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Infrastructure Department

Islamic Development Bank Public - Private Partnership. Infrastructure Department. ‘Together we build a better future’. Outline. Overview of IDB Introduction to Infrastructure Department Public-Private Partnership Eligibility for IDB’s Infrastructure Financing Projects.

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Infrastructure Department

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  1. Islamic Development Bank Public - Private Partnership Infrastructure Department ‘Together we build a better future’

  2. Outline • Overview of IDB • Introduction to Infrastructure Department • Public-Private Partnership • Eligibility for IDB’s Infrastructure Financing • Projects

  3. Islamic Development Bank IDB Scorecard Snapshot • Jeddah, Kingdom of Saudi Arabia • Regional Offices: Kazakhstan, Malaysia, Morocco and Senegal • Field Representatives in several Member Countries • AAA Rating by Moody’s, Fitch, and S&P. Zero-Risk Rating by the European Commission “We are committed to alleviating poverty; promoting human development, science & technology, Islamic banking & finance; and enhancing cooperation amongst member countries, in collaboration with our development partners” • Human Development • Agricultural Development & Food Security • Infrastructure Development • Private Sector Development • Intra-Trade among Member Countries • R&D in Islamic Banking & Finance As of 17 December 2009 Total Assets : US$ 13.1 bn Authorised Capital : US$ 45.78 bn Paid up capital of US$5.5 bn* Paid-up Capital : US$ 7.1 bn Member Countries : 56 Africa – 22 Middle-East & North-Africa – 19 South & South-East Asia – 8 Central Asia –7 Mission Statement Total Employees : 1,014 PriorityAreas

  4. Infrastructure Department Infrastructure Scorecard As of May 2010 • Structure Total Financing : US$ 15.5 bn Total Operations : 939 Active Projects : US$ 9.8 bn Active Operations : 279 Total Employees : 48 Non- Sovereign Operations Sovereign Guaranteed Operations

  5. Aggregate Infrastructure Financing (1975-2010) US$ 15,520 m Net Approved Financing* Sectoral Distribution Geographic Distribution * Total Approvals less Cancellations

  6. IDB’s PPP • Created • In June 2006 initially as Structured Finance Unit, became PPP Division after the Bank reform in 2009 • Objective • Become an Integral and Vital part of the IDB Operations Complex in alleviating poverty in MC • Be responsible for all Debt and Equity based Financing of Non-sovereign Infrastructure Projects, predominantly in “Public Private Partnership” projects, and in Mega Private Sector projects

  7. Public-Private Partnerships (PPP) Division Key Focus Areas • Non-sovereign Financing in the Energy, ICT and Transport sectors • Infrastructure Financing in Member Countries • Creating relationships to leverage IDB’s participation in Infrastructure development • Going forward, create Products/Funds • Credit enhancement tools/instruments • Position IDB as a catalyst for attracting co-financiers and mitigating risk • Advisory services for PPP focused project development/country capacity building Signature Achievements • Aggregate Net Financing* of over US$ 3 billion. * Total Approvals less Cancellations

  8. IDB’s PPP

  9. IDB / PPP Portfolio Value

  10. Benefits of PPP • Improve public sector capacity in terms of developing integrated efficient solutions for the society; • Introduce creativeness and innovation to infrastructure projects; • Introduce both time and cost savings in project implementation; • Create equitable risk sharing between the public sector and the private sector; • Bring in large and highly experienced bidders to the projects; • Create transfer of skills, experience and technology to the public sector.

  11. Islamic Financing Instruments for Infrastructure • Sukuk (Islamic bonds): • Sovereign Sukuk(by Governments, MDB’s for general budget use) • Corporate Sukuk(by corporates using their balance sheets) • Project Sukuk(by project companies, SPV, to finance specific projects) IDB issued its first local currency Sukuk (Ringitt) to finance toll road in Malaysia. • Equity Finance: • Direct equity participation (Musharaka, profit sharing) • Infrastructure Equity Funds • Global, e.g., IDB Infrastructure Funds, I and II • Regional, e.g., IDB-ADB Islamic Infrastructure Fund IDB sponsors and invests in infrastructure funds managed by external Fund Managers. • Debt Finance: • Ijara, Leasing (equipment, plant, machinery) • Istisna‘a, Construction finance (civil works) • Installment Sale About 55% of IDB debt financing is through Istisna'a, 30% through I.S and 15% through Leasing

  12. Security & Assets Sharing in Islamic Project/Corporate Finance Multisource Financing 1. Common Terms Agreement 2. Shared Security Agreement (IDB) Islamic Facility Conventional Facility Ownership Rights of the Leased Assets Assigned/Pledged to the Pool In the event of a liquidation the common security pool is shared by all lenders on a paripassubasis Common Security Pool • All payment obligations in respect of the facilities rank paripassuat all times. • The asset of the Islamic Facility Providers is treated as security and is assigned/pledged to the common pool for the benefit of all lenders. • The common security pool (typically overseen by the Lenders’ Security Agent or Inter-creditor Agent) is shared paripassuby all the lenders (conventional and Islamic). Project Company Lease IDB Owned Asset

  13. Risk Rigor Sovereign vs. Non-Sovereign

  14. Eligibility for IDB’s Infrastructure Financing • The project should have the following key characteristics: • located and incorporated in the MCs. • strong developmental impact • socially and environmentally sound • Financially viable • acceptable risk profile • sufficient local support (enabling environment) • Preference for green projects • PPP projects must have repayment capacity • Tenor depends on the project needs & related risks • Maximum tenor of up to 20 years • Long term financing in local and foreign currency

  15. PPP Projects Djibouti: Doraleh Container Terminal • Project Description: • Construction of a new container terminal with a total quay line of 1.05 km long. • Project represents the first ever PPP style financing in Djibouti • 30 year Concession Agreement • Sponsors:Port Autonome International de Djibouti (PAID) Dubai Ports World (DPW) • Total Amount:US$ 397 Million • IDB Participation:US$ 65 Million (US$15M sell down to OFID) • Tenure: 10 years • Lenders:DIB, SC, West LB, AfDB, Proparco,

  16. Djibouti: Doraleh Container Terminal

  17. PPP Projects SENEGAL: AIBD • Project Description: • The design, construction and management of a new airport in Dakar. • Sponsors: Saudi Binladin Group Daport-Subsidiary of Fraport • Total Amount:EURO 670 Million • IDB Participation:EURO 70 Million (EURO 25 M sell down to OFID) • Tenure:18 years • Lenders:AfDB, AFD, BOAD, IDC, SFD, IDB

  18. PPP Projects Tunisia: TIFERT • Project Description: • The construction of a new phosphoric acid production facility with a capacity of 360.000 tons per annum (tpa). • Sponsors:Groupe Chimique Tunisien Coromandel Fertilisers Limited Gujarat State Fertilisers & Chemicals Ltd. • Total Amount:US$ 290 Million • IDB Participation:US$ 150 Million (US$ 30 M sell down to OFID) • Tenure:15 years • Lenders:EIB, IDB

  19. PPP Projects Mauritania: SNIM • Project Description: • A maintenance and development programme involving the following: • Expansion of Iron Ore Mining capacity in the Guelb region (Guelb II); • Maintenance and modernization of railways; • Building a new Iron Ore Terminal. • Sponsor:SNIM • Total Amount:US$ 840 Million • IDB Participation:US$ 108 Million • Tenure:15 years • Lenders:EIB, AdDB, FDA, IDB, KfW, BNP Paribas, BHF, Fortis

  20. PPP Projects Malaysia: South Klang Valley Expressway (SKVE) • Project Description: • The SKVE is planned as a 43 km three-lane dual carriageway • 40 year Concession Agreement • Sponsor:HuntertonSdnBhd and Virtual Peaks Bhd • Total Amount:US$ 440 Million • IDB Participation:US$ 75 Million (First Local Currency Sukuk) • Tenure:14 years including 4 years gestation • Lenders: Bank Pembangunan, IDB

  21. PPP Projects Jordon: Al Qatrana Power Project • Project Description: • 373 MW combined cycle gas turbine power plant; fuel: natural gas • 25 year Concession Agreement • Sponsor:Korean Electric Power Company (KEPCO) & Xenel Industries Limited (XENEL) • Total Amount:US$ 457 Million • IDB Participation:US$ 80 Million • Tenure: 18 years including 2 years gestation • Lenders: PROPARCO, KEXIM, IDB

  22. Other Projects Other Projects Approved • Projects: Airports, Independent Power Plant, Textile, Refinery, Industrial, Toll Roads, Hydro Power, Petrochemicals, Water, Healthcare, Infrastructure Funds • Countries: Benin, Djibouti, Egypt, Gabon, Iran, Jordon, Malaysia, Mauritania, Morocco, Niger, Pakistan, Qatar, Saudi Arabia, Senegal, Tunisia and Uzbekistan Pipeline of New Projects for next year • Projects: Airports, Independent Power Plant, Oil Refinery and Pipelines, Wind Farms, Agriculture, Gas Fields, Toll Roads, Hydro Power, Petrochemicals, Infrastructure Funds • Countries: Bahrain, Bangladesh, Egypt, Iran, Indonesia, Kazakhstan, Maldives, Mali, Mauritania, Morocco, Pakistan, Saudi Arabia, Senegal, Turkey, Uganda and Uzbekistan

  23. Thank you For your attention!

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