Kyrgyz Republic
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Consultant’s Report August 2012 TA 7819-KGZ: Enabling Identification of Public-Private Partnership (PPP) Projects and Capacity Building in Kyrgyz Republic Prepared by: Robert Brown Eastbourne, United Kingdom For Asian Development Bank This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. ABBREVIATIONS ADB - Asian Development Bank CDA - City Development Agency (of the Bishkek Municipality) EBRD - European Bank for Reconstruction and Development GOK - Government of the Kyrgyz Republic ICIP - Investment Climate Improvement Program IFI - International Finance Institution JICA - Japan International Cooperation Agency KfW - Kreditanstalt für Wiederaufbau KYRM - Kyrgyz Resident Mission (of ADB) MEAP - Ministry of Economy and Anti-Monopoly Policy MOF - Ministry of Finance MTC - Ministry(formerly of Ministry Transport of Economyand Communications and Economic Regulation-MER) PPP - Public Private Partnership PPPA - Public Private Partnership Authority RMU - PPP Risk Management Unit TA - Technical Assistance UNDP - United Nations Development Program 2 CONTENTS This report contains the main sections covering; I. Executive Summary II. Main Report A. Introduction B. Background C. Scope of Work under the TA D. Time Inputs E. Activities of the Consultant under the Scope of Work F. PPP Project Development Activities G. Constraints and Issues H. Conclusions I. Recommendations III. Appendices A. Revised TOR for International Consultant B. PPP Framework Activities/Documents a. The 2012 PPP Law in English (edited) b. Assessment of the Compliance of the Kyrgyz Republic PPP Law of February 2012 c. MOF RMU Policy in English d. Comments to MEAP on Risk Management Policy e. Draft Summary Guidelines for RMU Activities f. PPP Project Cycle-Risk Assessment Focused g. General Risk Matrix h. Screening and Identification of PPP Projects i. First draft PPP policy for consideration by MEAP C. PPP Project Activities/Documents a. List of the Draft Project Briefs b. Draft PPP Project Briefs for; 1. Osh Airport (updated May 2012) 2. Bishkek Car Parking (updated May 2012) 3. Bishkek Kara Balta Toll Road 4. Bishkek Lighting 5. Bishkek Solid Waste Management 6. Bazar Korgon – Kyzyl Unkur – Sargata Toll Road 7. Issyk-kul airport D. Framework for the PPP Working Group E. People and Organizations Met F. Reports G. Draft MEAP PPP Work Program 3 Executive Summary 1. Introduction a. This report provides the final report required under TA 7819 by Robert Brown, PPP Consultant. The TA was undertaken on an intermittent basis between September 2011 and June 2012. The Consultant’s input was provided over 7 field visits each of approximately 2 weeks duration. b. The Mid-term Development Program, 2012-20141, is the strategic planning document of the Government of the Kyrgyz Republic. This document confirms the Government’s commitment to the development of PPPs. This TA program represents support to the Government in achieving its objectives related to PPP development. c. The fundamental components of the TA comprised support to (i) the developing PPP Framework (ii) PPP project development and (iii) PPP capacity building. d. The assignment was extended at the request of the Government and with agreement of ADB from 60 to 125 working days to meet the circumstances in the field and to take the opportunity to develop seven PPP Project Briefs. e. The Consultant worked cooperatively with various Ministries and the City Development Authority (CDA) of the Bishkek Municipality, and was well supported from ADB/KYRM2, and through experienced national consultant inputs3. Description of Findings and Activities: 2. PPP Framework a. The PPP diagnosis undertaken at the outset indicated a weak PPP framework. The draft PPP law was progressing slowly and had significant deficiencies. There was no PPP Policy. There was no policy on risk management and financial support. b. The Consultant supported the Ministry of Economy and Anti-Monopoly Policy (MEAP) on a number of major PPP issues. He contributed4 to ensuring a number of significant changes were incorporated in the PPP Law such that when it was signed into law in February 2012 it could be considered as compliant with good international practice. c. The Consultant worked with the Ministry of Finance (MOF) over several months to agree a risk management and financial support policy for PPPs. d. The Consultant worked with MEAP to support the implementation of a Government Resolution which will endorse (i) the MEAP as the home of the PPP Authority (ii) the MOF as the home of the PPP Risk Management Unit (RMU) and (iii) the objectives of the PPP RMU. This resolution is now (week of May 28, 2012) at the Ministry of Justice for processing. e. The Consultant drafted an initial PPP policy now being finalized by MEAP, a number of PPP technical notes including on PPP cost recovery and a framework for the PPP Working Group which met for the first time on May 30th 2012. 1 Mid-term Development Program of the Kyrgyz Republic for 2012-2014. Approved by the Government of the Kyrgyz Republic Decree #239, April 12, 2012 2 The Consultant appreciates the support from ADB Manila (Senior Project Officer, Jurgen Conrad) and from KYRM, Bishkek especially from Project Officer, Mirdin Eshenaliev 3 Bakyt Kartanbaev and Nurlan Abdyshev 4 Many bodies made comment including the Consultant who drafted 10 specific suggestions which were subsequently almost entirely included in the new PPP Law. 4 3. PPP Project Development a. There were few PPP project initiatives at the outset of the assignment. b. The Consultant developed a PPP project screening methodology and discussions have started with MEAP to adopt the screening criteria through a ministerial decree. c. Simultaneously with the development of screening criteria, several projects were selected for initial evaluation in Energy, Transport and the Municipality. By January 2012 it had been agreed by GOK that seven projects would be submitted by MEAP to ADB, with the help of the Consultant, as part of the ADB funded Investment Climate Improvement Program (ICIP) Matrix and Action Plan. d. With the support and assistance of the Ministry of Transport and Communications (MTC) and the CDA, seven project briefs, 4 in transport and 3 under the Municipality, have been drafted. e. The Consultant also drafted a PPP Project Cycle. f. The Consultant also provided comments on a number of projects initiated by the private sector (unsolicited projects). These projects included housing, power and airport projects. g. As briefed by ADB, the Consultant also discussed cooperation between ADB and other IFIs/donors in relation to the development of PPP Projects. Cooperation is advanced with JICA on the car parking project and very useful discussions have taken place with IFC and KfW consultants on PPP in the health sector and a number of discussions were held with EBRD on solid waste management and municipal projects. There were also discussions with UNDP. 4. PPP Capacity Building a. Some 15 workshops were held in MEAP, MOF, MTC, Ministry of Energy, the Municipality and the Chamber of Commerce and other private sector organizations. A seminar was held at the request of the Municipality on 24th May and some 70 people attended including the First Vice Mayor and the ADB Country Director. It was understood to be useful as it was the first exposure to PPPs for many Municipal staff. b. Preliminary PPP Guidelines were developed at the request of the MOF RMU. 5. Reports Six progress reports, one Inception report and a draft final report were produced as per contract. This report is the Final Report. Conclusions of the Consultant 6. Overview on the Technical Assistance - TA7819 KGZ a. The Consultant considers the TA has met all of its key objectives and activities under the TA will provide support for future PPP development. b. The TA support has been critically important to the Government and has been welcomed by them and the private sector. It is doubtful if the PPP Law, Risk Management policy, the seven project briefs and on-going work could have been achieved and implemented consistent with international standards and/or acceptable to the ADB without this ADB TA. c. The TA was designed to be implemented on an intermittent basis and this has proved to have provided a flexible approach for the support to Government with a number of on- going changes being made to the TOR during the assignment to ensure its effectiveness. 5 d. It is felt that the combination of (i) the enthusiasm and commitment of mid to senior level government staff (ii) the on-going support from ADB, including importantly on the ground from KYRM, and (iii) the inputs of the TA consulting ‘team’ have been very effective in achieving the key objectives. e. Current on-going ADB support to MEAP on the revision of PPP associated laws and regulations to make them internally consistent with the new PPP law, is also important. 7. The PPP Planning Framework a. The initial development of the PPP framework is nearing completion with the new PPP Law now implemented and PPP Risk Management nearing implementation. PPP Policy and consistency within laws and regulations are under preparation5 and should be finalized soon. b. The PPP Law provides a generally good basis for PPP development but there are many places in the Law where there is considerable need for subsequent amplification. The need for clear lower level implementing decrees, regulations and guidelines is therefore substantial with this need currently being met in part by the three legal consultants funded by ADB in the MEAP. c. The continued amplification of the PPP framework is needed and will need intensive TA support. The PPP framework still needs PPP operational procedures and guidelines, draft model contracts, tender documentation, terms of reference and procedures for the activities of the PPP network and other PPP planning and processing activities.