Preparing a stakeholder consultation 288,600 Stakeholder Meeting in Support on regional power sector investment consultations of Regional Energy planning and priorities and an extensive Projects in the road show for stimulating interest among Southern Africa private investors and lenders in regional Region generation and transmission projects in Africa Regional Review of Multisector Reviewing the institutional challenges of the 75,000 Policy, regulatory, Regulatory Agencies multisector regulatory agencies in five West and institutional in Five African African countries--Cape Verde, The Gambia, reforms Countries Guinea-Bissau, Niger, and Senegal--and providing a first-level assessment of their effectiveness Regional Support to the Providing assistance to NEPAD's Infrastructure 42,855 Capacity building New Partnership for Project Preparation Facility in its day-to-day Africa's Development business; assisting in the consideration of (NEPAD) Infrastructure longer-term strategic issues involved in Project Preparation processing applications to the facility; and Facility preparing an action plan for further assistance SNTA Program Senegal City of Dakar Financial Providing a diagnostic review of the financial 152,250 Specific Management management system of the City of Dakar so as performance Diagnostic to identify concrete short- and medium-term improvement measures to improve the city's creditworthiness in the eyes of prospective lenders South Africa Removing the Through financial, contextual, and policy 199,065 Other Barriers to Local analyses, identifying barriers to local Government government borrowing in a way that will Borrowing facilitate policy reforms needed to enable local governments to enter into prudent, market-based borrowing transactions not backed by sovereign guarantees 58 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Sub-Saharan Africa, SNTA Program, continued Swaziland Facilitating Sub- Facilitating the entry of creditworthy cities 315,000 Financing national Infra- and subnational entities into the regional structure Investment municipal finance market; building the knowledge of policy makers, subnational entities, and local governments on the benefits of and means to achieving credit- worthiness and accessing municipal finance markets; and examining ways in which equity financing may be useful in improving the creditworthiness and performance of subnational state-owned enterprises Uganda National Water Facilitating a bond issue by the National 75,000 Financing and Sewerage Water and Sewerage Corporation to raise Corporation domestic resources for capital investments-- Municipal Bond the first water infrastructure bond issue in Issuance Support Africa--by procuring legal counsel, preparing financial documents and reports required, and assisting in securing the approval of the Uganda Stock Exchange and the Capital Markets Authority Regional Credit Rating Project Engaging a recognized credit rating institu- 223,500 Credit rating with Development tion to prepare credit ratings for selected Finance Institutions African development finance institutions; (Southern African providing a credit assessment and Development diagnostic for each participating institution Community, that draws on previous work in Africa and Development in the developed world; and conducting a Finance Resource regional workshop to share knowledge on Center) issues relating to the creditworthiness of development finance institutions Regional South African Cities Providing technical assistance on a demand- 393,300 Other Network Subnational driven basis to subnational government Borrowing Support entities in southern Africa to facilitate the Program entry of the region's creditworthy cities and subnational entities into the regional municipal finance market and assist other subnational entities and local governments in achieving creditworthiness Regional Water Utility Credit Providing a creditworthiness assessment 320,300 Credit rating Ratings and diagnostic process for seven utilities, including an on-site dialogue and review with the utilities to arrive at a credit assessment score contextualized by an assessment of the local financial market and regulatory framework and the preparation of diagnostic reports identifying key strengths and weaknesses and the potential to access local finance East Asia and Pacific PPIAF Cambodia Regulatory Strategies Developing a strategy for electricity 341,850 Policy, regulatory, for the Development transmission and distribution, taking into and institutional of the Electricity account global experience and developments reforms Distribution Market in the sector; and providing recommendations on appropriate regulatory actions to achieve equity, efficiency, and reliability 2008 Annual Report | 59 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity East Asia and Pacific, PPIAF, continued Indonesia Infrastructure Supporting the Risk Management Unit in 500,000 Policy, regulatory, Guarantee Fund establishing an infrastructure guarantee and institutional fund to provide appropriate public support reforms to privately financed infrastructure projects in Indonesia Mongolia Integrated South Helping the government identify 700,000 Infrastructure Gobi Infrastructure infrastructure development options, taking development Development into account the financial, environmental, strategies Strategy and social implications of mining for the development of towns likely to be affected Philippines Development Helping to engage domestic consultants to 8,913 Stakeholder Forum Infrastructure work with the Infrastructure Sub-Working consultations Workshop Group to facilitate discussions at a workshop, ensure the quality of those discussions, and produce a discussion paper as an output of the workshop Philippines Support to the Helping the government obtain an 74,100 Infrastructure Government on the independent, third-party assessment of the development Assessment of the concession agreement for Transco with the strategies Privatization of the aim of protecting the government's interests, National Transmission highlighting priority areas of the agreement Corporation for improvement or modification, and bring- (Transco) ing in proven international practice and experience with similar concession and privati- zation transactions relevant to the Philippines Solomon Ownership and Assisting the government in developing a 65,000 Infrastructure Islands Financing Options strategy for ownership and financing of a development Study for a Renew- public-private hydropower development strategies able Energy Public- Private Partnership Vietnam Design of Vietnam Assisting the Electricity Regulatory Authority 54,075 Policy, regulatory, Competitive in completing the design of the competitive and institutional Generation Market (single-buyer) generation market to ensure reforms consistency with the objectives and conditions established by the 2005 Electricity Law and the government's sector road map Vietnam Ho Chi Minh City Providing a framework for ensuring that 200,000 Pioneering Metro Rail Project appropriate consideration is given to private transactions participation in implementing and operating the rail project, with a view to minimizing costs on a risk-adjusted basis, optimizing institutional arrangements, and taking advantage of a market-oriented approach to maximizing the benefits of the project Vietnam Support to Saigon Providing training for SAWACO in how to 73,270 Pioneering Water Corporation evaluate the bids for the PPP contract transactions (SAWACO) for from the prequalified bidders and in how Evaluating Bids to prepare for overseeing the contract, for Nonrevenue pending the mobilization of an international Water PPP Contract consultant who will provide ongoing implementation support Regional Study on Regional Examining options for the development of a 74,550 Capacity building Telecoms Regulatory resource center on telecommunications and Facility for the Pacific information and communication technology, Islands to assist telecommunications policy makers in the Pacific region in tackling regulatory challenges 60 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity SNTA Program China Ningbo Municipal Supporting the Workshop on International 68,000 Financing Finance Capacity Approaches to Municipal Finance, in Building Ningbo, China China Urban Development Delivering technical assistance to cities in 350,000 Credit rating Investment China, on a demand-driven basis, to help Corporations Credit them obtain a credit rating and an extended Ratings financial management assessment, with the aim of helping local governments manage the borrowing practices of their urban development investment corporations and transform them into financially viable entities engaged in the development of local infrastructure Philippines Credit Rating for Supporting efforts to reform the financing 390,000 Credit rating Selected Cities framework for local government units with policy advice and transactional support on a pilot basis--with the assistance focused on achieving credit ratings for selected local government units, developing a framework for monitoring and regulating the borrowing activities of such units, and sharing knowledge through a workshop to discuss the role of credit ratings in local government finance Philippines Initial Scoping Study Helping the City of Marikina develop an 27,000 Financing and Diagnostic for overall financing strategy to implement Marikina City components of its priority capital expenditure program and prepare the implementation of its priority projects, particularly those suited to market-based financing Philippines Small Water Utilities Helping 11 small water utilities improve their 69,000 Financing Improvement and access to finance from financial institutions Financing Project through an assessment of their financing needs and options and an assessment of their likelihood of obtaining commercial finance, including identifying steps that the financial institutions can take to remove some of the financing constraints South Asia PPIAF Bangladesh Road Shows to Supporting the participation of four 26,500 Pioneering Promote a 330- to government officials in a road show for the transactions 450-Megawatt IPP Bibiyana independent power producer project, Project as a way to improve market interest in the power generation project and thus lead to greater competition and more attractive bids for the government Bhutan Policy and Regula- Assessing options for private participation 70,000 Policy, regulatory, tory Framework for in the provision of backbone infrastructure, and institutional Telecommunications broadband, and value-added services and reforms Backbone Infrastruc- providing short- and medium-term recom- ture Development mendations for improving such services India Advice for Developing Finalizing the structure of a PPP for 200,000 Infrastructure an Implementation developing the power transmission system development Framework for in Maharashtra, identifying risks, and strategies Strategic Alliance developing a risk allocation framework for Partner Model for this innovative model that has not been Power Transmission applied elsewhere in India System Develop- ment in Maharashtra 2008 Annual Report | 61 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity South Asia, PPIAF, continued India Institutions, Pro- Supporting an assessment of the existing 107,800 Capacity building cesses, and Capacity institutional framework, processes, and Review to Facilitate capacity for implementing PPP projects; Public-Private identifying important areas where PPP Partnerships units and other key entities responsible for developing and implementing PPPs would require support; and developing an action plan to provide capacity building support India Legal, Policy, and Supporting the government of Bihar in 74,950 Policy, regulatory, Institutional Support developing an enabling legal, regulatory, and institutional for Facilitating Public- and institutional environment for public- reforms Private Partnership private partnerships in infrastructure Projects in Bihar service provision in the state India Preparation of Assessing market circumstances and 75,000 Policy, regulatory, Business Plan for preparing a strategy and business plan and institutional Maharashtra Urban for the Maharashtra Urban Infrastructure reforms Infrastructure Development Company to enable it to Development fulfill its mandate effectively; identifying Company potential revenue sources for the company; and suggesting organizational, governance, and capital structure models India Public-Private Developing a comprehensive PPP policy 75,000 Infrastructure Partnership Policy and and assessing options that Indian Railways development Options for Railways could use in soliciting and effectively strategies utilizing private sector resources and expertise in developing the rail sector India Study on Business Assessing the performance of the public 75,000 Policy, regulatory, Plan for Pune transport system in the city of Pune and and institutional Mahanagar Parivahan looking at strategic options for developing reforms Mahamandal Limited an action plan for improving the system India Technical Advisory Providing support to the Maharashtra 150,000 Policy, regulatory, Support to State Power Distribution Company in and institutional Maharashtra State establishing a franchisee management unit reforms Power Distribution Company Limited for Postfranchise Con- tract Management India Visakhapatnam­ Providing support to the government of 75,000 Infrastructure Kakinada Coastal Andhra Pradesh in preparing an "infra- development Growth Corridor structure vision" for the Visakhapatnam­ strategies Project: Preparation Kakinada coastal growth corridor, of an Infrastructure including an action plan and implementation Development and mechanism for key infrastructure projects Public-Private and identification of projects that can be Partnership Strategy implemented on a PPP basis Maldives Facilitating a Legal Providing draft laws and regulations to 75,000 Policy, regulatory, Framework for Port redefine the role of the Port Authority and and institutional Development other government and private entities reforms working in the port sector Nepal Structuring a Determining the scope and structure of 99,500 Infrastructure Public-Private the proposed Kathmandu­Terai road project development Partnership for the as a PPP strategies Kathmandu­Terai Road Project Pakistan Workshop on Public- Helping the government organize a two-day 35,500 Capacity building Private Partnerships workshop on PPPs in municipal services with in Municipal Services a specific focus on solid waste management and water and sanitation services 62 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity South Asia, PPIAF, continued Regional Workshop on Conducting a workshop to share 70,360 Emerging best Consultations experience and train selected reforming practices and Strategic policy makers in the region in using Communications effective communication techniques in the Water and while implementing reforms and infra- Sanitation Sector in structure development through public- East and South Asia private partnership SNTA Program India Facilitating Private Supporting the government of 440,000 Financing Financing and Karnataka in hiring a financial advisor to Domestic Borrowing outline options for leveraging a proposed for the Roads Sector World Bank loan to access additional in Karnataka financing from the private sector and local financial institutions, as a way to close the large financing gap for Karnataka's road improvement program Middle East and North Africa PPIAF Egypt, Arab Framework for Public- Developing a framework for PPPs in the 74,000 Policy, regulatory, Rep. of Private Partnership power sector based on a new law calling and institutional and Improved for greater competition, a gradual increase reforms Payment Collection in prices, and an appropriate allocation of in the Power Sector risk between public and private sector participants Egypt, Arab Public-Private Preparing a comprehensive diagnostic 450,000 Capacity building Rep. of Partnership Unit report on PPP development issues in Capacity Building Egypt, preparing a business development plan for the central PPP unit, and reviewing policy issues arising in the design of pilot PPP projects Morocco Development of Reviewing the role of the private sector in 290,000 Infrastructure Private Sector solid waste management in Morocco, development Participation Strategy examining options for further private strategies for Solid Waste participation in the sector, preparing model Management bidding documents for municipal solid waste services, and building capacity at the municipal and regional levels to ensure proper contracting of private participation Tunisia Sfax Municipal PSP Providing technical assistance to the 75,000 Infrastructure Slaughterhouse municipal government of Sfax and the development association of seven municipalities of Greater strategies Sfax to identify feasible PPP options for the development of a new slaughterhouse facility that will integrate the operations of four existing and deficient facilities Yemen, Public-Private Helping to formulate an optimal gas market 700,000 Infrastructure Rep. of Partnership Models structure and define possible options for development for Domestic Gas financing a gas pipeline, either as an strategies Pipeline Financing integrated pipeline with an associated power plant or as a separate project with a different financing structure Regional Support of the Arab Supporting the development of a Web portal, 75,000 Capacity building Water Council hosted by the Arab Water Council's Web site, on PPPs in water to facilitate capacity building and knowledge sharing among water professionals, decision makers, the media, and the private sector in the Middle East and North Africa 2008 Annual Report | 63 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Central Asia and Europe PPIAF Armenia Feasibility Study Preparing a feasibility study for an integrated 531,500 Infrastructure for Integrated Solid solid waste management system in Yerevan development Waste Management that incorporates private participation strategies through Public- Private Partnerships in Yerevan City Bosnia and Seminar on Private Providing a seminar or workshop on PPPs 29,400 Capacity building Herzegovina Sector Participation in infrastructure with the aim of helping in Infrastructure to strengthen the institutional capacity of several national and subnational ministries, road directorates, and concession commissions Croatia Assistance for Providing assistance to the Northwest 75,000 Pioneering Private Sector Regional Waste Management Facility transactions Participation in (JUSZH)--drawing on international best the Northwest practice--in structuring a scheme involving Regional Waste private participation to develop and Management implement a regional waste management Facility facility that optimizes waste minimization, carbon reduction potential, and renewable energy generation Kosovo Establishing Regula- Assisting the Energy Regulatory Office in 202,500 Policy, regulatory, tory Framework developing secondary legislation and and institutional for Developing regulations for the development of reforms Renewable Energy renewable energy sources Sources Macedonia, Assisting the Providing assistance to the Energy Regula- 605,767 Policy, regulatory, FYR Transmission System tory Commission in developing new tariffs and institutional Operator and Energy for the next control period and building reforms Regulator to Operate capacity for undertaking its responsibilities in the Competitive during the ongoing market reforms and Electricity Market introduction of competition Regime Montenegro Assessing Assessing the potential for the introduction 181,000 Infrastructure Public-Private of private participation in the development development Partnership Potential of the highway sector in Montenegro, strategies in Highways and specifically for the two priority road Developing Enabling corridors identified by the government, Framework which includes developing a draft legal framework for implementing PPPs and draft terms of reference for future support to take priority road investment projects to the bidding stage Serbia Advisory Support Assisting the interagency working group 74,600 Infrastructure to Interagency formed by the government in formulating development Working Group for a strategy to reform the delivery of essential strategies Designing a Reform municipal services (water and sanitation, Strategy for Munici- solid waste management, district heating, pal Public Utility and public transportation), including an Companies assessment of institutional reforms and potential for public-private partnerships Ukraine Review, Analyze, Helping the government strategize on how 237,000 Infrastructure and Recommend best to attract private investment for development Public-Private Euro 2012 infrastructure projects and, in strategies Partnership Invest- particular, providing detailed financial ment Models for analysis and guidance for attracting private Euro 2012 Projects investment for the modernization of regional airports 64 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Central Asia and Europe, PPIAF, continued Regional Southeast Europe Assessing the feasibility of developing 47,000 Infrastructure Regional Gasification regional gas infrastructure in Southeast development Study Europe and analyzing the economics strategies of gas storage as a part of developing gas infrastructure and a gas market SNTA Program Montenegro Creditworthiness Assisting the Podgorica Water and Sewer 285,000 Specific Assessment for the Company and its owner, the Municipality performance Podgorica Water of Podgorica, in its plans for upgrading improvement Utility and expanding water and wastewater services, possibly with private participation, commercial finance, or both Ukraine Municipal Supporting a program to enhance the 505,340 Specific Creditworthiness creditworthiness of two Ukrainian cities performance Enhancement so that each can guarantee the borrowing improvement Project of its heating company for priority infrastructure investment; and helping the cities in designing programs that cost- effectively enhance creditworthiness and in using competitive and transparent procedures to recruit and manage consultants to implement these programs Ukraine Review of Legal and Reviewing the legal and regulatory frame- 19,000 Financing Regulatory Frame- work in Ukraine to assess the potential for, work for Financing and the constraints on, subnational borrow- Subnational Entities ing for infrastructure development and pro- viding recommendations for enabling market- based financing for subnational entities Latin America and the Caribbean PPIAF Brazil Private Participation Identifying two suitable pilot projects in 400,000 Pioneering in Municipal Solid Brazil, systematically evaluating local transactions Waste Management conditions, reviewing potential project Projects structures, identifying an appropriate mix of public and private investment for each project, structuring the projects, and preparing the bidding documents and contracts for private participation Brazil Public-Private Part- Providing analytical and advisory services 75,000 Infrastructure nership Contracts for structuring PPP or concession development for Regional and transactions for developing and operating strategies Irrigation regional infrastructure (water resources Development and related transport and energy), with an immediate focus on legal services Colombia Evaluating Private Collecting information and analyzing the 74,000 Infrastructure Sector Participation effect of different forms of private partici- development Diversity in the Water pation on the performance of water and strategies Sector sanitation utilities Colombia Regulatory Structures Reviewing and analyzing existing regula- 248,358 Policy, regulatory, for Public Transport tory structures and designing an appropriate and institutional legislative framework for the improvement of reforms public transport and tariff regulation in Colombian cities Colombia Traffic Studies for Preparing traffic studies to help the 400,000 Infrastructure the Ruta del Sol government structure and tender the Ruta development Concession del Sol road concession, the largest infra- strategies structure project in Colombia and one of the largest in the region 2008 Annual Report | 65 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Latin America and the Caribbean, PPIAF, continued Panama Implementation Helping to implement the recommenda- 47,312 Policy, regulatory, of Bus Transport tions of an earlier PPIAF-funded activity and institutional Framework ("Improving the Bus Transport Frame- reforms work") by finalizing bidding documents and contracts and offering implementation advice to the government Regional Airport Benchmarking Documenting the operational and financial 150,000 Infrastructure and Performance performance of private participation in air- development Assessment ports in the region over the past decade, strategies analyzing regulatory schemes implemented in the region, and providing policy recom- mendations to improve the performance of the sector Regional Publication, Transla- Editing, publishing, and disseminating The 50,000 Policy, regulatory, tion, and Dissemina- Impact of Private Sector Participation in and institutional tion of Impact of Infrastructure: Lights, Shadows, and the reforms Private Sector Parti- Road Ahead, a book providing a systematic cipation in Infrastruc- evaluation of the impacts of private partici- ture Manuscript pation in infrastructure in Latin America Regional Public Transport Preparing for and presenting the World 27,200 Emerging best Service and Bank course "Introduction to Public Trans- practices Operations Planning port Service and Operations Planning" for Dissemination Course, Latin America and the Caribbean during the Bogotá, Colombia Transmilenio annual conference in Bogotá Regional Supporting Center Conducting the second phase of a strategic, 57,000 Infrastructure for Indigenous technical, commercial, and regulatory development Environmental analysis of the potential for implementing strategies Resources (CIER) energy exchanges by public and private Energy Exchange sector entities between the Andean Study countries and the countries of Central America and the Southern Cone SNTA Program Brazil Compesa IPO Action Assisting with an initial public offering (IPO) 29,000 Financing Planning Consultancy of ownership shares in Compesa (Companhia Pernambucana de Saneamento), to help state government officials and PPIAF better understand how much work will be required to carry out the IPO and how PPIAF can help Colombia Creditworthiness Conducting a detailed diagnostic review of 253,200 Financing Improvement Plan Barranquilla's public finances and proposing for Barranquilla a strategic plan to address the most pressing Urban Transport constraints, including the municipality's abili- ty to sustainably cofinance the 30 percent infra- structure costs of the bus rapid transit system Colombia Creditworthiness Helping La Promotora, a development finance 117,500 Specific Strengthening for institution owned by the Colombian city of performance La Promotora de Pereira, improve its operational risk manage- improvement Pereira ment practices, internal controls, and monitor- ing and evaluation capabilities, so as to improve the organization's ability to provide financing for sustainable infrastructure projects Colombia Feasibility Study for Evaluating the feasibility of two cable car 176,000 Financing the Implementation lines proposed for Bucaramanga of Integrated Cable- (Morrorico and Carrera 33; Palonegro Type, Aerial Corridors Airport and Ciudadela Real de Minas) and in the Integrated defining a strategy for financing those Mass Transit System cable car lines for Bucaramanga's Metropolitan Area 66 | 2008 Annual Report Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Latin America and the Caribbean, SNTA Program, continued Guatemala Testing Credit Preparing a manual for a proposed 56,389 Financing Enhancement Facility guarantee fund (FOGA) to support private (FOGA) for Com- banks investing in basic community mercial Financing infrastructure; and promoting, through of Basic Infrastructure seminars and training sessions, the FOGA for the Poor concept among communities, private banks, and microfinance institutions interested in financing local infrastructure projects Honduras Project Appraisal and Providing training to municipal authorities 425,904 Financing Legal-Regulatory in the appraisal and structuring of municipal Review borrowing transactions for their infrastructure projects; and undertaking an analysis of the legal and regulatory framework for municipal borrowing in Honduras that could provide the basis for a countrywide strategy to develop the municipal finance market Peru Access to Commercial Providing direct technical assistance to 355,296 Financing Bank and Capital selected subnational governments to Market Financing facilitate their access to commercial bank and capital market financing, so as to allow them to complement existing transfers and own revenues, diversify funding sources, create a credit history, and introduce financial discipline Global PPIAF Global Body of Knowledge Updating, expanding, and disseminating the 228,333 Emerging best on Utility Regulation Body of Knowledge on Utility Regulation practices and evaluating it so as to establish a path for the long-term sustainability of its governance board and secretariat Global Delivering Pro-Poor Providing a concept note for a proposed 40,000 Emerging best Infrastructure: study on approaches to the delivery of practices Background infrastructure to the poor and carrying out Literature and the background work needed to create an Concept Note, information base on pro-poor infrastructure Phase 1 programs Global Impact of Internal Conducting a study on the design of 75,000 Emerging best and External infrastructure reforms for state-owned practices Governance on enterprises and limited forms of public- the Performance of private partnership--including the full Infrastructure Service spectrum from service contracts to Providers concession contracts--to improve under- standing of the issues and draw new insights and lessons Global Measuring the Impact Supporting follow-up outputs to further 56,638 Emerging best of Private Sector capitalize on the major data collection practices Participation in effort on private participation and state- Water and Electricity owned utilities and the knowledge gained Distribution, Follow- as part of the earlier research Up Study Global Presentation of the Supporting the dissemination of the 1,750 Capacity building Urban Bus Toolkit to Urban Bus Toolkit to an international the International Mass audience of government officials and Transport Conference other technical experts in mass transport in Pereira, Colombia from Latin America and the Caribbean at the International Mass Transport Conference in Pereira, Colombia, August 21­23, 2007 2008 Annual Report | 67 Table A2.2, continued Economy Activity Description Funding (US$) Type of activity Global, PPIAF, continued Global Private Participation Supporting the maintenance and 349,950 Emerging best in Infrastructure (PPI) enhancement of the PPI Project Database, practices Project Database, which tracks private activity in infra- Fiscal 2008 structure in developing countries Global Publication of Paper Supporting the finalization of the paper 11,500 Emerging best on Public-Private on PPP units that was produced jointly practices Partnership Units by the World Bank and PPIAF in fiscal 2007 Global Public Transport Assisting in broader dissemination of the 147,900 Emerging best Service and Opera- approaches to bus transport reform practices tions Planning Train- developed under the Urban Bus Toolkit, to ing Courses and enable city policy makers to more systematic- Dissemination ally explore, design, and implement options for organizing the delivery of urban passenger transport Global Road Gridlines Preparing a four-page Gridlines note that 6,024 Emerging best Publication analyzes the key trends and emerging practices policy issues in private participation in roads in developing countries Global Small Providers of Identifying key issues and opportunities for 50,000 Infrastructure Water and Electricity, small-scale private service providers in development Phase 2 (Identifying improving access to, and the affordability strategies Key Issues and and quality of, basic water and electricity Opportunities) services for the poor in developing countries; and identifying a set of recommended policy and operational options for countries going forward Global Study on the Causes Analyzing the causes of the cancellation of 23,500 Emerging best of Public-Private PPI projects in middle- and low-income practices Infrastructure (PPI) countries and reviewing a set of case studies Project Cancellation providing more detailed analysis for a subset of canceled projects Global Supporting an In- Producing a publication on project finance 74,700 Emerging best Depth Publication for BOT concessions and PPPs, including practices on Project Finance best practices in BOT projects and project for Build-Operate- finance and issues of greatest interest to Transfer (BOT) developing countries, such as allocating risk, Concessions and mobilizing finance, using limited recourse Public-Private financing, and managing fiscal risks Partnerships Global Toolkit on Resource Developing a toolkit on resource allocation 385,400 Emerging best Allocation and and use in the transport sector (road, rail, practices Utilization in the aviation, maritime transport), with the aim of Transport Sector improving the understanding of issues relating to public and private expenditure in the sector; and systematically developing an instrument to help task teams and partner countries increase efficiencies in resource allocation and use in the sector SNTA Program Global Municipal Finance Providing a research paper, presentation, 74,825 Other Survey and Gridlines note surveying private, market- based lending to finance subnational government infrastructure in the developing world 68 | 2008 Annual Report Acronyms and abbreviations BOT Build-operate-transfer GDP Gross domestic product IPO Initial public offering IPP Independent power producer PPI Private participation in infrastructure PPIAF Public-Private Infrastructure Advisory Facility PPP Public-private partnership PSP Private sector participation SNTA Sub-National Technical Assistance (Program) How to contact PPIAF PROGRAM MANAGEMENT UNIT WEST AND CENTRAL AFRICA c/o The World Bank MIDDLE EAST AND NORTH AFRICA 1818 H Street NW REGIONAL COORDINATION OFFICE Washington, DC 20433 Corniche Ouest X Leon Gontran Damas USA BP 3296 Tel: (+1) 202 458 5588 Dakar, Senegal Fax: (+1) 202 522 7466 Tel: (+221) 33 859 4100 E-mail: ppiaf@ppiaf.org or snta@ppiaf.org Fax: (+221) 33 825 1518 E-mail: dakarrco@ppiaf.org EAST AND SOUTHERN AFRICA REGIONAL COORDINATION OFFICE SOUTH ASIA Kenya Re Towers CENTRAL ASIA AND EUROPE Upper Hill, P.O. Box 30577 REGIONAL COORDINATION OFFICE Nairobi, Kenya 50M, Shantipath Tel: (+254 20) 271 4095 Chanakyapuri Fax: (+254 20) 271 4275 New Delhi 110 021 E-mail: nairobirco@ppiaf.org India Tel: (+91 11) 411 77 801 EAST ASIA AND PACIFIC (+91 11) 411 77 850 REGIONAL COORDINATION OFFICE Fax: (+91 11) 411 77 849 Floor 23 Taipan Place E-mail: delhirco@ppiaf.org F. Ortigas Jr. Rd., Ortigas Center Pasig City, Metro Manila Philippines Tel: (+63 2) 637 5855 (+63 2) 917 3000 Fax: (+63 2) 637 5870 E-mail: manilarco@ppiaf.org