Ghana - PPP Project - P125595
Ministry of Finance | Published April 13, 2015 - Deadline April 27, 2015
Analysis Of Ghana Infrastructure Financing Gap - Eoi
REPUBLIC OF GHANA
MINISTRY OF FINANCE
GHANA PUBLIC PRIVATE PARTNERSHIPPROJECT
(PROJECT ID: P125595, IDA CREDIT NUMBER 5097?GH)
ANALYSIS OF GHANA INFRASTRUCTURE FINANCINGGAP
REQUEST FOR EXPRESSIONS OF INTEREST
(CONSULTING SERVICES ? FIRMS SELECTION)
The National PPP Policy of Ghana refers to infrastructure efficiency and funding gap of $1.5 billion per annum. Governmentof Ghana cannot finance needed infrastructure projects from public sector sources alone.The role of private sector participation iscritical to meet the increasing infrastructure investment requirements.
To enable private sector investment in infrastructure projects with long payback periods, it is necessary to have long termbanking and/or capital market solutions. Ghana's financing market is constrained with limited availability of long term finance,both local and international, to support its infrastructure pipeline. As many infrastructure projects generate revenues in localcurrency, the need for stable local currency debt financing is important because it eliminates the potential mismatch between aninfrastructure project's revenues (generally in local currency) and its debt service costs (in euros or dollars, if funded byinternational commercial banks). Thus, local currency financing helps mitigate exposure to exchange rate risk. However, thecapacity of Ghana's local commercial banks is relatively small compared to the levels of financing required for largeinfrastructure projects, furtheraugmenting Ghana's infrastructure financing gap. In addition, the lack of experience with projectfinancing also creates significant capacity issues within the commercial financing market and makes it more difficult for Ghana toattract financing from international financiers.
Government of Ghana announced in 2014 the launch of the Ghana Infrastructure Investment Fund (GIIF) as a potential solutionto attract long term financing for its infrastructure projects. The objective of GIIF is to mobilize and provide financialresources to manage; coordinate and invest in a diversified portfolio of infrastructure projects in Ghana for national development.On July 21, 2014 the Parliament of Ghana endorsed the Infrastructure Investment Fund Bill, and GIIF Act was assented on August 15,2014. The World Bank along with PPIAF grant is providing technical assistance to support the Government in establishing this Fund.As part of establishing this Fund, the Government wants to undertake a detailed analysis of the infrastructure financing gap andinefficiencies, which the Fund should address to enable infrastructure financing.
The objective of this study is to assess infrastructure financing demand and the current and expected sources of supply offinancing and products available for Ghana infrastructure projects. The analysis will provide detailed insights on the financinggap and the market inefficiencies that will assist in establishing the role and operational processes of the Fund.
The scope of this consultancy assignment is divided into two tasks to assess the current and potential gaps ininfrastructure financing and indicate the inefficiencies that need further considerations. It is important to note that thisassessment is for the whole infrastructure delivery modes and not restricted only to PPPs. The infrastructure sectors to beincluded are Power, Renewable & Energy Efficiency, Water and Waste Services, Transportation, Roads & Highways,Telecommunications, Oil & Gas infrastructure, Agriculture Infrastructure, Mining Infrastructure, Health, Housing, Tourism,Educational Facilities, Other key investments that involves significant new infrastructuredevelopment.
3.1 Task 1: Ghana Infrastructure Financing Demand Assessment: This task would include a detailed bottom up assessment of overall infrastructure financingdemand from various infrastructure projects and PPPs in above mentioned sectors in Ghana. Detailed project level analysis andsector level aggregation of expected infrastructure PPP projects to be included to cover both national and sub-nationallevelprojects; that meets national infrastructure priorities and consistent with the development plan of Government of Ghana. TheConsultant is expected to refer to financing requirements for projects identified by National development Planning Commission,Ministry of Finance -Public Investment Division (PID) other Sector Ministries, Sub-Nationals (State owned Enterprises, Utilities,Districts, Cities and Municipalities) and previous work undertaken by key stakeholders in the sector. The assessment is expected tocover the current and potential demand, based on estimated investment requirements, up to a period of [5-10]years and could makeuse of (or drawing lessons from) available/pipeline of projects under consideration under the WB supported PPP Projectand othersources of project development. Representatives from the PID and GIIF shall facilitate access to relevant information to undertakethis task.
3.1.1 Output: InfrastructureFinance Demand Assessment draft report to be submitted to World Bank, PID and GIIF Board for their review. This should includedetails of the current and expected capital programs, project pipeline from each ministries and Sub-Nationals along with theirfunding requirements over a period of up to [5-10] years.
3.2 Task 2: Ghana Infrastructure Financing Supply Assessment: The objective of this task is to identify various sourcesof financing available to meetinfrastructure investment requirementsin Ghana. This task would comprise an overall review of infrastructure finance sources suchas Government/public sector, multilaterals, commercial banks and financial institutions, insurance companies, pensionand socialsecurity funds, non-banking finance companies, infrastructure funds, private equity, and capital markets available to provideinfrastructure financing. The Consultant is expected to meet key National and Sub-national Government sources, active commercialbanks, project sponsors, capital markets investors, institutional investors, infrastructure funds, and other financial institutions(multilaterals, bilateral donors, etc.) to solicit their plan on lending to infrastructure PPP projects. The review should includevarious tranches of financing instruments (debt, equity, subordinated loan, mezzanine financing, risk guarantee, take-outfinancing, etc.) that are used or made availablefor use in Ghana infrastructure projects. The review should also includeidentifying inefficiencies in the infrastructure financing market (including high cost of capital, mismatching tenors, highrefinancing risk, lack of robust analysis, capacity and knowledge, etc.). The assessment would feed into current and potentialinfrastructure financing gap for PPP, private and public sector infrastructure projects. The assessment is expected to cover thecurrent and potential supply up to aperiod of [5-10] years.
To undertake this task, the Consultant's team should be well aware of Ghana and wider Africa infrastructure financingscenario and have thorough understanding of the financing sources and associated challenges in Ghana. As all sources of financingwould not have been earmarked forspecific projects, the Consultant's team should address this through an assessment of howfinancing demand identified under Task 1 could bemet with the identified sources in Task 2. In this regard, the Consultant's teamshould integrate task 1 & task 2 to produce the overall financing gap.
3.2.1 Outputs: InfrastructureFinance Supply Assessment draft report to be submitted to the World Bank, PID and GIIF Board for their review. The overallfinancing gap should be presented ata workshop with key stakeholders. The need and role for PID and GIIF should be clearlydemonstrated as part of this task, which should set out:.
· Determination of infrastructure financing gap, market barriers and supply sideconstraints
· Verification of the need, role and objective of GIIF in infrastructure financing inGhana
· From the overall demand for long termPPP project finance, the consultant would make an assessmentof the likely demand on GIIF for providing direct and indirect (on-lending), contingent and guaranteefinance.
4.0 Consultant's Team
The Consultant's team should include Senior and experienced Infrastructure and PPP/Project Finance Specialists to cover bothTasks. For Task 2, it is essential that the team members have extensive experience, understanding and access to key market players(Commercial Banks, Multilaterals, Infrastructure Funds, etc.) in Ghana and Africa infrastructure financingmarket.
The personnel should have Master's Degrees in Finance, Economics, Engineering, Law or equivalents. They should also have aminimum of five years working in the capital market.
Submission of Expression ofInterest
The attentionof interested Consultants is drawn to paragraph 1.9 ofthe World Bank's Guidelines: Selection andEmployment of Consultants [under IBRD Loans and IDA Credits & Grants] by World Bank Borrowers (January 2011) ("Consultant Guidelines"), setting forth the World Bank's policy on conflict of interest. Consultants may associate with other firms in the form of a joint venture or a subconsultancy to enhance theirqualifications.
The PID of MOF now invites eligible consultingfirms ("Consultants")to indicate their interest in providing the Services. Interested Consultants should provide informationdemonstrating that they have the required qualifications and relevant experience to perform the Services (brochures, description ofsimilar assignments, experience in similar conditions, availability of appropriate skills amongst Staff, etc. Theshortlistingcriteria are: (1) Core business and number of years in business, 2) Technical and Managerial organisation of the firm, (3)Availability of Appropriate qualifications and skills among Staff. The Team members should not be less than 5 years' experienced in the Capital market. (4) Firm'sexperience in similar assignments and (5) Firm's experience in working in similar conditions and environment
A Consultant will be selected in accordance with Selection Based on the Consultants' Qualifications (CQS) set out in the Guidelines. Interested Consultants may obtain furtherclarification, preferably by e-mail, at the address below from 9.00AM to 4.00PM, Mondaythrough Friday (except on public holidays).
Expressions of interestshall be in English and must be delivered in six (6) hard copies (one original and five copies) and a soft copy on CD-ROM in sealed envelope and clearly marked "Ghana PPP Project (Expression ofInterest) Consultancy on the analysis of Ghana Infrastructure Financing Gap" to the address below inperson or by courier by 3.00pm, 27th April 2015.
Mailing Address: Public InvestmentDivision
Ministry of Finance
4th Floor (New Block) Room 402
P.O. Box M40 Ministries
ContactPerson: Director, Public Investment Division
Telephones: +233-0302 -673431