Language: English

Original: English

AFRICAN DEVELOPMENT BANK

Grant Proposal for Financing under the MENA TRANSITIONAL FUND: Operationalizing Public Private Partnership in Tunisia

COUNTRY: Tunisia

Questions on this document are to be addressed to

K. Mhirsi, Team Leader, Chief Invesment Officer, OPSMV. Castel, Team Leader, Principal Economist ORNAM Mandaba, Senior Invesment Officer, OPSMK. Abderrahim, Economist, ORNAK.. Ammar, Economist, OSGE

T. Anvaripour, Manager, OPSM.2J. Kolster, Director ORNA

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PROJECT DOCUMENTMENA TRANSITION FUND

Operationalizing Public Private Partnership in Tunisia

1. Introduction 1.1 Background Information

Tunisia lags behind in the use of public-private partnerships (PPPs) to implement public policies. Effective & efficient PPPs are uncommon (airport, power plant, with several attempts in the late 2000s - desalination plant, sewage treatment plants), and are mostly designed as concessions. Hence, almost all essential public services are still delivered by the state or public enterprises. The reasons for the relatively low use of PPPs under the former regime are diverse and include: the existence of efficient public operators; the willingness of the former regime to maintain a tight control over public services regulation and delivery; a relatively narrow legal environment and a lack of transparency and good governance at the state and government.

After the revolution the new Tunisian authorities expressed their willingness to promote the use of such partnerships, with the aim, among others, to lighten the state investment burden, to improve public and private governance, to improve the quality of service delivery, to improve infrastructure maintenance and to increase foreign direct investment. In this context a new law has been prepared during the course of the year 2012. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013 (and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructure projects. In parallel to the finalization and adoption of the new PPP law, Tunisia critically needs to embark on operationalizing this reform in a context where PPPs knowledge is relatively limited nationally. The establishment of a specific unit – which will be a foundation for good governance and expertise in this specific field - is critical. Indeed, the increasing willingness (and pressure) of the private sector to engage on this front in Tunisia could potentially cause distortions and represents a risk if not managed properly.

1.2 Project ObjectivesThe objective of the project is to support the Government in operationalizing the new PPP law and implementation decrees, expected to have been adopted by April 2013, in a manner which will promote transparency, efficiency and effectiveness of public spending, and help the government of Tunisia in meeting its public policy objectives (economic transformation, job creation, nature of services and sectors covered, balanced development in the country, attracting Foreign Direct Investments, nature of the partnerships established). The proposed project should enable the rapid implementation of a number of PPP transactions so as to deliver tangible results and achieve quick wins (learning by doing and reassuring investors foreign and local). The

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project will ensure that PPPs are undertaken for reasons of value for money and are based on the appropriate skills, structures and tools. The project will build on experiences and best practices throughout the world.

1.3 Regional Department responsible for preparing the RequestThe department responsible for the preparation of this project is the Regional Department for North Africa A (ORNA) of the AfDB.

1.4 Justification for the use of resources:

The Interim Government has adopted an economic and social development agenda based on the implementation of far-reaching policy reforms to meet the aspirations of the revolution as well as sector policies centered on major infrastructure projects and the implementation of reforms to transform Tunisia's development model. This plan · the Jasmine Plan - has been articulated along a three-pronged approach: (i) Post-revolution crisis management and political reform, (ii) carrying out the transition towards democracy, and (iii) setting forth the conditions for sustained social and economic development in the medium term. More specifically under pillar (iii) the Plan indicates that in addition to the short term economic and social emergency measures initiated by the Government (job-support programs, enhanced financial support for social and regional development, assistance to those enterprises that were adversely affected by social disturbances, as well as various fiscal incentives aimed at reactivating the economy), the interim Government is conducting a complete overhaul of the regulatory frameworks pertaining to microfinance, private equity, Public Private Partnership (‘PPP’), and SMEs in support of the in view of their immediate impact on job creation and on bolstering innovation, R&D and investment in human capital. For the latter these will include the development of a technological infrastructure and encouraging the creation of a knowledge-based economy. The GoT’s Plan makes in this regard reference to a National Initiative for Industrial and Technological Development in cooperation with the private sector setting forth 80 measures and actions aimed at bolstering the technological content of the Tunisian economy (highlighting the urgent need for a revised PPP law).

In this context a new law has been prepared during the course of the year 2012 with the support of the donor community and more specifically the EU. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013 (and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructure projects.

The proposed project will contribute to the implementation of the above mentioned economic and social development agenda by supporting the implementation of the PPP reform in Tunisia and helping (i) strengthening governance in the delivery of public

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services and the design of PPP contract, (ii) increasing public investment efficiency, and (iii) stimulating job creation and economic sophistication. In addition, the proposed project encourages South-South knowledge exchange, namely by way of twinning arrangements, staff exchange and case studies involving countries having faced similar challenges (Egypt, India, Senegal, Mauritius).

2. Project Description

2.1Description of activities for which resources are requestedThe development and implementation of well-structured and balanced PPP implies 1) identifying the key challenges in the current situation, 2) training and sensitizing Government officials on PPP principles, 3) implementing a systematic and transparent selection and approval process, 4) applying rigorous and standardized quantitative and qualitative methods in order to 5) achieve bankable, balanced and sustainable models.

The proposed project (operationalization of the PPP law) addresses the above mentioned challenges through an integrated approach which will look at 1) the definition of the policy and institutional framework, 2) the establishment of a PPP Unit, 3) the development of in-house capacity, 4) the identification and preparation of PPP pilot projects, 5) the implementation of a consultation and communication strategy and 6) program management.

The proposed project will be structured in two phases. The first phase, subject of the present application, will span over a period of about two years. The subsequent phase will depend on the success of the first phase and will primarily focus on the identification and preparation of additional pilot projects.

The proposed project will use two sources of financing: The Middle Income Country Technical Assistance Fund (MIC TAF) hosted by the AfDB and the MENA Transition Fund (MENA TF).

The MIC TAF resources will be Government executed. These resources will be used to directly support GoT’s capacity in taking the lead for the implementation of components 1-A, 2-A, 3-A and 5-A. The services of a firm will be acquired competitively in this regard.

The MENA TF resources will be both Government and OECD executed. These resources will be used to: i) directly support GoT’s capacity in taking the lead for the implementation of components 4 and 6. The services of a firm will be acquired competitively in this regard; ii) implement the activities planned for components 1-B, 2-B, 3-B and 5-B which will be executed by the OECD. For these components the OCED will mobilized its expertise to advise the GoT and strengthened the work carried by the Tunisian authorities and the firm recruited using MIC TAF resources.

Component 1: PPP policy and institutional framework

This component will be designed to develop fundamental aspects of Tunisia’s PPP policy and institutional framework and will be jointly executed by the GoT (using MIC TAF resources) and the OECD (using MENA-TF resources).

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Component 1-A: Activities executed by the GoT (MIC TAF)

The GoT executed activities, funded the MIC TAF, consist in supporting the Tunisian authorities develop a PPP policy and institutional framework. An advisory firm will be competitively selected to undertake this task.

The Overall PPP framework must ensure policy coherence. Consequently the clarity and presence of key institutional roles and responsibilities will enable the implementation of concrete PPPs within a regulatory environment that is responsive and clear. Best practices from various countries’ experiences indicate that in order to secure value for money from PPPs, a number of central ministries and authorities must have clear policies, roles and responsibilities regarding PPPs. Key institutions include the Ministry of Finance, the Chief Executive, the Supreme Audit Institution, the relevant procuring authorities, the PPP Unit, the relevant economic and social regulators. Of importance is also the interaction and interface between the State and civil society (private sector, consumers associations and labor unions).

The effort will focus on: The state level (interface with sector ministries, cross-cutting ministries, the

ministry of finance and regulatory agencies) The local level (region and municipalities): identification of need and

communication with central authorities The broader policy framework: Beyond the PPP Law itself, the implementation of

Tunisia’s PPP policy framework will rely on the coherence of the PPP Law with broader investment regulations, as well as with other relevant legal and regulatory provisions (such as laws governing concessions, specific economic sectors, procurement and competition). Competent public bodies should assess this broader policy framework.

Regulations that may follow on the PPP Law will also be an integral part of the PPP policy and institutional framework.

The PPP Policy will cover, inter alia, the decision making process. Investment projects should be prioritized at the political level. The decision to pursue a PPP should be integrated in general infrastructure investment policy so that it is clear which investment method is likely to yield most value for money and that there is a transfer of risks to those that manage them best. The Ministry of Finance should play a key role as a PPP gatekeeper ensuring the project represents value for money, is affordable and that the overall investment envelope is sustainable.

This component could be reinforced by diagnostic missions composed of experts and peers from other developing countries recognized for having successfully implemented and operationalized PPP units. Such countries could include India, Senegal and South Africa.

Component 1-B: Activities executed by the OECD (MENA TF)

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The activities executed by the GoT will be reinforced by drawing inputs and lessons learned from OECD countries where PPP Framework Reviews and/or investment policy reviews were recently undertaken and recommendations on PPP public governance gathered.

The OECD executed activities, funded by the MENA TF, will include: The production of an analytic report on the PPP legal framework in Tunisia and

the identification of a number of reforms aiming at achieving greater policy coherence in the administration. The report will examine the conformity of the legislative framework (including procurement law, competition law, regulations per infrastructure sub-sector, international investment commitments etc.) and the proposed PPP law. Based on similar exercises undertaken in many developing and emerging economies via the OECD Investment Policy Reviews, this effort will be undertaken with the active participation of local stakeholders. The iterative review process will include a questionnaire shared across relevant government agencies as well as the private sector, together with joint scoping and fact-finding meetings. This will encourage greater consultation and coherence for PPPs across all relevant stakeholders.

Preparation of the above report will include several missions (for the purposes of scoping, fact-finding, and sharing and discussing results), as well as an all-stakeholder workshop where recommendations of the report are synthesized and presented for feedback. The aim of the workshop will be for stakeholders to discuss and agree on priorities, timeline and responsibilities for implementation of main recommendations (with lead agencies etc.)

The production and high level dissemination of analytic report contrasting the current institutional set up in Tunisia to current best practice in OECD countries. It will make specific recommendations as to how to reform and enhance capacity in order to secure a smooth pipeline and value for money. The report will discuss the multiplicity of functions and structures that need to be in place for PPPs to work.

Preparation of the above report will include several missions (for scoping and analytical work), as well as one follow-up training workshop for the high-level launch of the report (including a side workshop for high-level officials, focused on recommendations and their implementation).

Component 2: Establishing the PPP Unit

Building on the PPP Policy and institutional framework, the second component will help Tunisian authorities establish the PPP Unit and design its operating model. This component will be jointly executed by the GoT (using MIC TAF resources) and the OECD (using MENA TF resources).

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Component 2-A: Activities executed by the GoT (MIC TAF)

The GoT executed activities, funded the MIC TAF will consist in establishing the PPP Unit for which advisory services will be acquired competitively to assist the Tunisian authorities.

In particular, such advisory work shall: Propose an organization and management structure for the PPP Unit, staffing

requirements, skills requirements and job descriptions. The PPP skill mix at the PPP Unit being a key success factor. This can notably draw on best-practices identified in PPP Units across developing and OECD countries (for instance as analyzed in depth by the OECD Directorate for Public Governance and Territorial Development).

Assist the Ministry in the recruitment of staff for the PPP Unit; Advise the Tunisian authorities on the most efficient relationship between the

PPP Unit, Line Ministries, local authorities and civil society; Prepare the documents necessary to guide the implementation of the PPP Unit,

including PPP toolkit, draft procedures and operating manuals. This will cover the identification of : eligibility and selection criteria; preparation procedures; contractual and financial structuring principles; procurement rules and processes;

Develop an indicative budget for the PPP Unit, and recommendations on how this budget is to be funded;

Develop pro forma initial Standard PPP Bidding Documents; Assist the Ministry in defining information system requirements for the purpose of

establishing the PPP Unit. Indeed, the design of the toolkit and operating manuals will include knowledge documents, guidelines, methodologies but also an information technology (IT) component which will comprise software, intelligent databases and data-room applications in order to efficiently prepare projects but also manage transactions in the long term and collect data to measure key performance indicators and keep an institutional memory and build on lessons learnt on each transaction.

Component 2B: Activities executed by the OECD (MENA TF)

The activities executed by the GoT will be reinforced by drawing inputs and lessons learned from OECD countries and will comprise the development of a report analyzing the current budgetary framework with regards to appropriation process for capital investment. Based on the best practices in OECD countries with regards to budgeting and appropriating for PPPs and capital investment, the report will suggest suitable institutional and procedural changes. The report will also touch on key issues such as how to assess affordability, transparency and good accounting practices. Preparation of the report will involve several missions for the purpose of scoping and analytical work.

Component 3 : Developing capacity and skills transfer

This component will aim at developing capacity for the smooth functioning of the PPP unit. In addition, it can simultaneously help strengthen other parts of the civil service

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concerned with PPPs (including procurement entities, line ministries, infrastructure regulators, etc.). This component will include training of the PPP teams and partners (in the sector ministries for example) and transfer of experience.

Component 3-A: Activities executed by the GoT (MIC TAF)

The GoT executed activities, funded the MIC TAF will consist in the provision of workshops, training sessions and seminars to public sector staff involved in PPPs.

This component includes activities such as short seminars and workshops involving key stakeholders to discuss the most relevant examples of PPP implementation in developing countries. The seminars and workshops will be organized by leading consultants/Experts, based on similar programmes held with success in other countries (for instance by the OECD in Africa). They can draw on the structures initiated by regional networks of PPP practitioners. Based on the preferences of relevant public authorities, workshop modules can include: how to define a PPP Policy Framework; institutional organization of PPP units; procurement practices specific to different infrastructure sub-sectors; upstream project preparation; and project implementation and contract management. This component will also include training and mentoring targeting senior public staff, PPP’s team and the various stakeholders.

Twinning arrangements, staff exchanges and case studies will be organized with established PPP units in emerging markets which have faced similar challenges and/or have developed interesting models. As indicated above, India, Senegal and South Africa could be relevant.

Aside from training, other capacity development and facilitation services include fostering greater co-ordination in the civil service in the interest of national infrastructure and PPP development. Cross-cutting dialogue should be fostered to build investment policy coherence across all relevant public bodies, and also encourage greater consultation of the private sector. Such dialogue is already fostered by the AfDB, under the leadership of the Government through the organization of bi-monthly dialogue activities.

Component 3-B: Activities executed by the OECD (MENA TF)Such activities will be strengthened enhancing policy dialogue and alignment of infrastructure and PPP priorities across all relevant parts of the Tunisian civil service and could benefit from PPP Training Workshops (and the related course material) provided by the OECD.

The OECD executed activities, funded by the MENA TF, will mainly comprise: Preparation of training materials tailored to the needs of Tunisia’s PPP Unit and

to the country’s priorities for PPP development (including a Course-pack using case studies from other relevant country experiences). This will draw on OECD

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policy tools for infrastructure development and may focus on a specific infrastructure sub-sector.

A five-day workshop addressing the following components of PPP design & implementation (one day each): how to define a PPP Policy Framework; institutional organization of PPP units; procurement practices specific to different infrastructure sub-sectors; upstream project preparation; and project implementation and contract management. This will build on similar workshops undertaken in other emerging and developing countries (such as Zambia in March 2012). Past PPP trainings have included participants & presenters from DFIs, private sector, law firms, & other PPP Units in region. Best-practices highlighted are discussed through interactive exercises with participants (case studies, role-play in PPP design and cost-benefit analysis calculation etc.)

Component 4: Development of a PPP pipeline and preparation of pilot projects

This component will include the identification of potential projects which could be developed as PPP in Tunisia leading to the creation of a country PPP project pipeline. Out of that pipeline, the component will cover the preparation of two (2) PPP projects from feasibility studies to procurement of the private sector partner. This component will be exclusively executed by the GoT using MENA TF resources. This joint and synchronized approach will help to improve the PPP institutional framework by pilot testing through project preparation. The projects will be selected through consultation with relevant ministries and in line with government priorities. They will have to meet value for money, affordability and sustainability tests. While being prepared in parallel with the PPP Policy, such projects will have to be in line with the said policy.

More precisely, this component will include:a) Defining a strategy for identifying PPP. Based on an assessment of existing

PPPs in Tunisia, opportunities and risks for a successful development of PPP in Tunisia using a sector approach will be identified (infrastructure development, agriculture/agro-business, industrial development, social services and housing, among others). This will include identifying (i) government’s focus and priorities in various sectors and ii) potential social, financial sector and/or political risks.

b) Identification of projects in priority sector: the PPP unit will be assisted to identify projects with a high development impact and job creation component and/or a high potential for local replicability. Projects will be prioritized according to their strategic relevance and their bankability. This will yield a PPP project pipeline for the country.

c) Support to project preparation: The project will support the PPP unit in the procurement of a panel of experts needed to prepare 2 pilot PPP projects. The panel will cover legal, technical, financial, environmental and social expertise and will be tapped as and if needed.

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For each of the 2 pilot projects, the PPP unit will be supported in the following areas:

Conducting feasibility studies, environmental and social impact assessments.

Project structuring to ensure adequate risk mitigation between main project parties and maximize private sector participation while achieving value for money and affordability targets

Financial structuring to ensure reasonable level of financial returns and business success.

Preparation of project specific bidding documents and support in the bidding process

Support in negotiations with private sector

Component 5 : Consultation and communication

This component cuts across previous components and aims to establish a comprehensive stakeholder consultation and public communication strategy for the Tunisian PPP program. This component will be jointly executed by the GoT (using AfDB’s MIC TAF resources) and the OECD (using MENA-TF resources).

Component 5-A: Activities executed by the GoT (MIC TAF)It will mainly comprise:

a) Consultation

Success of the PPP program will require consultation within the public authorities, between public and private sectors and within the wider stakeholder community (parliament, civil society). The project will therefore include a support to the PPP Unit to host a ‘Government Stakeholders Awareness Seminar’, whereby the PPP Unit is introduced to the relevant line ministries, local authorities and other concerned agencies of the Government of Tunisia and ways of collaboration are collectively defined.The project will also include the setting up of a platform designed to support the dialogue between the private sector and the government in the area of PPP development. Finally the project will support the PPP unit dialogue with the wider civil society (labor unions, consumer associations, NGOs) and with the Parliament.

b) Communication outreach

Mass privatization programs implemented in the early 2000’s have sometimes led to corruption and developed, among the Tunisian population, a negative perception of private involvement in public services delivery. In this context extensive communication efforts will be needed. The communication program will aim at informing the population and also at promoting identified projects to attract investors. For that purpose, the PPP Unit will host a ‘Public Awareness Seminar’, to increase public awareness of the benefits of PPP initiatives.In addition, the project will comprise the elaboration of a communication strategy tailored towards attracting private sector participation for the 5 pilot projects. Project

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preparation on the private sector side often requires relatively high level of spending during the bidding process and before bid award. Consequently transparent and efficient communication is a key factor to ensure adequate resource management from private sector during bidding processes, therefore maximizing private sector interest and responses to bids. This will help enhance value for money from a public sector perspective.

The project will therefore include: The support of the PPP unit in communicating its PPP program and to the

investor community The support of the PPP unit in communicating to the investor community to

maximize the interest on the 5 pilot projects. This will cover the elaboration of project documentation (project teasers, information memorandum), the identification and targeting of potential investors and the support to the PPP Unit at investor road shows

Component 5-B: Activities executed by the OECD (MENA TF) The OECD will utilize available regional or international conferences (including at

OECD headquarters) as venues for sharing the Tunisian experience, and for following up on implementation of the project’s activities. This would include presentations jointly prepared by OECD and GoT (PPP Unit). Such events can contribute to raising awareness of ongoing reforms to Tunisia’s PPP policy framework, and of the status of the projected PPP pipeline, among development partners as well as the private sector. In addition conference participants can point to remaining shortcomings and suggested further improvements in the PPP framework, drawing on regional/international experiences.

Utilizing these show-casing opportunities would include preparation of material for dissemination, and regular consultation with GoT on available communication platforms.

Component 6 : Program Management

This component will ensure end-to-end management the project. It will be executed by the GoT, using MENA TF resources, and will mobilize the services of a PPP Investment Specialist, who shall:

Facilitate high level coordination of the PPP Program between OPM, Ministry of Finance (MoF), the relevant line ministries and utilities.

Ensure end-to-end coherency of Program from institutional/policy work to actual delivery of the overall project (Coherence between the use of MENA TF and MIC TAF financed activities )

Ensure coherent approach between different donors acting in the Program. Organize de dialogue within the donor coordination unit

Summary

The below table provides a summary of the project’s main components, detailing for each one, the beneficiary, key stakeholders, execution and source of funding.

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Component # Title

Beneficiaries Key stakeholders

Source of finance

Execution

Oversight and

fiduciary responsibi

lity

1

ALeading PPP policy and institutional framework Office of PM,

other relevant

institutions

Office of PM, MoF, Line Ministries, Private Sector,

Parliament, Civil Society

MIC TAF GoT AfDB

B

Advisory analytical work on PPP legal framework,

Advisory analytical work on current institutional set up

MENA- TF OECD OECD

2A

Lead in establishing the PPP Unit

PPP Unit, other

relevant institutions

PPP Unit, Office of PM, MoF, Line

Ministries,

MIC TAF GoT AfDB

BAnalysis of the budgetary

frameworkMENA- TF OECD OECD

3

ALead in developing capacity

and skill transfer PPP Unit, other

relevant institutions

PPP Unit, Office of PM, MoF, Line

Ministries

MIC TAF GoT AfDB

BTailored workshop & training

materials on PPP implementation

MENA TF OECD OECD

4Development of a PPP

pipeline and preparation of pilot projects

PPP Unit,

PPP Unit, MoF, Line Ministries, Private Sector,

Civil Society

MENA TF GoT AfDB

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ALeading consultation and communication activities

PPP Unit

Office of PM, MoF, Line Ministries, Private Sector,

Parliament, Civil Society

MIC TAF GoT AfDB

BCommunication around OECD

activitiesMENA TF OECD OECD

6 Program Management PPP UnitPPP Unit, Office of

PM, MoFMENA TF GoT AfDB

2.2Description of the expected outputs and their linkages to the targeted project At the end of the complete project, it is expected that the Operationalization of Public Private Partnership in Tunisia will result in: (i) the establishment of a PPP Unit with adequate staffing, operational manuals in place and PPP toolkits developed; (ii) the existence of a coherent capital investment framework; (iii) the existence of prudent links between PPPs and the annual budget process; (iv) the number of PPP projects identified and prepared; (v) the number of bids launched by the PPP Unit for the purpose of selecting a private partner; (vi) the volume of Private sector investments crowded in; (vii) the number of staff in other ministries trained on PPP; and (viii) the number of road shows organized to market Tunisian PPPs.

3. Cost Estimates Detailed cost estimates and Financing Plan

The project will be co-funded by the MENA TF and the MIC TAF hosted by the AfDB in addition to in-kind contributions from the GoT.

While the MENA TF will finance i) OECD executed activities spanning components: 1-B, 2-B, 3-B and 5-B; and ii) GoT executed activities spanning components 4 and 6, the

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MIC TAF will finance i) i) GoT executed activities spanning components 1-A, 2-A, 3-A and 5-A. Details of such funding are provided in below table.

Sources of funds Uses of funds

TotalCost by Component (million USD)

Transition Fund

AfDB-MIC Trust Fund

Country Co-

Financing

OECD execute

d activitie

s

ISA indirect costs

GoT execute

d activitie

s

Component 1 : Institutional and policy framework

A 0,500 0,044 0,544 0,544

B 0,460 0,440 0,020 0,460

Component 2 : Setting-up PPP Unit

A 0,310 0,020 0,330 0,330

B 0,220 0,200 0,020 0,220

Component 3 : Developing capacity and skills transfer

A 0,140 0,010 0,150 0,150

B 0,120 0,100 0,020 0,120

Component 4: Pipeline and pilot projects 1,220 0,100 0,020 1,300 1,320

Component 5 : Consultation and communication.

A 0,250 0,005 0,255 0,255

B 0,080 0,060 0,020 0,080

Component 6: program management 0,200 0,200 0,200

Total 2,300 1,200 0,179 0,800 0,100 2,779 3,679

1. Budget Breakdown of Indirect Costs Requested

Description Amount (USD)

For grant preparation, administration and implementation support undertaken by the AfDB

USD 100,000.00

Total Indirect Costs USD 100,000.00

4. Mode of Procurement of services For the procurement activities executed by the Government to be financed by the MENA TF Grant and the Middle Income Countries Technical Assistance Fund (AfDB MIC TAF), which are: consultant services, technical studies, local and international

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consultants to conduct training & short courses and workshops, African Development Bank’s Rules and Procedures for the Use of Consultants will be applied in acquiring advisory services of firms and in recruiting a PPP expert.

For the activities executed by the OCDE, the MENA TF will deal directly with this organization who will apply its own procedures.

5. Implementation 5.1 Implementation Arrangements

The execution of the activities will be undertaken by the Government of Tunisia and the OECD.

For the Government of Tunisia executed activities: MIC TAF resources: a service provider will be recruited under an international

competitive process. Draft terms of reference are detailed in annex 2 MENA TAF resources: a service provider will be recruited under an international

competitive process. Draft terms of reference are detailed in annex 3.

These activities will be led by will be led by the Office of the Prime Minister with the support of the African Development Bank for the country executed part of the project. Depending on the outcomes of the first component of the project and the ultimate location of the PPP Unit, the implementation on the GoT side might move to the PPP Unit.

In addition the GoT will recruit the services of a PPP international expert who will supervise and coordinate the overall implementation of the activities (draft terms of reference detailed in annex 4).

The AfDB will contribute its operational experience in Africa with PPP units and its financial expertise in preparing and setting-up PPPs. This contribution will be by means of in-kind services.

The OECD executed activities funded under the MENA Trust Fund resources are detailed in annex 5.

A coordination mechanism, the PPP DCU, will be put in place to ensure donors’ coordination and collaboration.

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PPP Initiative Capacity Building Activities

Institutionalization of PPP Skills Improving Sectorial PPP Focus

Developing PPP Enabling Funds and Instruments Developing PPP Pilot Projects

The AfDB PPP Focal Point

The GOT PPP Cell

Donor coordinationUnit at GoT level

OECD Directorates for Financial Affairs (DAF) & Public Governance (GOV) Other Ministries

- Power - Transport - Water & Sanitation - Telecommunications

5.2 Coordination mechanism

The proposed project will support one of the key reforms supported by the 2012 multi-donor (African Development Bank – World Bank – European Union) budget support operation. The “Governance, Opportunity and Jobs Development Policy Loan” was approved by the World Bank on November 28th 2012, while the Budget support for “Economic Recovery and Inclusive Development" was approved by the African Development Bank on the same day.

The policy matrix for both operations includes the following reform:

Adoption by the Council of Ministers of a draft Law relating to Public Private Partnerships (PPP) and transmission to the National Constituent Assembly (ANC) and the adoption of a Decree of the Prime Minister modifying the Decree n° 2008- 2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs.

Adoption of an application Decree of the new Law on Private Public Partnerships and modification of the application Decree of the Law on Concessions of 2008 to enable the harmonization of the operational procedures to all forms of PPPs to improve transparency

The formulation of the draft law and application decrees is supported by an EU-funded technical assistance.

The implementation of this project will include an embedded donor coordination unit (PPP DCU) which will facilitate the participation of the members of the multi-donor

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budget support operation but also other actors willing to support Tunisia in the development of its PPP agenda (e.g., the ALSF, the EU, the EIB, the EBRD, the IFC, the IsDB, the World Bank, the French Development Agency, the Arab Financing Facility for Infrastructure (AFFI), and other donors and development partners interested in supporting these efforts). The PPP DCU will be hosted by the Government and meet on a regular basis.

The involvement of each participant in the coordination mechanism is as follows:

A. Tunisian Government

The Tunisian Government will be in charge of the overall coordination of the program. A project implementation unit will be established to coordinate the implementation of the proposed project. The Implementation unit will initially be located at the Office of the Prime Minister. Depending on the outcome of the first component (institutional framework) and the ultimate location of the PPP Unit, the implementation unit could move to the PPP Unit. A PPP expert will be recruited who will advise the PPP Unit and other stakeholders on the implementation of the project to ensure continuity and adequate project supervision. The expert will facilitate the functioning of the Donor Community Unit

B. African Development Bank

The AfDB will mobilize Middle Income Country Technical Assistance Fund resources to finance the above mentioned activities.

The AfDB will contribute its experience in and knowledge of i) institutional PPP frameworks in emerging markets and particularly in Africa with lessons learned from pasts successes and failures ii) PPP procurement practices on the continent iii) preparing PPP projects, which includes identification, financial and economic assessment, structuring and engaging with private sector iv) management of PPP investments both form private and public sector perspectives. On all these aspects, the AfDB contribution will primarily focus on channeling in operational and hands-on experience acquired on infrastructure development and PPPs acquired in developing markets.

The AfDB will mobilize one expert who is currently facilitating the dialogue between the public and the private sector in Tunisia, laying the ground for the successful Implementation of the proposed project.

Finally, the AfDB will be solely responsible for the oversight and management of the funds used for the country-executed portion of the project.

C. The Organization for Economic Cooperation and Development

The OECD will contribute its experience, networks of PPP practitioners, tools and instruments – including the OECD Network of Senior PPP Officials, the SADC PPP

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Network and other networks, the OECD Recommendation on Public Governance of PPPs, the OECD Principles for Private Sector Participation in Infrastructure. The OECD Working Party of Senior Budget Officials will also be available for issues regarding budget transparency and public procurement. The OECD will be able to facilitate peer-to-peer learning (e.g. from Chile, Korea), including on the structure and management of dedicated PPP Units. The OECD will also mobilize in-house expertise. The OECD will be working on components 1-B, 2,-B, 3-B and 5-B. OECD will be solely responsible for the management of the portion of MENA TF used for OECD’s executed subcomponents.

The OECD will co-ordinate its involvement in all project components with its engagement on the newly-launched ‘Investment Security in the Mediterranean’ (ISMED) Support Programme (which provides technical assistance and advisory services with a view to improve the legal security of specific infrastructure projects in the Mediterranean region).

D. Private Sector

Private Sector companies and investors will contribute in both defining the institutional and legal framework and in the project identification/preparation phases. The project will facilitate dialogue between private and public sector from the outset as this is an essential ingredient of a successful PPP strategy. Workshops will be organized with private sector player and between public and private sector players for that purpose.

E. Parliament and Civil society

Parliament and Civil society (labor union, consumer associations, ..) will contribute to the project as stakeholders in the PPP decision process. They will be consulted in defining their role and position within the PPP institutional framework. They will also contribute on a project by project basis.

F. Other donors

In order to ensure necessary alignment and complementarity between the projects developed by the donors operating in the country as well as their appetite and requirements to provide financing for selected projects, coordination between members of the donor community will be undertaken through an embedded donor coordination unit (PPP DCU) which will facilitate the participation of the members of the multi-donor budget support operation but also other actors willing to support Tunisia in the development of its PPP agenda (e.g., the ALSF, the EU, the EIB, the EBRD, the IFC, the IsDB, the World Bank, the French Development Agency, the Arab Financing Facility for Infrastructure (AFFI), and other donors and development partners interested in supporting these efforts). The PPP DCU will be hosted by the Government and meet on a regular basis.

17

6. Financing Arrangements 6.1Terms of FinancingThe resources from the MENA FT are provided in grant.

6.2Suspension of disbursementSuspension of disbursement of MENA Transition Fund can take place in accordance with the Bank’s disbursement regulations.

Annexes:1. Result-based Logical Framework2. Terms of Reference : Advisory services in support of the preparation of pilot PPP

projects3. Terms of Reference : Advisory services in support of the operationalization of

PPP4. Terms of Reference of a PPP investment specialist 5. Breakdown of OECD executed activities

18

Annex 1

PROJECT DOCUMENTMENA TRANSITION FUND

Operationalizing Public Private Partnership in Tunisia

Results-based Logical Framework

Country and project name:

TunisiaOperationalizing Public Private Partnership in Tunisia

Purpose of the project :

The purpose of the project is to support the Government in operationalizing the new PPP law in a manner which will promote transparency, efficiency and effectiveness of public spending, and help the government of Tunisia in meeting its public policy objectives.

RESULTS CHAINPERFORMANCE INDICATORS

MEANS OF VERIFICATIONRISKS/MITIGATION

MEASURESIndicator (including CSI) Baseline Target

IMPA

CT

Impact

to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms

OU

TCO

MES

Outcome 1

number of policy reforms identified in view of strengthening the legal framework for PPPs

number of policy reforms 0 3 Project implementation unit, OECD

Project implementation unit

Project implementation unit

Outcome 2 PPPs pipeline is developed

number of PPP projects identified

0 5

Outcome 3

Institutional PPP awareness Number of staff trained 0 30

19

OU

TPU

TSComponent 1Output 1.1Implementation of PPP unit and Institutional framework

Output 1.2Co-ordination platform for monitoring PPP and infrastructure-related policies

Component 2Output 2.1Organization structure, staffing and skill requirements

Output 2.2Toolkit, operating manuals and procedure defined

Component 3Output 3.1Training sessions are organized

Output 3.2transfer of experience

Component 4Output 4.1Projects reviewed

Output 4.2Projects shortlisted

Output 4.3Projects prepared

Output 4.4Expert panel

Unit in placeInstitutional framework in place

Inter-ministerial taskforce set up to co-ordinate inputs to OECD policy review process.

Business Plan in place

Financing strategy in place

#PPP unit staff# Staff at sector ministries# external participants/experts sharing country experiences

#of seminars organized

# of projects

# of projects

# of projects

# of panels

0

0

0

0

0

0

0

0

0

0

1

1

1

1

30

4

30

5

2

1

Project implementation unit

Government task-force established for providing

responses to OECD questionnaire; and OECD

analytical team

Project implementation unit & OECD analytical

team

Project implementation unit

OECD training staff & feedback from training

participants

Project implementation unit

Project implementation unit

Project implementation unit

Project implementation unit

Project implementation unit

20

OU

TPU

TSComponent 5Output 5.1consultation platforms

Output 5.2communication material

Output 5.3web site

Output 5.4project specific road show

# of Round tables

# of communication products

# of dedicated website

# of road shows# international / regional conferences at which experience is discussed & presented

0

0

0

0

12

4

1

2

Project implementation

unit

Project implementation unit and OECD

Project implementation

unit

Project implementation

unit

21

Annex 2

DRAFT TERMS OF REFRENCE

GOVERNMENT OF TUNISIAOFFICE OF PRIME MINISTER

TERMS OF REFERENCE

ADVISORY SERVICES IN SUPPORT OF THE OPERATIONALIZATION OF PUBLIC PRIVATE PARTNERSHIPS IN TUNISIA

[date]

1. INTRODUCTION

1.1 The purpose of this document is to set out the Terms of Reference for the supply of advisory services to the Prime Ministry (Ministry) of the Government of Tunisia. The work to be undertaken by the advisors (the Consultants) will involve facilitating the successful establishment of a Public-Private Partnership Unit (the PPP Unit) within the Ministry and assisting with the identification, procurement and achievement of financial closure of 5 pilot PPP projects.2. BACKGROUND

2.1 Tunisia lags behind in the use of public-private partnerships (PPPs) to implement public policies. Effective & efficient PPPs are uncommon (airport, power plant, with several attempts in the late 2000s - desalination plant, sewage treatment plants), and are mostly designed as concessions. Hence, almost all essential public services are still delivered by the state or public enterprises. The reasons for the relatively low use of PPPs under the former regime are diverse and include: the existence of efficient public operators; the willingness of the former regime to maintain a tight control over public services regulation and delivery; a relatively narrow legal environment and a lack of transparency and good governance at the state and government.

2.2 After the revolution the new Tunisian authorities expressed their willingness to promote the use of such partnerships, with the aim, among others, to lighten the state investment burden, to improve public and private governance, to improve the quality of service delivery, to improve infrastructure maintenance and to increase foreign direct investment. In this context a new law has been prepared during the course of the year 2012. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013 (and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should

22

provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructure projects. In parallel to the finalization and adoption of the new PPP law, Tunisia critically needs to embark on operationalizing this reform in a context where PPPs knowledge is relatively limited nationally. The establishment of a specific unit – which will be a foundation for good governance and expertise in this specific field - is critical. Indeed, the increasing willingness (and pressure) of the private sector to engage on this front in Tunisia could potentially cause distortions and represents a risk if not managed properly.

3. OBJECTIVES OF THE ASSIGNMENT

3.1 The assignment has three key objectives.3.2 The first key objective is to provide the Ministry with the advisory services necessary to adopt an adequate PPP Policy and define the country’s PPP institutional framework. 3.3 The second key objective is to assist the Ministry in establishing an effective PPP Unit and design its operating model. 3.3 The third key objective is to assist the PPP Unit and the responsible Line Ministries in identifying, procuring and reaching financial close on five pilot PPP projects. These five pilot projects should be selected, with the assistance of the Consultants, on the basis of ease and speed of completion.4. DETAILED DESCRIPTION OF THE SCOPE OF WORK

4.1 Having regard to the objectives described in Paragraph 3, above the Consultants shall:

a) Undertake a research on lessons learned from PPPs in Tunisia detailing successful and unsuccessful projects.

b) Undertake a review of PPP policies and best practices in developing countries (countries to be reviewed could include India, Senegal and South Africa) as well a review of PPP policies in OECD countries.

c) Support the Ministry in designing a PPP policy.d) Support the Ministry in the developing the PPP institutional framework. e) prepare any required primary and secondary legislation, or legislative amendments,

necessary for the establishment of the PPP Unit and the implementation of the other aspects of the PPP Policy;

f) design the operating model of the PPP Unit at the Ministry – its organisation and management structure, staffing requirements, skill requirements, job descriptions, training requirements, key processes, information requirements, and systems requirements;

23

g) advise the Ministry on the most efficient relationship between the PPP Unit and (i) the PPP agencies at Line Ministries and Local Authorities; (ii) the Agency; (iii) the MT;

h) prepare the documents necessary to guide the implementation of the PPP Unit, including draft procedures and operating manuals;

i) develop an indicative budget for the PPP Unit, and recommendations on how this budget is to be funded;

j) develop pro forma initial Standard PPP Bidding Documents;k) assist the Ministry in the recruitment of staff for the PPP Unit;l) provide initial training sessions, in respect of the above-noted materials, for the staff

of the PPP Unit once they have been recruited;m) support the PPP Unit in hosting a ‘Government Stakeholders Awareness Seminar’,

whereby the PPP Unit is introduced to (i) the relevant Line Ministries and Local Authorities; (ii) the Agency; (iii) the MT; and (iv) other concerned agencies of the Government of Tunisia;

n) support the PPP Unit in hosting a ‘Public Awareness Seminar’, to increase public awareness of the benefits of PPP initiatives; and

o) support the PPP Unit in the identification and implementation of two pilot PPP projects as described above in Subparagraph 3.3.

5. DELIVERABLES

5.1 The Consultants shall provide the following deliverables to the Ministry:a) within one month following the inception of the contract for advisory services, the

Consultants will provide the Ministry with an INCEPTION REPORT, which shall outline in detail the activities that the Consultants will undertake to

provide the required advisory services; provide a detailed timetable for the delivery of the required advisory

services, in MS Project format; and identify and explain any proposed modifications to the Consultants’ initial

methodology as set out in the Consultants’ Technical Proposal;b) within two weeks following the delivery of the Inception Report, the Consultants

will give a presentation to the Ministry in respect of the Inception Report and, within two weeks following this presentation, the Consultants will provide the Ministry with a REVISED INCEPTION REPORT, reflecting any amendments to the initial Inception Report agreed to by the Consultants and the Ministry;

c) within two months following the inception of the contract for advisory services, the Consultants will provide the Ministry with the DRAFT LEGISLATION TO IMPLEMENT THE PPP POLICY, which shall provide the text, with explanatory notes of the proposed legislation described in Subparagraph 4.1(a) above;

24

d) within two weeks following the delivery of the Draft Legislation to Establish the PPP Unit, the Consultants will give a presentation to the Ministry in respect of the Draft Legislation and, within two weeks following this presentation, the Consultants will provide the Ministry with the REVISED DRAFT LEGISLATION TO IMPLEMENT THE PPP POLICY, reflecting any amendments to the initial Draft Legislation agreed to by the Consultants and the Ministry;

e) within three months following the inception of the contract for advisory services, the Consultants will provide the Ministry with a REPORT ON THE OPERATING

MODEL FOR THE PPP UNIT, as described in Subparagraphs 4.1(b) and (c) above, which shall outline in detail the recommendations of the Consultants as to the organisation and management structure of the PPP Unit, including its staffing requirements, skill requirements, job descriptions, training requirements, key processes, information requirements, systems requirements and interfaces with external entities (such as regulated entities, government bodies, the media and the public);

f) within two weeks following the delivery of the Report on the Operating Model for the PPP Unit, the Consultants will give a presentation to the Ministry in respect of the Operating Model Report and, within two weeks following this presentation, the Consultants will provide the Ministry with a REVISED REPORT ON THE OPERATING

MODEL FOR THE PPP UNIT, reflecting any amendments to the initial Operating Model Report agreed to by the Consultants and the Ministry;

g) within four months following the inception of the contract for advisory services, the Consultants will provide the Ministry with a REPORT ON THE DRAFT PROCEDURES,

OPERATING MANUALS AND BUDGET FOR THE PPP UNIT, as described in Subparagraphs 4.1(d) and (e) above, which shall

outline in detail the recommendations of the Consultants as to the procedures to be followed by, and the operating manuals to be used by, the PPP Unit; and

outline in detail the recommendations of the Consultants as to an indicative budget for the PPP Unit, and recommendations on how the Unit’s budgets are to be funded;

h) within two weeks following the delivery of the Report on the Draft Procedures, Operating Manuals and Budget for the PPP Unit, the Consultants will give a presentation to the Ministry in respect of the Procedures, Manuals and Budget Report and, within two weeks following this presentation, the Consultants will provide the Ministry with a REVISED REPORT ON THE DRAFT PROCEDURES,

OPERATING MANUALS AND BUDGET FOR THE PPP UNIT, reflecting any amendments to the initial Procedures, Operating Manuals and Budget Report agreed to by the Consultants and the Ministry;

25

i) within five months following the inception of the contract for advisory services, the Consultants will provide the Ministry with a REPORT ON PRO FORMA INITIAL

STANDARD PPP BIDDING DOCUMENTS, as described in Subparagraph 4.1(f) above, which shall provide the text, with explanatory notes, of the pro forma initial Standard PPP Bidding Documents to be used by the PPP Unit; and

j) within two weeks following the delivery of the Report on Pro Forma Initial Standard PPP Bidding Documents, the Consultants will give a presentation to the Ministry in respect of the Report on Pro Forma Initial Standard PPP Bidding Documents and, within two weeks following this presentation, the Consultants will provide the Ministry with a REVISED REPORT ON PRO FORMA INITIAL STANDARD PPP BIDDING

DOCUMENTS, reflecting any amendments to the initial Report on Pro Forma Initial Standard PPP Bidding Documents agreed to by the Consultants and the Ministry.

5.2 After the establishment of the PPP Unit, the Consultants shall also provide initial training sessions, in respect of the above-noted materials, for the staff of the PPP Unit, in accordance with Subparagraph 4.1(h) above. These initial training sessions shall be of at least two weeks in duration.

5.3 After the establishment of the PPP Unit, the Consultants shall also provide information packets for, and participate in, at least one ‘Government Stakeholders Awareness Seminar’, in accordance with Subparagraph 4.1(i) above.

5.4 After the establishment of the PPP Unit, the Consultants shall also provide information packets for, and participate in, at least one ‘Public Awareness Seminar’, in accordance with Subparagraph 4.1(j) above.

5.5 After the establishment of the PPP Unit, the Consultants shall also provide all documentation required for the identification and implementation of two pilot PPP projects, in accordance with Subparagraph 4.1(k) above.

5.6 Throughout the assignment, the Consultants shall submit, to the Ministry, monthly reports on the activities completed in the previous month and the planned activities for the next two months, reflecting decisions taken by the Ministry.

6. REPORTING REQUIREMENTS

6.1 The Consultants shall work under the general direction of the Project Manager appointed by the Ministry.

6.2 The Consultants’ personnel will, on reasonable notice, participate in meetings and discussions as required by the Project Manager.

6.3 All meetings, discussions, presentations, training materials and deliverables shall be in the English language.

26

6.4 The Consultants shall provide to the Ministry 10 printed copies of each deliverable described in Paragraphs 5.1, 5.3, 5.4 and 5.5 above, and two printed copies of any training materials prepared pursuant to Paragraph 5.2 above. In addition, the Consultants shall also e-mail to the Project Manager an electronic copy of each written deliverable, including presentations, training materials and monthly reports.

6.5 The Consultants shall also e-mail a copy of each written deliverable, including copies of any presentation or training materials, and monthly reports, to the AfDB Task Team Leader associated with this assignment.

6.6 The Consultants shall establish a password-protected electronic workroom containing electronic copies of each written deliverable (including presentations, training materials and monthly reports), which workroom shall be accessible to the Ministry, the Project Manager and the AfDB Task Team Leader.

7. SKILLS REQUIRED ON THE CONSULTANTS’ TEAM

7.1 The Consultants’ team should include international and local transactional and legal specialists with:

a) recent project experience in the development of PPP legal frameworks in Africa, including recent experience in the development of legislation and pro forma standard bidding documents for PPP transactions;

b) recent project experience in the establishment of new PPP Units, including the provision of advisory services related to the organizational structure and procedures of such Units; and

c) local knowledge of the principles applicable to the drafting of legislative and contractual instruments in Tunisia.

8. ANTICIPATED DURATION

8.1 The assignment is to be completed within approximately 24 months following the inception of the contract for advisory services.

9. CONFLICTS OF INTEREST

9.1 The Consultants are required to comment on any potential conflicts of interest arising out of other assignments or a conflicting involvement in other assignments.

10. CONFIDENTIALITY

10.1 The Consultants agree to keep confidential all information that they receive, directly or indirectly, from the Ministry or any other stakeholder, as well as all copies or analyses that they make, or have been made by third parties, on the basis of such information (collectively, the Material). The Consultants shall use the Material exclusively for the purpose of preparing deliverables relevant to this assignment. The confidentiality obligations shall not apply to information in the public domain. The Consultants shall only

27

permit access to the Material to persons within their organisations on a need-to-know basis. The Consultants shall explicitly inform such persons of the confidential nature of the Material and, prior to providing them the Material, subject them to the confidential obligations contained in these Terms of Reference.

28

Annex 3

GOVERNMENT OF TUNISIAOFFICE OF PRIME MINISTER

TERMS OF REFERENCE

TRANSACTION ADVISORY SERVICES IN SUPPORT OF THE PREPERATION OF PILOT PUBLIC PRIVATE PARTNERSHIP PROJECTS IN TUNISIA

[date]

1. INTRODUCTION

[Project Background]

2. PROJECT 1:

[Project description]

3. SCOPE OF WORK

The Scope of work is divided in two parts: (i) Undertake a Comprehensive Feasibility Study for the Project; and (ii) Provide Advisory Services for the Procurement of the Project.

3.1 Phase I: Feasibility Study

The Transaction Advisors will be required to undertake a comprehensive feasibility study for the Project using a public sector comparator and PPP reference models. This must enable PPPU and AfDB to determine:

Full Project Cycle Costs

Affordability Limits

Risks and their Costs

Optimal Value-for-Money Methods of Delivery

Market Soundings

29

Section 5 describes the deliverables required for the Transaction Advisors regarding the Feasibility Study.

3.2 Part II: PPP Procurement Cycle

In case the outcome of Phase I activities concludes that the PPP solution is not ideal, the Transaction Advisors shall submit a report indicating remedies and actions to be considered by the Gov that makes the PPP option valid. The report shall be available 2 weeks after the submission of the Feasibility Study.

The Transaction Advisors are expected to provide the necessary technical, legal and financial advisory support for the procurement of a private partner. This must be in compliance with all elements of the current available legislation and all implementing regulations. The Procurement Study Deliverables are set in Section 6.

4. Background

4.1 Mandate

The Mandate of PPPU is to implement the Country’s PPP Policy by facilitating, preparing, executing and monitoring PPP projects and by coordinating with other technical / regional departments.

4.2 Background Documentation and Preparatory Work

The Transaction Advisors will have to become familiar with all background documentation and preparatory work conducted to date and shall be responsible for carrying out initial technical, financial and legal framework reviews that are deemed necessary for a successful completion of the transactions, including, but not limited to:

Relevant existing reports, studies, audits, and others necessary to become familiar with the xxx Sector as a whole and the xxx Sub-Sector;

All information pertaining to the xxx market structure;

The [Country] Investment Code, ; Procurement Code and PPP law

Existing financial forecasts, historical financial performance and technical operating history for [the country’s utility], and existing PPP arrangements in the country;

30

Existing [sector] Laws and Regulatory Functions;

Responsibilities and relationships of the the country’s utility, with other Government Entities at different levels; and

[Reports] annexed to this TOR.

PPPU and AfDB have identified the following barriers in pursuing these types of Projects:

[…];

[…];

[…]; and

[…].

The Legal and Policy Framework for the Project is: [Section to be completed by PPPU]

[…];

[…];

[…]; and

[…].

4.3 Assumptions

In performing the Scope of Work, the Transaction Advisors shall assume: The Project will benefit from a [budget or contribution]

In line with the above, the Financial Model to be provided after Phase I shall make Sensitivity Analysis to take into account different tenors for the senior debt (e.g. 6 and up to 15 years) and average interest costs (6% to 15%) and reveal for each scenario the tariffs under the [PPP contract] that make the Project financially viable;

The Competitive Bidding Process shall be made in a way that defines, but still leaves room for negotiations with the bidding winner that may lead to acceptable changes: (i) size of the Project; (ii) output of the Project; (iii) Demand Profile; (iv) the location of the Project (names and coordinates); and (v) a previously agreed tariff. The objective is to receive from the potential bidders, in their proposals, a number of combinations of average cost of capital (debt and equity) including amounts of concessional instruments (grant, concessional loans or a combination of both under

31

the limits mentioned above) that make the project financially viable at a tariff acceptable by the utility/consumers. The outputs of the Market Soundings (see section 5.1) shall be taken into consideration

4.4 Budget

For more details on the Bidding Process, please consult Section 7.1.

5. FEASIBILITY STUDY

The Transaction Advisor Team is required to produce, in close liaison with the PPPU, a comprehensive feasibility for the Project. The feasibility study needs to clearly demonstrate the affordability for the full project cycle and propose the optimal value-for-money solution for the client to achieve its desired outcomes.

5.1 Component of the Feasibility Study

The Feasibility Study must include the following: Introduction

- Covering Letter from the Accounting Officer / Authority

- Executive Summary

- Introduction

- Project Background

- Approach and Methodology to the Feasibility Study

Section I: Needs Analysis

- Institutional Analysis

- Market Soundings to identify on a neutral way the views, needs and expectations of: (i) potential project developers; (ii) technology providers; (iii) EPC and O&M companies involved in the sector; and (iv) investors with potential interest. The list of companies to be consulted shall be prepared by PPPU and submitted to the Transaction Adviser Team.

- Output Specifications

- Scope of the Project

- Budget

32

Section II: Solution Options Analysis

- Options considered

- Evaluation and Assessment of each option

- Assessing the role of the Gov in the proposed PPP project, whether that role corresponds with the Gov’s legal obligations, maintains sufficient power to protect the Gov interests and corresponds to the proposed corporate structure of the SPV [and how in practice the Gov role will be established in the SPV (e.g. voting rights, pre-emption rights and the protection of minority shareholders)]

- Developing and providing detail to the legal architecture and design of the transaction, identifying e.g. the (i) type of PPP contract to be used (e.g. management contract or BOOT); (ii) investment commitments to be required, their nature and management; (iii) investment plan, how, where and when investments are expected to be made; (iv) type of public sector support required, including terms and conditions; and (v) corporate structure for the investment and commercial management including nature of the SPV holding the concession, etc.

- Summary of evaluation and assessment of all options considered

- Review of risk allocation assumptions to assess whether those risks can be allocated (e.g. legally) to the private sector (e.g. land acquisition)

- Assess the financial management and accounting structures proposed to identify efficiency gains available through other structural mechanisms, e.g. taxation of revenues and accounting methods for depreciation of assets.

- Assess risk management structures for potential efficiency gains through alternative structures or modifications.

- Assess the financial feasibility and provide valuation of revenues according to the different options and based on various assumptions used in the forecasts including those of demand and pricing should be stated clearly (See Paragraph 4.3)

- Confirming legality of budgeting assumptions and the management of revenue flows (e.g. are there restrictions on the use of monies collected for use with public services).

- Assessing risk allocation approaches to ensure that they correspond with private sector appetite and lender requirements. This should be done before

33

bidding to avoid failure of the bidding process and the costly and reputationally damaging recommencement of the tendering process.

- Assessing chosen approach to PPP and whether any aspect of that approach will conflict with available or required procurement, contracting and financing structures.

- Recommendation of a preferred option.

Section III: Project Due Diligence

- Legal Aspects including: (i) land access/right; (ii) use rights; (iii) regulatory matters; (iv) approvals required; and (v) key challenges to risk allocation as law

- Identify licensing, permitting and other legal risks that need to be addressed and allocated under the chosen approach

- Ensuring all necessary approvals and permissions are obtained for PPP processes before commencement of tender process, in particular to allow the relevant sovereign entity to sign the tender documents and the PPP contract

- Site enablement including any physical constraint identified

- Socio-Economic and Environmental in line with AfDB rules and guidelines

- Initial Market Testing

Section IV: Value Assessment

- PSC Model

o Technical Definition of the Project

o Discussion on costs (direct and indirect) and assumptions made on cost estimates

o Discussion on revenue (if relevant) and assumptions made on revenue estimates

o Discussion on all model assumptions made in the construction of the model, including inflation rate, discount rate, depreciation, budgets and assumptions under Paragraph 4.3

o Summary of results from the base PSC model: (i) Net Present Value (NPV); (ii) Financial Internal Rate of Return (FIRR); and (iii) current and forward-looking Debt Service Coverage Ratio (DSCR).

- PPP Reference

34

o Technical Definition of the Project

o Discussion on costs (direct and indirect) and assumptions made on cost estimates

o Discussion on revenue (if relevant) and assumptions made on revenue estimates

o Discussion on proposed PPP type

o Proposed PPP project structure and sources of funding

o Payment mechanism

o Discussion on all model assumptions made in the construction of the model, including inflation rate, discount rate, depreciation, tax and VAT, maintenance reserve account, contingency and debt service reserve account

o Summary of results from the PPP-reference model: NPV

- Risk Assessment

o Comprehensive risk matrix for all project risks (The following are some of the risks that need to be considered (this is a non-exhaustive list): (i) Technical risk; (ii) Market Risk (i.e., demand); (iii) Counterparty risk; (iv) Completion risk; (v) Operation Risk; (vi) Price and tariff risk; (vii) Political risk; (viii) Legal risks; (ix) Fiscal/macroeconomic risks; (x) Regulatory risk; (xi) Environmental risks; (xii) Resettlement risks; and (xiii) Force Majeure risks.

In doing the above matrix, the Transaction Advisors shall also:

identify the risks that the Project would face;

who among the stakeholders (Gov, other investors, International Finance Institutions (IFIs) and other financiers) would be negatively affected in the event of the risk materializing;

summary of the institution's retained and transferable risks;

o The review should contain recommendations on the mitigation mechanisms for each of the identified risks to be implemented by the party identified to bear that risk. In doing so, assessment and applicability and economy of various risk mitigation mechanisms

35

should be carried out, including but not limited to: (i) private mechanisms such as commercial insurance; (ii) specific developed country mechanisms such as export credit insurance and investment insurance available from national agencies (e.g. Overseas Private Investment Corporation OPIC of US); (iii) risk mitigation and insurance mechanisms from IFIs, including partial risk and partial credit guarantee mechanisms; (iv) the risk mitigation instruments available [from AfDB Group, Islamic Development Bank group (ICIEC) and World Bank Group’s Multilateral Investment Guarantee Agency (MIGA); (v) sovereign guarantees; and (vi) any special mechanisms that have been developed/deployed around the world in a high risk contexts and their applicability and adaptation for the current context.

- Risk Adjusted PPP reference

o Summary of results: NPV and other key indicators

o Sensitivity analyses

o Statement of affordability

o Statement of value for money

o Recommended procurement choice

Section V: Economic Valuation

- Introduction and Evaluation Approach

- Assumptions

- Valuation Results

- Macroeconomic Impact - This should analyze the: (i) revenues that would accrue to the Gov through value-added taxes, other taxes and levies as contributions to specific funds (e.g. Social Fund), corporate taxes, municipal taxes, customs duties and excise levies on equipment and services imported/purchased, guarantee/on-lending margins charged by the Gov; (ii) impact on sovereign debt levels and debt service position; and (iii) employment generation, regional development, betterment of people directly affected etc;

- Market Analysis – Economic aspects of the target markets: (i) demand projections for the length of the project period (minimum [20] years); (ii) the competitiveness of the Project vis-à-vis country’s current infrastructure; and (iii) the share of the Project in meeting the demand;

36

- Project Level Analysis - Project cost-benefit analysis including: (i) NPV; (ii) FIRR; and (iii) EIRR.

Section VI: Procurement Plan

Annexure I: Statements for information verification and sign off from each advisor to the project

Annex II: PSC model

Annex III: PPP reference model

Annex IV: Risk assessment and comprehensive risk matrix

Annex V: Document list (list of all documents related to the project, where they are kept, and who is responsible for ensuring that they are updated)

Annex VI: Attach as annexure all other documents that have informed the feasibility study and that are of decision-making relevance to the project.

In developing the Feasibility Study, the Transaction Advisor Team, should consider if appropriate the outcomes of the Market Sounding.

5.2 Presentation of the Feasibility Study

The feasibility study, comprising all the above deliverables, must be compiled in a single report in Word format (with relevant annexes) in French (original version) and English (translated version), and delivered as both electronic and hard copy documents (10 copies to be distributed between PPPU, and 3 copies to the AfDB). Two weeks shall be given for PPPU and AfDB to comment on the report.

All financial models must be in Excel format, and must clearly set out all assumptions made, sensitivity analyses carried out, and model outputs. The financial model (in English and French) must be sufficiently adaptable for use by others at later stages. The feasibility study must be presented with a thorough executive summary and must be accompanied by a Power Point presentation that encapsulates all the key features of the study. The executive summary and Power Point presentation must be compiled in such a manner that they can be used by the PPPU’s management for decision-making purposes.

The feasibility study must be of a standard that will be accepted by relevant authorities for the purposes of the PPPU obtaining approval. The Transaction Advisor Team is therefore advised to be fully familiar with the requirements of the relevant authorities.

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6. PPP Procurement Report

The Transaction Advisors are required to work with PPPU and the AfDB to manage the procurement process for securing contracts with a private party. All this needs to be in accordance with the systems and standards set out for PPPs in relevant laws and regulations.The Transaction Advisor Team will then have to deliver the following:

6.1 Approval and Administration of the Bidding Process

The Transaction Advisors must prepare a complete set of procurement documents, complying with public sector procurement law, policies and guidelines, and in accordance with the tendering systems of the relevant authorities. The documentation must be consistent with the results of the feasibility study and enable the PPPU and other Sub-National Entities to obtain relevant approvals if needed.

The Transaction Advisor Team must also include in the report all the necessary drafting, bidder communication and administrative support necessary for the entire procurement process to be conducted in accordance with law and policy, and to the highest standards of efficiency, quality and integrity.

Detailed Procurement Plan

The Transaction Adviser will design a complete procurement plan and process based on applicable procurement requirements, including:

- Advice on mechanisms to maximize competition while avoiding unrealistic bids and project vulnerability from overly aggressive bidding.

- Reviewing information to be provided by PPPU to bidders to manage Liabilities.

- Technical review, including:

o review of general functional/technical solutions,

o assessment of the estimated capital and operating costs

o review the proposals and compare them with current best practice, highlighting areas where the proposed solutions will increase risk (and therefore price) and making suggestions for changes in current proposals.

o Capacity of the site, and appropriateness for the technology and performance required of the Project,

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o weather conditions, status of land availability, status of permissions and permits,

o construction management contraints, etc.

o service levels and operating costs

o preparation of all alignment drawings and specifications (to the extent not provided in the feasibility study)

o review of project data, including ground conditions

o review of capital cost estimates from feasibility study, benchmarking against out turn costs /published cost estimate data on other projects

o review of operability of scheme in relation to technical specification

o infrastructure, off-take demand and required levels of output, availability and safety

o commentary on integration with - and linkages to the existing network (electricity grid or transport corridor or other applicable network)

o expected environmental and social impacts

- Designing pre-qualification and bidding procedures

- Designing key aspects of the tender procedure, for example deciding whether and to what extent to accept variant and non-conforming bids, how many bidders must bid before the process is valid, what rules to set in relation to the assessment of bids (scoring regimes, timing of bids and rejecting of excessively low bids) and how to maximize competition without sacrificing quality of bids.

- Outlining Tender Documentation

- Outlining the PPP contract (including all annexes) that implements the chosen PPP approach:

o applying the risk matrix developed during the feasibility study, but updated to address all project issues and market context

o explaining to PPPU whether and to what extent certain provisions could be amended without disturbing the key risk allocation goals of the Gov

o To make the PPP project financial viable or more cost effective. The Gov may need to provide some other financial instrument (e.g. equity,

39

sovereign guarantee). The Transaction Advisors shall identify these needs and advice the Gov, via PPPU, on structuring of such instruments, their drafting, negotiation and implementation (e.g. setting up trusts and escrow accounts, arrangements with security sharing and management and other aspects of financial management and ensuring compliance with financial covenants)

- All advice compliant with applicable law and considering any constraints or opportunities associated with applicable law

- A 2 day workshop with the Gov, PPPU, the AfDB and other relevant authorities to discuss policy decisions and risk transfer issues, followed by 1 further more extensive workshop to agree final project design.

Pre-Qualification

The Transaction Advisors must design and advice PPPU on a pre-qualification (request for qualification (RFQ)) process with the intention of:

- Ensuring that the Gov’s exact interest is communicated clearly to the market

- Determining the extent and nature of interest in the private sector

- Pre-qualifying a competitive number of competent consortia in an equitable and transparent way

The desired result is that every pre-qualified bidder is capable of providing the facilities and services required by PPPU. The Transaction Advisors must:

- Prepare all the necessary RFQ documentation, including advertising material

- Set up and administer the process by which the authorities can pre-qualify the parties, including responding to questions and interfacing with bidders; and

As part of this process, the Transaction Advisors shall develop a tightly focused promotional campaign for the Project, including short press briefings, advertisement inserts to be published in international trade publications and business newspapers, followed up by the targeted marketing of the selected generation and distribution companies through organizing Road Shows and Seminars for potential investors as well as initiating direct communications with them.

Bid evaluation criteria and bid process design

The Transaction Advisors must: - Set up a bid evaluation system and criteria;

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- Design a suitable bid process that will ensure comparable bids;

- Devise effective systems for communicating with bidders; and

- Inspire market confidence.

If appropriate, a system that allows for variant bids may be designed.

Request for proposals (RFP)

The Transaction Advisors must prepare an RFP document in accordance with best industry practice and applicable laws and regulations, consistent with the results of the feasibility study. The RFP must concisely set out:

- the output specifications of PPPU

- requirements for compliant bids

- a risk profile as established in the feasibility study

- the payment mechanism

- the bid process

- evaluation criteria

- bidder communication systems

Draft PPP Agreement

The Transaction Advisors must prepare a draft PPP agreement, in close liaison with PPPU, implementing the risk allocation regime and using best practice to maximize competition and keep pricing low, while protecting the country’s interests with a view to project implementation and manageability over the term of the project. The agreement will include all necessary annexes and subsidiary documentation, e.g. performance specification, project scope, client’s requirements, technical specification, project performance monitoring regime, code of construction practice, requirements for network integration, etc.

Approval by the Relevant Authorities

The Transaction Advisors must compile all the documentation necessary to obtain necessary approvals that enable the procurement process to begin.

Administration of the Bidding Process

The Transaction Advisors are to provide all necessary administrative support to the relevant authorities for the efficient and professional management of the bidding process.

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This includes managing a data room and other dissemination of project data to bidders, facilitating structured engagement between the PPPU and bidders, helping the Gov communicate effectively with bidders, including responding to bidder queries, managing bidder conferences and responding to communications with bidders to manage Government liabilities, and receiving bids.

6.2 Evaluation of Bids

The authorized staff of PPPU, helped by the Transaction Advisor, must evaluate bids. A Best and Final Offer (BAFO) process may be required. When costing this phase of work the Transaction Advisor must allow for the possibility of administering a BAFO process. If there is no BAFO process, the transaction advisor's remuneration will be adjusted accordingly.

6.3 Demonstrating Value-for-Money

Value for money must be demonstrated by comparing the net present value (NPV) of the bids received with the NPV of the PSC for the Project, with a suitable adjustment for risk assumed. The results of the bidding and evaluation of bids must be presented in a single value-for-money report (with relevant annexes) that demonstrates clearly how value for money will be achieved with the preferred bidder. The report must clearly indicate the preferred and second-ranked bidders and provide motivations. The value-for-money report must be in a suitable format and of a suitable standard for the relevant authorities to get necessary approvals if needed.

6.4 PPP Agreement Negotiations and PPP Agreement Plan

The Transaction Advisors must assist the relevant authorities in final negotiations with the preferred bidder. This will involve:

- preparing suitable negotiations teams

- categorizing issues appropriately, developing timelines for completion

- planning negotiation tactics

- reviewing proposed sub-contracts, in particular the Engineering, Procurement and Construction Contract, the Operations & Management Contract, and the concession agreement to the extent forms of these contracts have not been included in the PPP contract or the tender documents,

- advising on proposed changes to the agreed form sub-contracts,

42

- review of preferred bidder satisfaction of the conditions precedent to the PPP contract, often including the validity of licenses and permissions obtained by the preferred bidder, formation of corporate vehicles in the form required, financial close of the project financing, and implementation of the commercial requirements for performance of the project

- relationship with second and third place bidders, including managing bid bonds and on-going discussions to prepare for the eventual withdrawal of the preferred bidder

- processes for reaching agreement

- review and negotiation of the financial documentation which will often have a direct effect on the rights and obligations of the Gov

- legal opinion that transaction is binding on its terms

- legal opinion on security and financial management structure

- legal opinion on revenue structure and current regulatory mechanism.

The Transaction Advisors must ensure that all agreements reached are incorporated into all the financial, commercial and legal documentation, and must assist with drafting the necessary and related correspondence. The final terms of both agreements, each as negotiated with the preferred bidder, must be submitted by the relevant authority, along with the PPP agreement management plan for the Project, for approval. The Transaction Advisor is responsible for compiling the necessary submissions for the relevant authority to obtain this approval, including a comprehensive legal due diligence of the accounting officer/authority has been completed. This will relate to legal compliance, competence and capacity to enter into the PPP agreement.

6.5 PPP Agreements Signature, Close-Out Report and Case Study, and Financial Closure

The Transaction Advisor Team must help the relevant authorities with all functions related to signing of the final agreements through to financial close. The transaction advisor must also compile a comprehensive close-out report and case study, and must incorporate any additional factors that may be required by the client. The close-out report will be a confidential document of the Gov. The case study will become a public document, made available on various government websites. The Transaction Advisor Team must, in close liaison with the relevant authorities, draft a comprehensive PPP management plan for the relevant authority, in accordance with the provisions of the PPP agreement, to help in the management of the Project and its risks, rights and obligations after financial close. The management plan will be delivered no later than 20 days after financial close. This will be followed by a 5 day workshop with the Project Team to discuss project implementation and

43

management of relevant entities rights and obligations over the term of the Project, followed by 1 further workshop as follow-up. Financial closure signifies that all the procurement deliverables have been successfully completed, and that the Transaction Advisor's work is finished.

7. BIDBING, TRANSACTION ADVISORS SKILL, EXPERIENCE, REMUNERATION AND MANAGEMENT BY THE CLIENT

7.1 Bidding

Each Bidder shall at the same time submit two separate proposals for each Phase. These are:

(i) Undertake of a Comprehensive Feasibility Study for the Project; and

(ii) Advisory Services for the Procurement of the Project.

The continued engagement of the Transaction Advisor for Phase (ii) will be decided based on good performance during Phase I. The continued engagement of the Transaction Advisor Team will be decided two weeks after Completion Date of Phase I, through the means of an official communication by PPPU. If the same Transaction Advisor Team is selected for Phase II, it should be able to provide a discount on the deliverables of Phase II.

7.2 Necessary Skills and Experience

The Transaction Advisor will comprise a team, managed by a single lead advisor. The members of the team will have the skill and experience necessary to undertake the range of tasks set out in these terms of reference. Each individual on the team must be personally available to do the work as and when required. The lead advisor will be held accountable, in terms of the transaction advisor contract, for ensuring project deliverables and for the professional conduct and integrity of the team.The skills and experience required in the Transaction Advisory Team are as follows:

- financial analysis, with relevant PPP and project finance experience through to financial close

- PPP procurement and structuring

- legal, with relevant law and experience in the drafting and negotiating of PPP and PPA agreements

- technical due diligence and advice on PPP structuring and contracts

- Project planning management

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- Project facilities management

- relevant expertise in the specific sector

- contract management

- project management.

7.3 Remuneration Schedule and Disbursement Arrangements

Each bidder shall provide a Remuneration Schedule for each Phase of the Transaction linked to the main deliverables of each Phase and to allocate resources in accordance with the proposed schedule. Remuneration of the transaction advisor will be payable in [USD], on a fixed price for each of 3.1 and 3.2 above (corresponding to PPP Feasibility Study and Procurement of the project cycle). The procurement portion of the work may or may not transpire at the end of the feasibility study, and therefore Phase I should be priced accordingly.Deliverables completed in accordance with the remuneration schedule will be approved by PPPU and AfDB, after which invoices may be submitted for payment as per the remuneration schedule. PPPU will pay within 30 days of receiving the approved invoice.

Table 1: Example of a Remuneration SchedulePhase Task Delivery

DateFee Due

Date

I

Draft Feasibility StudyFinal Feasibility Study[…]

II

Commence Pre-QualificationPre-Qualification AnnouncedBidding CommencedBid SubmittedPreferred Bidders SelectedBAFO SubmissionAwardPPP and PPA Agreements Signed and in Force[…][…]

7.4 Disbursement Arrangements

Out-of-pocket expenses will be paid by the executing agency at cost within an agreed ceiling. All claims for travel and other legitimate disbursement expenditure must be pre-approved by the PPPU before they are incurred. An email system for these approvals will be set up when the Consultancy contract is signed. Pre-approved project expenditure on

45

international travel, related reasonable accommodation costs, expenditure on document reproduction, translation and interpreter services or any other legitimate pre-approved project disbursement expenditure will be reimbursed at cost. Other legitimate Project costs such as telephone, fax, photocopies and internet access will be reimbursed at cost. Payment will be made within 30 days of PPPU receiving approved and substantiated invoices, and does not form part of the remuneration schedule. Bidders are required to propose a ceiling for such disbursements in their Bids. This ceiling will not be evaluated as part of the price proposal.

7.5 Management of Transaction Advisor by the Client

The Transaction Advisor Team will be appointed by a Project Officer, in accordance with AfDB’s Procurement Rules and Guidelines. A Project Officer was appointed by PPPU to take full responsibility for managing the Transaction Advisors’ work and for ensuring delivery on the project. The Project Officer is Mr/Mrs XXX. and can be contacted by email at … or by phone at ….The Project Officer has established a Project Unit to engage regularly with the Transaction Advisor Team for efficiently completing the various delivery items. The Project Unit will meet at least monthly and the Transaction Advisor will report progress at these meetings, as instructed by the Project Officer. The Project Officer will confirm that the transaction advisor has satisfactorily completed each deliverable before invoices can be submitted for payment. A Transaction Advisor Team, housed at MoWE will be nominated in due time.

Annex I: Project Concept Note

IMPORTANT NOTE: Any information presented in the Project Concept Note hereunder shall only be used as informative and to complement the information presented in the TOR about the Project. The PPPU and the AfDB acknowledge that the final specificities of the Project will likely differ from those hereunder.

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Annex 4

DRFAT TERMS OF REFERENCE

AFRICAN DEVELOPMENT BANK

RECRUITMENT OF A PPP INVESTMENT SPECIALIST

1. INTRODUCTION1.1 The purpose of this document is to set out the Terms of Reference for the supply of advisory services to the African Development Bank (AfDB). The work to be undertaken by the advisors (the Consultants) will involve the support of the Government of Tunisia (GoT) in its efforts to successfully establish a Public-Private Partnership Policy and institutional framework, a PPP Unit (the PPP Unit) and to identify and prepare PPP pilot projects. 2. BACKGROUND2.1 Tunisia lags behind in the use of public-private partnerships (PPPs) to implement public policies. Effective & efficient PPPs are uncommon (airport, power plant, with several attempts in the late 2000s - desalination plant, sewage treatment plants), and are mostly designed as concessions. Hence, almost all essential public services are still delivered by the state or public enterprises. The reasons for the relatively low use of PPPs under the former regime are diverse and include: the existence of efficient public operators; the willingness of the former regime to maintain a tight control over public services regulation and delivery; a relatively narrow legal environment and a lack of transparency and good governance at the state and government.2.2 After the revolution the new Tunisian authorities expressed their willingness to promote the use of such partnerships, with the aim, among others, to lighten the state investment burden, to improve public and private governance, to improve the quality of service delivery, to improve infrastructure maintenance and to increase foreign direct investment. In this context a new law has been prepared during the course of the year 2012. The revised law on Public-Private Partnerships is expected to be adopted by mid-2013 (and modifying the Decree n° 2008-2965 dated 8 September 2008, relating to the creation of Unit for the monitoring of concessions and all types of PPPs). The law should provide a legal framework for Public-Private Partnerships (PPPs) and should enable the Government to better leverage the private sector financing and development of economic and social infrastructure projects. In parallel to the finalization and adoption of the new PPP law, Tunisia critically needs to embark on operationalizing this reform in a context where PPPs knowledge is relatively limited nationally. The establishment of a specific unit – which will be a foundation for good governance and expertise in this specific field - is critical. Indeed, the increasing willingness (and pressure) of the private sector to engage on this front in Tunisia could potentially cause distortions and represents a risk if not managed properly.3. OBJECTIVES OF THE ASSIGNMENT3.1 In this context, the Government of Tunisia (GoT) has requested the support of the AfDB to support its efforts in operationalizing a PPP Program comprising below 5 components:

Establishment of a PPP policy and institutional framework Setting-up of a PPP Unit Capacity building

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PPP project identification and project preparation Communication and stakeholder consultation.

The assistance proposed by the Bank includes the recruitment of a PPP Investment Specialist (PIS) to steer the development of the Program. The present ToRs pertains to the activities of the PIS.4 PIS’s Activities:In close collaboration with AfDB, the PPP Unit and Office of the Prime Minister (OPM), the PIS shall:

1. Facilitate high level coordination of the PPP Program between OPM, Ministry of Finance (MoF), the relevant line ministries and utilities.

2. Ensure end-to-end coherency of Program from institutional/policy work to actual delivery of projects.

3. Ensure coherent approach between different donors acting in the Program.4. Support stakeholder consultation and communication efforts undertaken by the GoT for

the purpose of advancing the PPP agenda.5. Support the development of the Program’s pipeline of projects. 6. Support GoT in the preparation of PPP projects until selection of a private partner,

signing of project and financial documentation and supervision of construction and early stage operations.

7. Facilitate interface with the Bank in relation with Program development 8. Advise on industry best practices and knowledge.

Qualifications and Experience PIS shall have the following qualifications / experience.

1. Participated on the private equity or private lending side to the closing of at least 3 PPP transactions

2. Min 5 years of transactional experience in project finance / non-recourse lending3. Engineering and MBA/Finance background is appreciated4. Exposure to both commercial banks and private sector development institution is a must5. Should have experience in at least 2 of the 4 infrastructure sub-sector (Water, ICT,

Power, Transport)6. Should be fully bilingual French and English. Arabic is a plus.7. Strong negotiation skills and capacity to reach consensus

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ANNEX 5

BREAKDOWN OF OECD EXECUTED ACTIVITIES

Unit number year 1 number year 2 cost per unit (for input) Sub-total212270

Input 1 OECD staff/ average cost per month 6 3 12500 112500Input 2 OECD administrative staff/ average cost per month 1 1 8500 17000Input 3 Travel OECD Staff 6 0 800 4800Input 4 Per diem (5 days x6) 30 0 185 5550Input 5 National expert / cost per day 30 0 400 12000Output Report on legislative framework* 1 NAOutput Greater policy coherence in administration NAOutput Number of reforms proposed NA

Outcome Reforms identified across legislative framework with active participation of relevant agencies

1 NA

151850

Input 1 OECD staff/ average cost per month 0 4 12500 50000Input 2 Travel OECD Staff 0 4 800 3200Input 3 Per diem (3 days x 4) 0 12 185 2220Input 4 Logistics of meeting 0 1 5000 5000Output Synthesis of primary recommendations NA NAOutput Agreed timeline for implementation NA NA

Outcome Greater policy coherence in administration & proposed timeline for implementation and sequencing of reforms

NA NA

60420

237140

Input 1 OECD staff/ average cost per month 8,5 2 12500 131250Input 2 Travel OECD Staff 6 800 4800Input 3 Per diem OECD Staff (4 days x 6) 24 185 4440Input 4 Fees for consultants & peer participants from best practice countries/day 35 550 19250Input 5 Travel consultants & peer participants 4 1000 4000Input 6 Per diem for consultants and peer participants 16 185 2960Input 7 National expert/cost per day 30 0 400 12000Output Report on the institutional structure in Tunisia compared to best practices in OECD countries NAOutput Priority reforms identified NAOutcome Reform of institutional structure for PPPs NA

1787002B. High level launch of reportInput 1 OECD staff/ average cost per month 2 12500 25000Input 2 OECD administrative staff/ average cost per month 1 8500 8500Input 3 Travel OECD staff 2 800 1600Input 4 Per diem OECD Staff (3 days x 2) 6 185 1110Input 5 Fees for consultants & peer participants from best practice countries/day 18 550 9900Input 6 Travel consultants & peer participants 6 1000 6000Input 7 Per diem for consultants and peer participants 18 185 3330Input 8 Materials 3000Output High-level dissemination of report findings NAOutput Discussion of recommendations/ Launch of report NAOutput Follow up consultations NA

Outcome Framework for implementing reform of institutional structure for PPPs

NA

58440

1. Coherence of legislative framework for PPPs1A. Participatory analytical work (based on OECD policy tools)

1B. Follow-up all-stakeholder workshop (to share & assess recommendations)

2. Institutional structure for PPPs2A. Analytical report

49

99300Input 1 OECD staff/ average cost per month 5 12500 62500Input 2 Travel OECD staff 5 800 4000Input 3 Per diem OECD Staff (3 days x 5) 15 185 2775Input 4 Fees for consultants & peer participants from best practice countries/day 15 550 8250Input 5 Travel consultants & peer participants 5 1000 5000Input 6 Per diem for consultants and peer participants 15 185 2775Input 8 Meeting logistical costs 1 9000 9000Input 9 Materials (coursepack) 100 50 5000Output Coursepack for training programmes 1 NAOutput Workshop expert presentations 10 NAOutput Experience sharing & best-practices explained NA

Outcome Greater understanding and expertise of Tunisia PPP Unit on the considerations for successful PPP implementation

NA

198150Input 1 OECD staff/ average cost per month 10 1,5 12500 143750Input 2 OECD administrative staff/ average cost per month 1 1 8500 17000Input 3 Travel OECD staff 5 800 4000Input 4 Per diem OECD Staff (5 days x 5) 25 185 4625Input 5 Fees for consultants & peer participants from best practice countries/day 35 600 21000Input 6 Travel consultants & peer participants 5 1000 5000Input 7 Per diem 15 185 2775Output Report on the institutional structure in Tunisia compared to best practices in OECD countries NAOutput Discussion of preliminary results/ Launch of report NAOutput Follow up consultantions NA

Outcome Facilitated institutional & procedural changes with regards to budgeting & appropriating for PPPs & capital investment NA

58525Input 1 OECD staff/ average cost per month 3 12500 37500Input 3 OECD administrative staff/ average cost per month 0,5 8500 4250Input 3 Travel OECD staff 5 800 4000Input 4 Per diem OECD Staff (3 days x 5) 15 185 2775Input 5 Travel for peer participants 4 1000 4000Input 6 Meeting logistical costs 1 6000 6000Output Material for dissemination on reforms (regularly updated) 0 NA NAOutput Presentation on current state of play 0 1 NAOutput Feedback secured from conference participants 0 NA NA

Outcome Tunisian experience showcased & opportunities for future collaboration identified

NA

92,7 805385

4. Budgetary processes and procurement framework

5. Peer-to-peer dissemination of findings & results

Grand Total

3. Implementation & value for money in PPPs

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