MADAGASCAR:MADAGASCAR:Public Private Partnership (PPP) for Public Private Partnership (PPP) for ToamasinaToamasina Container TerminalContainer Terminal

June 2005June 2005

IFC Advisory ServicesIFC Advisory Services

• Provide for fee advisory services to Provide for fee advisory services to governments for PSP and PPP governments for PSP and PPP transactionstransactions

• Focus on Infrastructure in recent Focus on Infrastructure in recent years… broadly based Africa. SE Asia, years… broadly based Africa. SE Asia, LAC, SECA, LAC, SECA,

• Power, telecom, ports, water, airlines, Power, telecom, ports, water, airlines, rural electrification, airports, private rural electrification, airports, private provision of public healthcareprovision of public healthcare

The way we operate…..The way we operate…..

• Core IFC teams supplemented by Core IFC teams supplemented by teams of consultants including teams of consultants including lawyers, engineers, regulatory lawyers, engineers, regulatory specialists, accountants, economists,specialists, accountants, economists,

• 18-24 months .. Two stages.. Due 18-24 months .. Two stages.. Due diligence and strategic stage.. diligence and strategic stage.. Implementation.Implementation.

• Fees heavily back-end loaded… donor Fees heavily back-end loaded… donor funds to pay balance of the tea,funds to pay balance of the tea,

Port of ToamasinaPort of Toamasina

Principal port of Madagascar

Accounts for 90% of containerised trade

1992 to 2004: traffic has increased from 26,500 TEU to 91,900 TEU

Until Aug. 2005: one of the worst performing ports in Africa (ie. 7 movements per hour compared to a regional avg. of 10-12 movements per hour)

Transaction Calendar Transaction Calendar

Strategic Options Prequalificatio

n

Investors Due Diligence &

Negociation of Bidding

Documents

Bid

May 26, 2005

Closing of

transaction

Mobilisation of IFC Team

Due diligence (legal, technical, social, financial, and accounting)

Expression of Interest

January 2004

Spring 2005

Summer

2005

Diagnostic Phase Implementation Phase

Information Memorandum

Summer 2004

Winter 2004-

05

Port of ToamasinaPort of Toamasina

Hutchinson Port Holdings Ltd.: #1 global container terminal operator (44 million TEU in 2004)

AP Moller Finances S.A. : # 3 global container terminal operator (22 million TEU in 2004)

International Container Terminal Services Inc. : # 7 global container terminal operator (1.9 million TEU in 2004) – Highest Bidder

Consortium of Malta Freeport – CMA CGM – Bolloré : Malta Freeport one of the leading transhipment ports in the Mediterrenean (1.3 millions TEU in 2004)

Transaction StructureTransaction Structure

20 years Concession guided by performance objectives Exclusivity of container terminal operations until level of

400,000 TEU. Concession entry fee: Initial payment of 5 million Euros by

selected operator towards (i) operating budget of Port Authority (SPAT), (ii) purchase of equipment from Port, and (iii) reimburse Government’s transaction development cost

Additional 5 million Euros to be paid by the operatorduring the first 3 years for container cranes

Mandatory rehabilitation and construction works (est. 10 million Euros)

Mandatory capitalisation of project company with minimal equity amount of 5 million Euros

Transaction StructureTransaction Structure

Hybrid concession fee: Fixed fee + Variable Fee (Euros per TEU)

Variable fee was the single financial bidding criteria

Expected returns to Madagascar over the life of the concession: efficiency gains, international best practices, investments.

Estimated financial returns to the Government in excess of US$ 300 million in investments, entry and concession fees.

Donor Support for TransactionDonor Support for Transaction

DevCo – funding from the UK’s Department for International Development (DIFD), the Dutch Ministry of Foreign Affairs and the Swedish International Development Agency (SIDA) for specialized consultants: Technical: Hamburg Port Consulting (Germany) Legal: White & Case (France) Social: FTHM (Madagascar) Audit: Delta Deloitte (Madagascar)

the Private Infrastructure Development Group's (PIDG) Technical Assistance Fund - for insitutional capacity building for Port Authority and within Ministry of Transports of Madagascar