NATIONAL GOVERNMENT AGENCY PUBLIC-PRIVATE PARTNERSHIP MANUAL
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National Government Agency Public-Private Partnership
Table of Annexes
ANNEX 1 SCOPING THE PROJECT
ANNEX 2 OVERVIEW OF PROJECT FINANCE
ANNEX 3 PHILIPPINE LAW ON THE PROTECTION OF INDIGENOUS PEOPLES’ RIGHTS
ANNEX 4 GUIDELINES FOR GENDER MAINSTREAMING IN PPP PROJECTS
ANNEX 5 GUIDELINES FOR ENVIRONMENTAL ASSESSMENT AND MONITORING OF PPP PROJECTS
ANNEX 6 INSTRUMENTS ISSUED BY DONORS AND BILATERALS IN SUPPORT OF PPP PROJECTS
ANNEX 7 GENERIC PREFERRED RISK ALLOCATION MATRIX ADOPTED BY NEDA FOR PPP PROJECT EVALUATION
ANNEX 8 REFINANCING GAINS
ANNEX 9 COMPENDIUM OF EXTERNAL RESOURCES
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Boxes, Figures, Tables
Box4.1 DefinitionofProjectFinance Box4.2 CommonFormsofSecurity Box4.3 ProjectfinanceinLargeComplexProjects
Table4.1 ProjectScopingofaRegionalAirportinthePhilippines Table4.2 ChecklistforScreeningPotentialImpactsofPPPProjectsonIPs Table4.3 AnnotatedOutlineofIPPlan Table4.4 FrameworkforMainstreamingGenderinPPPProjectDevelopment Table4.5 GeneralProceduresforMainstreamingGenderinPPPProjects Table4.6 ProjectImpactScreeningMatrix Table4.7 PotentialProjectImpactAssessmentChecklist Table4.8 EnvironmentallyCriticalPPPProjects Table4.9 SelectedNon-ECPPPPProjects Table4.10 OtherEligibleProjectsforPPPthatareNon-EnvironmentallyCriticalProjects
Figure4.1 TypicalBOTProjectStructure Figure4.2 PEISSystemStagesandProjectProponent’sMajorTasks
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Acronyms
ADB AsianDevelopmentBank APSC AirPollutionSourceandControlBLAs BilateralagenciesBOT Build-Operate-and-TransferBR BoardResolutionCCA ClimateChangeAdaptationCNC CertificateofNon-CoverageCOFACE CompagnieFrancaised’Assurancepour laCommerceExterieurDAO DENRAdministrativeOrderDENR DepartmentofEnvironmentand NaturalResourcesDOH DepartmentofHealthDPWH DepartmentofPublicWorksand HighwaysDRR DisasterRiskReductionEBRD EuropeanBankforReconstructionand DevelopmentECAs EnvironmentallyCriticalAreasECC EnvironmentalComplianceCertificateECGD ExportCreditGuaranteeDepartmentECP EnvironmentallyCriticalProjectECRSC EIACoverageandRequirements ScreeningChecklistEGF EnvironmentalGuaranteeFundEGGAR EngineeringGeologicalandGeohazard AssessmentReportEIA EnvironmentalImpactAssessmentEIARC EIAReviewCommitteeEIS EnvironmentalImpactStatementEIARC EIAReviewCommitteeEMB EnvironmentalManagementBureauEMF EnvironmentalMonitoringFundEMP EnvironmentalManagementPlan/ Program
EPC engineeringprocurementand constructionERA EnvironmentalRiskAssessmentESIA EnvironmentandSocialImpact AssessmentEximbank Export-ImportBankFM forcemajeureFS FeasibilityStudyGAD genderanddevelopmentGSIS GovernmentServiceInsuranceSystemGSSR GeologicalSiteScopingReportGTZ GesellschaftfürTechnischeZusammenarbeitIA ImplementingAgencyICC InvestmentCoordinationCommittee ICCs/IPs IndigenousCulturalCommunities/ IndigenousPeoplesIEC InformationEducationand CommunicationIEE InitialEnvironmentalExaminationIFC InternationalFinanceCorporationIP IndigenousPeoplesIPP IndigenousPeoplesPlanIPRA IndigenousPeoplesRightsActIRR ImplementingRulesandRegulationsJBIC JapaneseBankforInternational CooperationKfW KreditanstaltfurWiederaufbauLD LiquidatedDamageLGU LocalGovernmentUnitLLDA LagunaLakeDevelopmentAuthorityM&E Monitoring&EvaluationMC MemorandumCircularMCA Multi-CriteriaAnalysisMGB MinesandGeosciencesBureau
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MIGA MultilateralInvestmentGuarantee AgencyMLAs MultilateralAgenciesMMT MultipartiteMonitoringTeamMOA MemorandumofAgreementMPSS MinimumPerformanceStandardsand SpecificationsNEDA NationalEconomicandDevelopment AuthorityNGA NationalGovernmentAgencyNGO non-governmentalorganizationO&M operationsandmaintenanceOECD OrganizationforEconomicCooperation andDevelopmentP/O PermittoOperatePC PublicConsultationPCG PhilippineCoastGuardPD PresidentialDecreePDMF ProjectDevelopmentandMonitoring FacilityPEIS PhilippineEnvironmentalImpact StatementPEISS PhilippineEnvironmentalImpact StatementSystemPFS prefeasibilitystudyPPP Public-PrivatePartnershipRA RepublicActRAP ResettlementActionPlanROWA Right-of-WayAcquisitionSIA SocialImpactAssessmentSPC SpecialPurposeCompanySPSC Scoping/ProceduralScreeningChecklistSV SiteVisitTOR TermsofReferenceUNFCCC UnitedNationsFrameworkConvention onClimateChangeUSAID UnitedStatesAgencyforInternational DevelopmentVGF ViabilityGapFunding
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ANNEX 1Scoping the Project
1.0 INTRODUCTION
Theterm,projectscoping,canprovidedifferentmeaningsatdifferentphases inthedevelopmentofacandidatePPP
project. Inthisannex,projectscopingwillbetakentomean:adesktopinvestigationoftheprojectthat issufficiently
deeptobeabletodescribetheprojectqualitatively. Inparticular itssitingoptionsincludingmeritsofeach,minimum
performancestandardsandspecifications(MPSS),probablepaymentmechanism,potentialstructuringoptions, rough
approximationofimplementationandoperatingcosts,andsomeconceptofhowitsrevenuewouldbestructured.
Theapproachdescribedhereisintendedtofocusatahighleveloncertainattributesoftheprojectthataidinunderstanding
theprojectconceptually.
Theanalysis isaidedby theconceptualdescriptionofavery simplefinancialmodel thatcanbedevelopedby the IA
analyst,theultimateobjectiveofwhichistomeasurethelevelofrevenuestheprojectrequiresinordertobebankableto
theprivatesector.Asproposedbelow,thetargetedrevenuescanbeidentifiedbyworkingbackwardsfromdistributable
cashflows,todebtserviceandoperatingexpensestogetanapproximationoftherevenuesneeded.Oncethereisafix
onrevenuerequirements, itmaybeeasiertomakejudgmentsregardingtheabilityoftheprojecttobecommercially
sustainablewithjustuserfees;oralternativelysomecombinationof(a)userfeesandVGF;(b)userfeesandusagefees
suchasshadowtollsandminimumrevenueguarantees;(c)performancebasedfees,or(d)availabilitypayments.
Projectscopingisnotapreciseart;itismerelyonewaytounderstandaprojectanditspotentialrequirements.
ItisrecommendedthatIAsdeveloptheirownapproachtoProjectScopingthatisconsistentwiththeattributesofprojects
intheirsectors.
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2.0 EXAMPLE FOR SCOPING A REGIONAL AIRPORT PPP PROJECT
Theexamplebelow(Table4.1)featuresaregionalairport.Whiletheprinciplesofprojectscopingarethesameforevery
sector,theremaybeslightdifferencesinthewaythattheprojectisconceptualizedwithcertainattributestakingonmore
importancethanothers.
ItemProject attributes/
ProceduresLinks to Guidance
1 Purposeoftheproject AtthisstagetheIAshouldhaveatleastabroadideaofwhattheprojectisexpectedtodeliver, i.e. its outputs orminimumperformance standards and specifications(MPSS).The project scoping is “high level”, i.e. overall broad goals, and it isunderstooditwillberefinedwithadditionaldetailduringthedevelopmentoftheproject,particularlythePFSandFSstages.
2 Istherea“dominimum”scenario
Considertherangeofmanagementoradministrativeactionsthatmighttemporarilymeetthedemandfortheservicetheproposedprojectisexpectedtoprovidee.g.,insteadofbuildinganewregionalairport,considertheimprovementoftheroadto a distant regional airport with excess capacity. The alternative, constructingthe road, will involve close coordinationwith DPWH. If the alternative is viable,considerhowfarintothefuturedoesthealternativeresolvedemandfortheservice.Considerwhatotherwayscanthedemandfortheservicebemetthrougha“dotheminimum”scenario.
3 Istheremorethanonetechnicalsolution?
Iftheregionalairportisabsolutelyneeded,determinethedifferencesinprojectcostforthetechnicalsolutions.
Thenextstepbelowprovidesguidanceondeterminingprojectcostineachlocationoreachtechnicalconfiguration.
4 Projectsite • Isthereaproposedsiteorsites?• Arethesitesavailable?• What is the size of the airport? Howmany runways?What length? Size of
aprons?Sizeofpassengerterminal?Numberofgates?Concessionsneeded?• Whatarethemerits/demeritsofeachsite?• Considerthetechnicaldifficultiesofconstructingaregionalairportineachsite.
5 Projectcost Usepastexperiencetoprovidearoughmaximumandminimumestimateofprojectcostforeachtechnicalconfiguration-suchthattheactualisalmostcertaintofallintheselectedrangebutexcludecostforROWAforthispurpose.
Note:Toavoidconfusion,thematerialbelowassumesthereisonlyonetechnicalsolutionandonehighestimateofprojectcostandonelowestimate.Anexcelfilewillbecreatedforeachscenario.
6 Calculateequityforhighandlowprojectcostestimate(useseparateexcelspreadsheetforeachcalculation)
Allocate30%1ofthehighandlowprojectcoststoequityandallocatedisbursementsofequityovertheconstructionperiod(SeeChapter3,Section3.8.5oftheManualondebtandequityratioforthefinancialstructureofPPPs).Equityisnormallydisbursedonaparipassubasiswiththeconstruction“S”curve,seeStep9.Twocalculationsofequityareneeded,oneforthehighestimateofprojectcostononeexcelmodel;oneforthelowestimateofprojectcostonasecondexcelmodel.
Table 4.1 Project Scoping of a Regional Airport in the Philippines
1Theratioofdebttoequitywilldependontheperceivedrisksoftheproject.ForPPPs,debtcancoverasmuchas70-90%ofthetotalfundingrequirementofaproject.Forthisexample,debtisassumed70%whileequityisassumed30%.Forriskierprojects,debtwillbelowerandmaynotexceed60-65%oftotalfundingrequirementofaproject(Source:http://ppp.worldbank.org/public-private-partnership/financing/issues-in-project-financed-transactions)
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ItemProject attributes/
ProceduresLinks to Guidance
7 Futurevalueofequity Threestepsintheexcelmodel(s):a. Determinewhatconstitutesareasonablerateofreturnfortheproject,or
similarprojectsthatarebeingdeveloped,e.g.assume15%basedontheICCpredeterminedhurdlerateforEIRR;
b. Tocalculatethefuturevalueofequityasoftheendoftheconstruction,eachequitydisbursementmustbecompoundedattherateof15%untiltheendoftheconstructionperiod.Allthecomponentsandtherolledupinterest2arethenaddeduptoarriveatatotalvalueofequityattheendofconstruction;
c. Calculatethefuturevalueofequityforthehighandlowestimatesofprojectcostonseparateexcelmodels.
8 Calculatethelevelofdistributabledividendsneededbytheproject
Theformulainvolvesmultiplyingthereasonablerateofreturnonequity(assume15%)bythevalueofequityattheendoftheconstructionperiod;D=(E)tx0.15WHERE(E)t=thefullvalueofequityattheendofconstruction
Twocalculationsofdistributabledividendsareneeded:oneforthehighestimateofprojectcost;oneforthelowestimateofprojectcostinthesecondmodel.
9 Lengthofconstructionperiod • Shouldfallintherangeof1-3years,preferablylessthanthree• Considerthe“S”Curveofprojectcostexpenditure:• For3-yearconstruction:25%,50%,25%,respectivelyforyears1,2and3• For2-yearconstruction:30%,70%
10 Calculatethedebtservicerequirements
Sinceequityisassumedat30%(seeStep6),theremaining70%ofprojectcostswouldthenhavetobefinancedthroughdebt(SeeChapter3,Section3.8.5oftheManualondebtandequityratioforthefinancialstructureofPPPs).Fivestepsintheexcelmodel(s):a. DeterminewhatisanacceptableestimatefortheLTcostofdebtfundsinthe
market;b. AllocatedisbursementofdebtovertheconstructionperiodaspertheS
curve;c. Calculatetherolledupinterestforeachdisbursementduringtheconstruction
periodusingthereasonableestimateofLTcostoffunds;d. Arriveatthefullvalueofdebtincludingrolledupinterestattheendofthe
constructionperiodandallocatethissuminequalinstallmentsoveratenyearperiodforboth,thehighprojectcostscenarioandthelowprojectcostscenario;
e. Addinterestpaymentsduringtheoperatingperiodonunpaidbalancesinbothmodels,basedonthereasonableestimateofLTcostofdebtfunds;
f. Twocalculationsofdebtservicewillberequired:oneforthehighprojectcostexcelfile;theotherforthelowprojectcostexcelfile.
11 Implicationsforintermodalfacilities
• Thisincludesaccessroadstoairport,linkstomajorarteries;• Estimatedancillarycostsofimprovingtheintermodalfacilitiesservingthe
airport;• CoordinatewithDPWH,LGUs,andotherappropriateagencies.
12 Howwilltheintermodalfacilitiesgetfunded?
• ArethoseagenciesorentitiesmentionedinStep11willingtoparticipateintheirdevelopment?
• Whatplansarethereforcoveringthesecosts?• AnalternativeistoassignthemtotheProjectProponent,butthatmayrender
thewholeprojectunattractive;• AnotheralternativeistouseaVGFapproachandfundtheintermodal
connections.
2Interestthatisnotpaidattheendoftheapplicableinterestperiodbutwhichis,instead,addedtotheoutstandingprincipalamountoftheloan(hencethephrase“rolledup”)
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ItemProject attributes/
ProceduresLinks to Guidance
13 Identifyoperatingcosts-fixed-variable
• EstimatesshouldbebasedontheactualexperiencetheIAhasforsimilarundertakings;
• Fixedoperatingcostsareusuallyafixedpercentageofprojectcost,indexedtoinflation;
• Variableoperatingcostsareafunctionofthesizeoftheairportandmaybenegligibleinthecaseofregionalairports.
Addfixedandvariableoperatingcoststotheexcelfilethatcontainsthehighestimateofprojectcostandsimilarestimatesofoperatingcoststotheexcelfilecontainingthelowestimateofprojectcost.
14 Calculatetherequiredrevenuesneededtocoverthecostsofoperatingtheproject(e.g.costsincludedividendstotheprojectsponsorsorshareholders,debtservice,andtheproject’sfixedandvariablecosts)
Additems8,10and13foraroughapproximationofthelevelofrevenuesneededforthefirstyearofoperations.
Calculateahighandlowestimate,basedonhighandlowprojectcostexcelfiles.
Thetwoexcelfiles(highandlowestimates)definetheapproximaterangeinthelevelofrevenuesneededtocommerciallysustaintheproject,withouttakinginflationintoaccount.
Theissuenowistodeterminewhethertheprojectiscapableofgeneratingthislevelofrevenuesimmediately,overtimeandwithwhattimelapse.Thiswillessentiallydependonthetrendsinthevariousfactorsaffectingthedemandfortheproject(seeStep15),theallowableleveloftariffsorfeesfortheservicethattheprojectprovides(seeStep16-17),otherpotentialsourcesofrevenuesfortheproject(seeStep18)andtosomeextent,thepotentialforgovernmentsupport(seeStep19).
15 Demand Checkonthefollowingaspectstodetermineifstatisticsareavailable:• Populationservedbythenewproposedairport?• Economicgrowthforecastsforthearea?• Induceddemand,thatis,demandthatislikelytobecapturedfromother
neighbouringairportsduetocomfortandconvenience?• Businessdemand?• Touristdemand?• Familyorientedtravelto/fromMetroManila?• Cargodemand?• Internationaltraveltoandfromproposedairport?• Anexcellentwaytounderstandthefactorsthatarenormallyusedtoproject
futureairportusageistocontactBoeingandAirBustoseeiftherearerecentupdatesonprojectedairtravelintheregiontodeterminehowtheymightaffecttrafficattheproposedairport.Normally,theseareupdatedonarolling20-yearbasis.
16 Passenger,cargo,landingfees Likelysizeofaircraftneeded• Small• Narrowbody• Widebody
Checkontheregulatorydeterminationsrelatedtouniformpassenger,cargoandlandingfees(checktoseeiftheseareuniformacrossthecountry)
17 Terminalfees Checktoseeiftheseareuniformacrossthecountry.
18 Othersourcesofrevenue Food,drinksandotherconcessions?
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ItemProject attributes/
ProceduresLinks to Guidance
19 Possiblegovernmentsupport Theapproachisnotdefinitiveasitisjustawaytoestimate(atanearlystage)therangeoflevelsandsourceofrevenuesrequiredtomaketheprojectviable.Therangeofrevenuesmaynotbeachievedimmediately.Insomeinstancestheremayberoomtoincreaseuserfees.Ifincreasesareunlikelytobefeasible(duetoaffordabilityissues,forexample),someformofsupportsuchviabilitygapfundingorsubsidiesmayberequired.
FamiliaritywiththismethodologywouldmaketheprocessofundertakinganMCAScreenmucheasierandmoreeffective.
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ANNEX 2Overview of Project Finance3
1.0 INTRODUCTION
ProjectfinanceisoneofthemostcommonformsoffinancingforPPPprojects.Itisoftenreferredtoas“limited-recourse”as
theprojectlender’ssecurityreliesprimarilyontheperformanceoftheprojectitselfwhichcomprisesoftheproject’scash
flowandsensitivitytorisks,andtheProjectProponent’sequityintheproject.Thismeansthatunderprojectfinance,the
lendersareentitledtorepaymentonlyfromthecashflowrevenuesandassetsoftheprojectthattheloanisfunding,not
fromotherassetsoftheborrower(ProjectProponent).Thisisincontrastwithcorporatefinance-themoreconventional
waybankslendtobusinesses(“full-recourse”)–whereinlenderslendonthebasisoftheborrower’sbalancesheetand
havetherighttotakeanyorallassetsoftheborrowerorevenrecoverfromathirdparty(e.g.thegovernmentorproject’s
customersandsuppliersoftheproject)guarantees.SeeBox4.1onthedefinitionofProjectFinance.
Box 4.1 Definition of Project Finance
Thereisnostrictdefinitionof“projectfinance.”Thetermimpliesafinancingarrangementthatinvolves:• Some element of reliance on project assets and cash flowswithout full recourse to the project
proponentorborrower,• Specialisttechnicalandeconomicevaluationoftheproject,theprojectproponents’oroperators’
businessandthroughon-goingmonitoringbythelender,• Complexloanandsecuritydocumentation,involvinginnovativefinancingstructures;and• Highermarginsandfeestoreflectthelender’sexposuretotheproject–andoftenpolitical–risk
Source: Chance, C. (1991). Project Finance. IFR Publishing, London
Using project finance implies that in a typical Build-Operate-and -Transfer (BOT) project (See Figure 4.1), the special
purposecompanythatisset-upfortheprojectisring-fencedfromtheotherbusinessesoftheProjectProponent.The
PPPprojectrisksanddebtarethereforeisolatedfromtheborrower’sparentcompany,preservingtheparentcompany’s
borrowingcapacityandcreditrating.Suchan“off-balancesheet”treatmentunderprojectfinancingallowsforadditional
borrowingcapacityfornewinvestments.
3ThisannexaimstoprovideabriefgeneralintroductiontoProjectFinance.Itisnotmeanttobeanexhaustivetreatmentofthesubject,foramorecomprehensiveintroduction,readersmayseethevarioussourcescitedinthefootnotesofthisannexandinthelistofreferencesattheendofthisannex.
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Toacertainextent,projectfinanceisusedtokeeptheproject’sdebtandliabilitiesoffthebalancesheetofthegovernment,
thusfreeingupfiscalspacethoughitwouldnotnecessarilyreduceactualliabilities.4
2.0 LENDERS, PROJECT BANKABILITY AND TAKING SECURITY
Giventhe limitedrecourseofthefinancingarrangement, lenderswillbearabigpartoftheprojectrisksbornebythe
projectcompany.Lenderswillthereforepaycarefulattentiontoallpossiblereasonsforprojectfailure,analyzingindetail
theproject’s“bankability,”i.e.whethertheprojectriskallocationsufficientlyprotectstheprojectcompany.5InatypicalPPP
Project(asseeninFigure4.1),lenderswouldwanttoensurethatrisksareallocatedinthemostefficientwaypossibleto
thevarioussubcontractors,whichwillbetaskedtobuildandoperatetheprojectandtoensurethatthesesubcontractors
havethecapability(technicallyandfinancially)toundertaketheproject.
Debtnormallyaccountsforthelargestshareofprojectfinance,i.e.borrowingsnormallyexceedequity.Sincelendersdo
nothavedirectcontroloverthemanagementoftheproject,theywilltrytoprotecttheirinvestmentthroughcollateral
andcontracts,broadlyknownasasecuritypackage,whichcanhelpensurethattheloancanberepaid.
Generally,lenderscannottakesecurityoveraPPPproject’sphysicalassets(e.g.adamorroadcannotbeforeclosedandbe
soldasamatterofpublicpolicy)butwillrelyprimarilyonthecontractbetweentheprojectcompanyandthegovernment
toundertakethePPPprojectandthecashflowsthatcanbederivedfromthePPPproject.Lenderswouldcommonly
requireassurancesthattheprojectwill;(i)becompleted,(ii)generateenoughcashflowtoservicethedebtand(iii)beable
torepaydebteveniftheprojectisinterrupted,suspendedorterminatedforanyreason(includingforcemajeure).With
theseinmind,projectlenderswillbeconcernedwith:6
Project Company
Group of Lenders
Investors
Sub-Contractors- Construction- Operations
Government
UsersCo
nces
sion
Ag
reem
ent
Construction / Operation Costs
DebtRepayment
Debt
Equity
Dividends
Reve
nue
Source: National Economic Development Authority (2000). Advanced Manual on Project Evaluation Volume 2, NEDA, Pasig City.
Figure 4.1 Typical BOT Project Structure
4Delmon,J.(2009)PrivateSectorInvestmentinInfrastructure:ProjectFinance,PPPProjectsandRisk,SecondEdition.KluwerLawInternational,TheNetherlands5Ibid.6AscitedinFarquharsonE.,TorresdeMastle,C.,Yescombe,E.R.andEncinas,J.(2011)HowtoEngagewiththePrivateSectorinPublic-PrivatePartnershipsinEmergingMarkets,WorldBankandPublic-PrivateInfrastructureAdvisoryFacility,WashingtonDC
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• BankabilityofPublicSectorobligations
• Soundnessandstabilityofthelegalframework
• EffectivenessandenforceabilityofthePPPcontractandrelatedagreements
• Sectorregulatoryregimewhenapplicable
• Righttostep-inifaprojectfailsandavailabilityofalternativecontractors
• Abilityofcontractorsandqualityofcontractorguarantees
• Risksthatareunderstood,controllable,finite,andappropriatelyallocated
• Reputationimpactoftheproject(environmental,social)
• Availabilityandeffectivenessofinsurancecover,whereneeded
• Protectionoflenderrights
• Politicalrisks
• Expropriation
• Early-terminationpayments
• Residualvalueofprojectassetsupontermination
• Disputeresolutionandenforcement
Lenderswill essentially take various security rights for their lending tomitigate risks and such securitywill vary from
projecttoproject.SomecommonexamplesofsecurityarelistedinBox4.2.
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Box 4.2 Common Forms of Security
Thesecuritypackageutilizedwilldifferacrossprojectsand jurisdictions.Belowaresomeof themorecommonelementsofsecurityinprojectfinance:1. The Trust/EscrowAccount – In a nutshell, escrowaccounts are accounts held in theborrower’s
nameby a bank under the auspices of an escrow account agreement between the lender andborrowerwhereinalloperational revenueorproceeds fromthesaleofassetsof theprojectwillbepaidintothisaccount.Thelenderwillusuallyrequireintheproject’ssecuritypackagethatsuchcollectedfundsbeheldforitsbenefitassecuredcreditorsothatithaspriorityindisbursementsifthecreditorsaretobepaidoffupondefaultofdebtpaymentorfailureoftheproject(afterwhichsubordinateddebtsmaythenbepaid).
2. ChargesoverBorrowerAssets–Thiscouldbedonebyeitherhavingafixedcharge/mortgageorafloatingchargeovertheprojectassets.Afixedchargedoesnotattachtoanassetuntilaspecifiedeventoccursatwhichpointthechargecrystallizesandbecomesafixedchargeovertherelevantassets.
3. Assignment of Implementation Agreements and Other Benefits – This entails the assignmentof rights under the key contracts of the project (the concession, off-take contract, constructioncontracts, etc.) as security for the lender. This typeof security ismore relevant after theprojecthas reachedoperational stage.Theobjective is toprovide the lender step-in rights through thespecialpurposecompany,againstotherstakeholders(e.g.off-takerpurchaserorprojectusers;inputsuppliers,theoperator,constructioncontractorandinsurers)intheeventofdefault.
4. Sponsor (or Project Proponent) Support and Guarantees – Sponsor support may include theestablishmentofafund,normallypledgedorsecured,whichcanbeusedtobridgeanydeficienciesoffundsoranincreaseincostsduringtheperiodoflimitedrecourse.Also,supportcouldalsotakethe formofpriceguarantees (ensuringpricingofofftake),purchaseguarantees (whichensureaminimumquantityoftheproject’soutputwillbe‘purchased’overasetperiod),taxlosspurchases(i.e.ashareholderagreestopurchasecertaintaxlossesfromtheprojectcompany),technicalsupport,extendedwarrantiesandmaintenancearrangements,andcontingentequityorsubordinateddebttocoverconstructionoverruns.
5. Insurance,PoliticalRiskGuaranteesandGuaranteeFunds -A securitypackagemayalso includeinsuring the project against physical damage or loss, pollution, third party liability, businessinterruption(e.g.protectagainstdefinedregulatoryrisks)andevenpoliticalrisks(e.g. lossesduetodefinedpoliticaleventssuchascurrency risks,expropriationorwaror the inactionoractionsofgovernmentresultinginabreachofcontract).,TheinsurancebenefitsoftheProjectProponentareassignedtothelenderorinvestor/shareholder.Somegovernmentsestablishaguaranteefund(suchasinBrazilandIndonesia)tospecificallycovertheriskofthecontractingpublicentity’sfailuretomeetitsobligationunderthePPPcontract.
Sources: Achonwa, Jeremiah. Elements of Security in Project Finance, 2008/2009 Center of Energy, Petroleum, and Mineral Law, and Policy Gateway, Volume 13 (http://www.dundee.ac.uk/cepmlp/gateway/?news=30858); Delmon, J. (2009) Private Sector Investment in Infrastructure: Project Finance, PPP Projects and Risk, Second Edition. Kluwer Law International, The Netherlands; Farquharson E., Torres de Mastle, C., Yescombe, E.R. and Encinas, J. (2011). How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets, World Bank and Public-Private Infrastructure Advisory Facility, Washington, DC
3.0 ADVANTAGES OF PROJECT FINANCE
Essentiallytherearetwoimportantadvantagesofprojectfinanceoverthetraditionalcollateral-basedcorporatefinance:7
a. Increasetheavailabilityoffinance–SincerisksofthePPPprojectwillbeconsideredseparatefromtheProject
Proponent or the project company’s key shareholder’s existing business, the financial integrity of their core
businesseswouldnotbejeopardizedshouldtheprojectfail.ProperstructuringwillprotecttheProjectProponent’s
capitalbaseanddebtcapacity,allowingthePPPprojecttobefinancedwithoutrequiringtoomuchequityasthe
casewillbeiftheprojectisfinancedthroughtraditionalcorporatefinance.ThisenablestheProjectProponentto
increasedebt(whichislessexpensivethanequity)andexpanditsoverallbusiness(SeeBox4.3).
7 IFC (1999).LessonsofExperienceNo.7:ProjectFinance inDevelopingCountries (http://www.ifc.org/wps/wcm/connect/publications_ext_content/ifc_external_publication_site/by+title/lessonsofexperienceno7)andChance,C.(1991).ProjectFinance.IFRPublishing,London
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Box 4.3 Project finance in Large Complex Projects
A project can be funded using corporate finance wherein lenders lend directly to construction andoperations andmaintenance contractors;which in turn funds theproject. Lenders can recover theirloan (full recourse) from all the assets of the contractors or through guarantees (either from directguaranteesorfromthirdparties,suchasthegovernmentortheproject’scustomersorsuppliers).Butprojectcontractorsmayoftenhavelimitedcapacitytotakeondebt,especiallyiftheprojectislargeinrelationtotheirbusiness.Thus,theymayprefertotakeonequityinvestmentinastand-aloneproject.Projectfinanceinthiscaseisamoreefficientwayforlendersandinvestorstofinancemajorinfrastructureinvestmentsby theprivate sector aswell as increase the availabilityof financing. It is normal for thepublicauthoritytoletthebiddersdecidewhetherornottouseprojectfinanceandallowthecompetitiveprocesstodrivethemostefficientfundingstructure.
Source: Farquharson E., Torres de Mastle, C., Yescombe, E.R. and Encinas, J. (2011) How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets, World Bank and Public-Private Infrastructure Advisory Facility, Washington DC
b. Efficientriskallocation,therebyreducingtheoverallriskformajorprojectparticipants-byallocatingprojectrisks
amongtheprojectstakeholders(ProjectProponent,shareholdersoftheprojectcompany,projectsubcontractors,
lenders,etc.),projectfinancemakesitpossibletoundertakeprojectsthatwouldbetoolargeorwouldposetoo
greatariskforonepartyonitsown.Withtherepaymentofloanstiedtotheperformanceorsuccessoftheproject,
lenderswilltakealong-termviewofitsviabilityandensurerisksareappropriatelyallocatedandmonitored.This
drivesmanyofthebenefitsofthePPPprocess.Section4discussesthemajorparticipantsinprojectfinancedeals
whileSection5providesanoverviewoftherisksfacedbyprojectfinanceparticipants.
4.0 PARTICIPANTS IN PROJECT FINANCE DEALS
ThereareanumberofpartiesinvolvedinaprojectfinancedealofatypicalBOTproject:
a. ProjectProponentsandSpecialPurposeCompany(ProjectCompany)–ProjectProponentsareprivatesector
entities(eitheracorporationoraconsortium),whichputtogetherabidforaPPPproject.Onceitisselectedforthe
project,ProjectProponentswillcreateaSpecialPurposeCompany(SPC),whichwillhavecontractualresponsibility
fortheproject.ThecreationofaSPCenablestheProjectProponenttofinancetheprojectonalimitedrecourse
basis.
The SPC is registered in the host country for the purpose of implementing and operating a given project.
Wherea corporate joint ventureor limitedpartnership isused, the rightsandobligations in termsof funding,
administration,profitsharing,transferofinterests,terminationandotherissuesaredefinedinashareholders,or
jointventureagreement.TheSPCwillusuallyincludeshareholderswhichspecializeinoneorseveraltasksneeded
tobeperformed/deliveredundertheBOTcontract.
Project Proponent(s) are required tomake capital investments in the SPC according to the terms of the SPC
agreement. Inalmostallcases, there isusuallyadesignated leadProjectProponent. In thecaseofacorporate
jointventure,theleadProjectProponent(s)istheleaderoftheconsortiumandinthecaseofapartnership;itisthe
dominantpartnerunderthejointventurearrangements.
b. ConstructionContractor–TheSPCwillenterintoaengineeringprocurementandconstruction(EPC)contract
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withacontractortodesign,build,testandcommissiontheproject.Thisisgenerallyundertakenonaturnkeybasis
(i.e.undertaketheprojectfromconcept,designtoconstructionuptocompletion)therebyplacingcompletionand
performanceriskontheconstructioncontractor.Provisionsoncontractualliquidateddamage(LD),performance
bonds,retentionbondsandotherinstrumentsareusuallyimposedontheconstructioncontractor,whichcanbe
calledupontoremedyanybreachofthecontract.Theconstructioncontractorwillgenerallysubcontractsome
oftheconstructionobligationstootherentitiestobeabletosharerisksandrevenues,subjecttoanyrestrictions
undertheconstructioncontractortheBOTcontract.
Lenders usually prefer a single EPC contract because it gives them a single-point responsible party for all
subcontractorsandactivities.Occasionally,however,twoseparatecontractsbytwoaffiliatedpartiesareusedto
definetheconstructionarrangements:aninstallation,erectionandcommissioningcontractwithonecontractorand
asupplyofequipmentcontractwithanother.Toachievethecontractualequivalentofsingle-pointresponsibility,
eachcontractorisrequiredbythelenderstocross-guaranteetheother’sobligations.
c. Lenders–thegroupoflenderswoulddifferfromprojecttoproject.Itmayincludeacombinationofprivate
sectorcommerciallenders,exportcreditagenciesandbilateralandmultilateralfinanceorganizations.Theyfund
projectseitherbysovereignwealthfunds,projectbondsthataresoldonthecapitalmarkets,andotherfinancial
intermediaries.Inanyprojecttheywanttohavecertaintyontheirfinancialexposureandthusmaybeinvolved
in themost importantphasesof theprojectsuchas thedraftingof theprojectdocumentsandcertificationof
completion. They will generally have review powers over the project with the assistance of an independent
engineer.
• MultilateralandBilateralAgencies-MultilateralAgencies(MLAs)representagroupofnations,andareowned
and funded by their members, such as theWorld Bank (including theWorld Bank’s International Finance
Corporation or IFC and theMultilateral InvestmentGuaranteeAgency orMIGA), AsianDevelopment Bank,
Inter-American Development Bank, African Development Bank and European Bank for Reconstruction and
Development(EBRD).MLAsparticipateinprojectfinancethroughequityinvestments(e.g.IFCandEBRD)and
theprovisionofloansandguaranteesindevelopingcountrieswheretheyhaveamandatetosupporteconomic
developmentandalleviatepoverty.CertainMLAsspecializeinprovidingpoliticalriskcoverageforprojects,for
exampleWorldBank’sMIGA.MLAs,giventheyrepresentseveralcountries,willoftenrequire internationally
competitive tender of project contracts to encourage equality of treatment, transparency and free trade
betweenitsmembercountries.Bilateralagencies(BLAs)arealsoquiteactiveinemergingmarketsaswelland
aresimilartoMLAsinpurposebutarefundedbyonlyonenation.BLAsprovidesupportintheformofequity
investmentordebtandaremorepoliticallyorientedastheycarryouttheagendaoftheirdonornation(for
example,requiringprojectsfundedbytheBLAtosourcecontractorsonlyfromthedonornation).WhenMLAs
andBLAsareinvolvedinprojects,theyusuallyplacestrictprojectrequirements,suchasonenvironmentaland
socialsafeguards.
• ExportCreditAgency– is attached toagivengovernmentdepartmentofa country. Its role isgenerally to
supportexportsfromtheircountrythroughtheuseofdirectloanandguaranteemechanisms.Sincethemid-
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8Notethat issuingbondsmeansmoreregulatoryworkas thesewouldneedtoberatedbyacredit ratingagencyandthenhavetobeapprovedbytheSecurityandExchangeCommission.
1990s,severalExportCreditAgencieshaveestablishedProjectFinancedivisionsdesignedtoassistexporters
tocompeteinnewinternationalinfrastructureprojects.SixofthemoreimportantoftheseagenciesaretheUS
Eximbank,ExportCreditGuaranteeDepartment(ECGD)oftheUK,JapaneseBankforInternationalCooperation
(JBIC),CompagnieFrancaised’AssurancepourlaCommerceExterieur(COFACE)ofFranceandKreditanstaltfur
Wiederaufbau(KfW)ofGermany.
• Commercial lenders – are commonly private banks, insurance companies, credit corporations and other
financial institutions, based either abroad or in the host country. In higher income emergingmarkets and
industrialized countries, the largestpartof thedebtfinancingmobilized for agivenproject isusually from
commerciallenders.Forlessdevelopedcountries,donorsandExportCreditAgenciesareveryactiveinassisting
withthefinancingofprojectssitedinthesecountries.
• Privateplacementandbondmarket–projectfinancingcanalsoberaisedthroughthecapitalmarket.8Investors
in capitalmarket instrumentsgenerally shyaway fromprojects that arenotable toachievean investment
graderatingorbetter,althoughthisisnotalwaysthecase.EstablishedbondmarketsareinUS,UK,Germany
andJapan.Other,regional,bondmarketsinterestedinfinancinginfrastructureinAsiaareonlynowemerging.
d. InsuranceProviders–ProjectProponent(s)willprocureallinsurancecoveragerequiredbyapplicablelaw.In
addition,thetermsoftheserviceagreementandtherequirementsoflendersoftenresultintheneedtoobtain
abroaderportfolioofinsurancepoliciesandcoverage.Insomecases,ProjectProponent(s)mayseekadditional
insurancecoverage,suchaspolitical-riskinsurancefromtheWorldBank’sMIGA,theAsianDevelopmentBank,or
USAID,toprotecttheirinvestment.
e. Off-Taker–“Off-taker”isthenamegiventotheentitythatisthesinglepurchaserofalloftheprojectoutput
subjecttoaformalcontract.Insomedeals,theremaybemorethanoneoff-taker,butthisisrelativelyuncommon.
Otherprojectsmaynothaveanyoff-takers,oroff-takeagreements,e.g.atollroad,containerportormasstransport
system.Whenanoff-take agreement exists, it generallydefines theminimumamountof revenue thatwill be
generatedbytheprojectbasedonaminimumlevelofproductorservicethatistobesoldatagivenprice(including
annualescalation).Anoff-takeagreementisdesignedfrequentlytopermittheSPCtohedgeagainstcertainother
risks,includinginflationandforeignexchangeparityrisks.Paymentsdueundertheoff-takeagreementconstitute
amajorelementindeterminingthebankabilityoftheproject.
f. Third-PartyOperator-isresponsiblefortheoperationsandmaintenance(O&M)oftheproject.Theoperator
customarily receives a fee, subject to upward or downward adjustments based onperformance results of the
project.Whenathird-partyoperator isnotused inaproject, theProjectProponent(s)mayundertakethis role.
However,iftheoperatorisashareholderoftheSPCatthetimeofcontractnegotiationorlater,aconflictofinterest
arisesinthenegotiationandimplementationoftheO&MagreementbetweentheSPCandtheoperator.Theuse
ofindependentprojectmanagersorexecutivesinthemanagementoftheSPCandtheuseofindependentexperts
toverifydataanddecisionscanbeusedtoaddressthisissue.
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g. ResourceSupplier-isresponsibleforthedeliverytotheprojectofnecessaryinputs,suchasfuel(forapower
project),bulkwatersupply(forawater-treatmentfacility),orutilityservices(suchaswaterandelectricitywhich
many, ifnotmost,projects require). Forpowerprojectsusing fossil fuels,ProjectProponent(s)and lendersare
concernedwiththeunderlyingeconomicsofthesupplyarrangements(inrelationtoexpectedrevenues)andthe
abilityofsupplierstoperformtheircontracts(includingpaymentofdamagesintheeventofnon-performance).
h. OtherParties-Dependingontheproject,theremaybeotherpartiesinvolved,e.g.thirdpartyequitysources
(straightequityprovidedbypartieswhichareunaffiliatedwiththeProjectProponent(s))ormezzanineinvestors
or lenders (whoseparticipationmaytaketheformofconvertibledebt). InthePhilippines, thesewould include
Government Service Insurance System (GSIS) and Macquarie Group of Companies (Philippines). Mezzanine
investorstendtobepassive,andthustotallyuninvolvedwithoperationsofthefacility.Therearealsopotential
localpartnerswho,unlikeinvestors,doexpecttoparticipateactivelyintheoperationsoftheproject.Finally,there
aretheprojectmanagerswhoaredesignatedbytheactiveProjectProponentstorunthefacilityaswellasother
partieswhoassistduringthedevelopmentoroperationperiods,e.g.financialadvisors,engineeringconsultants,
environmentaladvisorsandlawyers.
i. Government–AtypicalBOTprojectisusuallygrantedbyacontractingauthoritysuchasaGovernmentAgency
orLGU“authorizedbylawortheirrespectivecharterstocontractfororundertakeinfrastructureordevelopment
projects(RevisedIRRoftheBOTLaw).”TheGovernmentwillplayanimportantroleinensuringthattheproject
startsontimeandiscompletedsuccessfullyandalsoduringoperationwithrespecttoregulatoryrequirements.
Itcanalsoprovideindirectcreditsupportbypurchasingaproject’sproductorserviceandactasasupplierofkey
resourceinputs.TheGovernment(throughtheDepartmentofFinance)mayalsoprovidesomefiscalincentivesto
theProjectCompany(e.g.taxholidays,viabilitygapfinancing,etc.)andassistancetoobtainingfinancing,insurance
andguaranteesfromlenderssuchasMLAsandExportCreditAgencies.
5.0 PROJECT RISKS AND PROJECT FINANCE
Theidentification,analysis,mitigationandallocationofriskarecrucialtotheplanningandsuccessofeveryproject.By
structuringriskappropriately,theprojectparticipantscanmaximizethelikelihoodthattheprojectwillbesuccessful.Asa
matterofprinciple,riskshouldbeallocatedtothepartythatisbestabletomitigateorcontrolsuchrisk.
Theappropriate structuringofprojectfinance lies inunderstanding theproject risks.Project lenders take intocareful
considerationallpossibleriskstotheproject’ssuccessfulcompletionandoperation.NGAManualVolume1,Chapter3and
Volume4,Annex7whichcontainsNEDA’sriskallocationmatrix,discussthevariousprojectrisksanditsallocationfrom
theperspectiveofthegovernment.Thediscussioninthisannexfocusesonthetypesofrisksinherentinprojectfinance:
a. Completion risk-Completionrisksarethoseassociatedwith
a) failuretocompletetheprojectatall;
b) aconstructiondelayand/oracostoverrun;
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c) failure of the project to perform to technical specifications resulting in shortfalls in expected capacity,
output,efficiency,etc.;
d) shortfalls in expected resources (reserves); (e) occurrence of a force majeure (FM) event leading to a
constructiondelayandcostoverrun;and
e) unavailabilityofqualifiedstaff,managersandreliablesubcontractors.
CompletionriskisthesinglemostimportantriskthatisfacedbytheProjectProponents.Itsmitigationmeasures
include: (a) seekingperformancebondsand/orguarantees from thirdparties covering theperformanceof the
contractor, its suppliers and subcontractors; (b) obtaining adequate levels of commercial insurance; and (c)
negotiatinganadequatelevelofliquidateddamages(LDs)fordelaysandperformanceshortfalls.
b. Credit risk-Theperceivedcreditriskofaprojecthasasignificantimpactontheabilityoftheprojecttoraise
financing.Itistheriskthattheborrowerwillnotbeabletoserviceitsdebttothelenders.Toassessthisriskproperly,
itisnecessarytoexaminetherisksassociatedwiththeproject’ssourcesofrevenue,includinganassessment,for
example,astowhether(a)paymentsfromanoff-takermaybeinterruptedduetoaninabilityoranunwillingness
topay;or(b)usersofthefacilityorservicearewillingtopaytheuserfeesor,fromadifferentperspective,whether
thetotalrevenuederivedfromitscollectiveusagebytheconsumingpublicwillbebelowexpectation.
TheabilityoftheProjectProponent(s)tomitigatetheserisksthroughtheuseofdetailedmarketstudiesbecomes
criticalintherisk-sharingprocess.Insomeinstancescreditenhancementsfromthegovernmentcanbeapplied,
suchasviabilitygapfundingwhereinthegovernmentmaypaypartofthecapitalcost.Anotheroptionistomake
paymentsduringtheoperatingphasedependingontheperformanceoftheproject,whichlessensthedependence
oftheprojectontariffrevenuewhileprovidingincentivesforperformance.Creditguarantees–whereinproject
debtisbeingguaranteedbyanotherentity–mayalsobeusedtoenhancetheproject’sabilitytoraisefinancing
fromthecreditmarket.SomeMLAs(e.g.theWorldBank)offerspartialcreditguarantees,whichcoverthetailend
repaymentsdueona long-termprojectfinanceloan.Also large insurancecompanies(knownalsoasmonoline
insurers)havealsobeenknowntoofferafull-credit(“wrap”)guaranteetocovertheentiredebtoftheproject.9
c. Demand and operating risk-Oncecommissioningoftheprojectisachieved,ProjectProponentsmustaddress
otherrisksassociatedwiththesaleofitsservice/outputs.Forexample,demandriskbecomessignificantforprojects
inthetransportationsectorwhereuserfeesareakeysourceofprojectrevenues.AProjectProponentfacesthe
risksthat(a)actualusageof,ordemandfor,servicesarebelowforecastedamounts;(b)unexpectedcompetition
develops;(c)tariffbarriersarestrongerthancontemplated,affectingcostofinputsorabilitytoexport;(d)physical
access(i.e.transportation)andcommercialaccess(i.e.marketentry)aredeniedduetogovernmentregulationsor
similarfactors;(g)technologybecomesobsolete;and(h)newtechnologiesutilizedbytheprojectfailoutrightor
resultincostoverrunsfromdelays.
9Thistypeofguaranteehoweverisrarelyusedinemergingordevelopingcountries.Source:FarquharsonE.,TorresdeMastle,C.,Yescombe,E.R.andEncinas,J.(2011)HowtoEngagewiththePrivateSectorinPublic-PrivatePartnershipsinEmergingMarkets,WorldBankandPublic-PrivateInfrastructureAdvisoryFacility,WashingtonDC
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Thereisalsotherelatedriskofperformance,i.e.,whethertheprojectwillperformaccordingtotheexpectationsof
theoff-taker.Foritspart,theProjectProponentcanreducethisriskbyoperatingtheprojectefficientlythroughthe
useofexperiencedmanagersandstaff(oranexperiencedoperator)andtheapplicationofstrongO&Mprograms.
Mitigationmeasurestoaddressdemandrisksincludethenegotiationoflong-term,take-or-paycontracts(power,
resource extraction projects); throughput agreements (oil pipelines); the use of shadow tollmechanisms (toll
roads)orminimumrevenueguarantees(transportationprojects).
d. Financial risk-Thepotential impactoffinancialdevelopmentsoutsidethecontroloftheprojectisasource
ofprojectrisktoboth lendersandtheProjectCompany.These includethevariabilityof (a)exchangerates; (b)
interestrates; (c)worldcommoditypriceswhichinturnaffectenergysuppliesandrawmaterials; (d)decreases
inworldpricesoftheproductproducedbytheproject; (e) inflation;and(f) internationaltrends intrade,tariffs
andprotectionism.Mitigationmeasuresincludeuseof(a)currencyswaps;(b)interestrateswaps;(c)commodity
forwardoroption contracts; (d)hybriddebt instruments; (e) negotiationof tariff indexation andpass-through
mechanisms;and(f)forwardsalesandoptioncontracts.
e. Political risk–Political risk includesseveralcomponents: (a) thereare futurechangestoexisting legislation
relatedtotax,importduties,customsprocedures,ownership,foreignexchangelawsandenvironmentalmitigation,
leading to an adverse impact on the project; (b) a future administration decides to confiscate, expropriate or
nationalizeproject facilities; (c)permits, licensesandotherconsentsfromthegovernmentarenot inplace ina
timelyfashionorarenotgrantedormaintained;(d)restrictionsareplacedonrepatriationofprofitsandinterest
payments;(e)controlsorrestrictionsapplyontherateofdepletionoftheproject’sreserves;(f)war,revolutionor
politicalviolencebreaksoutinthecountry,negativelyaffectingprojectperformance;and(g)devaluationoccursin
thelocalcurrency,leadingtoareducedvalueofthedividendstream.
To mitigate these risks, Project Proponent(s) and lenders obtain; (a) protection against change in law and
similar events through the PPP Contract; (b) political-risk insurance or guarantee as an added cover; and (c)
otherundertakingsfromthegovernmentsuchasensuringlicensesandpermitswillbegrantedontimeandbe
transferableto lenders intheeventofprojectvehicledefault,andthatallwaiverswouldbegrantedfor import
dutiesandsimilarassurances.
f. Legal risk-Thisriskisdefinedasthe(a) inabilitytoenforcesecurityarrangements;(b)absenceofadequate
protectionforintellectualproperty;(c)inabilitytoenforceforeignjudgments;(d)absenceofachoiceoflaw;(e)
inabilitytoreferdisputestoarbitrationortohaveachoicewithregardtoarbitrationrules,venueandlanguage.
Mitigationmeasuresformostoftheserisksarenotalwaysavailableandthecontractualallocationoftheserisksto
thepartiesthataremostabletocontroloraddressthembecomescritical.
g. Environmental and social risk - The preservation of the environment, health and safety, gender and the
protection of the resettlement rights of individuals who are displaced as a result of the implementation of a
projectareincreasinglybecominganimportantconcernamonggovernments,lendersandProjectProponent(s).
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Environmentalriskrelatestothefailureoftheprojecttocomplywithenvironmentalandresettlementstandards
andregulationswhichareamatteroflaw.ItcouldalsorefertoexogenousriskssuchasClimateChange,where
individualprojectscontributetoconditionswhichaccelerateclimaterisk.
Equallyimportant,however,istheopportunitytousepublic-privatepartnershipsasameanstoimprovegender
equalityandeconomicopportunityaswellasthatofotherprojectaffectedpersons.Twolawsthatrecognizethe
roleofwomeninnationbuildingandtheirequalrightswithmenhavebeenenactedbythePhilippineCongress:
RepublicAct7192,an“ActPromotingtheIntegrationofWomenasFullandEqualPartnersofMeninDevelopment
andNationBuildingandforotherPurposes”(February12,1992)andRepublicAct9710ortheMagnaCartafor
Women(enactedJuly2008;itsImplementingRulesandRegulations(IRR)wereapprovedinMarch2010).
Failuretocomplywithenvironment,genderandothersuchlawscouldgenerallyresultinpublicoutcry,project
delay,litigation,and/orimpositionoffinesandpenaltiesthatincreaseprojectliabilitiesandraiselenderconcerns.
Mitigationmeasuresappliedbylendersinclude(a)requirementthatanenvironmentalimpactassessment(EIA)
andresettlementactionplan(RAP)bepreparedontheprojectbyaqualified,internationallyrespectedcompany;
and(b)preparationofasocialplantoimplementopportunityandmitigationmeasureswithregardtogenderand
indigenouspeoples,thecostsofwhichareabsorbedbytheproject.
h. Force Majeure (FM) risk - This risk is createdpotentiallybyeventsoutsideof the reasonablecontrolof the
affectedpartytoacontract,whichitcouldnothavepreventedbygoodindustrypracticesorbytheexerciseof
reasonableskillandjudgment.InatypicalProjectFinancedeal,provisionswithregardtoFMtypicallyexcusethe
affectedpartyfromcontractperformanceduringtheperiodthatitisineffect.Nonetheless,theremaybeadverse
financial effects on theproject.Mitigationmeasures areusually negotiatedbetweenProject Proponent(s) and
lendersorotherthirdparties.
6.0 CAVEAT
Projectfinancehasitsrigorousrequirements.Foraprojecttoreapitsbenefits, itneedstobecarefullystructuredwith
theobligationsofallpartiesinvolvedwellnegotiatedandcontractuallybinding.Lenders,financialandlegaladvisersand
otherexpertswouldlikelyspendconsiderabletimeandeffortonundertakingduediligenceandnegotiatingtheusually
verycomplexprojectagreements.Thesewilladdtothecostofsettinguptheprojectandmaydelayitsimplementation.
Butoverallfinancialcostofprojectfinancemaynotbeashighasundercorporatefinanceiftheproject is (i)carefully
structured, (ii) risksandappropriateriskmitigatingmeasuresare identified,and(iii)financing issourcedappropriately
fromdifferentcategoriesofinvestors.10
10Ibid.
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Useful references and glossaries of project finance terms can be found at;
Buljevich,EstebanC.,andYoonS.Park,1999,ProjectFinancingand the InternationalFinancialMarkets,KluwerAcademicPublishers
(Norwell,MA).
Davis,H.,1996,ProjectFinance:PracticalCaseStudies,EuromoneyBooks(London,UK).
Delmon, J., 2009,Private Sector Investment in Infrastructure: Project Finance, PPP Projects and Risk, Second Edition,Kluwer Law
International,TheNetherlands
DevelopmentBankofSouthernAfrica(DBSA)website:www.dbsa.org/privatesector/project_finance.htm
HarvardBusinessSchoolProjectFinanceGlossary:http://www.people.hbs.edu/besty/projfinportal/glossary.htm
Harvey,C.,HypertextualFinanceGlossary:http://www.duke.edu/~charvey/Classes/wpg/glossary.htm
Hoffman,ScottL.,1998,TheLawandBusinessofInternationalProjectFinance,(KluwerLawInternational,London,U.K.).
InternationalFinanceCorporation,1999,ProjectFinanceinDevelopingCountries,LessonsofExperience,number7,Washington,D.C.
Khan,M.F.K.,andR.J.Parra,2002,FinancingLargeProjects:UsingProjectFinanceTechniquesandPractices,bookmanuscript.
MZProjectFinancewebsite(ProducedbyMauroZajec):www.mzprojectfinance.com/project_finance/glossary.htm
Nevitt,P.K.,andF.J.Fabozzi,2000,ProjectFinancing,7thedition,EuromoneyBooks(London,U.K.).
Pollio,G.,1999,InternationalProjectAnalysisandFinancing,UniversityofMichiganPress(AnnArbor,MI).
Razavi,H.,1996,FinancingEnergyProjectsinEmergingEconomies,PennWellBooks(Tulsa,OK).
Rhodes,T.,2000,SyndicatedLending:PracticeandDocumentation,3rdedition,EuromoneyBooks(London,UK).
Yescombe,E.R.,2002,PrinciplesofProjectFinance,AcademicPress—animprintofElsevierScience(London,UK).
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ANNEX 3Philippine Law on the Protection of Indigenous People’s Rights
Legislation was enacted in 1997 by the Philippine legislature that recognizes, protects and promotes the rights of
IndigenousPeoples.ThislawisotherwiseknownastheIndigenousPeoplesRightsAct(IPRA)orRepublicAct8371.
UndertheIPRA,IndigenousCulturalCommunities/IndigenousPeoples(ICCs/IPs)refersto“agroupofpeopleorhomogenous
societiesidentifiedbyself-ascriptionandascriptionbyothers,whohavecontinuouslylivedasanorganizedcommunity
on communally bounded and defined territory, and who have, under claims of ownership since time immemorial,
occupied,possessedcustoms,traditionandotherdistinctiveculturaltraits,orwhohave,throughresistancetopolitical,
socialandculturalinroadsofcolonization,non-indigenousreligionsandculture,becamehistoricallydifferentiatedfrom
themajorityofFilipinos.ICCs/IPslikewiseincludepeopleswhoareregardedasindigenousonaccountoftheirdescent
fromthepopulationswhichinhabitedthecountryatthetimeofconquestorcolonization,oratthetimeofinroadsof
non-indigenousreligionsandcultures,ortheestablishmentofpresentstateboundaries,whoretainsomeoralloftheir
ownsocial,economic,culturalandpoliticalinstitutions,butwhomayhavebeendisplacedfromtheirtraditionaldomains
orwhomayhaveresettledoutsidetheirancestraldomains.”
TherightsoftheIndigenousPeoplesasdefinedintherelevantprovisionsoftheIPRAlawservesastheframeworkfor
thisIPguidelineforPPPprojects.TheguidelinesareintendedtoprovidethebasicprocedurestoNGAprojectpreparers
inexaminingthepotentialpositiveandadverseimpactsoftheirproposedPPPprojectsonthecultureandoverallquality
oflifeoftheIPsasavulnerablegroup.TECHNICALNOTE1(following)providesthelistanddescriptionoftherightsofIPs
undertheIPRAlaw.
1.0 SCREENING OF PPP PROJECTS
PPPprojectsthataffectIPsshouldbethoroughlyscreenedandevaluatedbytheProjectProponentandIPleaderswith
technicalassistanceorguidancefromanthropologyexpertsorconsultantsinordertosafeguardIPsinterestandvarious
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rights. Examples of these projects are the construction of multi-purpose dams, major roads and highways, airports
andseaports,uplandorchardsand tree farms,and tourismresortdevelopment,amongothers.Physical infrastructure
constructionandoperationwithinorneartheirancestrallandsandwaterdomainssuchaslakes,riversandcoastalwaters
maypossiblyaffecttheircultureandlivelihoodactivities.Hence,developmentprojectsshouldbedesignedinsuchaway
thatissupportiveoftheirculture,livelihoodsystems,andpropertyrights.Assuch,proposedPPPprojectdevelopmentand
implementationmustcomplywiththerelevantprovisionsoftheIPRAlaw.
VariousinternationallendinginstitutionsalsopromotetheprotectionandenhancementofIndigenousPeoples’cultural
rightsandqualityoflifesuchastheSafeguardPoliciesofADBandtheWorldBank,andthePerformanceStandardssetby
internationalprivatebanks.
When IPs culture, dignity, human rights, livelihood systems, cultural resources or ancestral lands are threatened and
directlyorindirectlyaffectedbytheproposedproject,athoroughsocialimpactassessmentisrequired.Themeasuresto
avoidorminimizethenegativeimpactsofPPPprojectsonIPsshouldbeincludedintheIndigenousPeoplesPlan(IPP)that
mustbepreparedaspartofthedocumentaryrequirementofthePPPprojectproposal.
MainstreamingIndigenousPeoplesinprojectdevelopmentandimplementationinvolves:a)theirparticipationinplanning
anddecisionmaking;b)makingsurethattheybenefitfromtheproject;andc)thattheyarenot inanywayadversely
affectedbytheproject.Hence,PPPprojectsthatwillaffectIPsareclassifiedbyADB(2009)intothefollowingtypes:
1) Category A. These are projects thatwouldmost likely have significant impacts on Indigenous Peoples. An
IndigenousPeoplesplan(IPP),includingassessmentofsocialimpacts,isrequired.
2) Category B.TheseprojectsarelikelytohavelimitedimpactsonIndigenousPeoples.AnIPP,includingassessment
ofsocialimpacts,isrequired.
3) Category C.TheseprojectsarenotexpectedtohaveadverseimpactsonIndigenousPeoples.Nofurtheraction
isrequired.
2.0 ASSESSMENT OF A PPP PROJECT’S IMPACTS ON INDIGENOUS PEOPLES
ThegeneralproceduresfortheassessmentofthepotentialimpactsofaPPPprojectonIPsincludethefollowing:
1) IdentifythepresenceofIPsintheprojectsite.
2) Determinewhether theprojectoperationswilldirectlyor indirectlyaffect the IPs in thesiteorneighboring
areas.
3) InformtheIPsontheproposedPPPproject.
4) ConductscopingofissueswithIPleadersandrepresentatives.
5) IdentifythepotentialadverseimpactsoftheprojectontheIPsusinganimpactassessmentchecklist.
6) Gatherbaselinedataforfurtheranalysisofimpactsonthesocioeconomic,culturalandenvironmentalconcerns
ofIPs.
7) Determinethesignificantimpactsoftheproposedproject.
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8) CategorizetheprojectusingtheADBcategoryforIPs.
9) DeterminewhethertheprojectwouldrequireanEIA,IEEorPD.
10)Proposemeasurestoavoidormitigatethesignificantimpactsoftheproject.
11)PreparetheIPPPlanforCategoryAandBprojects.
12)IntegratetheIPPlanintheEIAorIEEdocument.
13)ConsulttheIPleadersontheproposedIPplan.
14)ObtainproofsontheacceptabilityoftheprojecttoIPsowningtitledancestrallands.
15)SecureconsentandagreementordocumentedcovenantswiththeIPsfortheimplementationoftheproject
thatwillaffecttheirpropertiesandcustomaryrights.
16)Involve the IP representatives inmonitoringof theproject’scompliance to theagreement/covenantand IP
Plan.
17)PrepareimplementationarrangementsfortheIPPlan.
18)PrepareaMonitoringandEvaluationSystem.
19)Estimatebudgetrequirements.
20)MonitorandevaluatethebenefitsoftheprojecttoIPs.
Checklist for Identifying Potential Impacts of PPP Projects on IPs:
ProposedPPPprojectsshouldbescreenedfortheirsignificantimpactsonIPsintermsofthefollowing(Table4.2):
Socioeconomic, environmental and cultural factors
Type of impacts Magnitude of impactsNegative Positive None Low Medium High Unknown
Culturalpropertiesandancestrallands
Accesstonaturalresources
Settlementsandhousing
Entryofmigrants
Safeandcleanairandwater
Localinstitutionsanddecisionmaking
Religious,culturalsitesandceremonies
Archeologicalsitesandartifacts
Culturalheritage
Indigenousknowledge
Healthandsanitation
Water
Education
EmploymentandLivelihoods
Transportation
Foodsecurity
Peaceandsecurity
Table 4.2 Checklist for Screening Potential Impacts of PPP Projects on IPs
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Examples of Potential Significant Impacts from Development Projects on IPs that would require the preparation of an
IP Plan (IPP):
1) Intrusionorencroachmentonancestrallandsandcustomaryresources
2) Threatstolanguages,cultures,religions,spiritualbeliefs,andinstitutions.
3) Lossofnaturalresource-basedlivelihoods
4) Lossofaccesstonaturalresources
5) Severedegradationordestructionofculturalheritage
6) Defacement,removalordestructionofartifacts
7) Declineorlossinfoodproduction
8) Displacementandrelocationofcommunities
9) Pollutionofwatersources(lakes,rivers,coastalwaters)andambientair
3.0 OUTLINE OF AN INDIGENOUS PEOPLES PLAN (IPP)
AnIPPisrequiredforPPPprojectswithsignificantimpactsonIndigenousPeoplestoensurethatpropersafeguardsare
designedandimplementedtogetherwiththeimplementationoftheproject.
TheproposedoutlineforaprototypeIPPisasfollows(WorldBank,2005,2011;ADB,2009):
1) Legalandinstitutionalframework
2) IndigenousPeoplesprofile(culture,demographicstructure,genderandintergenerationalrelationsandsocial
organization,institutions,productionsystems,religiousbeliefs,andresourceusepatterns)
3) Descriptionoftheproject
4) AssessmentofPotentialImpactsoftheProjecttoIPs
5) AvoidanceandMitigationMeasures
6) ConsultationandAgreementorcovenantswithIPs
7) ImplementationPlanforanIPP
8) GrievanceRedressMechanism
9) MonitoringandEvaluationSystem
10)FinancialRequirements
AbriefdescriptionoftheforegoingIPPoutlineisprovidedinTECHNICALNOTE2(following).
TheotherimportantcomponentsoftheIPplanarethefollowing(WorldBank,2005):
1) Summaryofsocialassessment.
2) Summaryofresultsofthefree,prior,andinformedconsultation.
3) ActionplanofmeasurestoensurethattheIndigenousPeoplesreceivesocialandeconomicbenefitsthatare
culturallyappropriate.
4) Actionplanonavoidanceandmitigationmeasuresonadverseaffectsoftheproject.
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5) CostestimatesandfinancingplanfortheIPP.
6) AccessibleproceduresappropriatetotheprojecttoaddressgrievancesbytheaffectedIndigenousPeoples’
communitiesarisingfromprojectimplementation.
7) Mechanisms and benchmarks appropriate to the project formonitoring, evaluating, and reporting on the
implementationoftheIPP.
4.0 CONSULTATION AND INFORMED PARTICIPATION
TheIPsaffectedbytheprojectshouldbeinvolvedinaprocessof“free,priorandinformedconsultation”inaccordance
withtheIPRAlaw.Theyshouldbegiventhenecessaryinformationandbriefingabouttheprojecttosolicittheircomments
andknowtheirapprehensionsothatfactscanbegiventothemaboutprojectbenefitsandpotentialadverseimpacts,
andproposedmitigationoravoidancemeasures.TheIPshavetherighttomakedecisionsonprojectsaffectingthem.The
resultsoftheconsultationshallbedocumentedthroughasignedcovenantbetweentheIPsandtheProjectProponentor
implementingagenciesandprivatepartners.ThePPPCentermayalsoattesttothesigningofthecovenant.
Expertsonanthropology,ancestrallands,environmentandnaturalresources,etc.fromtheacademe,reputableresearch
institutionsandNGOsshouldbeengagedintheprocessbytheImplementingAgencytoexplainproperlytotheIPsthe
issuesandconcernsthattheyraisedandtheresultsoftheimpactassessment.
TheIPsshouldalsobeinformedoftheirrightsunderIPRAsothattheycanknowledgeablyandconfidentlyparticipateand
makebetterdecisionsconcerningthesocioculturalandenvironmentalsoundnessoftheproposedproject.
5.0 CONSENT OF AFFECTED IPs AND AGREEMENTS ON PROPOSED PROJECT
Someprojectsmayhaveunintendedadverseeffectson the IPsculturalpractices,property rights,andsocioeconomic
conditions. Thus, thepotential impactsofproposedprojectsneed tobe thoroughly examined togetherwith the IPs.
Participationof IPswill facilitate communicationandunderstandingof thepotential adverse impactsof theprojects,
howtomitigateoravoidtheseimpactsandthebenefitsthattheywillderivefromtheproject.Throughtheinvolvement
oftheIPsintheprojectdevelopmentcycle,theywillbeinabetterpositiontojudgeandmakedecisionsonwhetherto
giveorwithholdtheirconsentandagreementintheimplementationoftheproject.Incaseofdisagreementoncertain
termsoftheprojectsuchasthedesign,location,ortheIPPitself,furthernegotiationswiththeIPsmaybeundertaken
bytheProjectProponent.Asmuchaspossible,theProjectProponentshouldavoidthephysicaldisplacementofIPsby
exploringalternativeprojectdesigns.Whenavoidanceisimpossible,aresettlementpackagethatisacceptableandmeets
therequirementsoftheIPsmustbeprovidedandproperlyexecuted.Ifpossible,theplanwillalsoallowtherelocatedIPs
toreturntotheirancestrallandwhenthereasonsfortheirrelocationceasetoexist.Theconsentandagreementbetween
theProjectProponentandtheIPsshallbedocumentedinasignedcovenant.
Theclientshouldthenpreparethedocumentationthatprovidesthedetailsoftheprocessandoutcomesofconsultations
withIPs.Anagreementdocumentmayalsohavetobesignedbyconcernedpartiesasproofoftheacceptabilityofthe
projecttotheIPs.ThePPPCenterandthefinancinginstitutioncanthenverifythesedocumentsaspartofthevalidation
process.
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6.0 GRIEVANCE REDRESS MECHANISM
The Project Proponent should establish amechanismwhereby IPs complaints and grievances can be discussed and
resolved.Themechanismshouldbeeasilyaccessibleandsensitive to thecultureandtraditionsof the IPs to facilitate
resolutionof issues.AGrievanceRedresscommittee shouldbecreatedby theProjectProponent. Itsmainpurpose is
to resolve and settle amicably conflicts in interest andother undesirable impacts of theproject on the stakeholders.
Nonetheless,theoptionfortheIPsandothersaffectedtoseekremediesincourtshouldremainopenifthecomplaints
cannotberesolvedthroughamicablesettlementbytheGrievanceFacility.Theexistenceofthemechanismshouldbe
communicatedwelltotheIPsincludingtheprotocolsfortheiraccessandresolutionofcases.
7.0 MONITORING, EVALUATION AND REPORTING
ItistheresponsibilityoftheProjectProponentwiththeoversightofthePPPCentertoestablishamonitoring,evaluation
and reporting systemwherein IP representatives canparticipate. The systemshouldbeable tomonitor, capture and
measuretheprogressoftheimplementationoftheIPPandthecomplaintsorsatisfactionoftheIPsonthewaytheproject
isconstructedandoperated.
ThesystemshouldbeabletomonitorthecomplianceoftheprojecttotheIPPandtheactualimpactsoftheprojectonIPs
culturalandsocioeconomicwelfare.Amulti-partitemonitoringteamconsistingofrepresentativesfromtheimplementing
agency,IPgroup,andNGOsshouldbeprovidedlogisticalandfinancialsupporttoconductthemonitoringandreporting.
PeriodicreportsshouldbesubmittedtothePPPCenterandconcernedNGA/LGU.
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TECHNICAL NOTE 1- RIGHTS OF INDIGENOUS PEOPLES UNDER THE IPRA LAW
TheIndigenousPeoples(IP)RightsprotectedundertheIPRAlawcanserveastheframeworkforassessingtheimpactsof
proposedPPPprojects.Theserightsincludethefollowing:
1) RightstoAncestralDomains-TherightsofownershipandpossessionofICCs/IPstotheirancestraldomainsshallbe
recognizedandprotected.Suchrightsshallinclude:
a) Rights of Ownership – The right to claim ownership over lands, bodies of water traditionally and actually
occupiedbyICCs/IPs,sacredplaces,traditionalhuntingandfishinggrounds,andallimprovementsmadebythem
atanytimewithinthedomains;
b) Right toDevelopLandsandNaturalResources–Theright todevelop,controlanduse landsandterritories
traditionallyoccupied,owned,orused;tomanageandconservenaturalresourceswithintheterritoriesanduphold
theresponsibilitiesforfuturegenerations;tobenefitandsharetheprofitsfromallocationandutilizationofthe
natural resources found therein; the right tonegotiate the termsandconditions for theexplorationofnatural
resources in the areas for the purpose of ensuring ecological, environmental protection and the conservation
measures, pursuant to national and customary laws; the right to an informed and intelligent participation in
theformulationand implementationofanyproject,governmentorprivate, thatwillaffector impactuponthe
ancestraldomainsandtoreceivejustandfaircompensationforanydamageswhichtheysustainasaresultofthe
project;andtherighttoeffectivemeasuresbythegovernmenttopreventanyinterferencewith,alienationofand/
orencroachmentupontheserights;
c) RighttoStayintheTerritories–Therighttostayintheterritoryandnotberemovedtherefrom.NoICCs/IPswill
berelocatedwithouttheirfreeandpriorinformedconsent,northroughanymeansotherthaneminentdomain.
Whererelocationisconsiderednecessaryasanexceptionalmeasure,suchrelocationshalltakeplaceonlywiththe
freeandpriorinformedconsentoftheICCs/IPsconcernedandwheneverpossible,theyshallbeguaranteedthe
righttoreturntotheirancestraldomainsassoonasthegroundsforrelocationceasetoexist.Whensuchreturn
isnotpossible,asdeterminedbyagreementorthroughappropriateprocedures,ICCs/IPsshallbeprovidedinall
possiblecaseswithlandsofqualityandlegalstatusatleastequaltothatofthelandpreviouslyoccupiedbythem,
suitabletoprovidefortheirpresentneedsandfuturedevelopment.Personsthusrelocatedshalllikewisebefully
compensatedforanyresultinglossorinjury;
d) RightinCaseofDisplacement–Incasedisplacementoccursasaresultofnaturalcatastrophes,theStateshall
endeavortoresettlethedisplacedICCs/IPsinsuitableareaswheretheycanhaveaccesstoatemporarylifesupport
system:Provided,ThatthedisplacedICCs/IPsshallhavetherighttoreturntotheirabandonedlandsuntilsuch
timethatthenormalcyandsafetyofsuchlandsshallbedetermined:Provided,further,Thatshouldtheirancestral
domainceasetoexistandnormalcyandsafetyoftheprevioussettlementsarenotpossible,displacedICCs/IPsshall
enjoysecurityoftenureoverlandstowhichtheyhavebeenresettled:Provided,furthermore,Thatbasicservices
andlivelihoodshallbeprovidedtothemtoensurethattheirneedsareadequatelyaddressed;
e) RighttoRegulateEntryofMigrants–Righttoregulatetheentryofmigrantsettlersandorganizationsintothe
domains;
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f) RighttoSafeandCleanAirandWater–Forthispurpose,theICCs/IPsshallhaveaccesstointegratedsystems
forthemanagementoftheirinlandwatersandairspace;
g) RighttoClaimPartsofReservations–Therighttoclaimpartsoftheancestraldomainswhichhavebeenreserved
forvariouspurposes,exceptthosereservedandintendedforcommonandpublicwelfareandservice;and
h) RighttoResolveConflict–Righttoresolvelandconflictsinaccordancewithcustomarylawsoftheareawhere
thelandislocated,andonlyindefaultthereofshallthecomplaintsbesubmittedtoamicablesettlementandtothe
CourtsofJusticewhenevernecessary.
2) Rights toAncestralLands -The rightofownershipandpossessionof the ICCs/IPs, to theirancestral landsshallbe
recognizedandprotected.
a) Righttotransferland/property–Suchrightshallincludetherighttotransferlandorpropertyrightsto/among
membersofthesameICCs/IPs,subjecttocustomarylawsandtraditionsofthecommunityconcerned;and
b) Right toRedemption– Incaseswhere it is shownthat the transferof land/property rightsbyvirtueofany
agreementordevice,toanon-memberoftheconcernedICCs/IPsistaintedbythevitiatedconsentoftheICCs/IPs,
oristransferredforanunconscionableconsiderationorprice,thetransferorICC/IPshallhavetherighttoredeem
thesamewithinaperiodnotexceedingfifteen(15)yearsfromthedateoftransfer.
3) RighttoParticipateinDecision–Making–ICCs/IPshavetherighttoparticipatefully,iftheysochoose,atalllevelsof
decision-makinginmatterswhichmayaffecttheirrights,livesanddestiniesthroughproceduresdeterminedbythemas
wellastomaintainanddeveloptheirownindigenouspoliticalstructures.Consequently,theStateshallensurethatthe
ICCs/IPsshallbegivenmandatoryrepresentationinpolicy-makingbodiesandotherlocallegislativecouncils.
4) RighttoDetermineandDecidePrioritiesforDevelopment–TheICCs/IPsshallhavetherighttodetermineanddecide
theirownprioritiesfordevelopmentaffectingtheirlives,beliefs,institutions,spiritualwell-being,andthelandstheyown,
occupyoruse.Theyshallparticipateintheformulation,implementationandevaluationofpolicies,plansandprograms
fornational,regionalandlocaldevelopmentwhichmaydirectlyaffectthem.
The [indigenouspeoples] shall,within their communities, determine for themselvespolicies, developmentprograms,
projectsandplanstomeettheiridentifiedpriorityneedsandconcerns.The[indigenouspeoples]shallhavetherightto
acceptorrejectacertaindevelopmentinterventionintheirparticularcommunities.Theindigenouspeoples’decisionto
acceptorrejectaproposedpolicy,program,orplanshallbeassessedinaccordancewiththeirdevelopmentframework
andtheirvaluesystemsfortheprotectionoflandandresources.
5) RightstoReligious,CulturalSitesandCeremonies–ICCs/IPsshallhavetherighttomanifest,practice,developand
teachtheirspiritualandreligioustraditionsandcustomsandceremonies;therighttomaintain,protectandhaveaccess
totheir religiousandculturalsites; theright touseandcontrolofceremonialobjects;andtheright to repatriationof
humanremains.Accordingly,theStateshalltakeeffectivemeasures,incooperationwiththeburialsites,suchthatthey
arepreserved,respectedandprotected.Toachievethispurpose,itshallbeunlawfulto:
a) Explore,excavateormakediggingsonarcheologicalsitesoftheICCs/IPsforthepurposeofobtainingmaterials
ofculturalvalueswithoutthefreeandpriorinformedconsentofthecommunityconcerned;and
b) Deface,removeorotherwisedestroyartifactswhichareofgreat importancetotheICCs/IPsforthepreservation
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oftheirculturalheritage.
6) Right to Indigenous Knowledge Systems and Practices and to Develop own Sciences and Technology – ICCs/IPs
areentitledtotherecognitionofthefullownershipandcontrolandprotectionoftheirculturalandintellectualrights.
Theyshallhavetherighttospecialmeasurestocontrol,developandprotecttheirsciences,technologiesandcultural
manifestations,includinghumanandothergeneticresources,seeds,includingderivativesoftheseresources,traditional
medicinesandhealthpractices,vitalmedicinalplants,animalsandminerals,indigenousknowledgesystemsandpractices,
knowledgeofthepropertiesoffaunaandflora,oraltraditions,literature,designs,andvisualandperformingarts.
7) AccesstoBiologicalandGeneticResources–Accesstobiologicalandgeneticresourcesandtoindigenousknowledge
relatedtotheconservation,utilizationandenhancementoftheseresources,shallbeallowedwithinancestrallandsand
domainsoftheICCs/IPsonlywithafreeandpriorinformedconsentofsuchcommunities,obtainedinaccordancewith
customarylawsoftheconcernedcommunity.
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TECHNICAL NOTE 2- ANNOTATED OUTLINE OF IP PLAN
TheproposedoutlineforIPPisasfollows(ADB,2009,WB,2005,2011)(Table4.3):
Main Chapter Brief Description of Contents
1. Legalandinstitutionalframework
DescribesthelegalandinstitutionalframeworkoftheIPRAlawasthebasisforassessingtheimpactsoftheprojectsontheIPs.
2. IndigenousPeoplesprofile Provides baseline information on the demographic, social, cultural, and political characteristicsof the affected IP communities; the land and territories that they have traditionally owned orcustomarilyusedoroccupied;andthenaturalresourcesonwhichtheydepend.
3. Descriptionoftheproject Discussesprojectcomponentsandactivitiesthatmaybring impactsonIndigenousPeoples.Theprojectarea’slocation,physicalandnaturalcharacteristicsandlandusearedescribed.
4. AssessmentofPotentialImpactsoftheProjecttoIPs
AnalyzesandpresentsthepotentialsignificantimpactsoftheprojecttotheIPs.Themethodsforassessmentarepresentedaswellastheresults.AlsodescribesthepotentialbenefitsthatcanbereceivedbytheIPsfromtheproject.
5. AvoidanceandMitigationMeasures
Providesthevariousmeasurestoavoidand/ormitigatetheadverseimpactsoftheprojectonIPs.Whentheavoidanceisnotpossible,themeasurestominimizeandcompensatetheIPsforidentifiedunavoidableadverseimpactsareidentified.
6. ConsultationandAgreementwithIPs
Identifies key project stakeholders and elaborates a culturally appropriate and gender-sensitiveprocessformeaningfulconsultationwithIPsateachstageofprojectpreparationandimplementation,takingthereviewandbaselineinformationintoaccount.DocumentstheagreementsconcerningtheacceptabilityoftheprojectandinformedconsentofaffectedIPs.AlsodescribestheprocedurestoredressgrievancesbyaffectedIPcommunities.Italsoexplainstheproceduresandprotocolsforthegrievancesystem.
7. ImplementationPlanforIPP
Specifies the organizational arrangements, strategies and actions that will be undertakento implement the IPP. Also provides the capacity building needed by NGAs/LGUs and IPs tomeaningfullyparticipateinprojectdevelopmentandoperation.
8. MonitoringandEvaluationSystem
Describesthemonitoringsystem,indicatorsandevaluationmethodfortheimpactsoftheprojectandcompliancewiththeIPP.TheparticipationofIPs,LGUsandimplementinggovernmentagencyisalsodescribed.
9. Financialrequirements ProvidestheitemizedbudgetfortheactivitiesincludedintheIPP.Thecostscheduleisalsoprovidedincludingthesourcesoffunds.
Table 4.3 Annotated Outline of IP Plan
REFERENCES
ADB.2009.SafeguardPolicyStatement.
ADB.OperationsManual.BankPolicies.March2010.
IndigenousPeoplesRightsAct(IPRA)orRepublicAct8371.October,1997.
WorldBank.2011.ImplementationoftheWorldBank’sIndigenousPeoplesPolicy.
WorldBank.2005.IndigenousPeoplesPolicy.
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ANNEX 4Guidelines for Gender Mainstreaming in PPP Projects
1.0 CONCEPTS AND DEFINITIONS
TheGADguidelines(NEDA,2007)describesGenderasashortenedformofthephrase“socialrelationsofgender”,which
seekstomakeevidentandtoexplaintheglobalsymmetrythatappearsinmale-femalerelationsintermsofpowersharing,
decisionmaking,divisionoflabor,andreturntolaborbothwithinthehouseholdandinsociety.GenderAnalysisisdefined
intheguidelinesasanexaminationofaproblemorsituationinordertoidentifygenderissueswithinthecontextofa
project,andtheobstaclestotheattainmentofgenderequalityorsimilargoals.Genderanalysisisaformofsocialanalysis
thatrequiresthecollection,analysis,andapplicationofsex-disaggregatedinformation. It istheprocessofconsidering
thedifferentimpactsthatadevelopmentprojectorprogramhasonwomenandmen,andontheeconomicandsocial
relationshipsbetweenthem(ADB,undatedandGTZ,2007).
Genderanalysiscanalsobedescribedasasystematicmethodofexaminingthepresentandfuturesituationwithand
without theprojectwith respect to gender equality andwomen’s empowerment. Analysis of thepresent issues and
potentialissues“withtheproject”isdonetodeterminethepotentialpositiveandnegativeimpactsofthePPPprojecton
genderconcernsandGADobjectives.Basedontheresultsofgenderanalysis,theissuesaredefinedandthecorresponding
strategiesandmeasuresareformulatedtoaddressthem.Thestrategiesandmeasuresarevalidatedwithstakeholdersand
arethenintegratedinthedesignofthePPPproject.Whenevernecessary,aGADplanispreparedtoenhancethegender
responsivenessofthePPPproject.
2.0 POLICY AND LEGAL FRAMEWORK
Twolawsthatrecognizetheroleofwomeninnationbuildingandtheirequalrightswithmenhavebeenenactedby
thePhilippineCongress.ThesearetheRepublicAct7192,an“ActPromotingtheIntegrationofWomenasFullandEqual
PartnersofMeninDevelopmentandNationBuildingandforotherPurposes”thatwasapprovedinFebruary12,1992;
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andRepublicAct9710ortheMagnaCartaforWomenthatwasenactedinJuly2008whileitsImplementingRulesand
Regulations(IRR)wasapprovedinMarch2010.GendermainstreamingwasadoptedbytheMagnaCartaforWomenasits
strategyforimplementation.
There is a specific provision in the Magna Carta for Women that requires project funds from official development
assistancetoallotasubstantialportion (5-30%) togenderanddevelopment (GAD)programs for the improvementof
women’swelfare.Moreover,thelawalsomandatesthatthecostofimplementingGADprogramsshallbechargedtothe
governmentagency’sorthelocalgovernmentunit’sGADbudgetwhichshouldbeatleastfivepercent(5%)oftheirtotal
budgetappropriations.
PursuanttoRA7192,theNEDAandtheNationalCommissionontheRoleofFilipinoWomen(NCRFW)preparedtheGAD
guidelinesin2007forthemainpurposeofprovidinggovernmentagenciesatoolwithwhichtointegrategenderand
developmentintheirplanning,budgetingandprogramandprojectimplementationactivities.TheNEDAguidelineisa
harmonizedversionthatconsidered,initsdevelopment,theGenderguidelinesofotherinternationalinstitutionssuchas
theADBandtheWorldBank.
BoththeaforementionedGenderlawspromoteempowermentofwomenandupholdtheirequalrightsandopportunities
withmen.Theselawsdonotonlyrecognizetheequalrightsofwomenbutalsoensurethattheybenefitfromgovernment’s
developmentprojectsandparticipatemeaningfullyinthedecision-making,planning,implementationandmanagement
oftheseprojects.Furthermore,theyalsoensurethatthereisanadequatebudgetavailabletoimplementGADprograms.
The Philippine Gender laws serve as the foundation and legal framework for mainstreaming GAD policies into the
development, implementation andmonitoring and evaluation of PPP projects. Hence, the design of PPP projects is
expectedtobegenderresponsiveandensurethattheyimplementacomponentonGAD.
3.0 MAINSTREAMING FRAMEWORK
Mainstreaminggenderinthedevelopment,implementationandmonitoringandevaluationofPPPprojectswillensure
thattheseprojectsaregenderresponsiveandsupportiveofthegoalsofgenderequalityandwomen’sempowermentin
development.
TheguidelinesandproceduresformainstreamingGenderinPPPprojectcyclesareconsistentwiththeharmonizedNEDA
GADguidelines(2007)andtheGender integrationstrategiesandguidelinesofother international lendinginstitutions
suchastheADBandtheWorldBank.Themainstreamingguidelinesprescribedhereinarepatternedaftertheapproach
adopted for the Environment and Social Impact Assessment (ESIA) to facilitate linkage and to establish clearly the
connectionamongtheserelatedguidelinesinformulatingandimplementingPPPprojects.
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Thetablebelow(Table4.4)illustratesgendermainstreamingintheprojectdevelopmentcycleofPPPprojects.Itshowsthe
genderresponsiveelementsormeasuresthatshouldbeintegratedinthegivenphasesoftheprojectcycle.Specifically,
thegenderresponsivemeasuresprovidedaretheproceduresthatmustbeundertakentoensurethatgenderconcerns
are sufficiently considered and integrated throughout the stages of project development and operation. Themain
proceduresinmainstreaminggenderconcernsinthePPPprojectsarebrieflysummarizedinTable4.5.
PPP Project Phases Proposed Procedures for Gender Mainstreaming
Project Identification • Prepareaprojectconceptnoteorinitialprojectprofile• Collectsexdisaggregateddata• Conductstakeholderanalysisandgenderanalysis• Screenprojectimpactsongender• Identifyissuesconcerninggenderequality,benefitsandwomenempowerment• FormulatestrategiestoaddressgenderissuesthatcouldpossiblybespawnedbyaPPPproject
Preliminary Design • PrepareaprojectdesignintegratingGADconcerns• PrepareaGenderresponsivenesschecklistforsectorPPPprojects• AssessPPPprojectdesignusingcheckliststodetermineitsresponsivenesstoGAD
Feasibility Study • IncorporateGenderresponsivenessintheTORsoftheconsultingfirmspreparingFeasibilityStudies(FS)andtheDesignandMonitoringFrameworkforthePPPproject
• Assesspotentialimpactsoftheproject’sdesignusingaProjectimpactchecklistforgender• PrepareaseparatechapteronGADintheFS• PrepareabudgetforGAD:calculateprojectcostincludingGADcostanditsimpactonthetariff• Formulate strategies and measures to safeguard women’s rights and enhance equal
opportunitieswithmenusingtheresultsofprojectevaluation• DevelopsexdisaggregatedmonitoringandperformanceindicatorsforGender• DevelopaM&EsystemincludingareportingsystemforGender
Tendering • IncludeGenderdatacollectionaspartoftheTORforthecontractmanager• ConductbriefingandseminarsfortheprivatesectorontheGADcomponentofPPPprojects• PrepareaGADplanforsectorPPPprojects(PrepareadetailedGADplanforProjectCategories
AandB,andasimpleGADplanforProjectC)withthefollowingminimumcontents:a. explicitgenderequalitygoals,objectivesandoutcomes;b. issuesandstrategies;c. programsandprojects;d. budgetestimates;ande. monitoringandevaluationplans
Construction and Supervision • Createacommitteewithwomenmembershiptodiscussissuesandcomplaintsonconstruction• Prepareperiodicreportsbytheprivatesponsoronstatisticsneededtobetracked(e.g.,number
ofwomenemployedandbenefittedbytheproject)• MonitorcomplianceofcontractorswithperformancestandardsestablishedforGAD
Operation • OperationalizeGADM&E• MonitorcomplianceoftheprojectorbusinessoperatortoGADplan• MonitorGenderimpactsoftheprojectandevaluateperformanceperiodically• GenerateregularlyperformancereportsonGAD
Table 4.4 Framework for Mainstreaming Gender in PPP Project Development
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1. Gather gender disaggregated data of the population located in the project site and those that will be potentially affected(benefittedanddisadvantaged)bytheproject.
2. ScreenthepositiveandnegativeimpactsofthePPPproject’sdesignonwomen’srights,equalopportunitiesandaccesstobenefitsthroughtheuseofGenderanalysismethodsandanimpactscreeningchecklist.
3. Inform and engage participation of localwomen’s organizations andmandated government agencies (NEDA and PhilippineCommissiononWomen)ontheproposedPPPprojectandintheevaluationofitsGenderresponsivenessusingGADchecklists.
4. Conductscopingofissueswithlocalwomenleadersandgovernmentagencyrepresentatives(NEDAandPhilippineCommissiononWomen)andconfirmresultsofinitialprojectscreeningandGADchecklist.
5. Determineandvalidatethesignificantadverseimpactsongenderoftheproposedprojectwithlocalstakeholdersandconcernedagenciesandinstitutions.
6. Integrateintheprojectdesigntheproposedstrategiesandmeasurestoavoidormitigatethesignificantpotentialimpactsoftheprojectonwomen,childrenandthedisabled.
7. PreparetheGADPlanforCategoryAandBprojects.
8. Involvethelocalwomenleadersandconcernedgovernmentagencies(Implementingagencyandprivatesectorpartner,NEDAandPhilippineCommissiononWomen)inthepreparationoftheGADplan.
9. Secureconsentandagreementorcovenantwiththeselectedlocalwomen’sorganizationandgovernmentagencies(Implementingagencyandprivatesectorpartner,NEDAandPhilippineCommissiononWomen)fortheimplementationoftheproject.
10. PrepareaGADMonitoringandEvaluationSystemandreportingsystem;andbuildupsex-disaggregateddatabase.
11. PrepareimplementationarrangementsfortheGADPlan.
12. EstimatebudgetrequirementsforimplementingGADprogramsandprojects.
13. ImplementtheGADplanwithparticipationofwomenstakeholders.
14. Involve the localwomen’s organization inmonitoringof theproject’s compliance to the agreement andGADPlan. Create amonitoring teamconsistingof the Implementingagencyandprivatesectorpartner,and representatives from localWomen’sorganizations.
15. MonitorandevaluatethebenefitsofthePPPprojecttowomen,childrenandthedisabledwiththeparticipationoflocalwomen’sorganizationrepresentatives.MonitorthecomplianceofthePPPprojecttoGenderlawsandGADguidelinesandtheirimpactsongender.
16. SustaintheimplementationoftheGADplanbyconcernedorganizations(implementinggovernmentagencyandprivatesector)byallottingaregularbudgettoGADprogramsandprojectsandinstitutionalizingtheimplementationprocess.
Table 4.5 General Procedures for Mainstreaming Gender in PPP Projects
4.0 OPERATIONALIZATION OF GENDER MAINSTREAMING
Thefollowingactions,notnecessarilyinorder,needtobeundertakeninmainstreamingGenderinPPPprojects:
• IncludeaseparatesectiononGendermainstreamingguidelinesinthePPPmanual;
• BriefingofPPPCenterstaffandImplementingagencycasehandlersonGendermainstreamingandGAD;
• HiringofGenderaspecialist(s)byPPPCentertooverseemainstreamingcomplianceandGADplanimplementation
byImplementingAgency;
• EngagementofGenderspecialistbyImplementingAgencytoconductgenderanalysisandGADplanpreparation;
• IncluderesponsibilitiesonGADplanimplementationintheTORoftransactionadvisers;
• CollectionofsexdisaggregateddataforgenderanalysisbyImplementingagency’sGenderspecialistandtrained
supportstaff;
• PreparestrategiesandmechanismstoimplementGADbudgetbyImplementingagency;
• Establishlinkagewithlocalwomen’s’organizations;
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• Conductconsultationandencourageparticipationoflocalwomen’sorganizationsinprojectidentification,gender
analysisandGADplanning;
• Conductworkshoporientationforbiddersonguidelinesongender;
• Multi-mediacampaignonPPPandgenderimpacts;
• IncludewomenGADexpertasmembersoftheexternalmonitoringteamforPPPprojects;
• Buildacadreofgenderspecialists(offertrainingcoursesthrougheducationalinstitutions);
• IncludeaGADcomponentinthePDMFforeveryoneofitsFeasibilityStudies;
• Establisharegistryofgenderspecialists;
• Conduct a special study on evaluating the impacts of Gender mainstreaming on financial and economic
performanceofthePPPprojectandtheprofitabilityoftheprivateinvestor;and
• DevelopGendermainstreamingguidelinesspecificforthePPPsectors.
5.0 PROJECT IDENTIFICATION
Candidate PPP projects are selected and prioritized from the list of projects provided in the NGA’s investment plan
consistentwithidentifiedeligibleprojectsforPPPforNGAs. Theprocessofselectionandprioritizationshouldalready
consider gender criteria and concernsparticularly equal rights andopportunities betweenmen andwomen and the
promotionofwomen’sempowermentthroughparticipationinallstagesofprojectdevelopment.Briefprojectprofileor
conceptnoteispreparedfortheselectedprojectforPPPfunding.
It is in this phase that a stakeholder analysis is undertaken, with focus on gender analysis. Sex disaggregated data
are collected and gender analysis is conducted to determine the present situation on gender equality andwomen’s
empowerment. Thepotential future scenarioswith thePPPproject are also examined so that thenecessarygender
measures are incorporated in thedesignof the selected andprioritizedproject.Gender issues are identifiedand the
strategiesandmeasurestoaddressthemareformulatedwithinthelocalcontext.
To enable a comprehensive assessment of the project’s potential impacts on gender, an impact screening matrix
isemployed inTable4.6,below.Thematrix initially identifieswhether thePPPprojectwillcausepositive,negativeor
uncertainimpactsongenderelementssuchasequalrightsandaccess,benefitsandimprovedwelfare,representation
andparticipation,ownershipofassets,protectionandsecurity,andsafetyfromman-inducedandnaturaldisasters.The
impactsare thencharacterizedaccording to theirpotentialmagnitude, i.e., low,mediumandhigh.The resultsof the
impactassessmentwilldeterminewhetherthePPPprojecthasthepotentialtocreatesignificantadverseimpacts.
Table 4.6provides the checklistmatrix for screening thepotential impacts of the PPPproject ongender, particularly
women’srights,equalopportunitiesandaccesstothepotentialbenefitsoftheproject.DRAFT
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Project Phase
Checklist for ScreeningGender Concerns Potential impacts of PPP Project Magnitude of impacts
Project will affect: Positive Negative Uncertain Low Medium High
Project Identification Equal rights and access of women to:
• Health
• Housing
• Land
• Naturalresources
• Food
• Decentwork
• Livelihood,credit,capitalandtechnology
• Ownershipofassets
• Educationandtraining
• Information
• Socialprotection/socialsecurity
• Recognition and preservation of cultural identity and integrity
• Safety from natural and human-induced disasters
Floods
Earthquake
Volcaniceruption
Toxicandhazardoussubstances
Chemicalpollution
Otherhazardsandrisks
Table 4.6 Project Impact Screening Matrix
5.1 Classification of PPP Projects according to Gender Responsiveness
PPPprojectscanbecategorizedintothreetypesaccordingtothelevelofsignificanceoftheirimpactsonGender:
1) Category A.TheseareprojectsthatwouldmostlikelyhavesignificantadverseimpactsonGenderconcerns.A
GADanalysisandplanshouldbeprepared.
2) Category B.TheseprojectsarelikelytohavemoderateadverseimpactsonGenderconcerns.Theprojectdesign
shouldbeable toaddress theadverse impacts throughavoidanceormitigationmeasures. Theprojectdesign
shouldintegrategenderresponsivemeasures.AsimplifiedGADplanisprepared.
3) Category C. These projects are inherently gender neutral projects and are expected to have positive and
enhancingimpactsonGenderconcerns.PreparationofaGADplanisoptional.
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NEDA’sharmonizedGADguidelines(2007)containchecklistsforscoringtheresponsivenessoftheprojectinitsdifferent
stagesoftheprojectcycle.TheNGAprojectpreparerscanusethesecheckliststodeterminethegenderresponsivenessof
itsproposedprojectunderdifferentprojectcyclestages.TheseGADchecklistsforeverystageoftheprojectcyclecanbe
downloadedfromtheNEDAwebsite.
6.0 PROJECT DESIGN
After the initialprojectdesign is laidout, theNEDAGADresponsivenesschecklist isappliedtodeterminetheGender
weaknessesoftheinitialdesign.Genderconcernslackinginthedesignarethenincorporated.Likewise,theresultsof
projectscreeningundertheProjectidentificationstagewouldfurtherfirmupthefindingsoftheNEDAresponsiveness
checklist.
ForthePPPprojecttohaveagenderresponsivedesign,itmustbeabletodetermineandaddresstwoimportantagenda
items:1)genderissuesarisingfromgenderanalysisofproposedPPPprojects;and2)strategiesandmeasuresthatmust
beincorporatedinthePPPprojectdesigntoresolveissuestobepotentiallygeneratedbytheproposedprojectduring
itsconstructionandoperationphases.Hence,thefulldesignformulationoftheproposedprojectwouldbeguidedby
properlyaccountingfortheproject’spredictedimpactsduringitsconstructionandoperationphases.Byprojectingthe
project’sadverseimpactsongenderconcerns,thenecessarystrategiesandmeasurescanbeintegratedintheproject’s
design.
Anotherimportantcomponentofthedesignisthecapacitybuildingandcommunicationmechanismstoensureinformed
choicesaremadebytheaffectedvulnerablesectors.
7.0 PROJECT FEASIBILITY STUDY
Thisprojectdevelopmentstageinvolvestheconductoftechnical,financial,economic,socialandinstitutionalfeasibilityor
viabilityoftheproposedproject.Thisstageisundertakenafterthefullprojectdesignhasbeenformulated.Itisadvisable,
wheneverpossible,fortheprojectevaluationteamtointegrategenderconcernsinthefeasibilityanalysistoolsthatwill
beemployedforprojectevaluation.
In project evaluation, it is important todetermine thepotential benefits thatwomenwouldderive from theproject.
Likewise,gapsandconstraints related togender integration thatareanticipated in theproject implementationstage
shouldbeaddressedinthefinaldesignformulationoftheprojectpriortoitsimplementation.Theuseofsexdisaggregated
monitoringandperformanceindicatorsaredevelopedandappliedduringtheprojectevaluationstage.
Table4.7providesthematrixtoolforassessingthepotentialimpactsoftheproposedprojectduringitsoperationstageon
genderindicatorsandforformulatingthestrategiesandmeasurestomitigateoravoidnegativeimpacts.
AGADplanispreparedasaseparatechapteroftheFS.ThecontentoftheGADplanisasfollows:
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a) Explicitgenderequalitygoals,objectivesandoutcomes;
b) Issuesandstrategies;
c) Programsandprojects;
d) Budgetestimates;and
e) Monitoringandevaluation.
Thisdevelopmentstagealsoinvolvestheestimationofappropriateamountoffundsforthepurposeofbudgetingand
programmingtheimplementationoftheGADprograminaccordancewithrelevantprovisionsofRA9710andRA7192.
The implicationsof implementing theGADprogramon tariffs aredetermined since thismight affect the investment
decisionoftheprivatesectorpartner.
Sex disaggregatedmonitoring and performance indicators for Gender as well as theM&E and reporting system are
developedduringtheFSstage.
Checklist indicators Yes No Strategies / Measures
Will the project:
Improve physical welfare of women and girls in terms of:
Lowerincidenceofmalnutrition,morbidity,andmortalityamonggirlsandboys
Improvedfunctionalliteracyofvariousgroupsofwomen,particularlyamongtheolderagegroupsinruralareasandamongindigenouspeoplesgroups
Improvedschoolparticipationofgirlsandboysatvariouslevels
Promote equal access of women and men to development opportunities in terms of:
Employmentgeneratedbytheproject
Resourcesandbenefitswhichimpliestheremovalofconstraints,barriersandvariousformsofgender-baseddiscriminationwithrespecttowomen’saccess
Greater understanding of women’s human rights among women and men in terms of:
CommitmentoftheStatetorecognizing,protecting,andfulfillinghumanrights,particularlyofwomenandgirls
Changesinattitudesandbeliefsconcerninggenderrelations,asindicatedbyareductionintheincidenceofviolenceagainstwomenandamoreequalgenderdivisionoflabor
Equal participation of women in bodies or organizations created by development programs or projects
Equal control of women and men over resources and processes and outcomes of development
Sources:NEDA2007;RA9710(MagnaCartaforWomen).
Table 4.7 Potential Project Impact Assessment Checklist
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8.0 TENDERING
DuringtheTenderingandContractingstage,GenderdatacollectionismadeapartoftheTORforthecontractmanager.
ItisalsoimportantatthisstagethatthoseinvolvedinPPPprojects,particularlytheprivatesectorpartners,areprovided
briefingsandseminarsonGAD.
TheGADplanforsectoralPPPprojects(DetailedGADplanforProjectCategoriesAandBandsimpleGADplanforProject
C)isincludedinthecontractofPPPprojectcontractors
9.0 CONSTRUCTION AND SUPERVISION
AcommitteewithwomenmembershipiscreatedtoreceivecomplaintsduringconstructionandoperationofPPPprojects.
TheotherimportantroleofthecommitteeistoensurethattheGADplanisproperlyimplementedaspartoftheproject.
Periodic reporting by the contractor on statistics needed to track Gender concerns such as the number of women
employedandbenefittedbytheprojectissystematicallyandperiodicallyundertakenduringtheconstructionstage.The
complianceofthecontractorinimplementingtheGADplanismonitoredduringconstructionbyadesignatedmonitoring
committeethatincludesrepresentativesfromthelocalwomen’sorganizations.
10.0 OPERATION AND SUPERVISION
Support by top management of the implementing agency is critical to the success of GAD mainstreaming during
implementationofPPPprojects.Anequally important factortoconsider issustainingthe implementationoftheGAD
planorprojectcomponentinthePPPproject.Forthispurpose,aregularbudgethastobeallottedbytheImplementing
agencytobeabletosustaintheimplementationoftheGADcomponentofthePPPproject.
Localwomen’sorganizations,NGOs,andconcernedgovernmentagenciesshouldbeharnessedtoensurethesustainable
implementationoftheGADprogramasaninherentpartofthePPPproject.Theseorganizationshavethecompetence
andcommitmenttosuccessfullysustaintheimplementationoftheGADprogram.
ItisinthisstagethattheGADM&Eisfullyoperationalized.MonitoringandevaluationoftheGADprogramandproject
includestwodimensions:1)monitoringcompliancetotheGADplan;and2)evaluatingtheactualimpactsoftheproject
onGenderasmeasuredthroughitsperformanceindicators.
TheNEDAGADguidelinescontainpulloutsofsector-specificGADmonitoringindicatorsthatcanbeappliedformonitoring
thegenderresponsivenessofPPPprojects.ThesectorscoveredbyGADmonitoringindicatorsinclude:1)Agricultureand
AgrarianReform,2)NaturalResourceManagement,3)SocialSector:Education,Health,HousingandSettlement,Women
inAreasunderArmedConflict,4)Justice,5)InformationandCommunicationTechnologies,and6)Microfinance.
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REFERENCES
GuidebookonPublic-PrivatePartnershipinInfrastructure.UNESCAP.Bangkok,Thailand.January2011;
GTZ.GenderandUrbanTransport.FashionableandAffordable.March2007;
Public-Private Partnership Center. Developing Public-Private Partnerships in Local Infrastructure and Development
Projects:DraftPPPManualforLGUs.Volume1.2012.QuezonCity;
MillenniumChallengeCorporation.FactSheet.MCC’sCommitmenttoGenderEquality.September16,2010.USA;
MillenniumChallengeCorporation.GenderIntegrationGuidelines.March2010.USA;
MillenniumChallengeCorporation.Gender Integration throughout the Stages of a Compact.May2011.USA;
Moser,Annlise.GenderandIndicators.BridgeDevelopmentandGender–InstituteofDevelopmentstudies-UNDP.July
2007;
NationalEconomicandDevelopmentAuthorityandNationalCommissionontheRoleofFilipinoWomen.Harmonized
Gender and Development Guidelines for Project Development, implementation, Monitoring and Evaluation. Second
Edition.November2007;
National Economic andDevelopment Authority andNational Commission on the Role of FilipinoWomen. TRAINING
MANUAL.HarmonizedGenderandDevelopmentGuidelinesforProjectDevelopment,implementation,Monitoringand
Evaluation.SecondEdition.November2007;
NEDA.2007.GADchecklistforProjectImplementationandManagement,andMonitoringandEvaluation;
Reyes,SocorroPolicyNote.GENDERINPUBLIC-PRIVATEPARTNERSHIPS:APUBLICSECTORPERSPECTIVE.January,2012.
Unpublished;
RepublicAct7192.AnActPromotingtheIntegrationofWomenasFullandEqualPartnersofMeninDevelopmentand
NationBuildingandforotherPurposes.February12,1992;
RepublicAct9710.MagnaCartaforWomen.July2008;
RepublicAct9710.MagnaCarta(RA9710).ImplementingRulesandRegulations.March2010;
Sanghi,Apuruvaet.al.NoteNo.27.Gridlines.PPIAF,September2007;
WorldBankInstitute.Public-PrivatePartnership,GenderandPovertyinInfrastructure.2004.
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ANNEX 5Guidelines for Environmental Assessment and Monitoring of PPP Projects
1.0 INTRODUCTION
EnvironmentalassessmentandmanagementofprojectseligibleunderthePublic-PrivatePartnership(PPP)Programisa
majorrequirement.ThePPPProgramadherestotheconceptofsustainabledevelopment,andthus,theImplementing
Agency (IA) should undertake environmental assessment of projects at the early stage of project preparation and
environmentalmonitoringduringprojectimplementation.Environmentalimpactassessment(EIA)isamajorcomponent
ofawell-preparedPPPProject.
TherearevariousPhilippineenvironmentalandnaturalresourceslaws,rules,andregulationsthatprogramsandprojects
have to adhere to and complywith. However, forpurposesof thePPPprojects, thisAnnexprovides anoverviewof
the requirements, processes andprocedures thatgenerally covermost PPPprojects,mostparticularly, thePhilippine
EnvironmentalImpactStatement(PEIS)System.
ThisAnnexprovidesinformationthatshouldenabletheIAtogainbasicknowledgeandunderstandingoftheenvironmental
impactassessment(EIA)processandcorrespondingenvironmentalmonitoringandreportingrequirementsforvarious
PPPprojects.
2.0 POLICY AND LEGAL FRAMEWORK
Environment and natural resources (ENR) management in the country is guided by two major laws, the Philippine
EnvironmentalPolicyandthePhilippineEnvironmentCode,PresidentialDecree(PD)1151and1152respectively. The
PhilippineEnvironmentalPolicydeclares“acontinuingpolicyoftheState(a)tocreate,develop,maintain,andimprove
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conditionsunderwhichmanandnaturecanthriveinproductiveandenjoyableharmonywitheachother,(b)tofulfillthe
social,economic,andotherrequirementsofpresentandfuturegenerationsofFilipinos,(c)toensuretheattainmentofan
environmentalqualitythatisconducivetoalifeofdignityandwell-being.”ThePhilippineEnvironmentCodeontheother
hand,setsforthmanagementpoliciesandprescribedqualitystandardsfortheenvironmentinitstotality.
Bothlawstookeffectinthe1970’s,togetherwithothermajorenvironmentallaws,includingthePhilippineEnvironmental
ImpactStatement(PEIS)System,whichisPD1586.Othermajorenvironmentallawsweredevelopedandimplemented
inthelastfourdecades.
Depending on the project’s circumstances, the requirements and obligations under the environment and natural
resourceslawswillneedtobecompliedwithforspecificPPPprojects.Duringprojectpreparation,itisessentialthatthe
IAsareawareoftheselawsandregulationssothatanyspecificrequirementsmaybecompliedwith,andthecostsforsuch
requirementsincludedintheprojectbudget.
2.1 Philippine EIS System
ThePhilippineEISSystem(PD1586)requiresallprojectstoundergoenvironmentalimpactassessment(EIA)priortoany
development.ThePEISSystemcoversprojectsdeclaredasEnvironmentallyCriticalProjects(ECPs)orprojectslocatedin
EnvironmentallyCriticalAreas(ECAs)presumedtohavepotentialsignificantimpactsonthequalityoftheenvironment.
Section4ofPD1586providesthatnoperson,partnershiporcorporationshallundertakeoroperatesuchdeclaredECP
andthoseprojectslocatedinECAswithoutfirstsecuringanEnvironmentalComplianceCertificate(ECC).
TheDepartmentofEnvironmentandNaturalResources(DENR),throughtheEnvironmentalManagementBureau(EMB),
implements this law. Under this law and consistent with the principles of sustainable development, the Philippine
governmentdeclaresitapolicytoimplementasystems-orientedandintegratedapproachtotheEISsystemtoensure
arationalbalancebetweensocio-economicdevelopmentandenvironmentalprotectionforthebenefitofpresentand
futuregenerations.TheEISSystemisconcernedprimarilywithassessingthedirectandindirectimpactsofaprojecton
thebiophysicalandhumanenvironmentandensuringthattheseimpactsareaddressedbyappropriateenvironmental
protectionandenhancementmeasures.
WiththePhilippinecommitmenttotheUnitedNationsFrameworkConventiononClimateChange(UNFCCC),assessment
ofclimatechangeadaptation(CCA)anddisasterriskreduction(DRR)concernsofprojectshavebeenintegratedintothe
PEISSystem.
AllthePEIS-relatedregulationsaredownloadablefromtheEMBwebsite.DRAFT
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3.0 ENVIRONMENTAL CLASSIFICATION OF PPP PROJECTS
TheDENR/EMBRevisedProceduralManualforDENRAdministrativeOrderNo.30,seriesof2003(DAO03-30)provides
a comprehensive listingofprojects thatarecoveredby thePEISSystem.The listprovides informationon theproject
classificationor grouping, and the correspondingproject sizeparameters, EIA report type required, and thedecision
documenttobeissuedbytheDENR/EMB.
Table 4.8 is a list of PPP-eligible projects taken from the PEIS Revised Procedural Manual that are categorized as
environmentallycritical.Byvirtueoftheirprojectsizeandcapacitiesandtheirpotentialtocausesignificantenvironmental
impacts,thesePPP-eligibleprojectsarerequiredtoundergocomprehensiveEIAandsubmitdetailedEISreporttoDENR/
EMBtosecureanECC.
Table 4.8 Environmentally Critical PPP Projects
Project Type Project Size Parameter for PEIS Coverage
1. MAJOR DAMS ReservoirfloodedareaORWaterstoragecapacity
≥25,000OR≥20millioncum
2. MAJOR RECLAMATION PROJECTS Areareclaimed ≥50hectares
3. MAJOR ROADS & BRIDGES
a. Bridgesandviaducts,newconstruction Length ≥10.0kilometers(km)
b. On-graderailwaysystem,new Regardlessoflengthandwidth
c. Roads,newconstruction,widening(includingRO-ROfacilities)
Lengthwithnocriticalslopeorlengthwithcriticalslope
≥20.0kmOR≥10.0km
d. Tunnelsandsub-graderoadsandrailways
Length ≥1.0km
4. MAJOR POWER PLANTS (Under PP 2146: fossil-fueled, nuclear fueled, hydroelectric or geothermal)
a. FuelCell Totalpowerproductioncapacity ≥100MW
b. Gas-firedthermalpowerplants Totalpowerproductioncapacity ≥50MW
c. Geothermalfacilities Totalpowerproductioncapacity ≥50MW
d. Hydropowerfacilities Waterimpoundingcapacity ≥20millioncum
e. Otherthermalpowerplants(e.g.diesel,bunker,coal,etc)
Totalpowerproductioncapacity ≥30MW
5. OTHER POWER PLANTS NOT LISTED IN PP 2146
a. Renewableenergyprojectssuchasocean,solar,wind,tidalpowerexceptwastetoenergyandbiogasproject
Totalpowerproductioncapacity ≥100MW
b. Substations/switchyard Poweroutput ≥50.0MW
c. Wastetoenergyprojectsincludingbiogasprojects
Totalpowerproductioncapacity ≥50.0MW
TakenfromAnnex2-1boftheRevisedProceduralManualforDENRAdministrativeOrderNo.30,seriesof2003(DAO03-30);Aug2007
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Table4.9,ontheotherhand,listssomePPP-eligibleprojectsthatarecategorizedasnon-ECPsbasedontheircapacities
as listedinthePEISRevisedProceduralManual. Theseprojectsareexpectedtocauseenvironmental impactsthatare
relativelyminimal.WhentheseprojectsaretobelocatedinECAs,thesewillberequiredtoundergoanEIAandsecurean
ECC.
Project Type Project Size Parameter for PEIS Coverage
1. MINOR DAMS ReservoirfloodedareaANDwaterstoragecapacity
<25hectaresand<20millioncum
2. MINOR RECLAMATION PROJECTS Areareclaimed <50hectares
3. MINOR ROADS & BRIDGES
a. Bridgesandviaducts,newconstruction Length ≥80mbut<10.0km
b. Roads,newconstruction,widening(includingRO-ROfacilities)
Lengthwithnocriticalslope,ORlengthwithcriticalslope
≥2kmbut<20.0km,OR≥2kmbut<10.0km
c. Elevatedroads,flyover,interchanges Regardlessoflengthandwidth
d. Tunnelsandsub-graderoadsandrailways
Length <1.0km
4. MINOR POWER PLANTS (Under PP 2146: fossil-fueled, nuclear-fueled, hydroelectric or geothermal)
a. FuelCell Totalpowerproductioncapacity ≥5MWbut<100MW
b. Gas-firedthermalpowerplants Totalpowerproductioncapacity ≥10.0MWbut<50.0MW
c. Geothermalfacilities Totalpowerproductioncapacity ≥1.0MWbut<50.0MW
d. Hydropowerfacilities Waterimpoundingcapacity <20millioncubicmeters
e. Otherthermalpowerplants(e.g.diesel,bunker,coal,etc.)
Totalpowerproductioncapacity ≥5.0MWbut<30.0MW
5. OTHER POWER PLANTS NOT LISTED IN PP 2146
a. Powerbarge Totalpowerproductioncapacity >1MWbut<10MW
b. Powertransmissionlines Powercarryingcapacity ≥138KV
c. Renewableenergyprojectssuchasocean,solar,wind,tidalpowerexceptwastetoenergyandbiogasproject
Totalpowerproductioncapacity ≥5MWbut<100MW
d. Substations/switchyard Poweroutput >1MWbut<50MW
e. Wastetoenergyprojectsincludingbiogasprojects
Totalpowerproductioncapacity >1MWbut<50MW
e. Windfarms/windprojects Totalpowerproductioncapacity ≥5MWbut<100MW
Table 4.9 Selected Non-ECP PPP Projects11
11Thecompletetypesofprojectsthatmaybeconsideredasnon-ECPsarefoundinAnnex2-1bofthePEISSystemRevisedProceduralManual
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Table4.10showstheDENRnon-ECPProjectgroupingwhereotherPPP-eligibleprojectsmayfallunder.ThesetypesofPPP
projectswhenlocatedinECAswillberequiredtoundergoanEIAandsecureECCdependingontheirprojectcapacities.
Table 4.10 Other Eligible Projects for PPP that are Non-Environmentally Critical Projects
Selected Additional Non-ECP Project Groups
(from PEIS Revised Procedural Manual)
Other PPP Projects Types (from the Revised IRR of the BOT Law)
1. Buildings,storagefacilitiesandotherstructures
• Telecommunications,backbonenetwork,terrestrialandsatellitefacilitiesandrelatedservicefacilities;
• Educationandhealthinfrastructure;• Governmentbuildings,housingprojects;• Markets,slaughterhouses,andrelatedfacilities;• Warehousesandpost-harvestfacilities
2. Tourismindustry • Tourismestatesortownships,includingecotourismprojects,suchasterrestrialandcoastal/marinenatureparks,amongothersandrelatedinfrastructurefacilitiesandutilities
3. Transportterminalfacilities • Portinfrastructureslikepiers,wharves,quays,storage,handling,ferryservicesandrelatedfacilities;
• Airport,airnavigation,andrelatedfacilities
4. Wastemanagementprojects • Environmentalandsolidwastemanagementrelatedfacilitiessuchasbutnotlimitedtocollectionequipment,compostingplants,landfillandtidalbarriers,amongothers
5. Watersupply,irrigationorfloodcontrolprojects
• Irrigationandrelatedfacilities;• Watersupply,sewerage,drainage,andrelatedfacilities
TheIAsareencouragedtocheckthePEISSystemRevisedProceduralManualanddiscusswithDENR/EMBonthefinal
categorizationandrequirementsoftheirPPPprojects.
4.0 MAJOR ENVIRONMENTAL ASSESSMENTS AND STUDIES REQUIRED
The PEIS system requires some major assessments and studies to complete the requirements for the issuance of
Environmental Compliance Certificate (ECC). Aside from the EIA, other major assessments and studies include
Environmental Risk Assessment (ERA), Social Impact Assessment (SIA), and Engineering Geological and Geohazard
Assessment Report (EGGAR). Conduct of these assessments and studies are also the responsibilities of the Project
Proponent.Theseassessmentsandstudiesarebrieflydiscussedbelow.
4.1 Environmental Impact Assessment (EIA)
Environmental ImpactAssessment (EIA)ofprojects is themain requirementunder thePEIS System. All PPPprojects
thatarecoveredbythePEISSystemsshallundergoenvironmentalimpactassessment(EIA).TheEIAinvolvesevaluating
andpredictingthelikely impactsofaproject(includingcumulativeimpacts)ontheenvironmentduringconstruction,
commissioning,operationandabandonment.TheEIAalsocoversnaturalhazardsandrelatedriskaswellastheanticipated
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riseinthefrequencyandintensityofclimatologicalhazardsassociatedwithclimatechange.Systematicanalysisofthe
potentialdisaster/climaterisk-relatedconsequencesofaprojectviaitsimpactontheenvironmentisincludedasacentral
componentoftheenvironmentalassessmentprocessespeciallyinhazard-proneareas.
The EIA includes designing appropriate preventive, mitigating and enhancement measures, including disaster risk
reduction (DRR) and climate change adaptation (CCA) measures that will address the consequences to protect the
environmentandthecommunity’swelfare.
Environmental Risk Assessment (ERA)
Anenvironmentalriskassessment(ERA)coverstheriskthatcanbebroughtaboutbycertainactivitiestoallecosystems,
includinghumans,exposedvia,orimpactedthroughvariousmedia.DENR/EMBdoesnotspecifytheoutlineoftheERA
report.TheIAmayusethebasickeystagesofenvironmentalriskassessmentasfollows:
a. Hazardidentification
b. Identificationofconsequencesifthehazardwastooccur
c. Estimationofthemagnitudeoftheconsequences
d. Estimationoftheprobabilityoftheconsequences(alsocalledexposureassessment)
e. Evaluatingthesignificanceofarisk(alsocalledriskcharacterization)
Attheendoftheriskassessmentprocess,existingcontrolsandfurthermeasuresneededtoreduceoreliminatetherisks
areidentified.TheERAisconductedasamajorpartoftheEIAanditsresultsareincludedintheEISdocumentasamajor
section.
Social Impact Assessment (SIA)
Aninherentpartofenvironmentalassessmentisthesocialimpactassessment,whichfocusesontheeffectsoftheproject
tothesociety.ForthePEISSystemrequirement,socialassessmentstartsfromthedeterminationoftheimpactedareas,
particularlythecommunitiesandstakeholdersthatmaybeaffectedbytheproject.Socialaspectsoftheprojectthatare
assessedincludesocio-economic,healthandsafety,relocation,indigenouspeoples,andgendermainstreaming.Annexes
3and4ofthisVolumediscussinmoredetailtheguidelinesandregulatoryrequirementsconcerningindigenouspeoples
andgendermainstreaminginprojects,whicharealsousedinthePEISSystem.
Theresultsofthevarioussocio-economicstudiesconductedfortheprojectareintegratedintotheEIS,particularlyinthe
SocialDevelopmentPlan,whichformspartoftheEISReport.
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Geological Studies
Subdivision,housingandotherlanddevelopmentandinfrastructureprojectsarealsorequiredtoundergoengineering
geological andgeohazardassessment. Thepurposeof this typeofassessment is toadequatelyandcomprehensively
addressandmitigatethepossibleeffects/impactsofgeologichazards.
TheIAsshouldcoordinatewiththeDENRMinesandGeosciencesBureau(DENR-MGB),whichconductsapreliminarysite
geologicalinspectionoftheproposedprojectareaorlanddevelopmentareatocomeupwithaGeologicalSiteScoping
Report(GSSR).ThereportrecommendsthescopeofworktobeundertakenbytheProjectProponentintermsofdetailed
engineeringgeological,structuralgeologicalandgeohazardassessmentandgeotechnicalengineeringtests, including
specializedstudies,ifnecessary.TheresultofthisstudyistheEngineeringGeologicalandGeohazardAssessmentReport
(EGGAR),whichissubmittedtoDENR-EMB,throughtheDENR-MGB,aspartoftheEISreport.
5.0 TYPES OF ENVIRONMENTAL IMPACT ASSESSMENT (EIA) REPORTS
The environmental impact assessment (EIA) report is a vital requirement of the DENR/EMB for the issuance of an
EnvironmentalComplianceCertificate(ECC).
ThefollowingarethetypesofEIAReportthatarepreparedbytheProjectProponentdependingontheprojectcategory
ofthePPPProjectandbasedontheagreedscopingchecklist:
a. Environmental Impact Statement (EIS): requiredformajorECPsandforsomenon-ECPslocatedinECAsthathave
projectsizeorthresholdthatareconsideredtoresultinsignificantenvironmentalimpacts.Thereportdocuments
thecomprehensiveEIAstudyconductedforthespecificproject.Thedocumentcontainsthedetailsofthestudy
andincludesanEnvironmentalManagementPlan/ProgramthattheProjectProponentwillfundandimplementto
protecttheenvironment.Thecompletedocumentincludesallotherrelatedstudiesthatwererequiredduringthe
scopingstage.TheDENRprovidesanEISOutlinefoundinDENRMCNo.2010-14.
b. Initial Environmental Examination (IEE) Report or Checklist Report: required forminor ECPs and for some
non-ECPs located inECAsthathaveprojectsizeor thresholdthatareconsideredtoresult in relativelyminimal
environmentalimpacts.ThesereportsarebothsimilartoanEIS,butwithreduceddetailsanddepthofassessment
anddiscussion.
ThefollowingtypesofPPP-eligibleprojectshaveIEEChecklistReportFormswithDRR/CCAsectionsthatareavailablefrom
EMB.Theseprojectsinclude:
• BuildingProjects(Commercial,Institutional,LandTransportationTerminal,andStorageFacilities)
• ResortsandotherTourism/LeisureProjects
• RoadsandBridges
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• WaterSupplyProjects
• IrrigationandFloodControlProjects
• WasteManagementProjects
c. Project Description (PD)isthedocumentrequiredfornon-ECPsthathaveminimalenvironmentalimpactsand
arenotlocatedinECAs.ThisdocumentissubmittedfortheissuanceofCertificateofNon-Coverage(CNC).
TypicalEIAReportscontainthefollowing:12
i. ProjectDescription,includingitslocation,scaleandduration,rationale,alternatives,phasesandcomponents,
resource requirements, manpower complement, estimate of waste generation from the most critical project
activitiesandenvironmentalaspects,projectcost;
ii. BaselineEnvironmentalDescription(oftheland,water,airandpeople),focusedonthesectorsandresources
mostsignificantlyaffectedbytheproposedaction;
iii. ImpactAssessment,focusedonsignificantenvironmentalimpacts(inrelationtopre-construction,construction/
development,operationanddecommissioningstages),takingintoaccountcumulative,unavoidableandresidual
impacts;and
iv. Environmental Management Plan, specifying the impacts’ mitigation plan, areas of public information,
education and communication, social development program proposal, environmentalmonitoring plans (with
multi-sectoral public participation for EIS-based projects) and the corresponding institutional and financial
requirements/arrangements.
6.0 ENVIRONMENTAL COMPLIANCE CERTIFICATE (ECC)
TheEnvironmentalComplianceCertificate(ECC)isissuedbytheDENR/EMBbasedonitspositivereviewofthedocuments
submittedby theProjectProponent. TheECCcertifies theProjectProponenthascompliedwith the requirementsof
thePEISSystemandappropriatemeasuresareorwillbetakenbytheProjectProponenttoensurethattheproposed
projectwillnotcausesignificantnegativeenvironmentalimpacts.ItcertifiesthattheProjectProponenthascommittedto
implementitsapprovedEnvironmentalManagementPlan/Program.TheECCcontainsspecificmeasuresandconditions
thattheProjectProponenthastoundertakebeforeandduringtheoperationofaproject,andinsomecases,duringthe
project’sabandonmentphasetomitigateidentifiedenvironmentalimpacts.
TheECChasthreemajorparts:
• Part1:Thecertificateofenvironmentalcompliancecommitment,whichdefinesthescopeandlimitsoftheproject
intermsofcapacity,area,technologyorprocess.ThispartoftheECCissigned-offbyboththeendorsingandthe
issuingauthorities.ThispartoftheECCcomeswithacoveringlettertransmittingtheECCtotheProjectProponent,
signedoffbythedecidingandsigningauthority(eithertheDENRSecretary,EMBDirectororEMBRegionalDirector);
11Section1,RevisedProceduralManualforDENRAdministrativeOrderNo.2003-30
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• Part2:AnnexAoftheECCliststheconditionsoftheECCthatarewithinthemandateoftheEMB.Non-compliance
toanyoftheconditionsmayimposeacorrespondingpenaltyontheProjectProponent.TheProjectProponent
commits to fully comply with the ECC through its Sworn Statement of Full Responsibility to implement the
mitigationmeasures;and
• Part3:AnnexBoftheECCliststheEIAReviewCommittee’srecommendationstotheProjectProponent,aswell
as suggestions toothergovernmentagenciesandLGUs thathavemandatesover theproject so that theycan
integrate theEIAfindings into theirdecision-makingprocess.TheEIARCChair, theEMBEIAChiefandtheEMB
Director/RegionalDirectorsignthisportionoftheECC.ThislastpartoftheECCisformallytransmittedbytheDENR-
EMBtotheconcernedgovernmentagenciesandLGUs.
Onceaprojectisstarted,theECCremainsvalidandactiveforthelifeoftheproject.TheECCautomaticallyexpiresifthe
projectisnotimplementedwithinfiveyearsfromECCissuance.
TheIAanditsprivatepartnermustunderstandallthetermsandconditionsoftheECC,asthesewillbemonitoredduring
projectimplementation,frompre-constructiontoprojectoperation,andevenuptoabandonmentasmaybeapplicable.
7.0 EIA PROCESS AND PROCEDURES
ThePEISSystemprocesshassix(6)majorstages,namely:a)screening;b)scoping;c)EIAstudyandreportpreparation;d)
EIAreviewandevaluation;e)DENRdecision-making;andf)Post-ECCmonitoring,validation,andevaluation.Thefirstthree
stagesaretheresponsibilityoftheProjectProponent,which,forPPPprojectscaneitherbetheImplementingAgency(IA)
oritsprivatepartner,orbothdependingontheiragreement.
Figure4.1presentsthePEISsystemstagesandthemajoractivitiesoftheProjectProponentduringeachstage.Theseare
furtherdiscussedinthefollowingsub-sections.
TheRevisedProceduralManualforDENRAdministrativeOrder(DAO)No.30Seriesof2003—ImplementingRulesand
Regulations(IRR)ofPD1586(www.emb.gov.ph)containsverydetailedsteps,requirements,andpro-formadocuments.
TheIAsandtheirprivatepartnersareencouragedtorefertothisRevisedManualformoredetails.
7.1 Stage 1: Screening
Asafirststep,theProjectProponentshoulddeterminewhetherornottheprojectiscoveredbythePEISSystem.The
ProjectProponentmayusetheEIACoverageandRequirementsScreeningChecklist(ECRSC)13todoaself-screeningof
theproject.ThesamedocumentisalsousedbyEMBasascreeningvalidationform,whichtheywillsigntovalidatethat
theprojectandsub-projectcategorizationiscorrect.ItisatthisstagewhereateamofexpertsisformedbytheProject
Proponenttoundertakethedetailedassessmentcoveringallenvironmentalsectorsandaspectsoftheprojects,including
biological,physical,socio-economic,climatechange,anddisasterriskconsiderations.
13Annex2-1aofthePEISRevisedProceduralManual
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IAs thatarequite familiarwith thePEISSystemand thecategorizationof theirprojectsmay skip thisprocessandgo
directlytoProjectScoping.
EISScreeningFormsthatintegrateDRRandCCAareavailableforsomeprojectsthatarePPP-eligible,suchashydropower/
dam,sanitarylandfill,andthermalpowerplants(seeDRR-CCAEIATechnicalGuidelines;www.emb.gov.ph).
EIA Study and ReportPreparation
Scoping
Post ECC Monitoring, Validation, and Evaluation
DENR Decision (Issuance or Denial of ECC)
• Determine if project is covered by PEIS System
• Form EIA team
• Conduct EIA and other required studies • Produce required EIA Report including
other requirement
RESULT: EIA Report accepted by EMB
• Provide additional information • Assist in organizing Site Visits, and Public
Consultation, or Public Hearing
• Conduct required monitoring • Submit required reports
• Sign commitment to comply with ECC conditions
• Form Multipartite Monitoring team • Establish Environmental Guarantee Fund /
Environmental Monitoring Fund
PEIS System Stages Proponent’s Major Tasks
• Determine tentative impact areas • Determine stakeholders • Conduct IEC of LGUs • Conduct three-level scoping
RESULT: Final TOR of the EIA study
EMB Review and Evaluation
Screening
Figure 4.2 PEIS System Stages and Project Proponent’s Major Tasks
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7.2 Stage 2: Scoping
Scoping is a required activity under the PEIS System. The Project Proponent initiates the process through formal
communicationswiththeDENR/EMB.ThePEISRevisedProceduralManualprovidesthe listandpro-formadocuments
thatshouldbesubmittedbytheProjectProponent.
Depending on the type of the proposed project, DENR/EMB forms an EIA Review Committee (EIARC), whose main
responsibilityistomakesubstantivereviewsoftheEIAreportandproviderecommendationstotheDENR/EMBonthe
decisiontobemadeontheECCapplication.TheEIARCconsistsofanEMBCaseHandler,thirdpartyEIARCmembersand/
orResourcePerson/s.
DENR/EMB requires a Three-Level ScopingActivity,which ispreferablydoneone-timeon siteor in the regionof the
projectlocation.TheProjectProponent,inconsultationwiththeEIARC,organizesthescopingactivity.
Thescopingactivityincludes:
a) ProjectBriefingwith theReviewTeam,duringwhich ProjectProponentpresents theprojectoverview,key
issuesandproposedTORoftheEIAStudy.
b) PublicScopingwithprojectstakeholders,duringwhichcommunitysectorsraisetheirissuestobeaddressedin
theEIAStudy.Publicscopingisnotrequiredforprojectsinnationalwatersoutsideofanylocalgovernmentunit
(LGU)jurisdiction.
c) TechnicalScopingwiththeReviewTeam,duringthefullscopeoftheEIA,includingalltechnicalanddocument
requirementsarediscussedandagreedbetweentheProjectProponentandtheReviewTeam.TheEIAScoping/
ProceduralScreeningChecklist(SPSC)14documentstheseagreements.
Attheendofthescopingactivity,thecoverage,details,typesofdocumentstobeproduced,andotherrequirementsfor
theEIAstudyshouldbeclearlyagreeduponbetweentheProjectProponentandtheEIARC.
7.3 Stage 3: EIA Study and Report Preparation
Themainbulkof theactivitiesareundertakenhere. TheEIATeamconducts thecomprehensiveEIA study. The study
assesses theexisting siteandconditionsandevaluates theanticipated impactson thenatural resource (flora, fauna),
environment (air, water, land), economy, historical, climate change, disaster risks, and social factors of the proposed
projectandprovidesspecificactionstobeundertakensothattheimpactsarereducedifnoteliminated.
Detailedmitigationmeasuresandmanagementplanwithcostestimatesandinstitutionalarrangementsareincludedin
thereport.
TheEIATeampreparesthereportbasedonearlieragreementswiththeEIARC.
14Annex2-7aofthePEISRevisedProceduralManual
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7.4 Stage 4: EIA Review and Evaluation
EIAreviewandevaluationmaybedoneatEMBcentralorregionalofficedependingontheprojectcategory.EISreports
ofECPsareprocessedatEMBCentralOffice,whilethoseofnon-ECPsareprocessedattheEMBregionalofficehaving
jurisdictionintheprojectarea.
PartofthereviewprocessistheconductofSiteVisit(SV),andPublicConsultation(PC)orPublicHearing(PH)byEMB,
withtheEIARCmembersinthepresenceoftheProjectProponentand/oritsEIAConsultantTeam.TheProjectProponent
usuallyorganizestheseactivitiesuponrequestoftheEMB.
Basedontheresultsofthesubstantivereview,theEIARCmakesrecommendationstoEMBonwhethertheECCmaybe
issuedortheapplicationisdenied.TheseEIARCactionsandrecommendationsarefullydocumented.
7.5 Stage 5: Issuance or Denial of Environmental Compliance Certificate
TheDENRSecretaryortheEMBDirectorissuesanECCordeniestheapplicationbasedontheresultsoftheEIARCreview.
ForECPs,theDENRSecretaryupontherecommendationoftheEMBDirector,signstheECC.OtherECCsaresignedbythe
EMBDirectoruponrecommendationoftheEIADivisionChief.
ItisimportantthattheIAanditsprivatepartnerunderstandalltheconditionalitiesoftheECC,asthesewillbemonitored
duringproject implementation, frompre-construction toprojectoperation,andevenup toabandonmentasmaybe
applicable.
Partof theECCconditions forECPsare thecreationofaMultipartiteMonitoringTeam (MMT),and theestablishment
ofanEnvironmentalGuaranteeFund(EGF)andEnvironmentalMonitoringFund(EMF).Theserequirementsarebriefly
discussedbelow.
7.5.1 Creation of Multipartite Monitoring Team (MMT)
ECPsarerequiredtoformproject-specificMMT.ForNon-ECPsinECAs,theEMBRegionalOfficeshavetheoptiontorequire
theformationofMMTs.
TheMMThas theprimary responsibilityof validating theProjectProponent’s environmentalperformance. TheMMTs
are composedof representativesof theProjectProponentandof stakeholdergroups, including representatives from
concerned LGUs, locally accreditedNGOs/POs, the community, concernedEMBRegionalOffice, relevantgovernment
agencies,andothersectorsthathavebeenidentifiedduringtheEIAStudyaspotentiallyaffectedbythevariousphases
oftheproject.
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Forprojectswithsignificantenvironmentalimpactsthatdonotpersistaftertheconstructionphase,theexistenceofthe
MMTisonlyduringtheconstructionphase.Otherprojectswithimpactsthatcouldbeaddressedthroughthemandatesof
othergovernmentagencies(e.g.,DepartmentofHealth(DOH)forhealthprojects,LGUforbuilding/structuralsafety,MGB
forgeologicalaspects),theMMTwillhaveaspecificterm,whichisnotofthesametimeframeastheprojectlife.Theseare
agreedandcontainedintheMemorandumofAgreement(MOA)signedamongthemembersoftheMMTandtheProject
Proponent,inthepresenceofEMB.TheMOAcontainsallagreements,includingreportingresponsibilitiesandfundsfor
theoperationoftheMMT.TheMOAandallrequiredreportshavepro-formas,whicharefoundinthePEISSystemRevised
ProceduralManualandtheDRR/CCATechnicalManual.
TheMMTrequirementisnotapplicableforEIS-basedprojectsthathavenoresidentcommunitieswithinthedirectimpact
areasandwhichareoutsideanyLGUjurisdiction.Forthesetypesofprojects,concernsonenvironmentalimpacts/risks
showntopotentiallyaffectthenearestislandsmaybereferredbytheDENR-EMBtotheappropriategovernmentagency
withmandateandpermittingauthorityoverthemanagementofsuchconcerns(e.g.PhilippineCoastGuard(PCG)for
projectsentirelyinnationalwaters).
7.5.2 Establishment of Environmental Guarantee Fund (EGF) and Environmental Monitoring Fund (EMF)
TheProjectProponentestablishesthesefundsfortwodifferentpurposes.
TheEMFisestablishedforprojectswithMMTtowhichthefundswillbeusedtosupporttheMMTactivities.Itmaybe
time-bounddependingontheexistenceoftheMMTandcanbeeasilyplannedandbudgeted.
The EGF is required for projects that have been determined by DENR to pose a significant public risk or where the
project requires rehabilitation or restoration. EGF is established to be used to fund community-based environment-
relatedprograms,compensatepartiesandcommunitiesaffectedbythenegativeenvironmentalimpactsoftheproject,
and for clean-up and rehabilitation of areas affected by damage to the environment and the resulting deterioration
ofenvironmentalqualityasadirectconsequenceofaproject’sconstruction,operationorabandonment.TheEGFhas
different components including IEC, community training, community environmental programs, and emergency and
disasterpreparedness.
DetailedguidelinesonthesettingupofbothfundsarealsoavailableinthePEISSystemRevisedGuidelines.
7.6 Stage 6: Post-ECC Monitoring, Validation and Evaluation/Audit
Therearethreegroupsresponsibleforconductingpost-ECCmonitoring,validationandevaluationactivities,namelythe
ProjectProponent,theMultipartiteMonitoringTeam(MMT),andtheEMB.
Themonitoring,validation,andevaluationorauditschemesarediscussedfully inthePEISSystemRevisedProcedural
Manual.
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For PPP projects, themonitoring responsibility rests on the private sector partner who won the bid to operate the
project. Thus, it is important that this responsibility is included in the Termsof Reference (TOR) of theproject being
tendered.Regardless,theIAshallhavethecontinuingresponsibilitytomonitorcomplianceoftheprivatepartneronthe
environmentalperformanceoftheproject.
8.0 OTHER ENVIRONMENTAL PERMITS AND CLEARANCES
TheIAoritsprivatepartnershouldalsoensurethatothermajorenvironmentalpermitsandclearancesaresecuredforPPP
Projectsdependingonthetypeoftheprojectandthestatusofitsimplementation.Thesemayinclude:
i. WastewaterDischargePermit-requiredunderCleanWaterAct(RA9275)forallland-basedsourcesofwater
pollution
ii. PermittoOperate(P/O)AirPollutionSourceandControl(APSC)Facilities-requiredundertheCleanAirAct(RA
8749)forallstationarysourcesofairpollution
iii. WaterPermit-RequiredunderWaterCodeofthePhilippines(PD1067)foruseofgroundandsurfacewatersfor
domestic,irrigation,power,fisheries,industrial,livestock,recreationalandcommercialpurposes
iv. LLDAClearance-RequiredunderLLDABoardResolution(BR)408,seriesof2011,amendingBR223,s2004and
BR286,s2006asauthorizedunderRA4850asamendedfordevelopmentplan/program/projectintheLaguna
deBayRegion(resourceextraction,agriculture,manufacturing,service,wastemanagement,otherdevelopment
projectsdefinedunderBR408
TheIAshouldcheckwiththeDENRandEMBwhichandwhenamongthesepermitsandclearancesshallbesecuredfor
specificprojects.
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GLOSSARY OF TERMS
(ThefollowingdefinitionsofwordsandtermsaretakenfromrelevantPhilippineenvironmentallaws,particularlyPD1586
andRA9729)
1. Adaptation–istheadjustmentinnaturalorhumansystemsinresponsetoactualorexpectedclimaticstimuliortheir
effects,whichmoderatesharmorexploitsbeneficialopportunities
2. Adaptivecapacity–istheabilityofecological,socialoreconomicsystemstoadjusttoclimatechangeincludingclimate
variabilityandextremes,tomoderateoroffsetpotentialdamagesandtotakeadvantageofassociatedopportunitieswith
changesinclimateortocopewiththeconsequencesthereof.
3. Certificate of Non-Coverage – a certification issued by the EMB certifying that, based on the submitted project
description,theprojectisnotcoveredbytheEISSystemandisnotrequiredtosecureanECC.
4. ClimateChange–achangeinclimatethatcanbeidentifiedbychangesinthemeanand/orvariabilityofitsproperties
andthatpersistsforanextendedperiodtypicallydecadesorlonger,whetherduetonaturalvariabilityorasaresultof
humanactivity
5. Co-locatedprojects–projects,orseriesofsimilarprojectsoraprojectsubdividedtoseveralphasesand/orstagesby
thesameProjectProponent,locatedincontiguousareas.
6. DisasterRisk–isthepotentialdisasterlossesinlives,healthstatus,livelihood,assetsandservices,whichcouldoccur
toaparticularcommunityoraSocietyoversomespecifiedfuturetimeperiod.
7. Environment–surroundingair,water(bothgroundandsurface),land,flora,fauna,humansandtheirinterrelations.
8. Disasterriskreduction–istheconceptandpracticeofreducingdisasterrisksthroughsystematiceffortstoanalyzeand
managethecausalfactorsofdisasters,includingthroughreducedexposuretohazards,lessenedvulnerabilityofpeople
andproperty,wisemanagementoflandandtheenvironment,andimprovedpreparednessforadverseevents.
9. EnvironmentalComplianceCertificate(ECC)–acertificateofenvironmentalcompliancecommitmenttowhichthe
ProjectProponentconformswith,afterDENR-EMBexplainstheECCconditions,bysigningtheswornundertakingoffull
responsibilityover implementationof specifiedmeasureswhicharenecessary tocomplywithexistingenvironmental
regulations or to operatewithin best environmental practices that are not currently covered by existing laws. It is a
documentissuedbytheDENR/EMBafterapositivereviewofanECCapplication,certifyingthattheProjectProponent
hascompliedwithalltherequirementsoftheEISSystemandhascommittedtoimplementitsapprovedEnvironmental
ManagementPlan.TheECCalsoprovidesguidancetootheragenciesandtoLGUsonEIAfindingsandrecommendations,
whichneedtobeconsideredintheirrespectivedecision-makingprocess.
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10.EnvironmentallyCriticalArea(ECA)–anenvironmentallysensitiveareadeclaredthroughProclamation2146wherein
significantenvironmentalimpactsareexpectedifcertaintypes/thresholdsofproposedprojectsarelocated,developedor
implementedinit.UpdatingoftechnicaldescriptionsofECAsisvestedontheDENR-EMBthroughSection2-DofAO42
(2002).
11.EnvironmentallyCriticalProject(ECP)–projectsbelongingtoprojecttypesdeclaredthroughProclamationNo.2146
andProclamationNo.803,whichmayposesignificantnegativeenvironmentalimpactatcertainthresholdsofoperation
regardlessoflocation.UpdatingoftechnicaldescriptionsofECPsisvestedontheDENR-EMBthroughSection2-DofAO
42(2002),incoordinationwiththeDTIasprovidedforinSection3-AofAO42.
12.EnvironmentalGuaranteeFund(EGF)–fundtobesetupbyaProjectProponentwhichshallbereadilyaccessibleand
disbursablefortheimmediateclean-uporrehabilitationofareasaffectedbydamagesintheenvironmentandtheresulting
deteriorationofenvironmentalqualityasadirectconsequenceofaproject’sconstruction,operationorabandonment.
Itshall likewisebeusedtocompensatepartiesandcommunitiesaffectedbythenegative impactsoftheproject,and
to fundcommunity-basedenvironment relatedprojects including,butnot limited to, informationandeducationand
emergencypreparednessprograms.
13.EnvironmentalImpactAssessment(EIA)–processthatinvolvesevaluatingandpredictingthelikelyimpactsofaproject
(includingcumulativeimpacts)ontheenvironmentduringconstruction,commissioning,operationandabandonment.It
alsoincludesdesigningappropriatepreventive,mitigatingandenhancementmeasuresaddressingtheseconsequences
toprotecttheenvironmentandthecommunity’swelfare.
14.Environmental Impact Assessment Review Committee (EIARC) – a body of independent technical experts and
professionalsofknownprobityfromvariousfieldsorganizedbytheEMBtoevaluatetheEISandotherrelateddocuments
andtomakeappropriaterecommendationsregardingtheissuanceornon-issuanceofanECC.
15.Environmental ImpactStatement (EIS)–document,preparedand submittedby theProjectProponentand/orEIA
ConsultantthatservesasanapplicationforanECC. It isacomprehensivestudyofthesignificant impactsofaproject
ontheenvironment.ItincludesanEnvironmentalManagementPlan/ProgramthattheProjectProponentwillfundand
implementtoprotecttheenvironment.
16.Environmental Management Plan/Program (EMP) – section in the EIS that details the prevention, mitigation,
compensation,contingencyandmonitoringmeasurestoenhancepositiveimpactsandminimizenegativeimpactsand
risksofaproposedprojectorundertaking.Foroperatingprojects,theEMPcanalsobederivedfromanEMS.
17.EnvironmentalMonitoringFund(EMF)–fundthataProjectProponentshallsetupafteranECCisissuedforitsproject
orundertaking,tobeusedtosupporttheactivitiesofthemulti-partitemonitoringteam.Itshallbeimmediatelyaccessible
andeasilydisbursable.
18.EnvironmentalRiskAssessment(ERA)–assessment,throughtheuseofuniversallyacceptedandscientificmethods,of
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risksassociatedwithaproject.Itfocusesondeterminingtheprobabilityofoccurrenceofaccidentsandtheirmagnitude
(e.g.failureofcontainmentorexposuretohazardousmaterialsorsituations).
19.InitialEnvironmentalExamination(IEE)Report–documentsimilartoanEIS,butwithreduceddetailsanddepthof
assessmentanddiscussion.
20.Initial Environmental Examination (IEE) Checklist Report – simplified checklist versionof an IEE Report, prescribed
by theDENR, tobefilledupbyaProjectProponent to identifyandassessaproject’senvironmental impactsand the
mitigation/enhancementmeasurestoaddresssuchimpacts.
21.MultipartiteMonitoringTeam(MMT)–community-basedmulti-sectoralteamorganizedforthepurposeofmonitoring
theProjectProponent’scompliancewithECCconditions,EMPandapplicablelaws,rulesandregulations.
22.PhilippineEnvironmentalImpactStatementSystem(PEISS)–PresidentialDecree(PD)1586issuedinJune1978,isthe
Philippinelawwhichdeclaresitapolicyofthegovernmenttoattainandmaintainarationalandorderlybalancebetween
socio-economicgrowthandenvironmentalprotection.ThelawestablishedaEnvironmentalImpactStatementSystem
foundedandbasedontheenvironmentalimpactstatementrequired,underSection4ofPresidentialDecreeNo.1151,of
allagenciesandinstrumentalitiesofthenationalgovernment,includinggovernment-ownedorcontrolledcorporations,
aswellasprivatecorporations,firmsandentitiesforeveryproposedprojectandundertaking,whichsignificantlyaffects
thequalityoftheenvironment.
23.ProjectDescription(PD)–document,whichmayalsobeachapterinanEIS,thatdescribesthenature,configuration,
useofrawmaterialsandnaturalresources,productionsystem,wasteorpollutiongenerationandcontrolandtheactivities
ofaproposedproject.Itincludesadescriptionoftheuseofhumanresourcesaswellasactivitytimelines,duringthepre-
construction,construction,operationandabandonmentphases.
24.Project–anyactivitywhichmayhavevaryinglevelsofsignificanceofimpactontheenvironment,e.g.fromhighto
moderatetonilsignificance,implyingdifferentintensitiesofpreventiveormitigatinginterventions
25.ProjectProponent–anynaturalorjuridicalpersonintendingtoimplementaprojectorundertaking.
26.Public Participation – open, transparent, gender-sensitive, and community-based public involvement in the EIA
process,aimedatensuringthesocialacceptabilityofaprojectorundertaking,involvingthebroadestrangeofstakeholders,
commencing at the earliest possible stageof projectdesign anddevelopment and continuinguntil post-assessment
monitoring.
27.Scoping – the stage in the EIS Systemwhere information andproject impact assessment requirements aremore
definitelyestablishedandfocusedtoprovidetheProjectProponentandthestakeholdersthefinalscopeofworkand
termsofreferencefortheEIS.
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28.SignificantImpacts–impactswhichdamagetheenvironmenttothepointthattheenvironmentalresourcelosesits
capacitytosustainlifeortocontinuefunctioningwithinbaselinelevelsandefficiency;impactswhichneedactionthrough
prevention,(e.g.changeinprojectsitingordesign)ormitigation(reduce,repair,rehabilitate)orotherinterventionsto
protecttheenvironmentfrombeingharmedatlevelsthatreduceitsfunctionalityforitsusersordependentbiota.
REFERENCES
RevisedProceduralManualforDENRAdministrativeOrderNo.30,seriesof2003(DAO03-30)(ImplementingRulesand
Regulations of Presidential Decree No. 1586, Establishing the Philippine Environmental Impact Statement System);
EnvironmentalManagementBureau;August2007
EMBMemorandumCircularNo.2011-005,IncorporatingDisasterRiskReduction(DRR)andClimateChangeAdaptation
(CCA)concernsinthePhilippineEISSystem,EnvironmentalManagementBureau,QuezonCity,November2011
DENR Memorandum No. 2000-28, Implementing Guidelines on Engineering Geological and Geohazard Assessment
as Additional Requirement for ECC Applications covering Subdivision, Housing and other Land Development and
InfrastructureProjects;DepartmentofEnvironmentandNaturalResources;March2000
ProclamationNo.2146,ProclaimingCertainAreasandTypesofProjectsasEnvironmentallyCriticalandwithintheScope
oftheEnvironmentalImpactStatementSystemEstablishedunderPresidentialDecreeNo.1586;OfficeofthePresident,
Philippines,December1981
ThePhilippineAmendedBOTLaw,R.A.7718,anditsRevisedImplementingRulesandRegulations,2012Revisionofthe
IRR;PublicPrivatePartnershipCenter;QuezonCity,2012
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ANNEX 6Instruments Issued by Donors and Bilaterals in Support of PPP Projects
1.0 INSTRUMENTS PROVIDED BY DONORS
Besidescreditenhancementsandperformanceundertakingsextendedby theGovernment, theremaybeguarantees
issuedbydonors.Suchguaranteesusuallyprotecttheprojectcompanyagainstcertainpolitical risks,butundersome
circumstancestheymayalsocoverbreachoftheProjectAgreementbytheContractingAuthority,forinstance,wherethe
projectcompanydefaultsonitsloansasaresultofthebreachofanobligationbygovernment.
Inadditionto lendingtogovernmentsandpublicauthorities,theWorldBank,ADBandotherdonorshavedeveloped
programstosupportPPPs.Forexample,theyprovideguaranteesthatareassignabletocommerciallendersforqualifying
projects.Insomecases,guaranteesprovidedbytheseinstitutionsrequireacounter-guaranteefromtheGovernment.The
instrumentsusedaredesignedtomitigatetherisksofdefaultonsovereigncontractualobligationsorlong-maturityloans
thatprivatelendersarenotpreparedtobearandarenotequippedtoevaluate.Forinstance,guaranteesprovidedbythe
WorldBankandADBmaytypicallycoverspecifiedrisks(thepartialriskguarantee)orallcreditrisksduringaspecifiedpart
ofthefinancingterm(thepartialcreditguarantee),assummarizedbelow:15
(i) Partial risk guarantees.Apartialriskguaranteecoversspecifiedrisksarisingfromnon-performanceofsovereign
contractualobligationsorcertainpoliticalforcemajeureevents.Suchguaranteesensurepaymentinthecaseof
debtservicedefaultresultingfromthenon-performanceofcontractualobligationsundertakenbygovernmentsor
theiragencies.Theymaycovervarioustypesofnon-performance,suchasfailuretomaintaintheagreedregulatory
framework,includingpriceformulas;failuretodeliverinputs,suchasfuelsuppliedtoaprivatepowercompany;
failuretopayforoutputs,suchaspowerpurchasedbyagovernmentutilityfromapowercompanyorbulkwater
purchasedbyalocalpublicdistributioncompany;failuretocompensateforprojectdelaysorinterruptionscaused
bygovernmentactionsorpoliticalevents;proceduraldelaysofanykindincludingissuanceoflicensestooperate;
andadversechangesinexchangecontrollawsorregulations.
15NOTEthatADBprovidesguaranteesundertermssimilartothoseoftheWorldBank.MaterialinthisAppendixisdrawnfromWorldBankandBerneUnionwebsites.
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(ii) Partial credit guarantees.Partialcreditguaranteesareprovidedtoprivatesectorborrowerswithagovernment
counter-guarantee.Theyaredesignedtocovertheportionoffinancingthatfallsduebeyondthenormaltenureof
loansprovidedbycommerciallenders.TheseguaranteesaregenerallyusedforPPPprojectsthatneedlong-term
fundstobefinanciallyviable.Apartialcreditguaranteetypicallyextendsmaturitiesofloansandcoversallevents
ofnon-paymentforadesignatedpartofthedebtservice.
The Multilateral Investment Guarantee Agency (MIGA) offers long-term political risk insurance coverage to new
investmentsoriginatinginanymembercountryanddestinedforanydevelopingmembercountryotherthanthecountry
fromwhich the investment originates. New investment contributions associated with the expansion,modernization
orfinancial restructuringofexistingprojectsarealsoeligible,asareacquisitionsthat involvetheprivatizationofstate
enterprises.Eligibleformsofforeigninvestmentincludeequity,shareholderloansandloanguaranteesissuedbyequity
holders,providedtheloansandloanguaranteeshavetermsofatleast3years.Loanstounrelatedborrowerscanalsobe
insured,aslongasashareholderinvestmentintheprojectisconcurrentlyinsured.Othereligibleformsofinvestmentare
technicalassistance,managementcontractsandfranchisingandlicensingagreements,providedtheyhavetermsofat
least3yearsandtheremunerationoftheinvestoristiedtotheoperatingresultsoftheproject.MIGAinsuresagainstthe
followingrisks:
(i) Transfer restrictions.Thepurposeofguaranteesof foreigncurrencytransferextendedbyMIGAissimilarto
thatofsovereignforeignexchangeguaranteesthatmaybeprovidedbytheGovernment.Thisguaranteeprotects
againstlossesarisingfromaninvestor’sinabilitytoconvertlocalcurrency(capital,interest,principal,profits,royalties
andotherremittances)intoforeignexchangefortransferoutsidethehostcountry.Thecoverageinsuresagainst
excessivedelaysinacquiringforeignexchangecausedbyactionorfailuretoactbytheGovernment,byadverse
changesinexchangecontrollawsorregulationsandbydeteriorationinconditionsgoverningtheconversionand
transferoflocalcurrency.Currencydevaluationisnotcovered.Onreceiptoftheblockedlocalcurrencyfroman
investor,MIGApayscompensationinthecurrencyofitscontractofguarantee;
(ii) Expropriation. This guarantee protects against loss of the insured investment as a result of acts by the
Government thatmay reduce or eliminate ownership of, control over or rights to the insured investment. In
addition tooutrightnationalizationandconfiscation, “creeping”expropriation–aseriesofacts that,over time,
resultsinanexpropriation–isalsocovered.Coverageisprovidedonalimitedbasisforpartialexpropriation(for
example,confiscationoffundsortangibleassets).Actionstakenbygovernmentwhicharenon-discriminatory(i.e.,
applytoallfirms)andaretakenthroughtheexerciseoflegitimateregulatoryauthorityarenotcovered.Fortotal
expropriationofequityinvestments,MIGApaysthenetbookvalueoftheinsuredinvestment.Forexpropriation
offunds,MIGApaystheinsuredportionoftheblockedfunds.For loansandloanguarantees,MIGAinsuresthe
outstandingprincipalandanyaccruedandunpaidinterest.Compensationispaiduponassignmentoftheinvestor’s
interestintheexpropriatedinvestment(forexample,equitysharesorinterestinaloanagreement)toMIGA;
(iii)Breach of contract. ThisguaranteeprotectsagainstlossesarisingfromtheGovernment’sbreachorrepudiation
ofacontractwiththeinvestor.Intheeventofanallegedbreachorrepudiation,theinvestormustbeabletoinvoke
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NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex6 3
adisputeresolutionmechanism(forexample,arbitration)undertheunderlyingcontractandobtainanawardfor
damages. If,afteraspecifiedperiodoftime,the investorhasnotreceivedpaymentor if thedisputeresolution
mechanismfailstofunctionbecauseofactionstakenbytheGovernment,MIGAwillpaycompensation;
(iv) War and civil disturbance. This guarantee protects against loss from damage to, or the destruction or
disappearanceof,tangibleassetscausedbypoliticallymotivatedactsofwarorcivildisturbanceinthehostcountry,
includingrevolution,insurrection,coupd’état,sabotageandterrorism.Forequityinvestments,MIGAwillpaythe
investor’sshareoftheleastofthebookvalueoftheassets,theirreplacementcostorthecostofrepairofdamaged
assets.Forloansandloanguarantees,MIGAwillpaytheinsuredportionoftheprincipalandinterestpayments
indefaultasadirectresultofdamagetotheassetsoftheprojectcausedbywarandcivildisturbance.Warand
civildisturbancecoveragealsoextendstoeventsthat,foraperiodofoneyear,resultinaninterruptionofproject
operationsessentialtooverallfinancialviability.Thistypeofbusinessinterruptioniseffectivewhentheinvestment
isconsideredatotalloss;atthatpoint,MIGAwillpaythebookvalueofthetotalinsuredequityinvestment.
2.0 INSTRUMENTS PROVIDED BY EXPORT CREDIT AND INVESTMENT PROMOTION AGENCIES
Insuranceagainstcertainpolitical,commercialandfinancialrisks,aswellasdirectlending,maybeobtainedfromexport
creditandinvestmentpromotionagencies.Suchagencieshavetypicallybeenestablishedinanumberofcountriesto
assistintheexportofgoodsorservicesoriginatingfromthosecountries.Theyactonbehalfofthegovernmentsofthe
countriessupplyinggoodsandservicesfortheproject.MostofthemaremembersoftheInternationalUnionofCreditand
InvestmentInsurers(BerneUnion),whosemainobjectivesincludepromotinginternationalcooperationandfosteringa
favourableinvestmentclimate;developingandmaintainingsoundprinciplesofexportcreditinsurance;andestablishing
andsustainingdisciplineinthetermsofcreditforinternationaltrade.
Whilethesupportavailablediffersfromcountrytocountry,exportcreditandinvestmentpromotionagenciestypically
offertwolinesofcoverage:
(i) Export credit insurance. In the context of the financing of PPP projects, the essential purpose of export
creditinsuranceistoguaranteepaymenttothesellerwheneveraforeignbuyerofexportedgoodsorservicesis
extendedcreditbytheseller.Exportcreditinsurancemaytaketheformofsuppliercreditorbuyercreditinsurance
arrangements.Underthesuppliercreditarrangements,theexporterandtheimporteragreeoncommercialterms
thatcallfordeferredpaymentevidencedbynegotiableinstruments(forexample,billsofexchangeorpromissory
notes) issuedbythebuyer.Subjecttoproofofcreditworthiness,theexporterobtainsinsurancefromanexport
creditagencyin itshomecountry.Underthebuyercreditmodality,thebuyer’spaymentobligationisfinanced
bytheexporter’sbank,whichinturnobtainsinsurancecoveragefromanexportcreditagency.Exportcreditsare
generally classifiedas short-term (repayment termsofusuallyunder2 years),medium-term (usually2-5 years)
andlong-term(over5years).Officialsupportbyexportcreditagenciesmaytaketheformofpurecover,bywhich
ismeant insuranceorguaranteesgiven toexportersor lending institutionswithoutfinancing support.Official
supportmayalsobegiven in the formoffinancingsupport,which isdefinedas includingdirectcredits to the
overseasbuyer,refinancingandallformsofinterestratesupport;
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4 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex6
(ii) Investment insurance. Export credit agencies may offer insurance coverage either directly to a borrower
or to theexporter for certainpolitical andcommercial risks. Typicalpolitical andcommercial risks includewar,
insurrectionorrevolution;expropriation,nationalizationorrequisitionofassets;non-conversionofcurrency;and
lackofavailabilityofforeignexchange.Investmentinsuranceprovidedbyexportcreditagenciestypicallyprotects
theinvestorsinaprojectcompanyestablishedabroadagainsttheinsuredrisks,butnottheprojectcompanyitself.
Inotherwords,theequityinvestorsarecoveredbytheinsurancebutnotthecreditorsoftheprojectcompanyorits
suppliers.Investmentinsurancecovertendstobeextendedtoawiderangeofpoliticalrisks.Exportcreditagencies
preparedtocoversuchriskstypicallyrequiresufficientinformationonthelegalsystemofthehostcountry.
TheconditionsunderwhichexportcreditagenciesandinvestmentpromotionofmembercountriesoftheOrganization
forEconomicCooperationandDevelopment(OECD)offersupporttobothsupplierandbuyercredittransactionshave
tobeinconformitywiththeOECDArrangementonGuidelinesforOfficiallySupportedExportCredits(alsoreferredtoas
theOECDConsensus).Themainpurposeofthearrangementistoprovideasuitableinstitutionalframeworktoprevent
unfaircompetitionbymeansofofficialsupportforexportcredits.Inordertoavoidmarket-distortingsubsidies,theOECD
Consensusregulatestheconditionsoftermsofinsurances,guaranteesordirectlendingsupportedbygovernments.
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NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 1
ANNEX 7Generic Preferred Risk Allocation Matrix Adopted by NEDA for PPP Project Evaluation
DRAFT
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2 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
GENE
RIC
PREF
ERRE
D RI
SK A
LLOC
ATIO
N M
ATRI
X AD
OPTE
D BY
NED
A FO
R PP
P PR
OJEC
T EV
ALUA
TION
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Pre-
cont
ract
risk
s
Exist
ingstru
ctur
e(re
furb
ishm
ent/
ex
tens
ion)
•Risk
thatth
epr
ocur
emen
tpr
oces
swill
expe
rienc
ean
yof
th
efo
llowing:(a
)failu
reto
attract
suffi
cien
tqua
lified
bidd
ersa
nd/o
rre
spon
siveoff
ers;
(b)p
rolong
ed
andex
pens
ive
nego
tiatio
ns;o
r(c)c
ollaps
eof
ne
gotia
tions
.
•Gov
ernm
ent
•Gov
ernm
entd
oesn
othav
ea
partne
ryet
att
hiss
tage
,soitha
sno
opt
ionbu
ttobe
arth
isris
k.
•Ca
refu
lpre
paratio
nan
dm
anag
emen
tof
thepr
ocur
emen
tpr
oces
s.•
Ensu
reth
atth
eag
ency
’spr
ocur
emen
tte
amis
exp
erienc
ed
andco
mpe
tent
.•
Establish
a
proc
urem
ents
ched
ule
com
men
surate
with
pr
ojec
tcom
plex
ity.
•Th
ereis
noagr
eem
ent
yets
igne
dwith
any
ot
herp
arty,the
reis
no
spec
ificalloca
tion
instru
men
tbut
lack
of
reco
urse
toany
sortof
com
pens
ation.
Site
Ris
k
Exist
ingstru
ctur
e(re
furb
ishm
ent/
ex
tens
ion)
•Risk
thatexisting
stru
ctur
esare
inad
equa
teto
su
ppor
tnew
im
prov
emen
ts,
resu
lting
in
additio
nal
cons
truc
tiontim
ean
dco
st.
•Pr
ivate
•Pr
ivatese
ctor
can
man
ageco
st-
effec
tivelyifpr
oper
due
dilige
nce
ofexistingstru
ctur
eis
cond
ucte
d.
•Pr
ivatefir
mw
illpas
sto
builder
which
relie
son
exp
ertt
estin
gan
ddu
e-dilig
ence
.•
Givepr
ivatefir
m
enou
ghtim
eto
dosit
estud
ies.
•Co
ntractclaus
ere
quiring
priv
ate
partne
rtopr
ovide
perfo
rman
cebon
d.
Site
con
ditio
ns•
Risk
that
unan
ticipated
ad
versege
olog
ical
cond
ition
s(g
eote
chnica
lrisk
)aredisc
over
ed
which
cau
se
cons
truc
tionco
st
toin
crea
seand
/or
caus
eco
nstruc
tion
delays
.
•Pr
ivate-
exce
pt
whe
nco
mplex
ge
olog
ical
cond
ition
sarepr
esen
tAN
Dpro
jectis
go
vern
men
tso
licite
d;priv
ate
toabs
orbon
ly
upto
asp
ecific
costam
ount
,afte
rwhich
go
vern
men
tas
sum
es
•Pr
ivatese
ctor
can
man
ageco
st
effec
tivelyifsit
estud
yeff
ortis
mod
eratean
den
ough
tim
eis
prov
ided
tobidde
rs.
•Co
mplex
stru
ctur
esonlin
ear
infra
stru
ctur
e(ro
ad,rail,pipe
line)
may
requ
irem
oreth
orou
ghand
de
taile
dge
o-te
chnica
lstu
dies
(for
ex
ample,lo
ngtu
nneland
long
sp
anbrid
gesi
nun
stab
lete
rrain)
,th
atm
aynot
bere
ason
ably
com
plet
edw
ithinth
ebidd
ing
perio
dof
may
beto
oex
pens
ivefo
rbidd
erst
oco
nduc
tatt
hebidding
stag
ewith
outc
ost-sh
aring.
•Pr
ivatefir
mw
illpas
sto
builder
which
relie
son
exp
ertt
estin
gan
ddu
e-dilig
ence
.•
Givepr
ivatefir
m
enou
ghtim
eto
dosit
estud
ies.
•Re
imbu
rsepa
rtof
thebidd
ingco
stto
en
cour
agebidd
erst
opr
epareth
eiro
wnsit
estud
ies.
•Co
ntractclaus
ere
quiring
priv
ate
partne
rtopr
ovide
perfo
rman
cebon
d.•
Cont
ractclaus
estipulatingth
eco
ndition
sand
m
echa
nism
to
com
pens
atepr
ivate
sector
fora
gree
dup
onpor
tionof
co
stove
rrun
son
tech
nica
llycom
plex
stru
ctur
es(for
ex
ample,tu
nnelcos
tov
erru
ngu
aran
tee).
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Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Perm
itsand
ap
prov
als
•Risk
thatnec
essa
ry
appr
ovals
(fore
xam
ple,
enviro
nmen
tal
licen
se,
enviro
nmen
tal
man
agem
ent
plan
,con
stru
ction
perm
it)m
aybe
obtained
orm
ay
beobt
aine
don
lysu
bjec
tto
unan
ticipated
co
ndition
swhich
ha
veadv
erse
cos
tco
nseq
uenc
esor
caus
epr
olon
ged
delay.
•Pr
ivateifan
dwhe
n:-
Perm
itsand
ap
prov
als
have
bee
nob
tained
pr
iort
oth
esu
bmiss
ion
ofpro
posa
lsby
pot
entia
lbidd
ers,
andlate
rm
odified
at
there
ques
tof
thesu
cces
sful
bidd
er.
•Gov
ernm
entif
andwhe
n:-
Perm
itsand
ap
prov
als
have
not
bee
nob
tained
prio
rto
bidde
rpr
opos
al
subm
ission—
privateis
resp
onsib
le
tom
anag
eth
epr
oces
s,th
ough
.
•W
henPr
ivate:
-Pr
ivateis
better
info
rmed
abo
ut
theratio
nalefo
ritsre
ques
t.
•W
henGov
ernm
ent:
-Gov
ernm
entisb
ette
rinf
orm
ed
andpo
sitione
dto
influ
ence
the
spee
dof
theap
prov
alpro
cess,
particularlyin
situ
ations
thatare
co
mplex
ors
ensit
ive.
•Gov
ernm
entt
oob
tainin
adv
ance
of
thebidd
erpro
posa
lsu
bmiss
ionstag
eth
ere
quisi
teper
mits
an
dap
prov
als,
which
wou
ldallo
wth
epr
ivatefir
mto
ach
ieve
am
easu
reofp
re-
cont
ractua
lcer
tainly
andan
earlyst
arto
fth
eap
prov
alpro
cess.
•Co
ntractclaus
estipulatingth
esc
hedu
leto
obt
ain
perm
itsand
app
rova
lan
dstipulating
liquida
tedda
mag
es
paya
bleto
priv
ate
partne
rinca
seof
delay.
DRAFT
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4 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Enviro
nmen
tal
liabilitiese
xisting
priort
opr
ojec
t
•Risk
that
projec
tsite
is
cont
aminated
re
quiring
sig
nific
ant
rem
ediatio
nex
pens
es.
•Pr
ivate,exc
ept
whe
n:-
Projec
twas
so
licite
dby
the
gove
rnm
ent;
and
-Co
stand
tim
ere
quire
dto
co
nduc
tafu
lldu
e-dilig
ence
(site
stud
y)fo
rea
chbidde
raresu
chth
at
thepr
ojec
twou
ldbe
signific
antly
de
laye
dor
wou
lddet
er
pote
ntial
serio
us
bidd
ers—
in
such
cas
e,
som
eris
ksh
aringalon
gth
elin
esof
geot
echn
ical
siteris
kco
uld
beaso
lutio
n.
•W
henPr
ivate:
-Pr
ivatese
ctor
can
man
ageco
st-
effec
tivelyifsit
estud
yeff
ortis
mod
eratean
den
ough
tim
eis
prov
ided
tobidde
rs.
•W
hensh
ared
:-
Site
swhe
resi
test
udyeff
ortm
ay
notb
ere
ason
ablycom
plet
ed
with
inth
ebidd
ingpe
riod
orm
aybeto
oex
pens
ivefo
rbidd
erst
oco
nduc
tatt
he
bidd
ingstag
ewith
outc
ost-
sharing.
•Pr
ivatefir
mw
illpas
sto
builder
which
relie
son
eex
pertte
stingan
ddu
edilig
ence
.•
Givepr
ivatefir
m
enou
ghtim
eto
dosit
estud
ies.
•Re
imbu
rsepa
rtof
bidd
ingco
stto
en
cour
agebidd
erst
opr
epareth
eiro
wnsit
estud
ies.
•Co
ntractclaus
ere
quiring
priv
ate
partne
rtopr
ovide
perfo
rman
cebon
d.•
Cont
ractclaus
estipulatingth
eco
ndition
sand
m
echa
nism
to
com
pens
atepr
ivate
sector
fora
gree
d-up
onpor
tion
ofre
med
iatio
nex
pens
es.
DRAFT
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NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 5
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Enviro
nmen
tal
liabilitiesc
reated
du
ringop
eration
•Risk
thatth
eus
eof
thepr
ojec
tsite
ov
erth
eco
ntract
term
has
resu
lted
insi
gnifica
nt
enviro
nmen
tal
liabilities(
clea
nup
or
reha
bilitation
requ
iredto
mak
eth
esit
efit
for
futu
reant
icipated
us
e).
•Pr
ivate,ifand
whe
n:-
Enviro
nmen
tal
licen
seand
en
viro
nmen
tal
man
agem
ent
plan
has
bee
nap
prov
edprio
rto
subm
ission
ofpro
posa
ls.-
Enviro
nmen
tal
licen
seand
m
anag
emen
tplan
hav
eno
tbee
nap
prov
edprio
rto
subm
ission
ofpro
posa
ls—lia
bilityis
limite
dto
am
ount
es
timated
in
thepr
opos
al.
•Gov
ernm
ent,if
andwhe
n:-
Enviro
nmen
tal
licen
seand
m
anag
emen
tplan
hav
eno
tbee
nap
prov
edprio
rto
subm
ission
ofpro
posa
ls—lia
bilityfo
ran
yex
cess
over
inve
stor
’spr
opos
ed
estim
ate.
•Priv
atepa
rtne
risa
bleto
man
age
theus
eof
theas
seta
ndatten
dto
its
maint
enan
ceand
refu
rbish
men
tac
cord
ingto
theen
viro
nmen
tal
requ
irem
entskno
wnatth
epr
opos
alst
age.
•Gov
ernm
entisb
ette
rable
tom
anag
een
viro
nmen
tal
requ
irem
entsnot
kno
wnto
bidde
rs
atth
epr
opos
alst
age.
•Dur
ingpr
ocur
emen
tpr
ivatepa
rtne
rmus
tde
mon
strate
fina
ncial
capa
cityors
uppo
rtto
de
liver
thesit
einth
estatere
quire
dby
the
gove
rnm
enta
tthe
end
of
theco
ntract.
•Gov
ernm
entt
ore
quire
sin
king
fund
sifitist
ore
sum
eth
esit
ean
dits
us
eis
liableto
resu
ltin
signific
antc
lean
-up/
re
habilitationco
st.
•Co
ntractclaus
ede
finingwha
tco
nstit
utes
en
viro
nmen
talliability
andth
em
echa
nism
to
estim
ateth
epr
ivate
partne
r’sliab
ilityand
pu
rsue
pay
men
t.•
Cont
ractclaus
ere
quiring
the
establish
men
tof
clean
-up/
re
habilitationsin
king
fu
nd.
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6 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Cultu
ralh
erita
ge•
Risk
ofc
osts
andde
lays
as
sociated
with
arch
aeolog
icaland
cu
lturalh
erita
ge
disc
over
ies.
•Gov
ernm
entt
oas
sum
eris
kon
go
vern
men
tpr
efer
redsit
e.•
Privatepa
rtne
rto
assu
meris
kon
pr
ivatepa
rtne
rpr
efer
redsit
e.
•Gov
ernm
entg
ener
allyhas
abet
ter
unde
rstand
ingof
pro
cedu
res,
andis
usua
llyin
bes
tpos
ition
to
man
ageth
isris
k.
•Re
search
cad
astral
reco
rdsa
ndobt
ain
expe
rtadv
ice.
•Con
trac
tclaus
ede
finingris
kan
dstipulatingsit
eav
ailabilitysc
hedu
le
andliq
uida
ted
dam
ages
pay
ablein
ca
seofd
elay
s.
Availabilityof
site
•Risk
thatte
nure
/ac
cessto
ase
lected
sit
ewhich
isnot
pr
esen
tlyowne
dby
gov
ernm
ent
orpriv
atepa
rtne
rca
nnot
be
nego
tiate
d.•
Risk
ofc
osts
andde
lays
in
nego
tiatin
gland
ac
quisi
tion.
•Gov
ernm
entt
oas
sum
eris
kon
go
vern
men
tpr
efer
redsit
e—pr
ivatepa
rtne
rm
ayre
main
resp
onsib
lefo
rm
anag
ingth
epr
oces
s.•
Privateto
assum
eris
kon
priv
ate
partne
rpre
ferred
sit
e.
•Ifgo
vern
men
tpre
ferred
site
:-
Gov
ernm
enth
asabet
ter
unde
rstand
ingof
pro
cedu
res,
hass
pecialpow
erso
fac
quisi
tionan
dus
eof
land
for
infra
stru
ctur
ean
dits
usu
allyin
be
stpos
ition
tom
anag
e.-
Gov
ernm
entisi
nbe
tter
pos
ition
to
neg
otiate
whe
repolicy
disc
ourage
suse
ofc
ompu
lsory
acqu
isitio
npo
wer
.
•Ifpr
ivatepr
efer
redsit
e:-
Privatepa
rtne
risi
nco
ntro
lof
sitese
lection.
•Re
search
cad
astral
reco
rdsa
ndobt
ain
expe
rtadv
ice.
•Ifgo
vern
men
tpr
efer
redsit
e:
com
plet
eland
ac
quisi
tionpr
iort
opr
opos
alst
age.
•Ifpr
ivatepr
efer
red
site:obligebidd
erst
ose
cure
acc
essp
riort
oco
ntractsi
gning.
•Co
ntractclaus
estipulatingsit
eav
ailabilitysc
hedu
le
andliq
uida
ted
dam
ages
pay
ablein
ca
seofd
elay
s.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Desi
gn, c
onst
ruct
ion
and
com
mis
sion
ing
risk
Des
ign
•Risk
thatth
ede
sign
ofth
efacilityis
subs
tand
ard,
unsa
fe,o
rinca
pableof
de
liver
ingth
ese
rvices
att
he
antic
ipated
cos
tan
dsp
ecified
leve
lof
service(o
ften
resu
lting
inlo
ng
term
increa
sein
re
curren
tcos
ts
andlong
-ter
m
inad
equa
cyof
service).
•Pr
ivate-
priv
ate
partne
rwillbe
resp
onsib
le
exce
ptw
here
an
exp
ress
gove
rnm
ent
man
date
dch
ange
has
ca
used
the
desig
neff
ect.
•Pr
ivatepa
rtne
rhas
mor
eex
perie
nce,kno
wledg
ean
dco
ntro
lov
erth
eva
riables
thatdet
erm
ine
thequ
ality
oft
hedes
ign(i.e.,
expe
rienc
e,com
pete
ntst
aff,e
tc.).
•En
sure
thatth
efeas
ibilityst
udy
isav
ailablewell
inadv
ance
oft
he
proc
urem
entp
roce
ss
toade
quatelyinfo
rm
thede
signpr
oces
s.•
Inco
rpor
atestric
tex
perie
ncean
dco
mpe
tenc
yre
quire
men
tsin
the
proc
urem
entp
roce
ss.
•Pr
ivatepa
rtne
rmay
tran
sfer
risk
tobuilder
/arch
itectsa
ndoth
er
subc
ontrac
torsw
hile
maint
aining
prim
ary
liability;gov
ernm
ent
hast
herigh
tto
abatese
rvicech
arge
pa
ymen
tsw
here
the
prob
lem
can
notb
esu
itablyre
med
ied
•Co
ntractclaus
ere
quiring
pe
rform
ance
bon
d.•
Cont
ractclaus
estipulatingliq
uida
ted
dam
ages
.
DRAFT
Draft Version as of 4 August 2014
8 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Cons
truc
tion
•Risk
thateve
nts
occu
rdur
ing
cons
truc
tionwhich
pr
even
tthe
facility
beingde
liver
edon
timean
don
cos
t.
•Pr
ivateex
cept
whe
n:-
Theev
entis
onefo
rwhich
re
liefa
sto
timeor
cos
tor
bot
hare
spec
ifica
lly
grou
nded
un
dert
he
cont
ract,
such
asf
orce
m
ajeu
reor
gove
rnm
ent
inte
rven
tion.
-Insi
tuations
whe
nth
ete
chnica
lor
geolog
ical
com
plex
ity
(fore
xam
ple,
tunn
els)
prev
ents
from
hav
ing
suffi
cien
tan
dre
liable
info
rmation
tom
easu
re
risk,th
ego
vern
men
tm
ayassum
epa
rtoft
herisk
.
•Pr
ivatepa
rtne
rhas
mor
eex
perie
nce,kno
wledg
ean
dco
ntro
lov
erth
eva
riables
thatin
fluen
ce
cons
truc
tionco
stand
con
trol
over
con
stru
ctionpr
oces
s(i.e
.,sc
hedu
le,e
quipm
ent,m
ater
ials
andte
chno
logy
,etc.)-th
isas
sum
es
thatpriv
atepa
rtne
rhas
eno
ugh
info
rmationto
estim
ateco
stsa
nd
starto
peratio
nsonsc
hedu
leand
as
plan
ned.
•A
possibleexc
eptio
nis
in
cont
ractua
llyagr
eedup
on
situa
tions
thatclassify
as
forcem
ajeu
reorg
over
nmen
tinte
rven
tion.
•Inco
rpor
atestric
tex
perie
ncean
dco
mpe
tenc
yre
quire
men
tsin
the
proc
urem
entp
roce
ss.
•En
sure
thatfe
asibility
stud
yis
availablewell
inadv
ance
oft
he
proc
urem
entp
roce
ss.
•Pr
ivatefir
mgen
erally
willent
erin
toafixe
dte
rm,fi
xedpr
ice
build
ingco
ntract
topas
sthe
risk
to
abu
ilder
with
the
expe
rienc
ean
dre
sour
cest
oco
nstruc
tso
ast
osa
tisfy
thepr
ivatefir
m’s
oblig
ations
und
erth
eco
ntract.
•Co
ntractclaus
ere
quiring
pe
rform
ance
bon
d.•
Cont
ractclaus
estipulatingliq
uida
ted
dam
ages
.•
Cont
ractcos
tove
rrun
gu
aran
teefo
rco
mplex
stru
ctur
es.
Com
miss
ioning
•Risk
thateith
er
theph
ysicalor
theop
erationa
lco
mm
issioning
te
stsw
hich
are
re
quire
dto
be
com
plet
edfo
rth
epr
ovisi
on
ofse
rvices
to
com
men
ce,c
anno
tbe
succ
essfully
com
plet
ed.
•Pr
ivate-
alth
ough
go
vern
men
twillassum
ean
ob
ligationto
co
oper
atean
dfacilitatepr
ompt
pu
blicse
ctor
atte
ndan
ceon
com
miss
ioning
te
sts.
•Pr
ivatepa
rtne
risi
nco
ntro
loft
he
desig
nan
dco
nstruc
tionpr
oces
san
dits
inpu
ts,a
ndth
erefor
ebe
tter
po
sitione
dto
man
ageth
eris
k.
•Inco
rpor
atestric
tex
perie
ncean
dco
mpe
tenc
yre
quire
men
tsin
the
proc
urem
entp
roce
ss.
•Co
ntractclaus
ere
quiring
a
perfo
rman
cebon
d.•
Cont
ractclaus
estipulating
liquida
tedda
mag
es
(unt
ilallp
hysic
al
andop
erationa
lco
mm
issioning
tests
passed
).
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 9
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Spon
sor a
nd F
inan
cial
Ris
k
Inte
restra
tesp
re-
com
plet
ion
•Risk
thatprio
rto
com
plet
ionloca
lcu
rren
cyin
tere
st
rate
smay
mov
ead
versely.
•Gov
ernm
ent
•Gov
ernm
enth
asm
oreex
perie
nce
andinfo
rmationre
gard
ingth
efactor
sinfl
uenc
ingloca
lcur
renc
yinte
restra
tesa
ndis
inbet
ter
posit
ionto
man
ageris
k.
•Co
nstruc
tionloan
inte
restra
tehed
ging
instru
men
t(ifan
dwhe
nav
ailable).
•Co
ntractclaus
ede
finingm
echa
nism
to
com
pens
ate
privatefo
rint
eres
trate
cha
nges
dur
ing
cons
truc
tion.
Inte
restra
tesp
ost
com
plet
ion
•Risk
thatafte
rco
mplet
ioninte
rest
rate
smay
mov
ead
versely.
•Pr
ivate
•Pr
ivatepa
rtne
rinco
ntro
lof
selectingan
darrang
inglong
-ter
m
finan
cing
.
•Inte
restra
tehed
ging
instru
men
ts(for
ex
ample,in
tere
stra
te
swap
from
(IFC
).•
Arrang
efin
ancing
us
ingam
ixoffor
eign
an
dloca
lcur
renc
y.
•Co
ntractclaus
eho
ldinggo
vern
men
tha
rmless.
Exch
ange
rate
•Risk
thatdur
ing
oper
ation,
exch
ange
rate
sm
aym
ove
adve
rsely,affe
cting
thepr
ivate
partne
r’sability
tose
rvicefo
reign
deno
minated
deb
tan
dob
tainits
expe
cted
pro
fit.
•Sh
ared
Gov
ernm
entt
oas
sum
epa
rtof
itby
allo
wing
totalo
rpartia
linde
of
paym
entsto
ex
chan
gera
te.
•Pr
ivateto
assum
ere
maind
er.
•Pr
ivatepa
rtne
risi
nco
ntro
lof
selectingan
darrang
ingloca
land
fo
reigncu
rren
cym
ixfo
rlon
g-te
rm
finan
cing
.•
Gov
ernm
enth
asm
oreex
perie
nce
andinfo
rmationre
gard
ingth
efactor
stha
tinfl
uenc
eex
chan
ge
rate
s.
•Pr
ivateto
partia
lly
mitiga
tebyfin
ancing
pa
rtoft
hepro
jectin
loca
lcur
renc
y.•
Privateto
estab
lish
Fore
ignEx
chan
ge
Liqu
idity
Fac
ilityto
co
verp
arto
fthe
po
tent
ialm
ismatch
be
twee
npr
ojec
t’slo
cal
curren
cyand
fore
ign
curren
cydeb
t.•
Gov
ernm
entt
opa
rtly
tran
sfer
risk
touse
rs
byallo
wingpa
ymen
tinde
toexc
hang
erate
.
•Co
ntractclaus
ere
quiring
es
tablish
men
tofa
Fo
reignEx
chan
ge
Liqu
idity
Fac
ility.
•Ta
rifforf
acility
paym
enta
djus
tmen
tco
ntractclaus
e.
Curren
cy
conv
ertib
ilityand
pr
ofitr
epatria
tion
•Risk
thatlo
cal
curren
cycan
not
becon
verted
into
fo
reigncu
rren
cy
asare
sultof
go
vern
men
tre
stric
tions
.
•Gov
ernm
ent
•Gov
ernm
enth
asm
oreex
perie
nce
andinfo
rmationre
gard
ingth
efactor
stha
tinfl
uenc
ecu
rren
cy
conv
ertib
ility.
•Pu
rcha
separtia
lrisk
gu
aran
teefro
man
Inte
rnationa
lFinan
cing
Institu
tion.
•Co
ntractclaus
estipulatingth
at
privatepa
rtne
rca
nbe
nefit
from
th
egu
aran
teeto
co
mpe
nsatefo
rlos
ses
relate
dto
cur
renc
yco
nver
tibilityand
re
patriatio
nof
pro
fits.
DRAFT
Draft Version as of 4 August 2014
10 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Infla
tion
•Risk
thatvalue
of
paym
entsre
ceived
du
ringth
ete
rmis
er
oded
byinfla
tion.
•Sh
ared
-Gov
ernm
ent
toassum
epa
rtofitb
yallowingto
tal
orpartia
linde
of
paym
entsto
infla
tion.
-Pr
ivateto
as
sum
ere
maind
errisk
th
roug
hth
em
etho
dology
ad
opte
dto
m
aint
ain
value.
•Gov
ernm
enth
asm
oreex
perie
nce
andinfo
rmationre
gard
ingth
efactor
stha
tinfl
uenc
einfla
tion.
•Gov
ernm
entt
otran
sfer
pa
rtofitt
ous
ersb
yallowingto
talo
rpartia
linde
ofp
aym
ents
toin
flatio
nrate
.•
Gov
ernm
entt
oen
sure
its
pay
men
tsdono
tov
erco
mpe
nsate
forinfl
ationan
dto
av
oidan
ydo
uble
paym
entf
orafte
rco
stsa
djus
tmen
ts(for
ex
ample,cha
nges
in
exch
ange
rate
).
•Co
ntractclaus
ede
finingpa
ymen
tad
justm
ent
mec
hanism
s.
Fina
ncingun
available
•Risk
thatw
hen
debt
and
/ore
quity
is
requ
iredby
the
privatefir
mfo
rthe
pr
ojec
titisn
ot
availableth
enand
inth
eam
ount
sand
on
theco
ndition
san
ticipated
.
•Pr
ivate
•Pr
ivatepa
rtne
risr
espo
nsiblefo
rarrang
ingfin
ance
.•
Gov
ernm
entr
equire
sallb
idst
oha
vefu
lly
docu
men
tedfin
ancial
com
mitm
ents
with
minim
aland
ea
silyac
hiev
able
cond
ition
ality
.
•Co
ntractclaus
ere
quiring
firm
letter
sofc
reditf
rom
re
putablefin
ancial
institu
tions
.
Spon
sorr
isk•
Risk
thatth
epr
ivate
partne
risu
nable
topro
vide
the
requ
iredse
rvices
or
beco
mes
inso
lven
t.•
Risk
thatth
epr
ivate
partne
risl
ater
fo
undto
bean
im
prop
erper
son
forinv
olve
men
tinth
epr
ovisi
onof
thes
ese
rvices
.•
Risk
thatfina
ncial
dem
ands
onth
epr
ivatepa
rtne
rex
ceed
itsfi
nanc
ial
capa
citycau
sing
corp
oratefailu
re.
•Gov
ernm
ent
•Ifth
isris
km
ater
ializ
es,the
reis
no
privatepa
rtne
rtotran
sfer
theris
kto
.
•En
sure
pro
jectis
fin
anciallyre
mot
efro
mexter
nalfi
nanc
ial
liabilities.
•En
sure
ade
quac
yof
fin
ance
sund
erlo
an
facilitieso
rspo
nsor
co
mm
itmen
ts
supp
orte
dby
pe
rform
ance
bon
d.•
Ensu
reade
quac
yof
fin
ance
sthr
ough
the
useof
non
-fina
ncial
evalua
tioncrite
ria
anddu
edilig
ence
on
privatepa
rtne
r.
•Co
ntractclaus
ere
quiring
a
perfo
rman
cebon
dan
dletter
sofc
redit.
•Co
ntractclaus
ere
quiring
minim
um
liquidityand
deb
tratio
s.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 11
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Furthe
rfina
nce
requ
ireddu
eto
go
vern
men
taction
•Risk
thatbyre
ason
of
acha
ngeinla
w,
polic
yor
oth
er
even
tadd
ition
al
fund
ingis
need
ed
tore
build
,alte
r,re
-equ
ipetc.,t
he
facilitywhich
ca
nnot
beob
tained
by
thepr
ivatefir
m
(resu
lting
inno
fund
ingav
ailable
tocom
plet
efu
rthe
rwor
ksre
quire
dby
go
vern
men
t).
•Gov
ernm
ent
take
srisk
that
privatefin
ance
is
unav
ailable-
ho
wev
er,
privatepa
rtne
rto
assum
ebe
st
ende
avor
sob
ligationto
fu
ndata
gree
drate
ofr
etur
nwith
opt
ionon
go
vern
men
tto
pay
viaan
increa
sein
fees
ov
erth
eba
lanc
eof
thete
rmviaa
sepa
rate
cap
ital
cont
ribut
ion.
•Gov
ernm
enth
asm
oreinfo
rmation
andis
better
pos
ition
edto
man
age
risk.
•Gov
ernm
entt
osa
tisfy
itselfa
stolik
elihoo
dof
nee
darisi
ng,
likelycritica
lityifit
does
aris
e,and
ast
ofin
ancialcap
acity
of
privateto
fina
nce
and(ifapp
ropr
iate
)bu
dget
allo
catio
nifgo
vern
men
tis
requ
iredto
fund
it.
•Co
ntractclaus
eof
be
stend
eavo
rs
oblig
ationby
priv
ate
tofu
ndw
ithopt
ion
ongov
ernm
entt
oco
mpe
nsateviafee
increa
seorc
apita
lco
ntrib
ution.
•Co
ntractclaus
epr
ovidingabu
y-ou
t(pu
t)op
tionor
te
rminationwith
co
mpe
nsationfo
rpr
ivate,sh
ould
finan
cenot
be
obtained
and
facility
cann
otbefu
rthe
rop
erated
.
Chan
gein
owne
rship
•Risk
thatacha
nge
inowne
rshipor
co
ntro
loft
he
privatefir
mre
sults
inaw
eake
ning
initsfi
nanc
ial
stan
ding
or
supp
orto
roth
er
detrim
entt
oth
epr
ojec
t.
•Sh
ared
-Gov
ernm
ent
riskas
to
thead
verse
cons
eque
nce
ofacha
ngeif
itoc
curs.
-Pr
ivatefir
m
riskth
atits
com
mer
cial
objectives
may
be
inhibite
dby
are
stric
tive
requ
irem
ent
for
gove
rnm
ent
cons
entt
och
ange
.
•Ifch
ange
occ
urs,
theab
ilityof
privatepa
rtne
rtom
anag
eris
kis
dim
inish
ed.
•Pr
ivatepa
rtne
rwou
ldhav
eto
ac
cept
requ
irem
entt
osig
nag
reem
ent,he
nceifco
ndition
is
nota
ccep
table,itw
ouldw
alkaw
ay
from
thepr
ojec
t.
•Gov
ernm
ent
requ
irem
entf
orits
cons
entp
riort
oan
ych
ange
incon
trol.
•Pr
ivatefir
mw
illse
ek
tolim
itth
isco
ntro
lto
circum
stan
cesw
here
su
bstant
iveiss
uesa
re
ofcon
cern
such
as
finan
cialcap
acity
and
pr
obity
.
•Co
ntractclaus
ere
quiring
gov
ernm
ent
cons
entp
riort
oan
ych
ange
incon
trol,
andpr
oviding
abilityto
influ
ence
or
pre
vent
cha
nge
onlyin
spec
ific
circum
stan
ces.
DRAFT
Draft Version as of 4 August 2014
12 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Refin
ancing
ben
efit
•Risk
(ups
ide)th
at
atcom
plet
ion
oroth
erst
age
inpro
ject
deve
lopm
entt
he
projec
tfina
nces
ca
nbe
restru
ctur
ed
tom
ater
ially
re
duce
the
projec
t’sfina
nce
cost.
•Pr
ivatepa
rtne
rto
bene
fit.
•Gov
ernm
entt
osh
areinlim
ited
circum
stan
ces
(i.e.,s
ymm
etric
al
riskalloca
tion
andsu
per
profi
ts).
•Sim
ilart
ointe
restra
terisk
-priv
ate
partne
rhas
con
trolove
rits
choice
oflon
gte
rmfina
ncing-
if
downs
idebu
rden
isplace
don
pr
ivatepa
rtne
r,sa
mepr
inciple
appliest
oup
side(sym
met
ricalrisk
alloca
tion)
.
•Gov
ernm
entt
oas
sure
its
elft
hatlikelybe
nefit
ha
sbee
nfactor
ed
into
com
petit
ivebids
to
avo
idth
eris
kth
at
thepr
ivatefir
mw
ill
beallo
wed
toearn
supe
rpro
fitsf
rom
the
projec
t.
•Co
ntractclaus
es
spellin
gou
tcircum
stan
cesw
here
go
vern
men
tist
osh
arean
datw
hat
rate
.
Taxch
ange
s•
Risk
thatbefor
eor
afte
rcom
plet
ion
thetaxim
poston
thepr
ivatefir
m,
itsasset
soro
nth
epr
ojec
t,will
chan
ge.
•Pr
ivateifan
dwhe
n:-
Taxincrea
ses
ornew
taxe
sarisi
ngfr
om
gene
ral
chan
gesi
ntax
law.
•Gov
ernm
ent,if
andwhe
n:-
Taxincrea
ses
ornew
taxe
sarisi
ngfr
om
disc
riminator
ych
ange
sintax
law.
•Gen
eralcha
nges
inta
xlawaffe
ctall
busin
esse
sinth
eco
untry.
•Th
ego
vern
men
tisi
nbe
tter
po
sitionto
influ
ence
spec
ific
disc
riminator
ytaxlawcha
nges
aff
ectin
gth
epr
ojec
t.
•Pr
ivatepa
rtne
rto
inco
rpor
ateinpro
ject
due-
dilig
ence
-fin
ancialre
turn
soft
he
privatepa
rtne
rsho
uld
besu
fficien
ttowith
stan
dge
neraltax
law
chan
ges.
•Co
ntractclaus
epr
oviding
com
pens
ationte
rms
ford
iscrim
inator
ych
ange
sintaxlaw.
•Co
ntractclaus
epr
ovidingabu
y-ou
t(pu
t)op
tionor
te
rminationwith
co
mpe
nsationfo
rpr
ivatepa
rtne
rwhe
nno
oth
er
com
pens
ation
mec
hanism
is
available.
Ope
ratin
g Ri
sk
Inpu
ts•
Risk
thatre
quire
dinpu
tscos
tmor
eth
anant
icipate,
areof
inad
equa
te
quality
ora
re
unav
ailablein
requ
iredqu
antit
ies.
•Pr
ivateex
cept
whe
n:-
Gov
ernm
ent
cont
rols
inpu
ts
(fore
xam
ple,
water
ca
tchm
ent).
•Pr
ivatepa
rtne
risi
nco
ntro
loft
he
selectionof
inpu
ts.
•Pr
ivatepa
rtne
rmay
m
anag
eth
roug
hlong
te
rmsu
pplycon
trac
ts
whe
requa
lity/
quan
tity
canbe
assur
ed.
•Pr
ivatepa
rtne
rcan
ad
dres
stoso
me
exte
ntin
itsf
acility
desig
n.
•Co
ntractclaus
eim
posin
gpe
nalties
fo
rbre
achof
spec
ific
andwell-d
efine
dpe
rform
ance
and
qu
ality
spec
ifica
tions
.•
Cont
ractclaus
eon
co
mpe
nsationto
pr
ivatefo
rissue
sattribut
ableto
go
vern
men
t-su
pplie
dinpu
ts.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 13
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Maint
enan
ceand
re
furb
ishm
ent
•Risk
that
desig
nan
d/or
con
stru
ction
quality
is
inad
equa
te
resu
lting
inhighe
rth
anant
icipated
m
aint
enan
ceand
re
furb
ishm
entc
ost.
•Pr
ivate
•Pr
ivatepa
rtne
risi
nco
ntro
lof
desig
nan
dco
nstruc
tionpr
oces
ses.
•Priv
atefir
mto
man
age
thro
ughlong
-ter
m
subc
ontrac
tsw
ith
suita
blyqu
alified
an
dre
sour
cedsu
b-co
ntractor
s.
•Co
ntractclaus
eim
posin
gpe
nalties
(and
pos
sible
term
ination)
forn
ot
mee
tingsp
ecific
andwelld
efine
dpe
rform
ance
,lev
elof
service,and
qua
lity
spec
ifica
tions
.•
Cont
ractclaus
ere
quiring
pe
rform
ance
bon
dfro
mpriv
ate.
Chan
gesi
nou
tput
sp
ecifica
tionou
tside
agre
edsp
ecifica
tion
rang
e
•Risk
that
gove
rnm
ent’s
ou
tput
re
quire
men
ts
arech
ange
dafte
rcon
trac
tsig
ning
whe
ther
pr
eor
pos
tco
mm
issioning
.•
Chan
geprio
rto
com
miss
ioning
m
ayre
quire
a
desig
nch
ange
with
cap
italc
ost
cons
eque
nces
on
thesig
nific
ance
of
thech
ange
and
its
pro
xim
ityto
co
mplet
ion.
•Ch
ange
afte
rco
mplet
ionm
ay
have
acap
italc
ost
cons
eque
nceor
a
chan
gein
recu
rren
tco
stonly(fo
rex
ample,w
here
an
increa
sein
out
put
requ
irem
entscan
be
acc
omm
odated
with
inexisting
facilityca
pacity).
•Gov
ernm
ent
•Gov
ernm
entisi
nbe
tter
pos
ition
to
man
agean
dm
itiga
teth
eoc
curren
ceoft
herisk
.
•Gov
ernm
entt
om
inim
izeth
ech
ance
of
itss
pecific
ations
ch
anging
and
,toth
eex
tent
they
muc
hch
ange
,itw
illens
ure
thede
signis
likelyto
ac
com
mod
ateitat
leas
texp
ense
;thisw
ill
invo
lveco
nsider
able
timean
deff
ort
insp
ecify
ingth
eou
tput
supfro
ntand
plan
ning
like
lyout
put
requ
irem
entsove
rthe
te
rm.
•Co
ntractclaus
eof
be
stend
eavo
rs
oblig
ationby
priv
ate
tofu
ndw
ithopt
ion
ongov
ernm
entt
oco
mpe
nsateviafee
increa
seorc
apita
lco
ntrib
ution.
•Co
ntractclaus
epr
ovidingabu
y-ou
t(pu
t)op
tionor
te
rminationwith
co
mpe
nsationfo
rpr
ivate,sh
ould
finan
cenot
be
obtained
and
cha
nge
mak
espro
ject
unviab
le.
DRAFT
Draft Version as of 4 August 2014
14 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Ope
rato
rfailure
•Risk
thata
subc
ontrac
top
erator
may
fail
finan
ciallyorm
ay
failto
pro
vide
dco
ntracted
service
tosp
ecifica
tion
(failu
rem
ay
lead
tose
rvice
unav
ailabilityan
dane
edto
mak
ealte
rnatede
liver
yarrang
emen
tsw
ith
corres
pond
ingco
st
cons
eque
nce).
•Pr
ivate
•Pr
ivatepa
rtne
risf
ullyand
pr
imarily
liab
lefo
rallob
ligations
to
gov
ernm
entirres
pectiveof
whe
ther
ithas
pas
sedth
eris
kto
a
subc
ontrac
tor.
•Gov
ernm
entt
oca
rry
outd
uedilige
nce
onprin
cipa
lsu
bcon
trac
tors
forp
robityand
fin
ancialcap
acity
an
dco
mm
issiona
lega
lrev
iewoft
he
major
subc
ontrac
tors
includ
ingth
egu
aran
tees
oro
ther
as
suranc
esta
kenby
th
epr
ivatepa
rtne
r;if
failu
redoe
socc
urth
epr
ivatepa
rtne
rmay
re
plac
eth
eop
erator
or
gov
ernm
entm
ay
requ
ireope
rato
rre
plac
emen
t.
•Co
ntractclaus
eim
posin
gpe
nalties
(and
pos
sible
term
ination)
forn
ot
mee
tingsp
ecific
andwelld
efine
dpe
rform
ance
,lev
elof
service,and
qua
lity
spec
ifica
tions
.•
Cont
ractclaus
ere
quiring
pe
rform
ance
bon
dfro
mpriv
atepa
rtne
r.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 15
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Tech
nica
lob
solesc
ence
or
inno
vatio
n
•Risk
oft
he
cont
racted
service
andits
met
hod
ofdeliver
yno
tke
epingpa
ce,fro
m
ate
chno
logica
lpe
rspe
ctive,w
ith
com
petit
ion
and/
orpub
lic
requ
irem
ents
-Pr
ivatepa
rtne
r’s
reve
nuem
ay
fallbe
low
projec
tions
eith
ervialo
ss
ofdem
and
(use
rpay
sm
odel)p
aym
ent
abatem
ent
(ava
ilability
mod
el)a
nd/o
rop
eratingco
st
increa
sing;
-Gov
ernm
ent
may
not
rece
ive
cont
racted
se
rviceat
appr
opria
te
quan
tity/
quality
.
•Pr
ivate-
-ex
cept
whe
re
cont
inge
ncyis
antic
ipated
and
go
vern
men
tag
rees
tosh
are
riskpo
ssiblyby
fund
ingare
serve.
•Pr
ivatepa
rtne
risa
bleto
use
its
exp
ertis
ean
dkn
ow-h
owto
m
inim
izeth
eris
k.
•Gov
ernm
entt
ode
velopde
taile
d,w
ell-
rese
arch
edout
put
spec
ifica
tions
.•
Privatepa
rtne
rto
deve
lopde
taile
d,
well-r
esea
rche
dde
sign
solutio
n.•
Privatepa
rtne
rmay
ha
vere
cour
seto
de
signe
r,bu
ilder
or
theirins
urer
s.•
Privatepa
rtne
rto
arrang
eco
ntinge
ncy/
re
servefu
ndto
mee
tup
grad
eco
stss
ubject
togov
ernm
ent
agre
emen
tast
ofu
ndingth
ere
serve
andco
ntro
lofr
eser
ve
fund
supo
nde
fault.
•Bo
thpartn
erst
om
onito
robligations
in
theco
ntract.
•Co
ntractclaus
eim
posin
gpe
nalties
(and
pos
sible
term
ination)
forn
ot
mee
tingsp
ecific
andwell-d
efine
dpe
rform
ance
,lev
elof
service,and
qua
lity
spec
ifica
tions
.•
Cont
ractclaus
ede
finingth
eco
ndition
re
quire
dof
thefacility
atth
een
dof
thete
rm•
Cont
ractclaus
ere
quiring
pe
rform
ance
bon
dfro
mpriv
ate.
•Con
trac
tclaus
esp
ecify
ingm
echa
nism
to
estab
lishare
serve
fund
(priv
ate,pub
lic-
private,pub
lic).
DRAFT
Draft Version as of 4 August 2014
16 NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Dem
and
risk
Dem
andris
k•
Risk
thatope
ratin
gre
venu
esfa
llbe
low
fore
castasa
resu
ltof
dec
reas
eof
se
rvicevo
lum
e(i.e.,traffi
cvo
lum
e,
water
orp
ower
co
nsum
ption)
attribut
ableto
an
eco
nom
ic
downt
urn,ta
riff
increa
seorc
hang
eincon
sum
erhab
its.
•Pr
ivateex
cept
whe
n:-
Unc
ertainty
indem
and
fore
castis
su
chth
at
prov
idingan
av
ailability
paym
ent
elem
enta
nd/
oram
inim
um
reve
nue
guaran
teeis
nece
ssaryto
attrac
tpriv
ate
inve
stm
ent
(fore
xam
ple,
gree
nfieldto
llro
ad),inw
hich
ca
se,the
go
vern
men
twillsh
are
inth
eris
kth
roug
han
av
ailability
paym
ento
ram
inim
um
reve
nue
guaran
tee.
•W
hende
man
dca
nbe
estim
ated
with
relativ
ece
rtaint
y,th
epr
ivate
partne
risi
nbe
tter
pos
ition
to
mitiga
terisk
thro
ughco
mm
ercial
man
agem
entp
ractices
.•
Whe
regov
ernm
entist
heprim
ary
off-tak
eitha
sbet
terinf
orm
ationto
m
anag
eris
k.
•Gov
ernm
enta
nd
privateto
per
form
inde
pend
entm
arke
tde
man
dan
alys
es
com
men
surate
with
pr
ojec
tsca
leand
ch
arac
teris
tics.
•W
here
use
rspay
pr
ivatepa
rtne
rwill
ensu
rero
bustfina
ncial
stru
ctur
ean
dfin
ancier
su
ppor
t.-
Adeq
uate
deb
tco
verage
-Ad
equa
tere
serves
-Cr
edit
enha
ncem
ent
insu
ranc
e
•Co
ntractclaus
estipulatingth
eav
ailabilitypa
ymen
tor
mec
hanism
to
establish
minim
um
reve
nuepa
ymen
ts.
Non
-tec
hnicallo
sses
(ta
riffavo
idan
ce)
•Risk
ofa
por
tionof
us
erso
rcus
tom
ers
notp
ayingor
ev
adingpa
ymen
tfo
rser
vice
,lea
ding
to
ash
ortfa
llin
cash
flow
s.
•Pr
ivate,exc
ept
whe
n:-
Ther
eis
limite
dsc
ope
forp
rivateto
stop
service
orpur
sue
paym
ent(
for
exam
ple,
service
deliv
eryor
pa
ymen
tco
llectionis
cont
rolle
dby
go
vern
men
t).
•Pr
ivatese
ctor
has
bet
tera
cces
sto
info
rmationne
eded
toid
entif
yno
n-pa
ying
use
rsand
stop
/co
ntinue
serviceto
them
.
•Pr
ivatefir
mto
inco
rpor
atem
easu
res
(tech
nologica
l,bu
sines
spro
cesses
,an
dot
herw
ise)t
oiden
tifyno
n-pa
ying
cu
stom
ersa
ndpre
vent
an
dde
tern
on-
paym
ent.
•Co
ntractclaus
egiving
theab
ilityto
pr
ivatepa
rtne
rto
stop
serviceto
non
-pa
ying
cus
tom
ers
andstipulatingth
em
echa
nism
sava
ilable
tocollectpay
men
t.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 17
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Net
wor
k an
d in
terf
ace
risk
With
draw
alof
supp
ortn
etwor
k•
Risk
that,w
here
the
facilityre
lieso
na
com
plem
entary
gove
rnm
ent
netw
ork,th
at
supp
ortis
with
draw
nor
va
riedad
versely
affec
tingth
epr
ojec
t.
•Gov
ernm
ent,
whe
reth
ech
ange
disc
riminates
ag
ains
tthe
pr
ojec
t.
•Gov
ernm
entisi
nco
ntro
lof
com
plem
entarynet
wor
km
anag
emen
t.
•Gov
ernm
entt
oco
nduc
ttho
roug
hne
twor
kplan
ning
pr
oces
swhe
nde
veloping
pro
ject
conc
ept.
•Co
ntractclaus
ede
finingwha
tco
nstit
utes
unf
air
disc
rimination
agains
tthe
pro
ject
andsp
ecify
ing
mec
hanism
sto
com
pens
atepr
ivate
(fore
xam
ple,
liquida
tedda
mag
es).
Chan
gein
co
mpe
titivene
twor
k•
Risk
thatan
exist
ingne
twor
kis
exte
nded
/ch
ange
d/re
-pric
ed
soast
oincrea
se
com
petit
ionfo
rthe
facility.
•Pr
ivateex
cept
whe
n:-
Chan
gesa
re
disc
riminator
yag
ains
tthe
pr
ojec
t.-
Com
petit
ionis
gove
rnm
ent-
subs
idized
(fo
rexa
mple,
aco
mpe
ting
toll-fre
ero
ad
onth
esa
me
corridor
).
•Gov
ernm
entm
anag
esnet
wor
kallowingitto
influ
ence
the
mater
ializ
ationof
net
wor
kris
kan
dits
con
sequ
ence
s.
•Gov
ernm
entt
oco
nduc
ttho
roug
hne
twor
kplan
ning
whe
nde
veloping
pr
ojec
tcon
cept
.•
Privatefir
mto
review
lik
elyco
mpe
titionfo
rse
rvicean
dba
rriersto
en
trypr
iort
oen
terin
gag
reem
ent.
•Pr
ivatefir
mw
ill
seek
com
pens
ation
agains
tcha
ngewhich
un
fairlydisc
riminates
ag
ains
tthe
pro
ject
bygov
ernm
ent
subs
idizing
com
petit
ion(existing
ornew
).
•Co
ntractclaus
eto
pr
ovidepr
ivate
partne
rwith
non
-co
mpe
tepro
tections
an
dco
mpe
nsation
mec
hanism
s.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 18
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Inte
rface
(1)
•Risk
thatth
ede
liver
yof
cor
ese
rvices
ina
way
which
is
nots
pecifie
d/
antic
ipated
inth
eco
ntractadv
erse
ly
affec
tsth
ede
liver
yof
con
trac
ted
services
.
•Pr
ivateex
cept
whe
n:-
Chan
ges
invo
lve
disc
riminator
yto
the
projec
t—go
vern
men
tto
pro
vide
co
mpe
nsation.
•Gov
ernm
entm
anag
escor
ese
rvice
activ
ities
allo
wingitto
influ
ence
th
em
ater
ializ
ationof
inte
r-face
risk
an
dits
con
sequ
ence
s.
•Gov
ernm
entt
oco
nduc
ttho
roug
hsy
stem
plann
ingwhe
nde
veloping
pro
ject
conc
ept.
•Upf
ront
asses
smen
t(b
ybo
thgov
ernm
ent
andpr
ivatepa
rtne
r)of
lik
elyinte
rface
issu
es.
•Co
ntinuo
usre
view
an
dm
onito
ring
deve
lopm
entsof
aco
mm
unications
strate
gyin
resp
ecto
fde
liver
yof
thetw
ore
late
dse
rvices
.
•Co
ntractclaus
eto
sp
ecify
theex
tent
of
core
services
and
the
way
inw
hich
they
willbede
liver
edso
th
atonlym
anife
st
andad
versech
ange
san
dde
ficienc
iesc
an
trigge
rthisr
isk.
•Co
ntractclaus
ede
fining
com
pens
ation
mec
hanism
forp
rivate
partne
r.
Inte
rface
(2)
•Risk
thatth
ede
liver
yof
co
ntracted
services
ad
verselyaff
ects
thede
liver
yof
co
rese
rvices
inam
anne
rno
tspe
cifie
d/an
ticipated
inth
eco
ntract.
•Pr
ivate
•Pr
ivatefir
mm
anag
escon
trac
ted
serviceac
tivities
.•
Upf
ront
asses
smen
t(by
bo
thgov
ernm
enta
nd
thepr
ivatepa
rtne
r)of
lik
elyinte
rface
issu
es.
•Co
ntinuo
usre
view
an
dm
onito
ringan
dde
velopm
ento
fa
com
mun
ications
strate
gyin
resp
ecto
fde
liver
yof
thetw
ore
late
dse
rvices
.
•Co
ntractclaus
ere
quiring
a
perfo
rman
cebon
dan
dsp
ecify
ing
liquida
tedda
mag
es.
Indu
stria
l rel
atio
ns ri
sk
Indu
stria
lrelations
•Risk
ofs
trikes
or
indu
stria
laction
caus
ingde
layan
dco
stto
thepr
ojec
t.
•Pr
ivate
•Pr
ivatepa
rtne
rhas
bet
ter
info
rmationab
outa
ndcon
trolove
rth
eca
uses
ofind
ustriala
ction.
•Pr
ivatepa
rtne
r(or
its
sub-
cont
ractor
s)
man
ages
pro
ject
deliv
eryan
dop
erations
.
•Co
ntractclaus
ere
quire
men
tpay
men
tof
liqu
idated
dam
ages
to
gov
ernm
ent.
Legi
slat
ive
and
gove
rnm
ent p
olic
y ris
k
Appr
ovals
•Risk
thatadd
ition
al
appr
ovals
requ
ireddu
ring
theco
urse
oft
he
projec
tcan
notb
eob
tained
.
•Pr
ivate,exc
ept
whe
n:-
Gov
ernm
ent
hasi
nitia
ted
thech
ange
re
quiring
ap
prov
al.
•Gov
ernm
entisi
nbe
tter
pos
ition
to
man
agean
dm
itiga
teth
eoc
curren
ceoft
herisk
.
•Priv
ateto
ant
icipate
requ
irem
ents
•Co
ntractclaus
eto
spec
ifypriv
ate
partne
rcom
pens
ation
mec
hanism
(for
ex
ampleliq
uida
ted
dam
ages
).
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 19
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Chan
gesi
nlaw/
polic
y•
Risk
ofa
cha
nge
inla
w/p
olicyof
go
vern
men
tonly,
which
cou
ldnot
be
ant
icipated
at
cont
ractsi
gning
andwhich
has
ad
verseca
pital
expe
nditu
reor
oper
atingco
st
cons
eque
nces
for
thepr
ivatefir
m.
•Pr
ivateifan
dwhe
n:-
Chan
geso
ccur
ingen
eral
lawand
are
no
tpro
ject
orse
rvice
spec
ific.
•Gov
ernm
entif
andwhe
n:-
Chan
gesa
re
disc
riminator
yan
ddire
cted
sp
ecially
and
ex
clus
ivelyat
thepr
ojec
tor
these
rvices
.
•Gen
eralcha
nges
inla
waffe
ctall
busin
esse
sinth
eco
untry.
•Gov
ernm
entisi
nbe
tter
pos
ition
to
influ
ence
spec
ificdisc
riminator
ytaxlawcha
nges
affe
ctingth
epr
ojec
t.
•Pr
ivatepa
rtne
rto
inco
rpor
ateinpro
ject
due-
dilig
ence
-fin
ancialre
turn
sof
thepr
ivatepa
rtne
rsh
ouldbesu
fficien
tto
with
stan
dge
nerallaw
/po
licych
ange
s.•
Gov
ernm
entt
om
onito
rand
lim
it(w
here
and
pos
sible)
chan
gesw
hich
may
ha
veth
eseeff
ectsor
cons
eque
nces
onth
epr
ojec
t.•
Gov
ernm
entt
ore
quire
th
epr
ivatefir
mto
eff
ectt
hecha
ngeina
way
thatth
efin
ancial
effec
tongo
vern
men
tinm
inim
ized
(for
ex
ample,pay
ona
prog
ressivesc
ale);
•Gov
ernm
entt
opa
ss
thro
ughto
end
use
rs
•Co
ntractclaus
eallowing
com
pens
ationto
pr
ivateinapre
-sp
ecified
form
ula.
•Co
ntractclaus
eto
allowpas
sthr
ough
to
endus
ers.
Regu
latio
n•
Risk
thatw
here
th
ereis
astatut
ory
regu
lato
rinv
olve
dth
erearepr
icing
oroth
ercha
rges
im
pose
don
the
privatefir
mw
hich
do
not
refle
ct
itsin
vestm
ent
expe
ctations
.
•Pr
ivateex
cept
whe
n:-
Tariff
sand
pa
ymen
tsare
pr
e-sp
ecified
inth
eco
ntract.
•Th
epr
ivatepa
rtne
rhas
theab
ility
tound
ertake
itso
wnas
sessm
ento
fth
ere
gulato
rysy
stem
.
•Pr
ivatefir
mto
asses
sre
gulato
rysy
stem
and
m
aym
akeap
prop
riate
re
pres
entatio
ns.
•Co
ntractclaus
eto
sp
ecify
whe
ther
pa
ymen
twillbe
subjec
ttore
gulato
ror
not,an
difno
t,sp
ecify
m
echa
nism
tose
tand
ad
justta
riffs
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 20
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Forc
e m
ajeu
re ri
sk
Forcem
ajeu
re•
Risk
thatin
ability
tom
eetc
ontrac
ted
servicede
liver
y(p
reorp
ost
com
plet
ion)
is
caus
edbyre
ason
of
forcem
ajeu
re
even
ts.
•Priv
atetake
sris
kof
lossor
dam
ageto
the
asse
tand
lossof
reve
nuewhe
nris
kis
insu
rable
(fore
xam
ple,
earthq
uake
,flo
ods,
firean
ddr
ough
t).•
Gov
ernm
ent
take
som
eris
kof
service
disc
ontin
uity
both
ast
oco
ntracted
se
rvicean
dco
rese
rvice
whe
nris
ksare
un
insu
rable(i.e.,
terror
ismacts,
war,c
ivilun
rest,
etc.).
•Pr
ivatepa
rtne
rcan
buy
insu
ranc
efro
mth
em
arke
tplace
—co
mm
ercial.
•Gov
ernm
entisb
ette
rpos
ition
edto
m
anag
eun
insu
rableris
ks.
•Pr
ivateto
pur
chas
einsu
ranc
efo
rins
urab
le
risks
.•
Ifun
insu
rable,priv
ate
firm
may
self-
insu
reby
establish
ingre
serve
fund
ing.
•Ifun
insu
rable,
gove
rnm
entt
oes
tablish
con
tinge
ncy
fora
ltern
atese
rvice
deliv
ery.
•Co
ntractclaus
eto
ex
pres
slydefi
ne
even
tsth
atw
ill
cons
titut
eac
tsofG
od
andpo
liticalfo
rce
majeu
reeve
nts.
•Co
ntractclaus
eto
re
lieve
priv
atefro
m
cons
eque
nces
of
servicedisc
ontin
uity.
•Co
ntractclaus
eto
requ
ireth
atif
insu
rable,priv
ate
mus
tens
ure
availabilityof
insu
ranc
epr
ocee
ds
towards
asset
re
pairan
dse
rvice
resu
mpt
ionan
dgo
vern
men
tist
obe
give
nth
ebe
nefit
of
insu
ranc
efo
rser
vice
disrup
tionco
sts.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 21
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Asse
t ow
ners
hip
risk
Defau
ltan
dte
rmination
•Risk
oflos
soft
he
facilityor
oth
er
asse
tsupo
nth
epr
ematur
ete
rminationof
leas
eor
oth
er
projec
tcon
trac
ts
upon
bre
achby
the
privatefir
mand
with
outa
dequ
ate
paym
ent.
•Pr
ivatefir
mw
ill
take
theris
kof
lossofv
alue
on
term
ination.
•Pr
ivatefir
mhas
mor
ekn
owledg
eof
theun
derly
ingca
uses
ofd
efau
ltan
dca
niden
tifyris
kea
rlier
than
go
vern
men
t.
•Onlyse
rious
bre
ache
sby
thepr
ivatefir
mto
lead
tote
rmination.
•Pr
ivatepa
rtne
rto
begiven
tim
ean
dop
portun
ityto
rem
edy
defaultsbyth
epr
ivate
partne
rwhich
may
lead
tote
rmination.
•Ifte
rminationoc
curs
pre-
com
plet
ion
gove
rnm
entm
ay(b
ut
need
not
to)m
ake
paym
entf
orvalue
in
thepr
ojec
tonaco
stto
co
mplet
eba
sis.
•Ifte
rminationoc
curs
postcom
plet
ionth
epr
ivatepa
rtne
rmay
re
ceivefairm
arke
tva
luelessallam
ount
sdu
eto
gov
ernm
ent.
•Gov
ernm
entt
ore
quire
step
inrigh
ts
toens
ureac
cessand
se
rviceco
ntinuityunt
ilow
nership/
cont
rol
issue
sare
reso
lved
.
•Co
ntractclaus
eto
defi
neopt
ions
fo
rrem
ediatio
nof
de
fault.
•Ifan
dwhe
nne
cessary,con
trac
tclau
seto
defi
ne
met
hodto
estab
lish
com
pens
ationto
pr
ivateincas
eof
te
rmination(p
reand
po
stcom
plet
ion)
.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex7 22
Risk
Defi
nitio
nPr
efer
red
Allo
catio
nRa
tiona
lePo
ssib
le M
itiga
tion
Stra
tegi
esAl
loca
tion
Inst
rum
ent
Resid
ualv
alue
on
tran
sfer
to
gove
rnm
ent
•Risk
thaton
expiryore
arlie
rte
rminationof
the
services
con
trac
tth
eas
setd
oes
noth
aveth
eva
lueor
iginally
estim
ated
by
gove
rnm
enta
twhich
thepr
ivate
partne
ragr
eedto
tran
sfer
itto
the
gove
rnm
ent.
•Pr
ivate
•Pa
rtne
rcan
inco
rpor
atelifecy
cle
maint
enan
ce,refur
bish
men
t,an
dpe
rform
ance
requ
irem
entsin
to
thede
signfacility,and
can
man
age
thes
epr
oces
sdur
ingth
ete
rmof
theco
ntract.
•Gov
ernm
entt
oim
pose
onth
epr
ivatem
aint
enan
ce
andre
furb
ishm
ent
oblig
ations
.•
Gov
ernm
entt
oen
sure
anac
cept
able
maint
enan
ce
cont
ractor
is
resp
onsib
lefo
rthe
wor
k,com
miss
ion
regu
lars
urve
ysand
insp
ectio
ns.
•Gov
ernm
entm
ay
requ
irepriv
ateto
es
tablish
aded
icated
sin
king
fund
to
accu
mulatefu
nds
suffi
cien
ttobr
ing
theas
sett
oag
reed
co
ndition
and
/or
(ifre
quire
d)obt
ain
perfo
rman
cebon
dsto
en
sure
thelia
bilityis
satis
fied.
•Co
ntractclaus
esp
ecify
ingth
eco
ndition
sinwhich
as
setsare
tobe
tran
sfer
redto
the
gove
rnm
enta
tthe
en
dof
thete
rm.
•Co
ntractclaus
es
stipulatingth
epe
rform
ance
indica
torsand
fre
quen
cyof
mon
itorin
gof
thes
eindica
tors.
•Co
ntractclaus
ere
quiring
thecrea
tion
ofasi
nkingfu
nd
tocov
erth
eco
stof
bringing
thefacility
upto
thede
sired
stan
dard
.
Sour
ce:N
ationa
lEco
nom
icand
Dev
elop
men
tAut
horit
y.
DRAFT
Draft Version as of 4 August 2014
NationalGovernmentAgencyPublic-PrivatePartnershipMANUALVolume4Annex8 1
ANNEX 8Refinancing Gains
1.0 INTRODUCTION
Sharingthegainsarisingfromarefinancingoperationisanimportantissueforthedesignandimplementationofthe
PPPcontractthathasbecomeincreasinglyrelevantoverthepastdecade.Refinancingisunderstoodasthereplacement
orrenegotiationoftheoriginalcapitalstructure,debtand/orequityoftheProjectCompanyonmorefavorableterms.
RefinancingisattractivetotheProjectCompanywheninterestratesfall(iftheProjectCompanycanbenefitfromsucha
fallunderitshedgingpolicy)orwhentheriskprofileoftheProjectCompanyhasimproved.Refinancingcantakedifferent
forms,suchas:
• Areductioninthedebtpricing;
• Extensionofthedebtmaturity;
• An increase in thegearing (i.e. theamountofdebt relative toequity).This ispossiblewhen lendersare
preparedtorelinquishsomeoftheircontractualprotectionastheperceivedprojectrisksarereduced;
• Lighterreserveaccountrequirements;or
• ThereleaseofguaranteesprovidedbytheshareholdersoftheProjectCompany,orProjectProponents,or
bythirdparties.
Refinancingwilloftenresult infinancialgainsfortheshareholdersoftheProjectCompany.Someofthegainsmaybe
justifiedby thegoodperformanceof theProjectCompany,butsomemayalsoarise frommacro-economic factorsor
lenders’greaterconfidence inaspecificPPPmarket (i.e. factorsnotattributabletotheProjectCompany). Inthiscase,
financialgainsfortheshareholdersmayappearundeservedandgiverisetopoliticaldifficulties.Asaresult,sharingthe
financialgainsfromarefinancingoperationbetweentheProjectCompanyshareholdersandtheImplementingAgency
isoftenconsideredappropriate.
CurrentpracticeistoincludedetailedprovisionsinthePPPcontractsettingoutamethodfordeterminingandsharing
thegainsfromfuturerefinancing–ratherthantorelyonbroadprinciplesandfullrenegotiationofthecontractwhen
refinancingtakesplace.TheUKstartedthetrendin2002withitsstandardizedcontractprovisionsforrefinancing.
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Othercountrieshavefollowedasimilarapproach.
Refinancingmechanismsarecomplexandtheirassessmentrequiresthesupportoffinancialandlegaladvisers.ThePPP
contractprovisionsrequirespecificdraftingthatneedstoaddressseveralstepsthatinvolve:
• CalculatingtheexpectedrefinancinggaintotheProjectCompanyshareholders(e.g.usingnetpresentvalue
techniques);determiningtheportionofthegainthatshouldbeallocatedtoeachparty(e.g.50:50split,the
ImplementingAgency’sshareincreasing,ifspecifiedtestsaremet,asintheUK,wherethemarginalrate
attains70%);and
• Decidinghowthegainsshouldbeshared(e.g.lumpsumpaymenttotheImplementingAgency,reduction
intheservicefeepayabletotheProjectCompany).
Manydetails(e.g.thediscountandinterestratestobeusedinthecalculations,andtreatmentofthepossibleimpactof
arefinancingoperationontheterminationpaymentthattheImplementingAgencymighthavetomakeinthefuture)
needtobeaddressedinthePPPcontracttoavoidsubsequentdiscussionanddisagreements.Aswithmanyotheraspects
ofPPPs,itisimportanttoanticipatetheissuesasmuchaspossibleandtosetoutdetailedprovisionsinthePPPcontract.
2.0 SAMPLE CLAUSE – REFINANCING GAINS16
2.1 REFINANCING
2.1.1 IMPLEMENTINGAGENCYmayrequesttheProjectCompanytoproceedwithaQualifyingRefinancingatany
timeaftertheEffectiveDateanduponreceiptofsuchrequestfromIMPLEMENTINGAGENCYinwriting,theProject
CompanyshallpromptlyproceedwithaQualifyingRefinancinginaccordancewiththetermsandconditionsset
outinthisclause. SPCwillhavenoobligationtoincurexternalcostsinundertakingthepreliminaryanalysisof
refinancingopportunities.
2.1.2 In the event the Project Companywishes to proceedwith a Qualifying Refinancing, the Project Company
shallobtainIMPLEMENTINGAGENCY’swrittenconsentpriortoproceedingwithanyQualifyingRefinancing,such
consentnottobeunreasonablywithheldordelayed,providedthat,theProjectCompanyhascompliedwithits
obligationsunderClauses1.1.3and[]17.IMPLEMENTINGAGENCY’sconsentinrelationtoaQualifyingRefinancing
shallbedeemedrejectedif IMPLEMENTINGAGENCYhasnotexpresslyconsentedorobjectedtotheQualifying
Refinancingwithin30daysofthedateuponwhichtheProjectCompanyhasprovidedtheinformationsetoutin
Clause[].
2.1.3 BothIMPLEMENTINGAGENCYandtheProjectCompanyshallatalltimesactingoodfaithintheperformance
oftheirobligationsunderthisclause.
2.1.4 The Project Company shall promptly provide IMPLEMENTING AGENCY with full details of any proposed
QualifyingRefinancing,includingtermsheetorotherdocumentationsettingoutthetermsandconditionsupon16ThematerialonRefinancingGainscomesfromaprojectintheMiddleEastwhichcloselymirrorstheUKapproach17Clause[]beinghypotheticaldependingoncircumstances
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whichanyFinancier(s)haveagreedtoprovidefundinginconnectionwiththeproposedQualifyingRefinancing,
a copy of the financialmodel (if any) relating to such proposed Qualifying Refinancing and the basis for the
assumptionsusedinthefinancialmodelandanestimateoftheexternalcoststheProjectCompanyanticipatesit
willincurinconnectionwiththeproposedQualifyingRefinancing.
2.1.5 IMPLEMENTING AGENCY shall, before, during and at any time after the implementation of the Qualifying
Refinancing, have rights of audit over any financialmodel and documentation related thereto (including any
aspectofthecalculationoftheRefinancingGain)whichisusedinconnectionwiththatQualifyingRefinancing.
2.2 DETERMINATION OF AMOUNT OF REFINANCING GAIN
2.2.1 TheRefinancingGainarisingfromaQualifyingRefinancingshallbetheamountthatisequaltothegreaterof
zeroand(A-B),
Where:
A = theNetPresentValueoftheDistributionsprojectedimmediatelypriortotheQualifyingRefinancing
(takingintoaccounttheeffectoftheQualifyingRefinancing,theamountandtimingofcostsincurredin
accordancewithClause[]andusingtheFinancialModelasupdated(includingastotheperformanceof
theProject)soastobecurrentimmediatelypriortotheQualifyingRefinancing)tobemadetotheProject
Proponents(withoutdoublecounting)overtheremainingtermofthisAgreementfollowingtheQualifying
Refinancing;
B = theNetPresentValueoftheDistributionsprojectedimmediatelypriortotheQualifyingRefinancing
(butwithout taking intoaccount theeffectof theQualifyingRefinancingandusingtheFinancialModel
asupdated(includingastotheperformanceattheProject)soastobecurrent immediatelypriortothe
QualifyingRefinancing)tobemadetotheProjectProponents(withoutdoublecounting)overtheremaining
termofthisAgreementfollowingtheQualifyingRefinancing.
2.2.2 IMPLEMENTINGAGENCYandtheProjectCompanywillnegotiateingoodfaithtoagreetheestimatedamount
of the Refinancing Gain and the consequential adjustment to the Treatment Charge prior to any Qualifying
Refinancingbeingimplemented.
2.2.3 Fortheavoidanceofdoubt,theconsequencesofaChangeinStatutoryRequirementsshallbedealtwithin
accordancewithArticle[]oftheAgreement.
2.3 IMPLEMENTING AGENCY’S ENTITLEMENT TO SHARE OF REFINANCING GAIN
2.3.1. Subject to Clause 1.3.2, IMPLEMENTING AGENCY’s entitlement pursuant to Clause 1.2.2 to a share of any
RefinancingGainshallbeasfollows:
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a) inrelationtotheamountofanyRefinancingGainwhichisuptobutnotexceedingUS$1million,IMPLEMENTING
AGENCYshallbeentitledtopaymentoffiftypercent(50%)ofthevalueofsuchRefinancingGain;
b) in relation to theamountofanyRefinancingGainwhich is inexcessofUS$1millionbutnotgreater than
US$2million, IMPLEMENTINGAGENCYshallbeentitledtopaymentofsixtypercent(60%)ofthevalueofsuch
RefinancingGaininexcessofUS$1million;and
c) inrelationtotheamountofanyRefinancingGainwhichisinexcessofUS$2million,IMPLEMENTINGAGENCY
shallbeentitledtopaymentofseventypercent(70%)ofthevalueofsuchRefinancingGaininexcessofUAS$2
million.
2.3.2 IntheeventofaQualifyingRefinancingthatincludesareductionoftheProjectProponents’equityparticipation
intheProjectand/oraDistributiontotheProjectProponents,ineithercasearisingdirectlyfromsuchQualifying
Refinancing,thefollowingwillprevailinrelationtoIMPLEMENTINGAGENCY’sentitlementpursuanttoClauseX:
a) intheeventthattheQualifyingRefinancingiseither(i)agreedpriortotheExpansionCommercialOperation
Dateor(ii)implementedwithinoneyearaftertheExpansionCommercialOperationDate,IMPLEMENTINGAGENCY
willbenefitfrom100%oftheRefinancingGains.
b) inthecaseofotherQualifyingRefinancingstheprovisionsofclauses1.3.1willapplysubjecttoIMPLEMENTING
AGENCYandtheProjectCompanyagreeingonanadditionalcompensationtoIMPLEMENTINGAGENCYtotake
intoaccountthebenefittotheProjectProponentsofanyreducedProjectProponents’equityparticipationinthe
ProjectCompanyand/orthereductioninexposureofProjectProponentsinrespectoftheProject.Intheeventthat
nosuchcompensationisagreedupon,noRefinancingwillbeauthorized.
2.4 METHOD OF PAYMENT OF IMPLEMENTING AGENCY’S SHARE OF REFINANCING GAIN
IMPLEMENTINGAGENCY shall receive its share of any RefinancingGain arising from aQualifying Refinancing agreed
pursuanttoClause[]asareductionintheTreatmentChargespayableovertheremainingContractPeriod.
2.5 DISPUTES
IfthePartiesfailwithin90daysfromthedateoffinancialcloseoftheQualifyingRefinancingtoagreeanyofthematters
referredtoinClause[],suchdisputeshallberesolvedinaccordancewithArticle[](savethat,inconnectionwithany
appointmentofanExpertinaccordancewithArticle[]todetermineanymatterrelatingtoorinconnectionwiththis
clause,thefirstsentenceofArticle[]shallnotapplyandinsteadsuchExpertshallbeanexpertinthefieldoffinancewith
notlessthanfifteen(15)yearsofrelevantexperience).
2.6 COSTS
UponfinancialcloseofaQualifyingRefinancing,theProjectProponentswillbeentitledtoreimbursementofonehundred
percent(100%)ofsubstantiatedandapproved(withsupportingdocumentation)externalcoststheProjectProponents
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incur inconnectionwithaQualifyingRefinancingplusanothertwentyfivepercent (25%)ofthetotalamountofsuch
external costs to account for any internal costs incurred by the Project Proponents in connection with a Qualifying
Refinancing.TheProjectProponentsshallbeentitledtoreimbursementofsuchcostspriortoeffectinganyreductionin
theTreatmentChargesinaccordancewithClause[].
3.0 DEFINITIONS
“Distribution”means,whetherincashorinkind,any:
a) dividendby,orotherdistributioninrespectofsharecapitalof,theProjectCompany;
b) reductionofcapital, redemptionorpurchaseof sharesoranyother reorganizationorvariation toshare
capitaloftheProjectCompany;
c) paymentsundertheProjectProponentLoans(whetherofprincipal,interest,breakagecostsorotherwise);
d) payment,loan,contractualarrangementortransferofassetsorrightstotheextent(ineachcase)itwasput
inplaceafterFinancialCloseandwasneitherintheordinarycourseofbusinessnoronreasonablecommercial
terms;or
e) receipt by the Project Proponents of any other benefitwhich is not received in the ordinary course of
businessandonreasonablecommercialterms.
“ExemptRefinancing”means:
a) anyRefinancingthatwasfullytakenintoaccountinthecalculationoftheTreatmentChargesornecessary
tofinancetheperformanceofobligationsoftheProjectCompanypursuanttoagreementstowhichtheProject
Companyisaparty;
b) achangeintaxationorchangeinaccountingtreatment;
c) theexerciseof rights,waivers,consentsorsimilaractionswhich relate today todayadministrativeand
supervisorymatters,andwhichareinrespectof:
d) breachofrepresentationsandwarrantiesorundertakings;
e) themovementofmoniesbetweenorinvestmentsmadefrommoniesin,orsecuritypostedinconnection
withmoniesintheProjectAccountsinaccordancewiththetermsoftheFinancingDocumentsasatFinancial
Close,includingpursuanttotheexerciseofrights,waivers,consentsorsimilaractionsinaccordancewithsuch
terms;
f) lateornon-provisionofinformation,consentsorlicenses;
g) amendments to contracts entered into between the Project Company and the Project Company’s
Contractors;
h) approvalofrevisedtechnicalandeconomicassumptionsforfinancialmodelruns(totheextentrequiredfor
forecastsundertheFinancingDocuments);
i) failure of the Project Company to obtain any consent by statutory bodies required by the Financing
Documents;or
j) votingbytheFinanciersundertheFacilityAgreementandthevotingarrangementsbetweentheFinanciers
inrespectofthelevelsofapprovalrequiredbythemundertheFinancingDocuments;
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k) anyamendment,variation,modification,supplementoforwaiverinrespectofanyagreement(otherthan
theProjectProponentLoans)approvedbyIMPLEMENTINGAGENCYunderthisAgreement;
l) anysaleofsharesintheProjectCompanybytheshareholdersorsecuritizationoftheexistingrightsand/or
interestsattachingtosharesintheProjectCompany;
m)anysaleortransferoftheProjectProponents’existingrightsand/orinterestsundertheProjectProponent
LoansorsecuritizationoftheProjectProponents’existingrightsand/orinterestsundertheProjectProponent
Loans;or
n) anyQualifyingBankTransaction.
“NetPresentValue”means theaggregateof thediscountedvalues, calculatedasof theestimateddateof the
Refinancing,ofeachoftherelevantprojectedDistributionstobemadetoeachoftheProjectProponents,ineach
casediscountedusingtheThresholdEquityIRR.
“ProjectAccounts”meansaccountsreferredtoinandrequiredtobeestablishedundertheFinancingAgreements.
“QualifyingBankTransaction”means:
a) thesyndicationbyaFinancierofanyofitsrightsorinterestsintheFinancingDocuments;and/or
b) thegrantbyaFinancierofanyrightsofparticipation,orthetransferordispositionbyaFinancierofanyof
itsrightsorinterests(otherthanasspecifiedinparagraph(a)above),inrespectoftheFinancingDocuments
infavorof(i)anyotherFinancier(ii)anyinstitutionwhichisrecognizedorpermittedinanyjurisdictiontocarry
onthebusinessofacreditinstitutionorwhichisotherwisepermittedtoacceptdeposits(iii)alocal,publicor
governmentalauthorityoragency(iv)anyinstitutionwhichisrecognizedorpermittedinanyjurisdictionto
carryonthebusinessofinsurance(v)anyunittrustscheme,pensionfund,providentfundorsimilarrecognized
or permitted in any jurisdiction (vi) any other institution in respect of which the prior written consent of
IMPLEMENTINGAGENCYhasbeengiven.
“QualifyingRefinancing”meansanyRefinancingthatwillgiverisetoaRefinancingGaingreaterthanzerothatis
notanExemptRefinancing.
“Refinancing”means:
a) anyamendment,variation,novation,supplementorreplacementofanyFinancingDocument(otherthan
anyProjectProponentLoan);
b) thegrantofanywaiverorconsent,undertheFinancingDocument(otherthananyProjectProponentLoan);
c) thedispositionofanyrightsorinterestsin,orthecreationofanyrightsofparticipationinrespectof,the
FinancingDocuments(otherthantheProjectProponentLoans)orthecreationorgrantingofanyotherform
ofbenefit(suchasareductioninthefees,expenses,marginsorcostoffundstotheProjectCompanyand/
or an increase in the tenoror averageweighted lifeof theOutstandingDebt) or interest inor fromeither
theFinancingDocuments(otherthantheProjectProponentLoans)ortherevenuesorassetsoftheProject
Company;or
d) anyotherarrangementputinplacebytheProjectCompanyoranotherpersonwhichhasaneffectwhichis
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similartoanyof(a)-(c)aboveorwhichhastheeffectoflimitingtheProjectCompany’sabilitytocarryoutany
of(a)-(c)above
ineachcase, savewhereanEventofDefault (asdefined in theFacilityAgreement)andanaccelerationof the
repaymentoftheLoanAmount(asdefinedintheFacilityAgreement)hasoccurred.
“RefinancingGain”hasthemeaninggiventoitinClause0.
“ThresholdEquityIRR”means[]%\
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ANNEX 9Compendium of External Resources
I. APPENDIXES RELATED TO TOOLKITS AND THEIR WEB ADDRESSES
Appendix1 ToolkitforPublicPrivatePartnershipsinRoadsandHighwayshttp://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/highwaystoolkit/index.html
Appendix2 RailwayReform:AtoolkitforImprovingRailSectorPerformancehttp://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/railways_toolkit/index.html
Appendix3 PortReformToolkithttp://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/Portoolkit/toolkit.html
Appendix4 LegalToolsforPortReformhttp://www.ppiaf.org/sites/ppiaf.org/files/documents/toolkits/Portoolkit/Toolkit/module4/annex.html
Appendix5 GuidebookforDevelopingandLeasingAirportPropertyhttp://onlinepubs.trb.org/onlinepubs/acrp/acrp_rpt_047.pdf
Appendix6 BuildingRegionalPowerPoolshttp://siteresources.worldbank.org/EXTENERGY2/Resources/toolkit_book_final.pdf?resourceurlname=toolkit_book_final.pdf
Appendix7 DevelopingBestPracticeforPromotingPrivateSectorInvestmentinPowerhttp://www.adb.org/publications/developing-best-practices-promoting-private-sector-investment-infrastructure-power
Appendix8 EmergencyPowerProcurementToolkithttp://ppp.worldbank.org/public-private-partnership/sector/energy/laws-regulations/toolkits/emergency-power-procurement
Appendix9 ConcessionforInfrastructure–AGuidebooktotheirDesignhttp://rru.worldbank.org/Documents/Toolkits/concessions_fulltoolkit.pdf
Appendix10 PrivateSectorParticipationinMunicipalSolidWasteManagementhttp://www.worldbank.org/urban/solid_wm/erm/CWG%20folder/Guidance%20Pack%20TOC.pdfDRAFT
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Appendix11 GuidebooktoMunicipalSolidWasteManagementinIndiahttp://www.urbanindia.nic.in/programme/uwss/pp_partnership.htm
Appendix12 ApproachestoPrivateSectorParticipationinWaterServiceshttp://siteresources.worldbank.org/INTINFNETWORK/Resources/ApproachestoPrivateParticipationWaterServices.pdf
Appendix13 ADBDevelopingBestPracticesforPromotingPrivateSectorParticipationinInfrastructure:WaterSupplyhttp://www.adb.org/publications/developing-best-practices-promoting-private-sector-investment-infrastructure-water-supp
Appendix14 PublicPrivatePartnerships–ImprovingPerformanceofIrrigationServicesProvision[ane-learningcourse]http://einstitute.worldbank.org/ei/course/public-private-partnerships-ppp-improving-performance-irrigation-services-provision
Appendix15 PublicPrivatePartnershipine-GovernmentKnowledgeMaphttp://www.infodev.org/en/Publication.821.html
Appendix16 AlternateDisputeResolutionManual:ImplementingCommercialMediationhttp://rru.worldbank.org/Documents/Toolkits/adr/adr_fulltoolkit.pdf
Appendix17 ResourceManualforAirportInTerminalConcessionshttp://onlinepubs.trb.org/onlinepubs/acrp/acrp_rpt_054.pdf
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II. APPENDIXES RELATED TO LEGAL AGREEMENTS AND THEIR WEB ADDRESSES
Appendix1 WindPowerEnergyPurchaseAgreement(DevelopedforPakistan)http://ppp.worldbank.org/public-private-partnership/library/power-purchase-agreement-ppa-produced-pakistan
Appendix2 ImplementationAgreement(fourexamplesforpowerplant)http://ppp.worldbank.org/public-private-partnership/ppp-sector/energy-power/energy-power-agreements/implementation-agreement
Appendix3 FuelSupplyAgreementsforPowerPlant(twoexamples)http://ppp.worldbank.org/public-private-partnership/sector/energy/laws-regulations/bulk-fuel-supply-agreements
Appendix4 PowerPurchaseAgreements[SeveralExamples,differentfuels]http://ppp.worldbank.org/public-private-partnership/ppp-sector/energy-power/energy-power-agreements/power-purchase-agreements
Appendix5 PerformanceBasedContractsintheRoadSector–BrazilExperiencehttp://siteresources.worldbank.org/INTTRANSPORT/Resources/336291-1227561426235/5611053-1229359963828/TP-31_PBC_Brazil.pdf
Appendix6 SampleBiddingDocumentandAgreementforPerformanceBasedContractsinRoadshttp://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:20646773~isCURL:Y~menuPK:84284~pagePK:84269~piPK:60001558~theSitePK:84266,00.html
Appendix7 RoadConcessionAgreements(fourexamples)http://ppp.worldbank.org/public-private-partnership/sector/transportation/roads-tolls-bridges/road-concessions
Appendix8 SkukuzaAirportPublicPrivatePartnershipAgreement(SouthAfrica)http://ppp.worldbank.org/public-private-partnership/library/skukuza-airport-public-private-partnership-agreement-south-africa
Appendix9 Operations,ManagementandDevelopmentAgreementforAirports(India)http://www.airportsindia.org.in/righttoinformation/OMDA_DIAL.pdf
Appendix10 SampleConcessionAgreementsforPorts(SeveralExamples)http://ppp.worldbank.org/public-privatepartnership/sector/transportation/ports
Appendix11 SampleConcessionAgreementsforRail,LightRailTramsandMetro(SeveralExamples)http://ppp.worldbank.org/public-private-partnership/sector/transportation/railway-trains
Appendix12 Examples,SolidWasteManagementAgreementshttp://ppp.worldbank.org/public-private-partnership/sector/solid-waste/sample-agreements
Appendix13 AgreementsforBulkSupplyofWater,O&Mofwaterutility,Lease/Affermage,Concessionshttp://ppp.worldbank.org/public-private-partnership/ppp-sector/water-sanitation/water-agreements
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