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Program to Improve Fiscal Capacity for Public Investment - PPP Program

Start date

Thursday, April 15, 2021

Closing date

Thursday, June 3, 2021

Country

Ecuador

Sector

Business and Professional Services

IDB Project

EC-L1230 : PROGRAM TO ENHANCE FISCAL CAPACITY FOR PUBLIC INVESTMENT

Description

The general objective of this Program is to increase the participation of private resources in infrastructure and services at the national and subnational levels and its specific objectives are aimed at: (i) strengthen fiscal management instruments for public investment through Public-Private Partnerships (PPP); (ii) increase the amount of investment structured and tendered under PPP modality; and (iii) increase the amount of public investment (PI) structured and tendered under PPP modality of the Decentralized Autonomous Governments (GAD) with private participation.

 

To achieve the above objectives, the program comprises the following components:

 

Component 1. Creation and strengthening of instruments for responsible fiscal management of PI through PPPs. It will finance: (i) elaboration and implementation of a model for the identification, prioritization, quantification, allocation and mitigation of PPP project risks; (ii) elaboration and implementation of an optimized model for the analysis of multi-year availability of budgetary resources; (iii) elaboration and implementation of guidelines for the valuation, registration, and management of firm and contingent commitments; (iv) development and implementation of an optimized model for fiscal sustainability analysis; (v) development and implementation of a PPP contract management model; (vi) development of a PPP project registration module in the national PI system; and (vii) design and implementation of a training program for public officials on issues related to the preparation, structuring and monitoring of PPP projects.

 

Component 2. Strengthening of PPP IP project structuring instruments at the national level. This component will finance: (i) the development of a public infrastructure asset recycling program, including (a) identification of assets subject to the program; (b) preparation of Terms of Reference (ToR) and bidding documents for structuring; (c) evaluation of proposals and awarding of contracts; (d) management of structuring processes; and (e) design and implementation of a (reimbursable) PPP Development Fund for the structuring of PPP projects; and (ii) preparation and structuring of three PPP projects in priority sectors, to be funded by the reimbursement of the cost of the structuring studies and the resources obtained by the government from the asset recycling program.

 

a. PPP Development Fund to finance the preparation of PPP IP project structuring studies and thus develop a portfolio of bankable projects. The Fund will provide a sustainable source of financial resources for project structuring, and will be capitalized through reimbursement of the winning bidder or sectoral ministries in case of unsuccessful bidding. Until the fund is established, the program will be able to finance the structuring of PPP projects.

 

Component 3. Improving the IP of the GADs, with private participation. It will finance: (i) the preparation and technical, legal and financial structuring of 12 PPP projects; (ii) design and implementation of a guarantee fund for the bankability of GADs' PPP projects; (iii) provision of financial guarantees to two PPP projects; and (iv) implementation of an ongoing plan to strengthen technical capacities and institutional framework of theBDE and GADs.

 

a. Guarantee Fund. In order to support the financial closure of subnational PPP projects, the program will assist in the creation and operation of a Guarantee Fund to guarantee the credit contracted by the private entity with commercial banks for the construction, rehabilitation and management of infrastructure or public services through PPPs. By sharing the risks with the banking sector and with risk capital consultants, it is intended to lower the risk profile of the projects and obtain better credit conditions and lower expected return requirements on the capital invested for the awarded companies, resulting in a lower financial cost for the GADs.

 

b. There is empirical evidence that supports the value of these funds in overcoming the problems that limit access to credit due to perceived risk, both in the infrastructure and PPP areas. To ensure the sustainability of the fund, a contingent resource recovery or counter-guarantee mechanism will be incorporated (either by the GADs or by the awarded company or Special Purpose Vehicle). The fund will be managed by a commercial trust created by the BDE, with a procedures manual detailing its governance and products. The fund will detail, in its design, the conditions necessary to ensure its liquidity and credibility.

 

The Consulting Firm shall submit the following information supporting its experience in: 

 

Pre-structuring and structuring studies for projects under the PPP modality in infrastructure

Eligible countries

Argentina
Austria
Bahamas
Barbados
Belgium
Belize
Bolivia
Brazil
Canada
Chile
China
Colombia
Costa Rica
Croatia
Denmark
Dominican Republic
Ecuador
El Salvador
Finland
France
Germany
Guatemala
Guyana
Haiti
Honduras
Israel
Italy
Jamaica
Japan
Mexico
Netherlands
Nicaragua
Norway
Panama
Paraguay
Peru
Portugal
Slovenia
South Korea
Spain
Suriname
Sweden
Switzerland
Trinidad and Tobago
United Kingdom
Uruguay
USA
Venezuela
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