Almaty Ring Road PPP (BAKAD)

Ministry of Investments and Development
of Republic of Kazakhstan
Almaty Ring Road PPP (BAKAD)
London, December 9, 2014
Contents
Subject
Slide
Introduction
3
Technical parameters
7
Financial structure
13
Contractual aspects
22
Tender process
30
Ministry of Investments and Development
of Republic of Kazakhstan
2
Project Snapshot
• Part of the “Western China – Western Europe”
transnational highway
• Population served1 – c. 2,000,000
• Greenfield bypass toll road
• Length – 66 km (4/6 lanes)
• CAPEX – est. $680m
• Remuneration based on availability payments
• Currency risk mitigation mechanism
• Other standard project finance features (incl.
termination, arbitration, step-in provisions, etc.)
[1] Includes Almaty and three neighbouring districts, 2014.
Ministry of Investments and Development
of Republic of Kazakhstan
3
Importance of BAKAD
Infrastructure
 Construction of a key link in the “Western China – Western Europe”
transnational highway
 Reduction of commuting time to Almaty
Signalling effect
 First large PPP in Kazakhstan
 First large infrastructure project outside of the Oil&Gas sector financed
with private capital
 Pipeline of road projects
Ministry of Investments and Development
of Republic of Kazakhstan
4
Project Team
Ministry of Investments and Development
(Automobile Roads Committee)
Sweco International
(Sweden)
IFC
EBRD
Lead Transaction Advisor
Mobilized grant to co-finance project preparation
Kocks
Consult
PPP TA Unit
(Kazakhstan)
(Germany)
Archaeology
Expedition
Gide Loyrette Nouel
(France/Russia)
(Kazakhstan)
Design Institute
“TRTI” (Sweco)
Engineering Center
Astana
Colibri
Law Firm
(Russia)
(Kazakhstan)
(Kazakhstan)
Ernst & Young
(Russia/
Kazakhstan)
Design Institute
“Dortrans”
(Kazakhstan)
Other stakeholders:
• JSC “Kazakhstan Center for Public-Private Partnership” (PPP Center): Regulator under Ministry of National Economy
• RSE “Gosexpertiza” (Independent State Expert Review): Regulator under Ministry of National Economy
• Local municipal and regional authorities (akimats): Public-sector beneficiaries of the project
Ministry of Investments and Development
of Republic of Kazakhstan
5
Contents
Subject
Slide
Introduction
3
Technical parameters
7
Financial structure
13
Contractual aspects
22
Tender process
30
Ministry of Investments and Development
of Republic of Kazakhstan
6
Technical Parameters: Overview
Construction period 50 months
Operations period c. 15.5 years
66 км long
27 k vehicles
4/6 lanes
April-October 23
construction season
23
toll plazas entrances
Cost of Construction (US$ m)
Year 1
Year 2
Year 3
Year 4
Year 5
86
114
285
163
33
12 intersections
21 bridges
Ministry of Investments and Development
of Republic of Kazakhstan
Total: US$
680m
19 viaducts
7
Technical Parameters: Construction
Parameter
Unit
Construction length (length)
Total
km
66
Road category
--
Ι-а
Design speed
km/h
150
Number of traffic lanes
А) on sections Stake 0-55 and Stake 570-660
B) on sections Stake 55-570
-
Traffic lane width
m
3.75
Road shoulder width
m
3.75
Width of the hard part of the road shoulder
m
2.5
Width of median
m
6.0
Width of safety strip near the median
m
1.0
Carriageway width
A) with 4 lanes
B) with 6 lanes
m
m
4х3.75
6х3.75
Width of pavement
A) with 4 lanes
B) with 6 lanes
m
m
22
29.5
Width of roadbed
A) with 4 lanes
B) with 6 lanes
m
m
28.5
36
Ministry of Investments and Development
of Republic of Kazakhstan
4
6
8
Technical Parameters: CAPEX
•
Cost of Construction
Estimated cost of construction:
US$680 m
(US$ mln)
300
•
CAPEX estimated by GoK’s advisors
based on:
 Detailed designs
285
250
200
 Local methodology for cost
estimation
163
150
114
•
Approved by Gosexpertiza
•
Bidders allowed to review CAPEX
estimates during bidding process
100
86
50
33
0
Year 1
Ministry of Investments and Development
of Republic of Kazakhstan
Year 2
Year 3
Year 4
Year 5
9
Technical Parameters: Traffic
Average Annual Traffic Volumes, 2018
TRAFFIC STUDY
• Transport model based on economic development
forecasts, 2 traffic counts and a WTP/O-D survey
• Unique vehicles entering motorway begin at 78,495 vpd
and rise to 112,650 vpd by 2038
Number of Vehicles
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
P1-P2
• Average Daily Traffic:
 2018: 27,308 vpd
 2038: 44,344 vpd
P2-P3
P3-P4
P4-P5
P5-P6
P6-P7
P7-P8
P8-P9 P9-P10 P10-P11P11-P12
Road Segment
Heavy trucks/buses
• Substantially, all traffic is local (commuters)
Medium trucks/buses
Light trucks/buses
Cars
Average Annual Traffic Volumes, 2038
 Proportion of trucks increases over time (western
China-Western Europe Corridor)
• Traffic expected to be remarkably stable given variable
weather conditions throughout the year
Cross-section traffic figures
Weighted average
2018 forecast
2038 forecast
Number of Vehicles
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
P1-P2
P2-P3
Cars
Trucks
Total AADT
Peak hour
(% total) (% total) (real vpd) (equiv. vpd) (real vpd) (equiv. vpd)
88
12
27,308
32,838
1,327 Heavy trucks/buses
1,543
78
22
44,344
56,970
2,211
2,858
Ministry of Investments and Development
of Republic of Kazakhstan
P3-P4
P4-P5
P5-P6
P6-P7
P7-P8
P8-P9 P9-P10 P10-P11P11-P12
Road Segment
Medium trucks/buses
Light trucks/buses
Cars
10
Technical Parameters: Tolling
TOLLING STRATEGY
• Toll rates set by GoK
• Concessionaire to collect tolls on behalf of GoK and
transfer toll revenue to the state budget
• Concessionaire to supply tolling equipment
Toll Plaza
• “Open” toll system
Intersection
 Flat fee upon entry
 No ‘main carriageway’ toll plazas
 “Congestion charge” approach
• 23 toll plazas (15 + 8)
• GOK interested in creating conditions for seamless
transition between toll roads to be developed in
Kazakhstan
 To be discussed with short-listed bidders
Comparison of proposed tolls against benchmarks
Toll rate
(KZT)
Class 1 - light vehicles
Class 2 - minivans
Class 3 - light trucks
Class 4 - heavy trucks
Ministry of Investments and Development
of Republic of Kazakhstan
International benchmark
Min
Max
343
489
399
570
456
651
536
765
Suggested gross
toll rates
240
240
325
385
11
Contents
Subject
Slide
Introduction
3
Technical parameters
7
Financial structure
13
Contractual aspects
22
Tender process
30
Ministry of Investments and Development
of Republic of Kazakhstan
12
Transaction Structure
•
20-years BTO
•
Traffic revenues collected by concessionaire and transferred to GoK
•
Concessionaire remunerated through front-loaded availability payments
•
Paid in local currency but government to compensate for currency fluctuations
Availability Payments
(illustrative)
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Compensation other expenses
Investment Cost compensation
Ministry of Investments and Development
of Republic of Kazakhstan
13
Investment Cost Compensation
Investment cost compensation – Fixed
 Cost of construction including interest during construction (LIBOR + 3%) and other elements
 Paid during first years of operation (to mimic debt repayment schedule)
Availability Payments
(illustrative)
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Compensation other expenses
Investment Cost compensation
Ministry of Investments and Development
of Republic of Kazakhstan
14
Compensation of Other Costs
Compensation of other costs– Fixed
 OPEX, REPEX, tax, cost of capital and other costs
 Paid during operations period
Availability Payments
(illustrative)
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Compensation other expenses
Investment Cost compensation
Ministry of Investments and Development
of Republic of Kazakhstan
15
Currency Risk Compensation
Currency risk compensation – Variable
 Additional public subsidy to compensate for any devaluation-depreciation of KZT Vs US$ above 5%
(cumulative)
Availability Payments
(illustrative)
Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20
Compensation other expenses
Investment Cost compensation
Ministry of Investments and Development
of Republic of Kazakhstan
FX compensation
16
Availability Payments
AVAILABILITY PAYMENTS, A SUM OF
• Investment cost compensation
 Cost of construction and other
 Paid during first [10] years of operation (to mimic debt repayment schedule)
• Other cost compensation
 OPEX, REPEX, tax, cost of capital and other costs
 Paid during operations period
• Currency risk compensation
 Additional public subsidy to compensate for any devaluation-depreciation of KZT Vs US$
• Other
 Performance penalties, other
•
Credit rating Kazakhstan: BBB+ (S&P), Baaa2 (Moody’s)
•
Strong interest from lenders: IFC, EBRD and ADB
Ministry of Investments and Development
of Republic of Kazakhstan
17
Risk Matrix
Type of risk
Grantor
Concessionaire
Land expropriation
Financing risk
Inflation and cost overruns
Commissioning of road; meeting hand-back standards
Availability of road; meeting operating standards
Traffic risk
Currency fluctuations
Termination payment; discriminatory change in law
Ministry of Investments and Development
of Republic of Kazakhstan
18
Transaction Structure: Modifications
MODIFICATIONS SINCE PREVIOUS INVESTORS CONFERENCE
• Traffic risk: Transferred to GoK
 Availability payments applicable to “projects of exceptional significance”
• FX risk: Transferred almost fully to GoK
 Government to compensate for currency fluctuations above 5%
• Bankability: Step-in rights for lenders allowed
 Government to sign a Direct Agreement with lenders
• Dispute resolution mechanism: International arbitration outside of Kazakhstan applicable to PPPs
 International arbitration allowed even if SPV is registered in Kazakhstan
• Limited incentives for private sector efficiency
 Availability payment not adjusted for efficiency gains
• Tender process:
 Two-stage tender process allowed
• Mandatory use of local templates for the preparation of bidding documents
 International templates approved and adapted to local legislation
Ministry of Investments and Development
of Republic of Kazakhstan
19
Land Expropriation
STATUS OF THE LAND ACQUISITION PROCESS
• Land expropriation process near completion
 96% of landplots have been acquired
 Completion of land expropriation and delivery of the site is a condition precedent to the Concession
Agreement
 Grantor will provide the land free of any encumbrances, with no adverse claims pending in court
Ministry of Investments and Development
of Republic of Kazakhstan
20
Contents
Subject
Slide
Introduction
3
Technical parameters
7
Financial structure
13
Contractual aspects
22
Tender process
30
Ministry of Investments and Development
of Republic of Kazakhstan
21
Legal & Institutional Framework (1)
• Strong political will and clear government policy to promote BAKAD project
• Stable institutional framework dedicated to concessions, including a PPP Center set up to implement
the policy framework and to assist in the selection of PPP projects
• Established legal and regulatory framework, including the Law of the RK on Concessions No. 167-III
dated 7 July 2006 (as amended) and tender rules that allow a fair and transparent selection of
concessionaires
• BAKAD project awarded in the form of a concession by Order of the Government of the RK No. 1518
dated 31/12/2013. Recognized as a project of special importance (Order of the Government of the RK
No. 1060 dated 7/10/2014)
• Established investment protection (against illegal acts of state bodies, against nationalization and
requisition, right to use and dispose of revenues)
Ministry of Investments and Development
of Republic of Kazakhstan
22
Legal & Institutional Framework (2)
• Enhanced attractivity of the Kazakh legal and regulatory framework, thanks to recent legal amendements
allowing:
 Signing of the concession agreement by the SPV itself
 Conclusion of a direct agreement
 International arbitration in case of a dispute between resident entities
 Mitigation of FX risk through adjustment of availability payments
 Provision of termination payments in line with best practices
Ministry of Investments and Development
of Republic of Kazakhstan
23
Contractual Aspects of the Concession (1)
• Concession Agreement based on international best practices and Kazakhstani law
CONTRACTING PARTIES
• Government of Kazakhstan acting through the Ministry of Investments and Development (Grantor)
• A resident SPV created by Successful Bidder (Concessionaire)
CONDITIONS PRECEDENT (CP)
• Delivery of Site to the Concessionaire
• Execution of financing agreements, fulfilment (waiver) of all conditions precedent thereto
• Provision of construction works programme and submission of design to Grantor
• Delivery of construction bond
• Obtaining all necessary consents by Concessionaire; delivery of certificates of insurance
DURATION OF THE CONCESSION
• CPs to be fulfilled <6 months from signature of Concession Agreement
• Construction period starts when all CPs are fulfilled ("Commencement Date") and last <50 months from
Commencement Date
• Operation period starts when certificate of acceptance of the construction works is issued and ends 20
years after Commencement Date
Ministry of Investments and Development
of Republic of Kazakhstan
24
Contractual Aspects of the Concession (2)
FINANCIAL ISSUES
• Concessionaire responsible for arranging financing
• Direct agreement between Grantor, lenders and Concessionaire
• Availability payments to be paid semi-annualy during period of operation as exclusive source of
compensation
• Availability payments to be adjusted if certain risks materialize (MAGA, FX, etc)
INTERFACE ISSUES
• Grantor can exercise control over compliance with contractual terms/conditions via Grantor
Representative, approving Concessionaire’s annual programme, monitoring of records (in particular in
respect of toll collection), disclosure obligations and Grantor step-in (conduct of required actions)
• Sections of “WC – WE” corridor will also be tolled (incl. Almaty-Khorgos): interoperability implications
Ministry of Investments and Development
of Republic of Kazakhstan
25
Contractual Aspects of the Concession (3)
LABOR
• Concessionaire to comply with Equator Principles and Law.
• No specific local content requirements for project.
ENVIRONMENTAL
• Concessionaire to conduct environment and social assessment, and establish an Environmental
Social Management System.
• Concessionaire responsible for strictly complying with Law and Equator Principles relating to protection
of environment, health and safety.
OPERATIONAL PERFORMANCE REQUIREMENTS
• Deductions to availability payments, in case of:
 defect(s) (immaterial, material or dangerous): i.e. deviation from GOST/SNiP requirements;
 non-performance: i.e. failure to comply with detailed technical, reporting or other requirements;
 unavailability: i.e. closure of any lane or lanes / entries to user traffic.
Ministry of Investments and Development
of Republic of Kazakhstan
26
Contractual Aspects of the Concession (4)
VARIATION PROCEDURE
•
Concession Agreement provides for a variation procedure in line with PFI standards, subject to
Kazakhstani budgetary procedures when compensation is to be paid by Grantor.
STABILIZATION PROVISIONS
•
Subject to strict conditions, Concessionaire entitled to compensation through adjustment of
availability payments and/or extension of time and/or relief in event of:
 Adverse Government Action;
 Force Majeure;
 Qualifying Change in Law.
Ministry of Investments and Development
of Republic of Kazakhstan
27
Contractual Aspects of the Concession (5)
TERMINATION PAYMENTS
•
Concessionaire Default: (1) – (5)
•
Grantor Default or Prolonged AGA: (1) + (2) + (3) – (5)
•
Prolonged Force Majeure: (1) + (4) – (5)
With:
(1): lowest of: (i) Capital Expenditure already incurred, or (ii) “Cost of the Concession Object”, multiplied by:
(percentage of ICC remaining due at Termination Date) × 0.9
(2): termination costs
(3): an amount, which when taken together with dividends (or other distributions) paid by the
Concessionaire and equity invested or other forms of investment on or before Termination Date taking into
account the actual timing of all such payments, gives a real internal rate of return of 13%.
(4): mitigation costs.
(5): insurance proceeds received by the Concessionaire.
Ministry of Investments and Development
of Republic of Kazakhstan
28
Contents
Subject
Slide
Introduction
3
Technical parameters
7
Financial structure
13
Contractual aspects
22
Tender process
30
Ministry of Investments and Development
of Republic of Kazakhstan
29
Tender Requirements
•
Form of the bidders: single entity or consortium
•
Access of the bidders to a virtual data room
•
Bid applications shall comprise:
 First stage bid application, to be submitted at Step I (qualification stage)
 Second stage bid application, to be submitted at Step II, including:
•
Feasibility study (“TEO”, including technical and financial offers)
•
Bid security, in the form of a bank guarantee or in the form of a deposit (equal to 0.1% of value of
concession object)
•
Contents of the applications: 1 printed original, 1 printed copy, 1 electronic copy
•
Language of the applications: Kazakh or Russian. Additional electronic copy in English is recommended
•
Bid application validity period: 12 months from date of expiry of the second stage bid application
submission deadline
Ministry of Investments and Development
of Republic of Kazakhstan
30
Qualification Criteria
STEP I – BIDDERS QUALIFICATION
Main qualification criteria:
•
Financial and material resources for the project: Participated over last 10 years in at least 2 projects
satisfying any of the 3 following categories:
 category 1: investment in a project of construction or reconstruction of motor roads >US$40 mln; or
 category 2: >=2 contracts as general contractor in a project of construction and (or) reconstruction
of motor roads with >=4 traffic lanes in similar climatic conditions >US$190 mln; or
 category 3: assets (book value) of a project operated (managed) >US$190 mln.
•
Bidders must have a net worth of not less than 10% from the value of the concession object
Ministry of Investments and Development
of Republic of Kazakhstan
31
Slide 31: Qualification Criteria
STEP II – SUBMISSION OF SECOND STAGE BID APPLICATIONS
•
Technical criteria: pass / fail review of compliance with technical specifications of the project + sign
undertaking to contribute no less than 10% of cost of concession object in the form of equity
•
Financial criterion: minimum amount of government support discounted at 8%
•
Technical evaluation carried out by MID, Expertiza and PPP center.
•
Financial offers of only those bidders who passed the previous stage will be opened
•
Bid approved by expert reviews, meeting technical criteria and providing for lowest discounted
availability payments is designated as first-ranked bid
Ministry of Investments and Development
of Republic of Kazakhstan
32
Tentative Tender Schedule
Event
Tentative Timelines

Deadline for requests for clarification at Step I
January 3, 2015

Deadline for submission of Bids for Step I
February 3, 2015

Invitation to submit documents for Step II
End of February 2015

Deadline for requests for clarification at Step II
June 29, 2015

Deadline for submission of documents for Step II
July 29, 2015

End of evaluation phase at Step II
Not later than end of November 2015

Negotiations with the first-ranked bidder
Within 6 months from designation of the best bid

Bid approval and announcement of the successful
bidder
Within 1,5 month from end of negotiations

Signing of the concession agreement
Within 90 days from announcement of the successful bidder
Ministry of Investments and Development
of Republic of Kazakhstan
33

Download Report