“Development and Management of Integrated Parking System including two New Multi-Level Car parks (MLCPs) in Thimphu through PPP model”

Better Business Summit 2018 (17-18 May 2018)

South elevation (MLCP-1)

Background

Due to rapid urbanization and to mitigate increasing traffic congestion, upon approval of RGOB, Thimphu Thromde started to implement the “Integrated Parking System” on “PPP” model in 2014.

IFC provided the consultancy to conceptualize, formulate the Concession Agreement, assist bidding process till award of the SPV contract and materialize the PPP project on Build Operate Transfer (BOT).

Stakeholders:

Thimphu Thromde (TT)

KCR Pvt. Ltd. incorporated in July 2014 as the FDI Joint Venture Company with:

i) CE Construction Company Pvt. Ltd. from Nepal as the FDI lead partner, and

ii) Rinson Construction Company Pvt. Ltd. and

KNG Pvt. Ltd. as the two domestic partners

Better Business Summit 2018 (17-18 May 2018)

South entry-exit ramp (MLCP-1)

TT & KCR Pvt. Ltd. signed the CA on 1st Sept. 2014 for a Concession Period of 22 years.

Objectives/Scope of Project:

i) Design, construction, operation & Mgmt. of two (2) Multi-Level Car parks (MLCPs)

MLCP-1 at Phendey Lam to accommodate 352 parking slots and 3,517 m2 commercial space.

MLCP-2 opposite BOD for 222 parking slots and 2,034 m2 commercial space.

ii) Operation and management of Integrated Parking Management System.

Better Business Summit 2018 (17-18 May 2018)

North-East View (MLCP-1)

Roles and Responsibilities

Thimphu Thromde

• The Authority to oversee the entire stages of PPP process within the concession period.

• Ensure parking fees is collected as per the approved rates

• Ensure construction is as per approved design and specifications

• Initiate penalties in case of defaults

• Revision in the parking fees as per the CA.

KCR Pvt. Ltd.

• The Concessionaire to design, prepare drawings, execute contracts and construct two MLCPs, mobilize all needed resources to finance the capital on manpower, materials and operation and management over the entire concession period.

• CE Construction Pvt. Ltd. : design, prepare drawings & BOQ for MLCPs

• KNG Pvt. Ltd. : manage & operation of on-street & off-street parking

• Rinson Construction Co. Pvt. Ltd. : construct MLCPs as per the contract executed with KCR.

Better Business Summit 2018 (17-18 May 2018)

Financing modality: Debt : Equity Ratio : 70 : 30

Benefits:

TT free from daily hassles on O&M of parking slots

Thromde’s annual earning over Nu. 13.00 million from the off-street & on-street parking. Revenue will proportionately increase after commissioning of MLCPs.

Capital investments on feasibility studies, design, construction including operation cost by KCR Pvt. Ltd.

The MLCP buildings are built to international standard. The buildings will create a new face-lift to the local area plan.

PPP foster teamwork and sense of ownership of the Public and Private stakeholders to achieve the common goal.

Better Business Summit 2018 (17-18 May 2018)

North - West view (MLCP-1)

Benefits : Contd.

Generate employment to Bhutanese nationals

Earnings to RGOB exchequer from levy of direct and indirect taxes.

At the end of concession period, the properties shall be handed over to Thimphu Thromde.

Project Status:

i) MLCP – 1 : 70% achieved ii) MLCP - 2 : 80% achieved

Better Business Summit 2018 (17-18 May 2018)

South - East view (MLCP-2)

Constraints/Challenges:

Some shortfalls as the 1st PPP Project to have started in September 2014 while the PPP policy & regulations are still under formulation.

Some set back due to stakeholders inexperience, lack of knowledge & awareness on PPP.

Shortage of skilled manpower in corporate governance & understanding the corporate responsibilities.

Cost over-run on investment and implementation delays.

Parking operation for 20 years concession period is short to get the return on investment in RED.

Better Business Summit 2018 (17-18 May 2018)

North – West view (MLCP-2)

Suggestions/Way-forward:

Implementing Agency (IA) to ensure designated manpower and organizational set up is in place at the outset

Technical specifications in the RFP should be adequately comprehensive to cover full scope of work to avoid misleading financial analysis.

PPP model is the best option for a win-win situation to boost economic self reliance provided IA and other utility/public agencies are adequately aware on PPP concepts and benefits.

Better Business Summit 2018 (17-18 May 2018)

East view facing Norzin Lam (MLCP-2)

North Ramp Entry (MLCP-2)

Suggestions/Way-forward - Contd.

Functional separation between Shareholders, Board and Management.

Promoters restrict to financing and outsource the project activities.

Implementing agency to represent in the corporate governance.

Better Business Summit 2018 (17-18 May 2018)

East Elevation facing Norzin Lam (MLCP-2)

Thank You !!!

Better Business Summit 2018 (17-18 May 2018)