Chidi IzuwahSubmitted as Final Project for online PPP MOOC Course

2015

Accelerating PPP’s in Nigeria – Road Sector Options, Health Sector Specific Inputs for return of Health Care Delivery at

World Class Levels in Nigeria and Potential Formula for Unsolicited Proposals

Infrastructure & the Economy

“If Nigeria was a three

legged stool I would say

its stability and future

depends on how well

and how fast we tackle

the infrastructure problem

– the shaky leg of the

stool”

Former Nigerian Minister

......Nigeria centre of the world

Goldman Sachs projections places Nigeria as;

• the 20th largest economy by 2025 on the basis of GDP

• 21st on per Capita Income (2025).

• 12th largest economy if Nigeria maintains its growth trajectory to 2050,

overtaking Korea, Italy and Canada on GDP.

Projections (Top 20 League)

5

Imagine Our Nigeria – We have a dream………..

With world class highways & interchanges

World Class High Speed Rail

8

Modern Tertiary Hospitals………..

Objectives

1. Provide Doable Option to Speed up PPPs in Nigeria

2. PPP in Health - Way Forward for Nigeria

3. Transparent Management of Unsolicited Proposals

9

ACCELERATED PPP PROCUREMENT OPTIONS FOR NIGERIA – DELIVERING HIGH QUALITY PPPs, VFM AND INFRASTRUCTURE SERVICE AT SPEED

Outline

1. Infrastructure Procurement Options

2. PPP Basics and Legal Framework

3. PPP Time Challenge and Our NEED as a Nation

4. PPP Acceleration Option

5. Annuity PPPs for Road Sector

11

12

Infrastructure Service Procurement Options

Asset Procurement Options

Public Sector

Private Sector

Risk Spectrum

Traditional Procurement • The public and private sectors have always

worked together…

• Companies have paid taxes

• Companies have supplied governments with goods

• Companies have constructed projects for the government

• Traditional infrastructure procurement

• Gov designs / finances

• Private company constructs

• Government owns / operates / maintains

Example

– Government designs a bridge joining 2 islands

– Runs tender and gets cheapest construction company to build it

– Government pays for the construction from the budget

– When built the government operates and maintains the bridge

– If anything goes wrong the government pays

TRADITIONAL OR CONVENTIONAL PROCUREMENT

Procurement of goods and services through annual budgetary allocation:

Inefficient, volatile and rarely meets crucial infrastructure expenditure requirements in a timely manner

Exerts constant pressure on fiscal budget due to competing demands

Funding generally inadequate and receives a larger brunt of fiscal retrenchment in times of financial crises

Leads to constant abandonment of Projects or Projects that take for ever to complete. Many Universities in Nigeria are still at their temporary sites.

Need for another way.....PPPs.....but no silver bullet

WHAT IS PPP?

PPPs Definition and Introduction

17

Wide Infrastructure

Gap

Growing demand for

private sector participation in infrastructure

Small and depleting

Government resources

Urgent need for alternative funding

of Infrastructure

The goal is to combine the best capabilities of the public and

private sectors for mutual benefit

A Public-Private Partnership is a contractual agreement between a

public agency (federal, state or local) and a private sector entity.

Through this agreement, the skills and assets of each sector (public and

private) are shared in delivering a service or facility for the use of the

general public. In addition to the sharing of resources, each party shares

in the risks and rewards potential in the delivery of the service and/or

facility.

PPPs are Fundamentally Different

• Formal contract between public and private partner (over the years duration the service will be provided) – usually multiple years duration

• Entered through competitive procurement

• Using output specification – government specifies ‘what’, private sector can define ‘how’

• With suitable risk allocation between parties

• Putting private investment at risk

• With regulation or contract management of performance of the private partner

Example

• Government defines output = connection to let 1,000 vehicles p.d. travel between islands

• Government tenders for best solution over 30 years – e.g. ferry, tunnel, bridge??

• Government enters 30-year contract with private company

• Private company designs, builds, finances bridge, then operates and maintains it for 30-years

• Private company receives payment if the bridge works and is available for traffic

• Government checks on safety and availability

• If the bridge is closed, or unsafe, the private company looses money

Public Private Partnerships: Basics

PPPs are contractual arrangements between the public sector and a private sector party for the private delivery of public infrastructure services

Project related risks (i.e., technical, performance, market and financialrisk are transferred (to a great extent) to the private entity.

PPPs are complex structures, involving different parties, long and demanding negotiations, and relatively high transaction costs.

Contract payments are usually structured in such a way that the public authority and / or users pay only for services rendered satisfactorily and not for assets, which are inputs to service provision.

Revenues are generated via: (i) user fees, (ii) government payments (iii) multilateral/donor funding and or (iv) a combination of all of the above.

Why can PPPs Deliver Better Value for Money?

• PPPs let Public Sector and Business do what they do Best!

• Private

• Innovation, use of technology

• Professional management

• Good project and lifecycle management

• Efficiency

• Technology

• Maintenance practices

• Financing

• Public

• Policy setting

• National planning

• Regulation

• Looking after public interest

Developer& Operator

PPPs are about:

1. Mobilizing private sector’s money, expertise and capacities for infrastructure development

2. Long- term relationship between government and private sector (usually>10years)

3. Sharing of Risks and Rewards (no lop-sided agreements-privatizing the profits, nationalizing the loses)

4. Private sector performs to agreed KPIs

5. Life cycle focus (operations and maintenance)

Government is moving from role of Developer & Operator to Facilitator (and Governing)

Facilitator

Forms of PPP

Service contracts:

√ Private sector contracted for specific tasks

√ Capital investment and ownership of the asset is by the public sector

√ Public entity pays the private company for provision of services but retains the commercial risk

Management contracts:

√ Private sector manages but does not finance it

√ Capital investment and ownership are retained by the public

√ Public entity pays private manager a fixed management fee

√ Commercial risk is held by the public

Lease:

√ Private sector manages and finances the O&M

√ Capital investment and ownership are retained by the public

√ Private operator collects revenues and pays to the public entity a fixed fee

√ Commercial risk is shared

Concession:

√ Private operator manages and finances new investments as well as O&M

√ Capital investment is made by the private operator but ownership is retained by the public

√ Private operator collects revenues and may pay a concession fee to the public entity

√ Commercial risk is borne by the private operator

BOT ( and other variations e.g. BOOT, BTO, DBOT, DFBOT, etc)

√ Private operator builds new infrastructure, operates it for fixed period and transfers it to public sector

√ Capital investment is made by the private operator, but ownership is by both at different points in time

√ Public utility pays private operator for services provided by the new asset

√ Commercial risk is usually private, but could also be shared

There are a number of models of private sector participation in infrastructure, primarily distinguished by three

key factors (i) varying levels of responsibility assumed by the public and private sectors; (iii) the degree of risk

allocation between the public and private sectors; and (ii) the length of the contract period.

Types of PPP’s – Alphabet Soup

►BOT – Build Operate Transfer

►BOO – Build Own Operate

►BOOT – Build Own Operate Transfer

►DBF – Design Build Finance

►DBFO – Design Build Finance Operate

►DBO – Design Build Operate

►BLT – Build Lease Transfer

►BTO - Build Transfer Operate

►DBFOM – Design Build Finance Operate Manage

►Leasing

►Joint Ventures

►Operations or Management Contracts

►Cooperative Arrangements

►LROT – Lease Renovate Operate Transfer

►DCMF – Design Construct Manage Finance

►BOOR - Build Own Operate Remove

… PPP & TIME CHALLENGE

• The biggest challenge to procuring infrastructure via PPP is time

• Procurement of infrastructure can be an intensely political process

• Politicians are keen (to produce infrastructure quickly; to preserve their decision making prerogatives; to reward supporters)

• PPPs require:

• TIME to undertake a proper feasibility study/business case

• TIME to secure approvals

• TIME to conduct a fair, equitable, transperent and competitive procurement process.

25

Nigeria’s Legal and Regulatory Framework for PPPs

Establishes the Infrastructure Concession Regulatory Commission (ICRC)Sec. 14.1

MDAs may enter into a contract with or grant concession to any duly pre-qualified private sector proponent for the financing, construction,operation, and maintenance of any infrastructure that is financiallyviable or any development facility of the Federal Government. (Section1.1).

Empowers the ICRC to; Provide general policy guidelines, rules and regulations.

Take custody of every concession agreement entered by the Federal Government

Ensure efficient execution of any concession agreement or contract entered bythe Federal Government.

Section 11 (Arbitrary Variation etc) No agreement reached in respect ofthis Act shall be arbitrarily suspended, stopped, cancelled or changedexcept in accordance with the provisions of this Act.

26

The ICRC Act 2005

PPP FRAMEWORKNATIONAL POLICY ON PPP

Government Commitment

Policy Objectives

– Economic

– Social

– Environmental

Enabling institutional environment

– Guidelines for the PPP

– Coordination and planning

– Capacity building

– Effective communication

– Roles and responsibilities

– Market development

– Collaboration with states and other stakeholders

… PPP Phased Evolution

• Development Phase – Outline Business Case (Pre Contract regulation)

• Procurement Phase – Full Business Case (Pre Contract regulation)

• Implementation Phase (Post Contract regulation)

• Contract Maturity

Development Phase

NEEDS ANALYSIS

PPP OPTIONS APPRAISAL

VALUE FOR MONEY

AFFORDABILITY

SUSTAINABILITY

PRELIM RISK MATRIX

VIABILITY/BANKABILITY

VGF

OBC

OBC APPROVAL BY FEC

PREPARING AND IMPLEMENTING EFFICIENT

AND EFFECTIVE PPP TRANSACTIONS

PPP LIFECYCLE in line with National Policy

Procurement Phase

TRANSACTION ADVISER

EoI/RFQ Phase AND RFP

BIDDING

BIDDERS CONFERENCE

BID EVALUATION

VALUE FOR MONEY TEST

PREFERRED BIDDER

FULL BUSINESS CASE

BY FEC

Implementation Phase

TECHNICAL ADVISER

MONITOR DESIGN AND

CONSTRUCTION

COMMISSIONING TEST

VERIFY OUTPUT

REQUIREMENTS

CONTRACT MANAGEMENT

Project Identification

Project Prioritization

Project Selection

Preliminaries

IRR > Weighted Average Cost of Capital

RoE > Shareholders Requirement

Debt Service Cover Ratio > Bankers or Lenders Requirements

Loan Life Cover Ratio > Bankers or Lenders Requirements

Focus on not just comparative but competitive advantage !!

Ideas don’t get funded bankable projects get funded. We are taking to market projects with robust cash flows and cost reflective returns

FOCUS ON BANKABLE PPP PROJECTS TO

MARKET

KEY PPP PRINCIPLES BEING DRIVEN BY PPP REGULATOR

• Value for Money

Ensure project appraisals take into account not only cost but also risks and service quality

• Public interest

Adequate and prior consultation with end-users and other stakeholders of an infrastructure project as standard.

• Output requirements

Concept of “verifiable service standards” to be used as basis for output or performance based specifications.

• Transparency

Very high world class standards of public and corporate governance to enhance credibility and transparency.

• Risk allocation

Risks allocated to the party best able to manage them.

• Competition

Ensure business activities are subject to competition and appropriate commercial pressures, dismantling unnecessary barriers to entry, and implementing and enforcing adequate competition.

• Capacity to deliver

Ensure authorities responsible for privately operated infrastructurehave the capacity to manage the commercial processes involved and to partner on equal basis with their private sector counterparts.

ACCESS TO CAPITAL

Availability of long tenor private capital

SUCCESSFUL

PPPs

POLITICAL WILL AND

TRANSPARENT POLICY

A PPP ‘Champ’ with the transperency

Track record and power to make it

happen cleanly

INSTITUTIONAL FRAMEWORK

Public sector competence and expertise

to ensure efficient and

effective detailed preparation of projects and

faithful

implementation of transact ions

LEGISLATION

To enable private sector participation in an

efficient and effective manner

PREPARING AND IMPLEMENTING EFFICIENT

AND EFFECTIVE PPP TRANSACTIONS

Critical Success Factors for PPPs

Project Company

Sponsor Vehicle (Private Investors)

Institutional Investors

Commercial Lenders

DFIs/MFIs

EPC ContractorOperations & Maintenance

Contractor

Offtaker – Corporate Customer, Bulk Trader

Power Purchase Agreement

NERC/ESIA/Other Government

Fuel Supplier

Generation License, Permits

Financing Agreements

Shareholders’ agreement

(Equity)

Shareholder loan

agreement

Fuel Supply Agreement

O & M Contract

EPC Contract

Typical PPP Power Project Structure / Timeline - IPP

Other Service Providers

Development / Finance (3 Years) Construction (1 – 5 Years) Operations (10 – 30 Years)

PPP Time to Deliver Case Study from Canada and Nigeria

• Alberta’s southeast(P3) and southwest Edmonton ring roads are the most comparable pair.

• The Edmonton Ring Road was part of a long-standing provincial and city commitment to “create a highway trade corridor linking Alberta to the United States and Mexico.

• The P3 project was delivered two years earlier than the conventionally procured project (P3 4yrs)

• Lekki Toll Road from Inception to Financial Closure 5 to 6yrs and other projects have indeed taken longer and yet to reach financial closure

• This kind of timing is unacceptable for a country that wants rapid infrastructure delivery to drive economic growth

WHAT NIGERIA NEEDs

35

*

* Indicative timelines

FASTER PPPs

Reduce time by 60%

BETTER PPPs

Increase Value by 30 to

50%

MORE PPPs

Increase Capacity by

80%

Forumula 1 Approach to PPPs in Nigeria

Formula 1 is very fast but kills few people

Its Fast

Its Safe

Its Reliable

WHY

Rules are known

Competent team members

Timing is known to all

Records especially time is transparently

kept and openly monitored by spectators

and home viewers

Commitment by all

You need a Formula 1 type PPP

ecosystem to make it fast for Nigeria

37

ContentsInfrastructure Leadership Quote from Other Lands

We told them we will give them roads to bring their products on, schools to send their children to, hospitals and clinics to improve their health.

We cannot waste our time.

We have to work fast to show results for we are judged by our performance, not what we promise

Tun Abdul Razak Hussein – Prime Minister of Malaysia 1970 - 1976

PPP Acceleration Actions for Nigeria

• Have Robust and Well communicated legal and regulatory framework, PPP Manual etc (Minimize rework get permission to copy (shamelessly) and adapt from others Canada, Australia, Philipines, South Africa etc – use WBI, AfDBi, ADBi, UNESCAP leverage to accomplish)

• Use PPPIRC of the World Bank• Agree national PPP Project Pipeline at highest levels based on long

term national infrastructure plan and priorities• Establish a Project Development Funding Mechanism and a PPP

Project Development Company (Like EBP led by BNDES in Brazil)• Implement a National PPP Capacity building programme like India • Have a PPP Centre of Excellence in the Public Service

PPP Acceleration Actions for Nigeria

• Pre Qualify and Enpanel Consultants and Transanction Advisers

• Standardization – PPP Manual, Business Case, RFQ, RFP, Financial Model

• Have Model Concession Agreements with inbuilt flexibility to cater for differences in style and infrastructure stock

• Leverage learnings from others (Assign Public Sector Staff to Successful PPP Jurisdictions

• Have regular PPP fora with all stakeholders

• Have a very transparent procurement and disclosure process that attracts Credible Sponsors

• Use balance sheet of government via appropriate instruments to incentivize the private sector and kickstart investments (Viability Gap Funding, Infrastructure Finance Funds etc)

• Use creative approaches like Annuity or availability PPPs to limit demand risk on the private sector

• Exploit Scale (Use program approach to create scale)

Challenges facing PPPs eg. Roads

• Generally, average daily traffic(ADT) of 15,000 vehicles perday (VPD) is attractive fortolling. However, only about5% of Nigeria’s roads meet thiscriterion.

• Less than 10,000 VPD tend notto be viable as toll roads, unlessadditional funds are providedto offset the loss likely to besuffered by the investor

40

Proposed Solution

Modified Annuity Payments Concession Model

• In order to address the challenges facing PPP toll road projects, it is proposedthat annuity payments concession model should be considered as a viableoption for development of roads in Nigeria under the PPP arrangement. Thismodel kickstarted india’s progress with road concessions.

• Annuity Concessions are a variant of the Build Operate Transfer (BOT) PPPmodel in which the private operator is remunerated via a fixed, periodicpayment ("annuity") from the government rather than through toll proceeds.

• Under these PPP contracts, the private operator is responsible both forconstructing the road, as well as for operating and maintaining it for a fixedperiod of time.

• However, this option significantly reduces revenue risk for the private sectorand also incentivises the private sector to then propose innovative financingand construction options.

41

Annuity Concession Model eg. Roads

Shorter Project Development Cycle

• Under annuity concession model the project lifecycle could be significantly shortened as depicted below:

42

Development

PhaseImplementation Phase

Procurement

Phase

Financial and Transaction Advisor Appointed

Financial Model Completed

EOI and RFP Bidding

Bidders Conference

Bid Evaluation

Value for Money Test

Preferred Bidder

Full Business Case

Federal Executive Council Approval

Technical Adviser

Project Monitoring

Commissioning Test

Verify Output Requirements

Contract management

6 months TBD

Proposed SolutionWhy Annuity Payments Concession Model

Less risky PPP model

• Because the annuity payments are fixed and not indexed, the private sectorretains any risks associated with higher than anticipated operations andmaintenance (O&M) costs.

• This model is effective for de-risking road PPPs and attracting Private SectorParticipation since revenue streams are more predictable. Under this model,concerns about the economic viability of a road are linked to the concessionpayments and not the traffic volumes the road witnesses.

• Annuity concessions have been successfully used in India and are perceived bythe investment community as having a secure and stable source of funding(the annuity payments, are financed by ring fenced fuel taxes in India)

• Generally, there is no requirement for debt servicing during the constructionperiod and repayment begins after project commissioning

43

Proposed Solution How will this model work

• The proposed Annuity Concession structure for Nigeria is as follows:• The concession process will be a one-stage competitive procurement process.

All required feasibility studies will be done and financed by the private sectoras part of the Annuity Bidding process. As this process could be quiteexpensive to the private sector participants, the successful bidder will berequired to pay an entry fee to the government and part of this payment maybe used as compensation to unsuccessful bidders to keep them interested inother bid rounds.

• Annuity Concession contracts will be bidded competitively for selected roadsand awarded to the bidder providing the most technically and financially soundproposal

• For Each selected road, the Federal Government of Nigeria will raise a 20 yearspecific road construction/rehabilitation bond via the Debt ManagementOffice. The proceeds from the road bond will be used to pay annuitycommitments from the concession contracts as awarded above.

44

Proposed Solution How does this model work

• The proposed Annuity Concession structure (Cont’d):• On conclusion of the road and commencement of Annuity Payments, the Federal

Government will collect tolls from the road via a private sector toll systemsoperator or the concessionaire

• The tolls collected will be paid into a special Debt Service Account that would beused to pay the road bond interest payments and full payment at maturity

• Depending on the commercial viability of the road, the government may berequired to provide Viability Gap Funding (VGF) to augment the toll revenue, whichwill be used for the bond repayments. This funding could be on-budget or could bepart of off-budget funding, such as a Road Sector Infrastructure DevelopmentIntervention Fund.

• At the end of the concession period the government will take over managementand operations of the road or award another Annuity Concession for a new period.

45

Proposed SolutionHow does this model work

• A systems diagram post the award of the Annuity Concession is shown in the diagram below.

• *

• Annuity payments are funded by investments from the bond

46

Govt. raises Road

Infrastructure bond

Concessionaire receives annuity

payments to Build Operate and Maintain

the roads*

Concessionaire collects tolls on

behalf of the government

and remit to a specific account

Toll funds are left to

accumulate in account until

maturity

Toll proceeds are used to

offset payments to bond holders upon maturity

Proposed SolutionIn summary

• Benefits of Annuity Payment Concessions• Annuity payments also referred to as “Fixed Availability Payments” because,

Annuity Concessions do not require any advance payment to the privateoperator. The Government does not begin paying the annuities until the road isconstructed i.e. until the roads are “available for usage” in accordance withpredetermined quality standards

• The Annuity Concession model rewards early completion and provides the privateoperator with a built-in incentive to ensure that the road is constructed in a waythat minimizes long term O&M costs while meeting quality standards

• This model of PPPs has been found to be increasingly more attractive to privatesector players as the risk profile is more predictable and it accelerates PPPcompletion as its basically a project finance transanction.

47

Proposed SolutionIn summary

• Other advantages include:• Transfer of initial financing, construction, O&M, and project completion risks to

the private sector;

• Construction completed much faster and less expensively than under traditional EPC contracts;

• The annuity payment structure allows a firm calculation of Governments financial exposure under the contract;

• The fixed nature of the annuity payments significantly reduces the risk of contract renegotiation with the private sector; and

• Substantial growth of domestic private sector capacity (not just in construction, but in operations and maintenance as well) in the roads sector in countries like India that have practised it.

48

Revitalizing Healthcare Delivery in Nigerian via Public Private

Partnerships

Outline

1. Healthcare in Nigeria – Our Pedigree

2. Experience from others

6. PPP in Health Options for Nigeria

7. Next Steps

8. Challenges

50

Health Care in Nigeria – Our Pedigree

University College Hospital (UCH) Ibadan goes back to 1948. UCH as it is today was commissioned on 20th November, 1957 @ 500 beds

Amongst first 8 Hospitals in the Commonwealth in the 60s (Commonwealth includes -UK, Canada, Australia, Malaysia, Singapore, New Zealand, South Africa, India, Pakistan, Botswana, Mauritius)

Saudi Royal Family used UCH in the 60s; Referral hospital for the whole of West Africa in the 60s plus

WB/IFC – Queen Mamamotho PPP Hospital opened in 2011 (425 beds)

Health Care in Nigeria – Our Pedigree

Open Heart Surgery at University of Nigeria Teaching Hospital – First in Nigeria and Sub Saharan Africa in 1974 (Professors Yaccoub, Udekwu, Nwafor, Anyanwu…continued by Prof. Martins Aghaji)

Portable Anesthesia Ventilator invented by Prof. Eziashi

Achievements Continue till today

Renal Transplant Lagos University Teaching Hospital – since 2011

IVF Babies

Best Medical Student in Ghana 2013 – Ms. Tinuade Okoro

Best Medical Student in Russia 2013 – Victor Olalusi (GPA 5.0)

Aminu Kano Teaching Hospital (AKTH) – Renal Transplant Jan 2013

Delta State University Teaching Hospital Oghara – Pace Maker Implant April 2013

Coronary Artery Catherization, Angiopasty & Stenting – UCH

AKTH – Fertility and Child Birth by 54 year old woman

Health Care in Nigeria at Large – Admiral John Agwunobi

John O. Agwunobi, MD, MBA, MPH served as the 12th Assistant Secretary for Health (ASH) from December 17, 2005 to September , 2007. During his term as the ASH, he was a serving member of the United States Public Health Service Commissioned Corps, a uniformed service, and held the rank of four-star admiral. Agwunobi was born in Dundee, Scotland. His father trained as a medical doctor in Great Britain and then returned to his native Nigeria, so Agwunobi was largely raised in Nigeria. He received his medical training at the University of Jos, where his father was a professor of medicine

Health Care in Nigeria at Large – Dr. Sam Dagogo-Jack

Samuel E. Dagogo-Jack is the A.C. Mullins Endowed Professor in Translational Research, Professor of Medicine, and Chief, Division of Endocrinology, Diabetes and Metabolism at the University of Tennessee Health Science Center, Memphis, TN. He is also Director of the Postgraduate Specialist Training Program in Endocrinology, Diabetes and Metabolism at UTHSC, and Director of the Clinical Research Unit, Clinical and Translational Research Institute at UTHSC. Dr. Dagogo-Jack earned his medical degree (MBBS) from the University of Ibadan Medical School in Nigeria. US Presidential Award Winner

Emerging Countries Experience in Health Care PPPs

Inkosi Albert Luthuli Hospital, SA

59

Signed: Dec 2001

Term: 15 years

Queen Mamohato Memorial Hospital Lesotho

PPP in HEALTH OPTIONS FOR NIGERIA

Country Specific ?Sector Specific ?Project Specific ?

But Build on Lessons from other Emerging Countries especially recent integrated health

campus experience from turkey

HEALTH SERVICE DELIVERY SPECTRUM

New Build Hospital PPP Framework

New

Hospital

• Detailed designs

• Capital financing

• Construction

• Medical supplies & equipment

• Clinical services

• Maintenance

• Non-clinical services

• Staffing and Training

• Sector Policies and Strategy

• Service Package

• Reimbursement for all clinical and non-clinical services

• Performance monitoring

• Joint Services Committee

$ $

Ministry of HealthPrivateOperator PPP Agreement

PPP FORMS OPTIONS FOR NIGERIA

Best PPP Options for Nigeria

►BOT – Build Operate Transfer

►BOO – Build Own Operate

►BOOT – Build Own Operate Transfer

►BLT – Build Lease Transfer

(For New Build Facilities and Co Location)

Existing Hospitals and Brownfield Improvements –Operations by Own Staff

►DFBM – Design Finance Build Maintain

►DEM – Design Equip Maintain

►RUEM – Rehabilitate Upgrade Equip Maintain

Health PPP Focus Projects for Nigeria

- World Class PPP Major Hospitals and Rehad & Upgrades;

- Medical Education (Malaysia Model)

- In Hospital Services (Imaging/Radiology, Diagnostics –Hematology, MRI, CT Scan)

- Specialized Care – Truama, Renal/Hemodialysis, Radio Oncology

- Mobile Medical Units and PHC Centres

- Ambulance/Emergency Services, Pharmacies

- Medical Waste Management

- After Life Facilities (aka Mortuary)

Credit - Deloitte

Medical/Clinical by Public Sector

PPP in Health Next Steps

- Establish National PPP in Health Task Force

- Develop PPP in Health Strategy Paper

- With WB/IFC/AfDB/ICRC hold Nigeria PPP in Health Capacity Building

- Put in place institutional framework (Universal Insurance)

- Identify and Select Pilot & Model PPP Projects

- Prepare Model PPP in Health Process (Business Case, Financial Model, PPP Agreements)

- Prepare Pilot Projects and seek PPP partners

- Obtain approval, operate and monitor PPP in Health projects

What’s The Road Block to Good PPPs in Health

Awareness & Education, Political Will, Execution

Discipline and Due Process

Constraints to PPPs in Health in Nigeria

• Political Clock, lack of acceptability of PPPs due to suspicion over Jobs and limited political will

• Lack of a clear institutional and regulatory framework• Weak project preparation and development capacity of the public

service• High cost and risks of project preparation facing the public sector

and bidding costs facing the private sector

• Lack of a strong and capable private sector• Lack of long term debt instruments and a weak capital market• Affordability of privately provided infrastructure services• Policy somersaults, Weak governance track record and weak

institutions and contract sanctity

71

Transforming Nigeria’s Health Sector is

Doable

Everybody Has a Role to

Unsolicited Proposals and the Swiss Challenge Methodology an Option for doing public good in Nigeria

Unsolicited PPP Proposals

• Initiated by Private Party –Project Proponent (must be full proposal with development phase complete or nearly complete ie, bankable Outline Business Case submitted)

• Project Proponent to submit unsolicited proposal and pay unsolicited proposal fee (fee would be used to fund swiss challenge and pay compensation to unsuccessful bidders

• (Unsolicited proposals means moving straight into PPP procurement phase)

• Contracting Authority Receives and Makes Preliminary Review

• Does proposal certify Bankable Outline Business Case requirements

• Decision to use Swiss challenge to introduce competition (In recognition of expense and effort of project proponent Swiss Challenge is granted ie. Proposal will be bid competitively but Project Proponent has the right to match most responsive bid incase he or she is not)

• Counter proposals requested by public competitive bidding but PP has option to match most responsive offer if his offer is not. Unsuccessful bidders would be compensated from fee paid by project proponent

Unsolicited PPP Proposals

• On conclusion of swiss challenge bidding – if project proponent is not the most responsive; he or she is allowed to match that offer and win. Thereafer loosing bidders are compensated. Incase Original proponent is unable to match best offer he losses. But is refunded part of his unsolicited proposal fee less swiss challenge administration cost from concession entry fee to be piad by winners.

• On conclsion of swiss challenge, results are submitted to cabinet for approval and thereafter concession contract is signed.

Unsolicited PPP Proposals - Flowchart

PP submits unsolicited proposal to MDA with fee

MDA performs technical & financial due diligence of PP and reviews

proposal1

Regulator assesses proposal and performs independent due diligence3

Regulator Directs Swiss Challenge

Does PP have technical /financial capacity &

Is proposal OBC standard? 2

MDA rejects the proposal

No

Yes

Reg. reverts to MDA to request further proof of capability

from PP4

No Does PP have technical /financial capacity

Concession Signed

Is proposal up to OBC standard?5Yes

YesProposal Rejected

No

If PP not winner asked to match best offer

Swiss Challenge is Held

PP Matches best offer and is winner and If PP is unable to Match he

loses

Fee is utilized as apprpriate

Award sent to Cabinet for Approval

THANK YOU

7 Things That Will Destroy Us

Wealth without work

Pleasure without conscience

Knowledge without character

Commerce without morality

Science without humanity

Worship without sacrifice

Politics without principle

- Mahatma Ghandi

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