Kuwait’s Public Private Partnerships Program

PARTNERSHIPS TECHNICAL BUREAU STATE OF KUWAIT

PTB‐President Adel Al‐Roumi www.ptb.gov.kw Kuwait – February 2013

Kuwait

1 Kuwait – February 2013

PTB Set-up and Priority Sectors

Partnerships Technical Bureau Set-up

  The Partnerships Technical Bureau (PTB) was established in 2008, under Article 12 of Law No. 7/2008 and serves as the main body responsible for PPP projects implementation

  PTB aims to utilize private sector skills and expertise to maximize value for money and service quality.

  Increasing Kuwait’s Gross Domestic Product and diversifying its sources   Encouraging private sector participation in development projects   Improving public sector service quality   Promoting human development and creating job opportunities for Kuwaiti

nationals   Promoting scientific research and technological development

Objectives PTB’s Key Objectives

Key

Sec

tors

Invo

lved

In

Power

Education

Water/ Wastewater

Healthcare

Transportation

Sold Waste Management

Real Estate

Communication

Law 7 of 2008 and its associated by laws (256) set the legal framework for the introduction of PPPs in Kuwait

2 Kuwait – February 2013

3 Kuwait – February 2013

Ranked List of Active PPP Projects

List of PPP Projects # Sector Project

1 Power Az-Zour North

2 Power AlKhairan

3 Power AlAbdaliyah (ISCC)

4 Water/ Wastewater Um Al Hayman WWTP

5 SWM Kabd Treatment SWTP

6 Education Kuwait Schools Development Program

8 Real Estate Failaka Island Development

9 Real Estate South Jahra Labor City

10 Real Estate Highway Rest Houses and Doha Chalet Centers

11 Real Estate Commercial, Educational, Cultural and Entertainment Center in Abdulla Alahmad Street

14 Healthcare Physical Medicine and Rehabilitation Hospital

16 Real Estate Expired Contracts of Properties Established on State-Owned Real Estate

High Priority Medium Priority Low Priority

Al Abdaliyah ISCC

5 Kuwait – February 2013

Power – Al Abdaliyah ISCC

  This is the 1st Unsolicited Proposal that the Government approves to be a PPP

project to an open tender for participation from international and local investors

  SPV will be established to undertake the development of this plant, ownership

of SPV will be distributed between the investor, the government and the

citizens through an IPO

  The Project Company shall build and operate the ISCC Plant for a period of 25

years and shall enter into a Power Purchase Agreement “PPA” with the Ministry

of Electricity and Water "MEW"

  During the investment period, the Project Company shall convert fuel, which is

supplied by MEW, into electricity and shall supply such electricity to MEW

  The Project site will also be provided by the MEW and the leasing cost of such

site will be paid for by the Project Company

6 Kuwait – February 2013

Power – Al Abdaliyah ISCC

Al Abdaliyah ISCC

Description:   The Project involves the establishment of a new Integrated Solar Combined Cycle in order to help the State of Kuwait manage the increasing

demand for electricity consumption. The Project includes the sale and purchase of associated power by the Ministry of Electricity and Water pursuant to an Energy Conversion Purchase Agreement

Project Overview

 Build, Operate, and Transfer (BOT) PPP Model

 High Priority Project Priority

 Power: 280 MW of which 60 MW will be solar Capacity

 Ministry of Electricity and Water (MEW) Public Entity

 Appointing Transaction Advisor Project Status

Project Timeline Overview

Initiation

RFP Package Issued

Execution of Project

Contracts

Financial Close Early Power Project

Completion

Preferred Bidder

Selection

Project Initiation

RFQ TA Appointed

Review of Feasibility

Study

Phase 2

Phase 2 Construction Period

Phase 1

Key Milestones

  Energy saving by utilizing solar thermal energy

  Reduction of CO2 emission

  Introduce efficiency

  Provide investment opportunities for local banks & businesses

  Boost Kuwait’s attractiveness for international lenders and Investors

  Reduce the governments spending obligation

  Transfer operation and construction risk to the private sector

  Ensure timely completion of the construction

  Improve reliability of power generation and water production capacity

  Visibility of operation and maintenance costs

  Allocate risks inline with international / regional best practices

Um Al Hayman WWTP

10

Description: The Umm Al Hayman Wastewater Project consists of a number of treatment plant, related facilities, and transmission and distribution assets being constructed, operated, rehabilitated and/or decommissioned under a single concession agreement (the TSTCA).

Project Overview

 Build, Operate and Transfer (BOT)  Design, Build, Operate PPP Model

 High Priority Project Priority

  Initial capacity of 500,000 m3/day (“Stage 1”) and an expanded capacity of 700,000 m3/day (“Stage 2”)

Capacity

 Ministry of Public Works Public Entity

 RFP release Project Status

• The State of Kuwait, through the Partnerships Technical Bureau (“PTB”) in collaboration with the Ministry of Public Works (“MPW”), is seeking to procure through the public tendering process a new Waste Water Treatment Plant (“WWTP”) and associated wastewater and Treated Sewage Effluent (“TSE”) networks for the wastewater project in the Southern Area of Kuwait (Umm Al Hayman) (the “Project”). • The MPW will enter into a Transmission and Sewage Treatment Concession Agreement (“TSTCA”) with the Project Company (a special purpose company to undertake the Project), which includes a concession agreement for an investment term of 25 years for the WWTP and a design/construction term for the associated wastewater and TSE networks. • The new WWTP will be located in the southern sub region of the State of Kuwait. The Project service area comprises the areas of Riqqa and UAH. The Riqqa service area is located in the southern part of the Metropolitan Area and specifically in the governorates of Ahmadi and Mubarak Al Kabeer. The UAH service area contains the existing Umm Al Hayman Ali S. Al Salem town (at present serviced by the Existing UAH WWTP) and Az Zur settlement. Other major elements of this service area are the site designated for the new (under construction) town known as Uraifijan or Sabah Al-Ahmed.

Water/ Wastewater Management – Um Al Hayman WWTP

Um Al Hayman WWTP

Kuwait – February 2013

11

MPW • The Ministry of Public Works (MPW) is responsible for the execution of a wide range of state projects, including the construction of schools, clinics, hospitals, mosques and government buildings, and the development and maintenance of infrastructure projects like sanitary drainage, water networks, wastewater treatment, roads and highways. • Based on MPW’s analysis, the UAH Wastewater Project is being developed in response to an urgent requirement to expand the sewage treatment capacity (and retire obsolete treatment capacity) for the Southern Area of Kuwait and a requirement to expand the transmission network (both for wastewater and TSE distribution) to service the new UAH WWTP, future population growth in the region and future TSE demand. • MPW will be the sole intended off taker of wastewater services for the Project, signatory to the TSTCA and key long term counterparty for the Project Company. PTB • The Partnerships Technical Bureau (PTB) is the Government agency responsible for the implementation of the State of Kuwait’s PPP program and is in charge of the financial, commercial and technical evaluation of PPP projects. Established under Article 12 of the PPP Law, PTB is involved in all phases of a project, from inception to Financial Close. The UAH Project falls under PTB’s remit.

Water/ Wastewater Management – Um Al Hayman WWTP

Key Government Participants

Kuwait – February 2013

12

Water/ Wastewater Management – Um Al Hayman WWTP

Basic Contractual Structure

• The contractual relationship between MPW and the Project Company, including all obligations of DBO Company, will be governed by the TSTCA, thereby providing a single point of procurement between MPW and the private sector. • The BOT elements will be financed on a limited recourse basis with senior debt being serviced through receipt by the Project Company of plant payments on an availability basis for the term of the TSTCA. • For the DBO elements, MPW will reimburse the Project Company directly (who will in turn reimburse the DBO Company) for the cost of the DBO works on completion of contracted progress milestones and for the provision of O&M services, in accordance with the TSTCA. • The concession structure reflects that the BOT elements the DBO elements of the Project are paid for by MPW through payment mechanisms outlined in the TSTCA. The DBO payments will flow through Project Company to DBO Company in accordance with the terms of the TSTCA and DBO Agreement. • The Successful Bidder will establish the Project Company which may have foreign and local shareholding as appropriate. The Successful Bidder will be required to contribute 40% of the Equity required for the Project Company.

Kuwait – February 2013

13

Water/ Wastewater Management – Um Al Hayman WWTP

Project Timetable

Request for Proposal ("RFP") • The RFP documents will include Instruction to Bidders, the Transmission and Sewage Treatment Concession Agreement, the Technical Specifications, and the associated Annexes and Bid Formsheets and other legal agreements. The RFP will contain all the necessary information of the Project for the bidders to submit competitive and compliant bids. • The full set of the RFP documents is now under finalization by PTB and MPW in collaboration with the Transaction Advisor. The target date to release the RFP is November 2012. • When the RFP is available for purchase, PTB and MPW will notify prequalified companies and consortia, and also companies listed on the Kuwait Stock Exchange, by way of a public advertisement.

Kuwait – February 2013

Thank You  

14 www.ptb.gov.kw Kuwait – February 2013

PARTNERSHIPS TECHNICAL BUREAU