1

Models of PPP Project Finance

Case Study

Presentation for Canadian

Council on Africa Montreal, March,19-20

African Development Bank Private Sector Operations

1. An Overview of PPP

2. Motivation for PPP

3. Doraleh project Case Study

- Project description

- Project shareholder structure

- Contract structure

The Canadian Council for Public-Private Partnerships defines PPP as “A cooperation venture between the public and private sector, built on the expertise of each partner, that best meets clearly defined public needs through the appropriate allocation of resources, risks, and rewards.

3

1. 1. To attract private capital investment (often to either supplement public resources or release them for other public needs);

2. 2. To increase efficiency and use available resources more effectively;

3. 3. To reform sectors through a reallocation of roles, incentives, and accountability; and,

4. 4. The allocation of risks between partners who are better able to manage risk.

Development, construction and operations of Container terminal in Republic of Djibouti in a 30 year concession under build-operate- transfer PPP arrangement

Total project USD 396 million with debt to equity funding of 70% 30%- first PPP financing in Djibouti

Joint venture between the Djibouti government and Dubai Port World

Djibouti port has a monopoly position for Ethiopian imports and exports

The new terminal has an annual capacity of 1.9 million TEU (twenty foot equivalent container units)

Bank provided USD 100 million, 10 year senior loan.

No loan to government;

Borrower is a single purpose business;

Separate legal and financial entity with ring-fenced cash

flows;

Sponsor guarantees don’t cover all the risks;

High leverage and long repayment terms ;

Contracts with major project parties are a key credit

support mechanism ; and,

Security rarely covers the nominal value of the loan.

100%

DP World Government

of Djibouti

DP World

Djibouti

Port Autonome

International de

Djibouti (PAID)

Doraleh

Container

Terminal

100%

33.3% 66.7% Concession

Agreement

Management

Agreement

JV

Agreement

Direct

Agreement

Direct

Agreement

Procurement

Agreement

Management

Contract Port Services

Agreement

Dredging

Contract Equipment

Contract

Fixed Price

Construction Contract

Direct

Agreement

Finance

Agreement

Doraleh Container

Terminal

PAID DP World

Djibouti FZCO

Government

of Djibouti

Financiers

Civils Crane

Supplier Dredging