KENYA PPP FRAMEWORK AND PROGRAMME

INVESTORS CONFERENCE ON 140 MW OLKARIA PPP

GEOTHERMAL POWER PROJECT

The Public Private Partnerships Unit

National Treasury and Planning

WED 27th Nov., 2019

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Based on a policy of a private sector-led growth strategy

A deliberate desire to expand scope and opportunity for private sector efficiency and

innovation in public service design and delivery

Management of the delicate balance between expansive social and economic

imperatives/needs, and a narrowing fiscal space

Search for sustainable solutions in partnership models (the energy sector has shown

us that partnerships can be catalytic tools in the production of sustainable public

goods)

And a desire to accelerate delivery – both quantity and quality

Background And Strategic Context

Successful PPP Projects

3 Core tests/principles in PPP

Procurement:

Value for Money;

Affordability; and

Risk Transfer (optimal

allocation).

Solicited Bids

(Open &

Competitive)

Solicited Bids

(Open &

Competitive)

PIIPs

(Unsolicited

Proposals)

PIIPs

(Unsolicited

Proposals)

The PPP Act, 2013The PPP Act, 2013

Procurement of PPP

Projects

All EMPIRICAL Questions – the function of feasibility studies

FCCL assessment and approval a critical parameter in the large

scheme of approvals.

PROJECTS CAN BE INITIATED IN TWO WAYS

*: Cabinet Approval of the National Priority List

NB: Post financial close – project/contract management practices are regulated in the Act i.e. S65

•Pre-viability

Transaction Advisor

by Contracting

Authority

Step 1PPP Project

Proposal

Step 1PPP Project

Proposal

Step 2 Feasibility

Study Report

Step 2 Feasibility

Study Report

Step 3

EvaluationReport

Step 3

EvaluationReport

Step 4Project & Financial Risk Assessment

Report

Step 4Project & Financial Risk Assessment

Report

Step 5 Contract

Execution

Step 5 Contract

Execution

Financial Close

Financial Close

PPP

Committee

Approval*

PPP

Committee

Approval

PPP

Committee

Approval

PPP

Committee

Approval

Cabinet

Approval

The PPP process is structured and sequentialwith review and approval steps built-in

at various stages of the project’s life cycle

The PPP Process

CABINET

PPP Project

Clearance

PPP Committee

PPP Unit

PPP Node

PPP Petition

Committee

PPP Institutional Framework

So…where are we? (2013 - 2019)

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Total Project Pipeline as at Nov 2019: 80 projects – out of which:

1 – Feasibility Study Stage

1 - Construction (Financial Close)

11 – Signed Contracts (Commercial Close)

8 – Contract Negotiation Stage

4 – Actively in Tender Stage

1 – Feasibility Study Concluded – pending regulatory

approval for next steps

5 – Ready for Tender Initiation – Feasibility Studies

Complete – Approval to Procure Granted

31 - Front-runner Projects - at different preparation/ development stages

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No. Key Milestone in the

PPP Process

Projects Project Details

1 Financial Close 1 1. Lot 33 of Road Annuity Program: Ngong-Isinya,

Kajiado-Imaroro road

2 Commercial Close 11 1. Lot 3 of Road Annuity Programme- Modogashe-

Habaswein-Samatar

2. 35 MW Sosian Menengai Geothermal Power Plant

3. 35 MW Quantum Menengai Geothermal Power Plant

4. 35 MW Orpower22 Geothermal Power Plant

5. 1,050 MW Coal Power Plant in Lamu

6. Kenyatta University Student Hostels

7. Likoni Cable Car Project in Mombasa

8. Lot 15 of Road Annuity Programme

9. Lot 18 of Road Annuity Programme

10. Lot 32 of Road Annuity Programme

11. Nairobi JKIA-James Gichuru Road Expressway

Summary of Front-runner Projects

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No. Key Milestone in the PPP

Process

Projects Project Details

3 Projects at Contract

Negotiations

8 1. Nairobi-Nakuru- Mau Summit Highway

2. Lot 8 of Road Annuity Programme

3. Lot 10 of Road Annuity Programme

4. Lot 20 of Road Annuity Program

5. O&M of Lamu Port

6. Lamu –Garissa-Isiolo Highway

7. KCB Usalama Police Housing

8. Naivasha Special Economic Zone

4 Tender Stage 4 1. 2nd Nyali Bridge

2. Lot 6 of Road Annuity Programme

3. 140 MW Olkaria PPP Geothermal Power Project

4. KNH PPP Hospital Project

Summary of Front-runner Projects (2)

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No. Key Milestone in the PPP

Process

Projects Project Details

5 Ready for Tender 5 1. O&M Nairobi-Thika Highway

2. O&M Nairobi Southern Bypass

3. Nairobi-Mombasa Highway

4. O&M Shimoni Port

5. Nanyuki Bulk Water Supply

6 Completed Feasibility

Studies

1 1. Murang’a Water Supply

7 Project at advanced stages

of Feasibility Study

1 1. Nakuru Integrated Solid Waste Management Project

31 Front-runner PPP Projects, estimated $15.6B in projected private sector capital

mobilization = the road is well-laid, the future is promising, and we are restructuring and

repositioning ourselves for faster delivery in order to meet the massive expectations of

Kenyans for first-rate public services …. Where PPPs can be the solution bearer

Summary of Front-runner Projects (3)

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Our Market Drivers

1. A stable law on PPPs

2. Established and mature PPP institutions

3. A supportive policy and stable political environment for PPPs

4. A positive macroeconomic framework

5. Progressive economic fundamentals

6. Maturing financial sector

7. De-risking and credit enhancing tools

Drivers

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Ticks all the strategic drivers for PPPs in Kenya Allows for innovation and private sector efficiency

Promotes improved public service delivery by KenGen (public function)

Amenable to output-based performance-linked contracting (SMART)

Externalizes financing for the public good (off-balance sheet transaction)

Extends and actualizes the GoK Big 4 Agenda as one of the enablers for especially

Agenda 1- Enhancing Manufacturing

Provides opportunity for strategic power generation design between KenGen and

the private sector, guided by Kenya’s energy sector policies (which also recognize

the role for PPPs in expanding access to energy). The energy sector has a long

history of Independent Power Producers (IPPs), and this project shall be one of the

IPPs.

The Project’s Goodness of Fit

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We wanted to tell you this good story

Make you understand us, our business, our strategy, our vision, our plan, and the

opportunities for investment in PPPs

We are open to business, and for those of you planning to bid for this project, the

tender is open: apply for qualification! Help us actualize this dream for KenGen

We will select you carefully! In your strength, lies our success!

Our Promise: WE WILL PLAY FAIR.

OUR ACTIONS ARE JUSTICIABLE.

Hence this Conference!

THANK YOU!

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