IDB Business Seminar: Financing Private and Public Sector

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IDB Business SeminarFinancing Private and
Public Sector
Energy and Transportation
Washington D.C. September 25, 2003
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Contents

• 1. Sector Background.
• 2. Bank Strategy for the Sector.
• 3. Activities in Support of the Strategy.
• 4. Role of IDB.
• 5. Projects in the Pipeline.
• 6. Support to regional integration.
• 7. Business Opportunities.
• 8. Key to Success.

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The Energy Sector
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Background

• A few years ago, difficult economic situation in
  the region
• Insufficient resources for much-needed
  investments.
• Construction works fell behind schedule.
• Postponement of new projects.
• Inadequate maintenance of existing facilities.
• Result
• Quality of services and efficiency deteriorated.
• Power shortages in some cases.
• Limited improvements in access/coverage .

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Background

• Governments in the Region implemented
  economic/sector reform programs aimed at
• Improving deteriorated fiscal situations.
• Restoring electric power sectors to an
  institutionally and financially sound position.
• Promoting a more active role for the private
  sector
• Obtaining sector sustainability.
• Outcome
• Increased economic and sector activity.
• Recovery in energy demand.
• New markets, imperfect markets, new distortions.
• Continued regulatory strengthening required.
• Increased need for Bank technical and financial
  support.

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Bank Strategy for the Energy Sector

• Consolidate regulatory role of government
  seeking sector development, rational prices and
  QoS.
• Improve the living conditions of the population
  by expanding the coverage of the service at the
  lowest cost, but in a sustainable way.
• Provide greater emphasis on socio-environmental
  aspects.
• Promote conservation and sustainable
  non-conventional energy programs.
• Promote the participation of the private sector
  in management, operations, rehabilitation, and
  expansion.
• Support regional integration projects.

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Bank Activities in Support of the Energy Strategy

• Institutional strengthening and technical
  cooperation
• Improve institutional, regulatory and legal
  framework.
• Support governments in their efforts to promote
  private participation in the sector.

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Bank Activities in Support of the Energy Strategy

• Rehabilitation and expansion financing
• Market enhancements through private and public
  investment in transmission facilities and
  networks.
• Restore adequate quality and reliability of
  service.
• Expand coverage to rural and other unserved
  areas.

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Transportation Sector
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Background

• Reform evolution has been more gradual
• Country specific.
• Sub sector specific (roads, railways, ports,
  airports).
• Function specific within sub sectors.
• Different degrees of private sector involvement
• Result
• New roll of government .
• Policy making, regulation, project management
• More focused public investment.
• Spectrum from private ownership, to BOMT, to
  maintenance contracts.

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Bank Strategy for the Transportation Sector

• Develop the institutional and financial capacity
  of governmental agencies to carry out integrated
  transport programs.
• Improve the accessibility of the population to
  adequate transportation services and reduce the
  transport costs of goods and passengers.
• Provide assistance to governmental agencies in
  devising adequate ways to secure the maintenance
  and efficient operation of their transport
  infrastructure.

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Bank Activities in Support of the Transport
Strategy

• Institutional strengthening and technical
  cooperation
• Knowledge and experience transfer among
  countries.
• Strengthening of sector planning function.
• Exploit multimode synergies.
• Aim for sustainable systems
• Promote innovative maintenance financing and
  management.
• Support governments in their efforts to promote
  private sector participation in the sector .
• Promote low cost solutions (I.e urban transit).
• Traditional public sector investment .

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Implementing transportation and energy strategies
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The role of the IDB

• Loans to the public sector
• Technical Cooperation (reimbursable and
  non-reimbursable).
• Investment Loans, Sector Reform Loans, Hybrid
  Loans .
• The borrower could be the national government or
  regional and municipal governments or a public
  company (with guarantees from the nat.
  government).
• Loans to the Private Sector.
• Non-financial services.

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Projects in the PipelinePublic Sector - ENERGY
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Projects in the Pipeline
Public Sector - TRANSPORTATION
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Projects in the Pipeline
Public Sector Transportation (2)
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Projects in the Pipeline
Public Sector Transportation (3)
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Regional Integration Support

• Across all sectors and sub sectors.
• Two initiatives worth following up
• Plan Puebla Panamá (PPP)
• Eight countries MX, HO, GU, BE, PN, CR, ES, NI.
• Integración de la Infraestructura Regional para
  América del Sur (IIRSA)
• Multinational initiative that includes the twelve
  south American countries.
• Long term strategic impact in the energy and
  transport sectors.

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Plan Puebla Panamá PPP

• Includes Energy and transport initiatives.
• Multinational projects.
• Regional Dialog to harmonize regulation.

http//www.iadb.org/ppp
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IIRSA

• Multisectorial initiative.
• Transportation, energy and telecom.
• Seeks strategic coordination.
• Governments, multilateral organizations, and
  private sector.

http//www.iirsa.org/
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Business Opportunities

• Consulting/Advisory Services
• Support to institutional development and
  strengthening
• Support to policy and regulatory reforms
• Feasibility and other technical studies
• Socio-environmental assessments
• Project finance and structuring
• Legal advisory services
• Goods and Civil Works
• Generation units and associated civil works
• Equipment, materials and works for rehabilitation
  and expansion of transmission and distribution
  systems

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Key to Success

• Establish Local Contacts
• Obtain information as early as possible
• Make an effort to speak the local language
• Get to the point and be clear
• Follow explicit directions in bidding documents
• Submit proposals on time
• Use your Embassy or Chamber of Commerce

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Thank You