Infrastructure Advisory

IFC Advisory Services Infrastructure Advisory business line provides advisory services to governments on private sector participation in infrastructure, public services, and the restructuring of state-owned enterprises. The objective of the program is to expand access and improve the quality of services in infrastructure, such as power, transport, water and sanitation, as well as, more recently, in health and education. In particular, the initiative aims to:

• Increase access and improve the quality of public services
• Alleviate the budgetary constraints of governments
• Respect consumers’ affordability to pay for public services
• Attract private sector know-how and investments through the structuring of bankable transactions, while ensuring cost recovery and financial sustainability to the sector

The initiative is active in Egypt, Jordan, Lebanon, Pakistan, and Saudi Arabia.


What Does IFC Advisory Service's Infrastructure Business Line Offer?

Acting as an honest broker, IFC advises clients on how to structure and implement projects that meet the needs of government, consumers, and investors, helping formulate long-term agreements with the private sector to provide specific investments and services using strict performance-driven criteria.

In addition to providing transaction support, IFC advises on policy and regulatory issues, optimizing commercial value while being sensitive to the country’s economic and political context. With ties to the World Bank and the global investment community, IFC can leverage its resources and expertise to bring about long-term and sustainable solutions.

What Makes IFC Advisory Service's Infrastructure Advisory Attractive?


Improvements in infrastructure and public services are the intrinsic part of sustainable economies. This is particularly true in the Middle East and North Africa, where people have primarily relied on the state to provide essential services that require major capital expenditures, such as utilities and infrastructure.

With governments facing chronic budget constraints and increased demand for the expansion of infrastructure and public services, the private sector can help increase infrastructure investments, especially for large projects, while reducing the budgetary and fiscal constraints on governments. The private sector can also provide governments with a source of revenue through user charges, enabling them to concentrate their limited resources on social sectors, including education, health, and rural services.

The private sector can help improve efficiency, innovation, and managerial capabilities, which can lead to reduced tariffs for consumers and improved quality of services.


Key Achievements

From IFC Advisory Services in the Middle East and North Africa's inception to the end of fiscal year 2007, the Infrastructure Advisory business line has been successful at:

• Mobilizing over $1.2 billion in private sector investment in the airport and water sectors in Jordan and Saudi Arabia
• Generating government receipts (up-front and concession fees) for a total value of over $900 million over the life of the transactions
• Making governments save a total of over $415 million in avoided subsidies
  

Examples of Projects in Egypt

Egypt: A Memorandum of Understanding (MoU) was signed in October 2006 by the government of Egypt's Ministry of Finance and IFC to provide advisory assistance in the implementation of five pilot public-private partnership (PPP) transactions. This MoU was signed as part of an ambitious program launched by the government of Egypt to significantly expand and develop Egypt’s infrastructure through a number of model PPP transactions in parallel with building a conducive legal, regulatory, and economic environment fostering sustainable private sector participation in public services and PPP schemes. The following projects have been signed with the government of Egypt:

• Wastewater: A PPP concession for a 500,000 m³/day wastewater treatment plant for New Cairo and its adjoining areas, a new urban center developed to ease overcrowding and the infrastructure burden in Cairo
• Potable Water: A PPP concession of a 500,000 m3/day potable water treatment plant for New Cairo and its adjoining areas, which is expected to be operational by 2012/13, in line with the projected growth in water demand and population
• Schools: A PPP project to address the country’s shortage of primary and secondary schools and enhance the cost-effectiveness and quality of school infrastructure and maintenance. The project will include the building and management of 300 new school facilities, while the government will maintain responsibility for teaching and other core public services Read more...
• Alexandria Hospitals: A PPP project for the construction and provision of non-clinical services for two of Alexandria's University hospitals, a gynecology / obstetrics hospital and a tertiary care hospital

Examples of Projects in Jordan

Jordan: In order to meet sustained air traffic growth, the government of the Hashemite Kingdom of Jordan sought to invite private sector participation in the expansion and rehabilitation of Amman's Queen Alia International Airport. The Jordanian government appointed IFC as its lead advisor for structuring and implementing a balanced transaction, which would increase the terminal's capacity, develop it as a regional hub, increase service-quality standards in line with international best practices, and ensure revenue flows for the government. In April 2007, a winning bidder was successfully selected for the 25-year concession. Read more...



Examples of Projects in Morocco

IFC signed a Memorandum of Understanding with Morocco’s Privatization Commission (DEPP) of the Ministry of Finance and Privatization to provide advisory assistance in defining Morocco’s short-term strategy to promote the country’s economic development through increased private sector activity in the country. To this end, IFC will undertake a study to identify and analyze potential PPP transactions in the following priority sectors: transport, social infrastructure, water and sanitation, and power.


Examples of Projects in Saudi Arabia

IFC advised the General Authority of Civil Aviation (GACA) of the Kingdom of Saudi Arabia in two landmark private sector participation projects: the expansion and rehabilitation of the Hajj terminal at the King Abdulaziz International Airport (KAIA) in Jeddah, the terminal dedicated to the pilgrims visiting Mecca for the Hajj and Umrah pilgrimages; and the development of a new 30,000m³/day desalination plant to supply potable water to the KAIA airport and its associated facilities.

The projects will have a tremendous impact on the millions of pilgrims that use the airport on a daily basis, improving the currently sub-standard facilities and intermittent supply of water, and reducing the extremely long processing and waiting times.

The expansion and rehabilitation project resulted in significant savings for GACA, which was previously operating at a deficit to sustain the operations of the Hajj terminal. It is estimated that GACA will save over $23 million per annum, starting from the first year of the project, increasing to an estimated $25 million as a result of the growth in passengers and the change in the traffic allocation to the terminal. Savings are further increased when taking into account the capital costs avoided, with $250 million of private investment expected to be mobilized over the life of the project. The project is also the first step in the General Authority’s redevelopment program aimed at meeting the airport’s increasing volume of passengers' traffic. Read more...

The desalination project will significantly lower the cost of water and introduce international best practices in the operation of the desalination plant at the airport, leading to a more sustainable and improved water supply, impacting millions of airport users every year. It is estimated that the price quoted by the winning bidder will save GACA about $12 million per year as a result of technical, economic, operational, and managerial efficiencies. Savings are further increased when taking into account the capital costs avoided. In fact, it is estimated that the project will mobilize over $35 million in private investment in the country. Read more...

In addition, the projects have set a precedent in Saudi Arabia for transparency and the establishment of best practice in the selection of private sector partners in infrastructure projects, helping to demonstrate the benefits of a transparent and competitive process in the selection of a long-term partner for the government.


For additional information contact:
Moazzam Mekan
Senior Operations Manager
E-mail: mmekan@ifc.org