QUARTERLY REPORT: (April 1 June 30, 2006) Status of Approved Activities

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized QUARTERLY REPORT: (April 1 June 30, 2006) Status of Approved Activities PPIAF Helping to eliminate poverty and achieve sustainable development by facilitating private involvement in infrastructure. c/o World Bank, 1818 H Street NW, Washington DC USA Tel: +1 (202) , ppiaf@ppiaf.org Fax: +1 (202)

2 August 14, 2006 Program Council Members: In accordance with the PPIAF Program Charter, please find attached the PPIAF quarterly progress report on the status of approved activities. This report covers the period from April 1 June 30, Sincerely, Jyoti Shukla Program Manager PPIAF Helping to eliminate poverty and achieve sustainable development by facilitating private involvement in infrastructure. c/o World Bank, 1818 H Street NW, Washington DC USA Tel: +1 (202) , ppiaf@ppiaf.org Fax: +1 (202)

3 PPIAF Quarterly Report April 1 June 30, Activities worth $6 Million Approved in the Fourth Quarter of Fiscal The quarterly call for proposals attracted 32 applications with a face value of $6.5 million. Twenty nine activities totaling $6 million of PPIAF grants were approved. Fifteen of these were for small activities ($75,000 or less), with an average value of $58,500, and the remaining 14 were medium and large activities, averaging $362,660 in value. The Africa region had the largest share of approvals (53 percent) thanks to a large number of high value approvals, followed by Global or Knowledge Management portfolio. Multi-sector activities accounted for the largest share of the sectoral distribution with 47 percent of total approvals. I Highlights of Some Activities Approved in FY06 Q4 Africa Country Diagnostic (AICD) In May, PPIAF became a key contributor to the AICD, a comprehensive study requested by the Consortium for Africa (ICA) to help fill the data gap that inhibits a full understanding of Africa s infrastructure financing needs. The AICD study is designed to provide this missing information and help establish a baseline that can be used to measure efforts by the development community to begin meeting those needs. The World Bank will conduct the study, which will be funded largely by DFID, with help from other bi-lateral donors. PPIAF's contribution ($1 million or about 25% of the total needed) is substantial precisely because the data collection and benchmarking has special relevance for our ability to understand the possibilities for private participation in infrastructure (PPI) in Africa. The study will clarify the fiscal resources available for infrastructure investment in the region and contrast this with the estimated investment needs for the sectors as well as the efficiency parameters of the sectors. This three part view of the infrastructure situation in each of the 24 countries examined will help to illustrate the potential role for PPI both in closing the financing gap and in improving sector performance. This kind of information is critically needed in order to help facilitate consensus regarding the role of PPI in Africa something that, in the absence of hard data, has been the subject of wideranging debate. PPIAF will participate on a multi-donor Task Team that will guide the AICD research activities, as well as ensure coordination between the AICD study and related ICAsupported research efforts being undertaken by NEPAD, the African Union and the African Development Bank. 2 2

4 PPIAF Quarterly Report April 1 June 30, 2006 Users' Guide to Project Preparation Facilities In July, PPIAF completed a collaborative activity with the Secretariat of the Consortium for Africa (ICA), involving the preparation of a users' guide to donor-supported infrastructure project preparation facilities active in Africa. ICA is a group of high-level decision makers representing the G8 countries, the World Bank, the European Community, as well as key African counterpart organizations like the African Union, NEPAD, the African Development Bank (AfDB), and many of the Regional Economic Communities on the continent. The ICA Secretariat, hosted in Tunis by the AfDB was established in early 2005 and tasked with coordinating work to develop key regional infrastructure projects identified as priorities by NEPAD. In the course of carrying out this assignment, the staff of the Secretariat became aware of the many donor-supported facilities that can help with various stages and elements of infrastructure project preparation, including facilities like PPIAF, GPOBA, DevCo, InfraCo, etc. In order to better understand how these facilities work, the Secretariat asked for PPIAF help in preparing a user-friendly guide that catalogues the facilities and clarifies the conditions under which their support can be accessed. Although not a sophisticated research project, the activity has produced a guide (in both English and French) to over two dozen facilities, which has sparked a great degree of interest among ICA members, as well as many other African professionals involved in infrastructure development. PPIAF's Regional Program Leader based in Nairobi has already introduced the guide in presentations to the ICA plenary meeting in Addis in June, facilitated a half-day workshop on project preparation for the international field staff of DFID in London in July, and presented the final version of the guide to 21 African water utilities in South Africa in early August. By late August or early September, the guide will be available from both the ICA and PPIAF websites. Assisting the CAREC Members Electricity Regulators Forum (CMERF) Asian Development Bank (ADB) is assisting the countries of Central Asia to facilitate greater regional economic integration under the auspices of CAREC (Central Asian Regional Economic Cooperation). EBRD, IMF, UNDP and the WB are also partners of the CAREC program. CAREC member countries are: Azerbaijan, Peoples Republic of China (PRC), Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan and Uzbekistan. Primary focus areas of CAREC are transport, energy, trade facilitation (customs cooperation), and trade policy. To promote effective and efficient power sector regulation, ADB with support from PPIAF, assisted in establishing CMERF in CMERF has requested PPIAF funding for two studies on: (i) Appropriate pricing and provision of ancillary services in power sector in China and (ii) risk sharing under Power Purchase Agreements in Kazakhstan and the Kyrgyz Republic. These studies will assist design of regulations at the national and regional level and regulatory capacity building. The results of the studies will be disseminated widely using the CMERF website. 3 3

5 PPIAF Quarterly Report April 1 June 30, 2006 Assessing viability and options for public private participation in highways sector in Kosovo Kosovo is one of the poorest regions in South Eastern Europe. The Kosovo Government Program for lists infrastructure development as one of the top priorities and the Government intends to promote new models for co-financing of road projects. This PPIAF-funded study, approved in June 2006, will provide the Ministry of Transport & Communications with an assessment of the options and viability of private sector participation in the highway sector. It will provide recommendations to the government on appropriate policy, legal, institutional and regulatory issues important for facilitating PPPs. The study is expected to provide an assessment of the suitability of private sector engagement for one or more investment projects, and enable consensus building within the Government on the next steps including inviting private sector bids for the selected projects. II PPIAF Annual Meeting 2006 The seventh PPIAF annual meeting was hosted by the Federal Ministry for Economic Cooperation and Development (BMZ) in Bonn, Germany over a two day period, May 23-24, The meeting was attended by representatives of PPIAF s donors. AusAid, The African Development Bank and the Private Development Group (PIDG) attended as observers. Please check the PPIAF website for minutes of the meeting. III Select News and Regional Events During the Quarter PPIAF Announced the Launching of its New Gridlines Series Gridlines share emerging knowledge on PPP and give an overview of a wide selection of projects from various regions of the world. Through technical assistance and knowledge dissemination PPIAF supports the efforts of policymakers, nongovernmental organizations, research institutions, and others in designing and implementing strategies to tap the full potential of private involvement in infrastructure. The gridlines are available on the PPIAF website by following attached link

6 PPIAF Quarterly Report April 1 June 30, 2006 SUB-SAHARAN AFRICA ECOWAS Workshop on Harmonization and Reform PPIAF supported the organization of a regional workshop held in Abuja, Nigeria, on April 3-4 and hosted by the Secretariat of the Economic Community of West African States (ECOWAS). The workshop was held to disseminate the results of PPIAF-funded studies on policy and regulatory harmonization to facilitate the development of the regional telecommunications and energy sectors. Over 60 stakeholders from 11 West African countries were in attendance, including representatives of policymakers, regulatory agencies, operators, regional organizations, donors and academics. Training on Reform and Regulation In cooperation with the World Bank Institute (WBI), PPIAF hosted a conference in Dakar, Senegal, on April 27 to launch the dissemination of new training materials on Reform and Regulation. The multimedia training materials were developed by WBI under a PPIAF grant. The conference was presided by the Minister of State of Senegal in charge of infrastructure, and included the participation of over 70 senior officials from public authorities, service providers, civil society, and donors. The event was followed by a press conference with several representatives from the media. SOUTH ASIA India: Workshop on PPPs in Industries and Regulation PPIAF supported the National Council of Applied Economic Research (NCAER), in India to organize a workshop on "Public Private Partnership in Industries and Regulation" on April 10-11, 2006 in Delhi. This workshop was a part of NCAER s project entitled "Blending Efficiency and Competition in " under the EU-India Economic Cross Cultural Program. The workshop focused on some of the overarching themes in PPPs such as design and regulation, specifically in power and transport sectors. Distinguished speakers from India (including officials from the Planning Commission, Ministry of Finance, Confederation of Indian Industries etc.) and international speakers (from CEPR London, IDEI Toulouse, University of Brunel and University of Bristol) provided a wide spectrum of perspectives. Afghanistan: Ringing in the Future PPIAF produced a short documentary film to highlight the impact of telecommunications reforms and private sector participation in Afghanistan. PPIAF had provided support to the Afghanistan government in 2002 to develop the legal and regulatory framework in telecommunications sector with the objective to facilitating private sector participation and competition. This documentary was presented at PPIAF s annual donor meet at Bonn in May DVDs of the documentary will be disseminated to telecom sector clients in developing countries, regulators, donors and other partners. 5 5

7 PPIAF Quarterly Report April 1 June 30, 2006 Pakistan: Stakeholder Consultation Workshop on Urban WSS reforms A consultative workshop was organized on April 26, 2005 to discuss the key findings of a households survey and recommendations for improving water services in 8 medium sized cities of Punjab province in Pakistan. This study is being jointly funded by PPIAF, GPOBA and WSP. 61 participants including Government officials, private sector, consumer advocates and media actively participated in the workshop. A post-workshop evaluation highlighted positive outcomes of the workshop in Mixing of sewerage and water pipes raising the stakeholders awareness of the current unsustainable situation in the sector and various reform options available to improve services. IV New Activities Approved A. The source of funding for the 29 approved activities is summarized in Table 1. Twenty six of the twenty nine approved activities, with a total value of $5.6 million were funded from PPIAF s core funds. Three activities valued at $0.4 million were funded from non-core funds: two from the Sweden non-core contribution for priority countries in Sub-Saharan Africa, and one from the Swiss non-core contribution for priority activities in Eastern Europe and Central Asia region. Table 1: Funding Source for PPIAF Activities (April 1 June 30, 2006) Source No. Of Activities Value Core Fund 26 5,556,487 Non-Core Funds 3 398,300 Total 29 5,957,537 B. The Geographic Focus of the 29 activities approved is summarized in Table 2. The largest share of activities was in Africa due to a high number of large size activities approved in the period under review. 6 6

8 PPIAF Quarterly Report April 1 June 30, 2006 Table 2: Geographic Focus of Total Approved Activities Region (# of activities/ amount) % By Number % By Value Sub-Saharan Africa (11/ 3,185,655) East Asia and Pacific (3/448,500) 10 8 Europe and Central Asia (4/ 664,800) Global (4/ 805,232) Latin America and Caribbean (3/226,300) 10 4 Middle East and North Africa (3/200,300) 10 3 South Asia (1/424,000) 4 7 C. The Sectoral Focus of the 29 activities approved is summarized in Table 3. Multi-sector activities were the most dominant over the quarter representing 49% of total approvals valued at $3 million. Table 3 Sectoral Focus of Total Approved Activities Sector (# of activities; amount) % By Number % By Value Multi-sector (11/2,784,802) Water and sanitation (4/1, 246,285) Transport (5/ 1,161,800) Energy (9/ 761,900)

9 PPIAF Quarterly Report April 1 June 30, 2006 D. The Primary Focus of the 29 activities approved is summarized in Table 4 1. Table 4 Primary Actions of Total Approved Activities Action Area (# of activities; total amount) % By Number % By Value development strategies (12/ 2,830,705) Capacity Building (3/953,800) Policy, regulatory and institutional reforms (6/1,184,750) Emerging best practice (5/810,232) Consensus Building (2/104,000) 7 2 Pioneering Transactions (1/71,300) 4 1 V. Next Call for Proposal for Fiscal 2007 The next call for proposals for the second quarter of fiscal 2007 will be issued at the end of August 2006, and again in September 2006, closing on September 30, In practice, many approved activities comprise actions that correspond to two or more of these specific categories. The analysis above is based on the PMU s judgment as to the primary focus of each approved activity, and should thus be treated as indicative only 8 8

10 PPIAF Quarterly Report April 1 - June 30, 2006 PPIAF: Fourth Quarter FY06 Report Approved Activities for the period April 1 - June 30, 2006 Country / Title Project Description Approved Funding Sector Nature of Activity I. CORE FUND: Small Activities (Less than USD $75,000) 1 AFRICA: Consortium (ICA) Secretariat: Survey of Project Preparation Facilities in Africa Prepare a report detailing the results of a survey of infrastructure project preparation facilities focusing on Africa. The survey will identify key characteristics of these facilities and explain how the services of these facilities can be accessed which will serve as a "users' guide" to these facilities. $ 73,720 Multi-sector 2 CHINA: Building Consensus Support consensus building among key stakeholders on on Next Steps for Power the need to revitalize the power sector reform program in Sector Reform and Regulation China and identify the key next steps to be taken. $ 74,000 Energy Consensus Building 3 EGYPT: Options in Public Private Partnerships in Operating and Maintaining Irrigation and Drainage Assist the Ministry of Water Resources and Irrigation identify a blueprint on which to engage the private sector in operating and maintaining water resources such as irrigation and drainage. $ 75,000 Water 4 GLOBAL: Model Methodology Study to help overcome and remove geology-related risk of Geothermal Risk Mitigation as one of the major barriers for geothermal energy Instruments development projects. $ 75,000 Energy Global Best Practice 5 GLOBAL: Research on Regulatory Requirements of Different Forms of Utility Service Delivery A study leading to a concise report intended to clarify regulatory requirements under different contract types involving private participants in infrastructure service delivery. $ 36,500 Multi-sector Global Best Practice 6 INDONESIA: Private Participation in Geothermal Energy Development Identify the geothermal specific barriers to investment in Indonesia, review international best practice in tackling such challenges, and propose a set of reform measures that the Ministry of Energy and Mineral Resources may implement to enhance private participation in the sector. $ 74,500 Energy 9

11 PPIAF Quarterly Report April 1 - June 30, 2006 PPIAF: Fourth Quarter FY06 Report Approved Activities for the period April 1 - June 30, 2006 Country / Title Project Description Approved Funding Sector Nature of Activity 7 IRAQ: Private Sector Participation in Electricity Generation Assess existing laws and regulations and advise the government on emerging best practices in engaging private providers in a Build-Operate-Own scheme to ensure that the scheme will be conducted properly, and send a signal to potential private providers of an appropriate framework for the sector in the medium to long term. $ 75,000 Energy 8 LATIN AMERICA AND CARIBBEAN: Flagship report on infrastructure Publication of a book in English and Spanish on recent developments in infrastructure in the region, along with an easily accessible presentation on state of the art research on infrastructure related topics (infrastructure finance, political economy of reform, concession structure and regulation) $ 30,000 Multi-sector Consensus Building 9 LATIN AMERICA AND CARIBBEAN: Study on Impact of Development on Economic Performance A study on the impact of infrastructure development on economic performance with special focus in Latin America $ 15,500 Multi-sector 10 MOROCCO: Seminar on A 2 day Power Sector Liberalization Kick-off seminar to Electricity Market Liberalization analyze various alternative market liberalization models based on international experience, to examine certain aspects particularly relevant to Morocco, and to propose a concrete implementation roadmap for the implementation and steering of the liberalization of the electricity market. $ 50,300 Energy Policy; Regulatory and Institutional Reforms 11 NIGERIA: Final Design of the Consultations among key stakeholders and other Nigeria Advisory interested parties regarding NIAF's design to achieve Facility (NIAF) sufficient consensus for the management of NIAF to be bid out by a donor, such as DFID. The consultations and related local research work will produce recommendations regarding amendments to the preliminary design of NIAF. $ 74,700 Multi-sector 12 SENEGAL: Enhancing the Assist the Government of Senegal enhance the framework Framework for Delegated of delegated contract management for infrastructure Contract Management investment and maintenance through a comparative study in selected countries and the production and dissemination of strategic recommendations on improving transparency, mitigating corruption risks, and fostering competition and a deeper role of private operators. $ 73,000 Multi-sector Policy; Regulatory and Institutional Reforms 10

12 PPIAF Quarterly Report April 1 - June 30, 2006 PPIAF: Fourth Quarter FY06 Report Approved Activities for the period April 1 - June 30, 2006 Country / Title Project Description Approved Funding Sector Nature of Activity 13 ZAMBIA: Policy Framework for Assist the Ministry of Energy and Water Development the Electricity Sector (MEWD) in Zambia to develop priorities and implementation strategies as part of a new, overall policy framework in the electricity sector, particularly in the area of private sector involvement and public-private partnerships. $ 74,000 Energy II. CORE FUND: Medium and Large Activities (Over USD $75,000) 14 AFRICA: Africa Provide an in-depth cross-sectoral analysis of Country Diagnostics (AICD) A infrastructure sectors in Sub-Saharan Africa, and act as a Regional core reference document on all strategic issues relating to Flagship Study infrastructure. The regional diagnostic will assist individual countries in benchmarking the relative performance of their infrastructure sector and formulating their own country-specific strategies in the light of regional experience. It will also assist donors in designing appropriate support for infrastructure reform, finance, regulation and investment. 15 CAPE VERDE: Regulatory Assist the Government of Cape Verde strengthen the Strengthening and Capacity regulatory framework in the electricity, water, and Building for Agencia de sanitation sectors, and implement a capacity building Regulacao Economica (ARE) program for ARE---the multi-sector regulatory agency. $ 1,000,000 Multi-sector $ 461,000 Multi-sector Capacity Building 16 CHINA: Reform of the Second phase of a two-phased approach, by the Regulatory Environment for Chongqing Municipal Government (CMG) to move towards Private Sector Participation For engaging private sector operators in the municipal services Chongqing Municipal sector (water supply, wastewater, solid waste and public Government transport sectors). $ 300,000 Multi-sector Policy; Regulatory and Institutional Reforms 17 DEMOCRATIC REPUBLIC OF Assist the Government of DRC prepare a suitable pilot CONGO: Pilot Water Sector PSP option in the water sector in the Lubumbashi region, Private Sector Participation to improve water service delivery and achieve the MDGs. (PSP) Strategy and Institutional Framework $ 508,500 Water 18 EASTERN EUROPE AND Improve the capacity of the regulators to analyze the cost CENTRAL ASIA: Assisting the factors of the four types of ancillary services and outline a Central Asia Regional suggested package of these mechanisms for ensuring Economic Cooperation ancillary services provision with reasonable certainty and (CAREC) Members Electricity at low cost in the context of People s Republic of China Regulators Forum (CMERF) (PRC) plans for its power market. $ 262,800 Energy Capacity Building 11

13 PPIAF Quarterly Report April 1 - June 30, 2006 PPIAF: Fourth Quarter FY06 Report Approved Activities for the period April 1 - June 30, 2006 Country / Title Project Description Approved Funding Sector Nature of Activity 19 ECUADOR: Public Private Design a new regulatory framework for private participation Partnerships (PPPs) in Urban in urban transport services, support the consensus building Transport for Cuenca and process within the local authorities and among the Quito stakeholders, including the incumbent operators; and Improve the institutional capacity of the agencies in charge of planning, monitoring, and controlling the urban transport system in the two cities. $ 180,800 Transport Policy; Regulatory and Institutional Reforms 20 ETHIOPIA: Public-Private Prepare partnership models and an action plan to Partnerships (PPPs) in operationalize public-private partnerships in irrigation Irrigation infrastructure development in Ethiopia through the Development Irrigation and Drainage project. $ 268,785 Water 21 GEORGIA: Implementing Support the implementation of railway reform by assisting Railway Reform Using Long the Georgian Railway Ltd. in strengthening its capacity to Term Private Partnership negotiate long term freight contracts with private sector Contracts with Freight Services customers. At the end of this technical assistance, a pilot transaction with a private sector customer would commence. $ 230,000 Transport Capacity Building 22 GLOBAL: Building a Second year of the PPIAF and Economics Partnership for the PPI and Finance (IEF) partnership to maintain and enhance the Database (Year 2) Private Participation in (PPI) database. Continue updating, improving, and maintaining the PPI database according to the business plan for FY06-FY08 period. $ 299,732 Multi-sector Global Best Practice 23 GLOBAL: Improving Urban Draw the multiple lessons from a decade of water PSP WSS Utilities in Developing projects in developing countries, consolidating the wealth Countries: Drawing the of material available into a comprehensive Scoping Paper, Lessons of the last decade of and providing a solid basis for building consensus with PSP and Expanding the Scope stakeholders and initiating new exploratory work. of Private Sector Involvement (Phase I) * $ 394,000 Water Global Best Practice 24 MALDIVES: Developing Port of Assist the government in selecting the location for a new Male through Public-Private port in Male which can be developed in partnership with Partnership the private sector; assist the government select the appropriate form of PPP and provide recommendations for enabling policy, legal, institutional and regulatory framework. $ 424,000 Transport 12 * Award letter for this activity has not been sent out, pending donor no-objection.

14 PPIAF Quarterly Report April 1 - June 30, 2006 PPIAF: Fourth Quarter FY06 Report Approved Activities for the period April 1 - June 30, 2006 Country / Title Project Description Approved Funding Sector Nature of Activity 25 MOZAMBIQUE: Design of a Facilitate private operation of municipal services in Maputo Framework for Public Private through public-private partnerships (PPP) through slum Partnerships upgrading, sanitation, solid waste management, water in Municipal Service Provision supply in unserved areas, public transport improvement, Phase II urban development or market upgrading. $ 420,650 Multi-sector Policy; Regulatory and Institutional Reforms III. (C) NON-CORE FUNDS (Small, Medium and Large Activities): SWEDEN 26 TANZANIA: Implementation of Assessment of policy framework and potentials for PPP in Public Private Partnerships the road sector in Tanzania, review and design of (PPPs) In The Roads Sector appropriate legal, regulatory and institutional frameworks, as well as feasibility of and approach for a PPP for the Kigamboni bridge and ferry in Dar es Salaam. $ 160,000 Transport Policy; Regulatory and Institutional Reforms 27 UGANDA: Uganda Electricity Assist the Government of Uganda restructure the UMEME Distribution Concession Distribution Company and review the proposal terms for Restructuring the restructuring of the Concession and, if appropriate, draft amendments to the concession documents so as to protect UMEME from sector issues caused by a power generation crisis in Uganda. $ 71,300 Energy Pioneering Transactions III. (D) NON-CORE FUNDS (Small, Medium and Large Activities): SWITZERLAND 28 KOSOVO: Assessing the Assessing the potential for the introduction of private Viability and Options for Public participation in the development of the highway sector in Private Participation in Kosovo and draft Terms of Reference for future support to Highway Sector take priority project(s) to bidding stage. $ 167,000 Transport 13