Infrastructure Development Corporation Limited Risk Mitigation through Project Development Focus on...

Infrastructure Development Corporation Limited

Risk Mitigation through Project Development

Focus on Safer Airplanes in addition to better Parachutes

Pradeep Singh

President & CEO

ILFS Infrastructure Development Corporation

March 15, 2005


The Project Development Goals for Infrastructure Projects

To achieve true “Partnership” in Risk Management in Public-Private Partnerships

– Optimal Information Generation to minimize Risks – Balanced Risk Allocation among various State and

Private Stakeholders– Appropriate Management of Allocated Risks through

Policy, Legislative and Regulatory Structures


The Project Development Challenge

Political and Bureaucratic understanding and buy-in for the need for Project Development effort

Risk Capital to undertake extensive studies, structuring and documentation

Technical Capacity to undertake Project Development

Policy & Decision making apparatus within governments

The patience of an elephant and the staying capacity of a bull


Cost & Price Certainty

Regulation

Governance

Project Development


State Government of Andhra Pradesh, ADB - PSD dept., IL&FS Partnership in India

Develop bankable projects for competitive bidding to Private Sector Parties (PSP’s)

Balanced Risk StructureEnvironmentally and Socially Sound ProjectsRobust Contractual ArrangementsCompetitive Pricing and Safeguarding of Public Interest

Objectives

Undertake Project Development for Infrastructure Projects for Public Private Partnerships

Goal


Proposed Sectors Urban Infrastructure

Industrial Parks and Area Development Projects

State Roads and Bridges, Ports, Airports, etc.

Energy and Environment

e-Governance and ITES

Health and Education

Capacity Building and Training

Any other sector mutually decided


Proposed Structure

A Steering Committee– Chaired by Chief Secretary to Government

• 5 Department heads of the Government

• 3 Members from IL&FS and

• 2 members from ADB

An MoA between the Govt. and ADB outlining– Project development framework– Inter-se Roles


Proposed Process

Government proposes Projects to the Steering Committee with preliminary project details

ADB, ILFS together establish Project Development framework, budget and milestones (Initial Screening Report)

IL&FS leads the Project Development work along with Technical Consultants

Steering Committee provides Periodic reviews & guidance


Proposed Financing Arrangement

ADB Role goes beyond TA Assistance

ADB and ILFS to bear the Project Development Risk

Project Development expenses to be capitalized and recovered from the Projects along with a Success Fee

Government to reimburse ADB if it decides to drop a Project mid-way


Role of State Government State Government to mandate ADB/ILFS to develop

each Project

Coordinate with various government departments and allied agencies to facilitate – project clearances– project agreements – fiscal concessions, if required

Contribute in-house technical and other manpower

Review the Projects through Steering Committee

Undertake Policy, Legislative reform as necessary


Role of IL&FS Assist State Government in project identification Prepare Initial Screening Report

Undertake detailed Project Development to create pipeline of bankable infrastructure projects

Procure & manage external technical consultants as necessary

Design & Implement procurement process including bid evaluation, negotiation and selection of private sector partner

Assist in Policy Formulation & Capacity building


Role of ADB

Provide value addition in project development process - its halo effect

Advise on best practices for project development and procurement

Contribute financial resources for Project Development

Assist in Capacity Building of Government Departments

Commit financial resources for Project Implementation, as appropriate


THANK YOU

Infrastructure Development Corporation Limited Risk Mitigation through Project Development Focus on...

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