1. Economic Policy Reform and
Competitiveness Project
Attracting Private Investment for
Urban Infrastructure
Ulan Bator – Mongolia
June 11th, 2009

2. Economic Policy Reform and
Competitiveness Project
Agenda
1. Private Participation: Understanding the Concept
2. Private Investment in Urban Roads
3. Urban Infrastructure Development
4. Mongolian Urban Infrastructure Challenges

3. Economic Policy Reform and
Competitiveness Project
1. Private Participation:
Understanding the Concept

4. Economic Policy Reform and
Competitiveness Project
Why to use PPP?
• Excess of demand for the facility, product or service, managed
by the public sector.
• Potential increase of demand in the short/medium run for the
facility, product or service.
• Low capacity of the public sector (lack of financial resources or
inefficiencies) to increase the level of investments to close the
excess of demand or to improve the performance/efficiency and
quality of the service.
• Fast way to reach Social Responsibility/ Accountability in the
allocation of resources and sustainability.
• Cost recovery and private sector financing.
• Creation of a new industry, new formal sector in the economy.
Employment, wealth and economic growth.

5. Economic Policy Reform and
Competitiveness Project
Several Ways of Partnership
Operation and
Management
Contracts
Joint Venture Leasing
PPP
BOT
Partial
DBOT (DBFOT)
Divestiture
BOO

6. Economic Policy Reform and
Competitiveness Project
2. Private Investment in Urban
Roads

7. Economic Policy Reform and
Competitiveness Project
Chile
• The Concession Law establish that the Ministry of
Public Works is the public agency in charge of the
concession of public works process.
• Establish clearly the mechanism and requirements to
submit unsolicited proposals
• Procurement procedures and bidding variables are
clearly specifies.
• Encourage a competitive biding process
• Rights and obligations of the concessionarie
• Conflict resolution procedures
• Causes of contract suspension and extinction

8. Economic Policy Reform and
Competitiveness Project
Chile

9. Economic Policy Reform and
Competitiveness Project
Santiago in the Nineties
Population: 5 million
Economic Development 10,3 Million of trips per day
135 cars / 1000 persons 65%: Public Transportation
Rate Growth: 6% annually 35% : Private Transportation
Lack of Public Investment
Transport System with huge operation problems

10. Economic Policy Reform and
Competitiveness Project
Santiago Infrastructure Plan
• Public Transportation Modernization
• Enlargement of the Metro System
• Enlargement of Suburban Trains
• PPP for the main urban roads
• Economic regulation for the private transportation
• Enhancement of the local transportation
infrastructure
• Traffic control system improvement

11. Economic Policy Reform and
Competitiveness Project
R-57
PPP Urban Roads in Santiago-Chile
1. Costanera North Highway
2. North-South System
R-68
R-68
3. Américo Vespucio South
4. Américo Vespucio North
5. Radial NorOrient
6. South Urban Segment
R-78
R-78
R-5 Sur
R-5 Sur

12. Economic Policy Reform and
Competitiveness Project
Santiago Infrastructure Plan
• Three tariffs: 1T
Valley US$ 0,05/km
Peak US$ 0,06/km
Congestion US$0,12/km
2T
• Tariff adjustment RPI +
3,5% annually.
• Concessionaire can do
tariff management. 3T

13. Economic Policy Reform and
Competitiveness Project
Bidding Mechanism
• Concession Period: 30 years
• Bidding Mechanism:
• Tramo 1: “Payment for goods and rights (BD)"
Payment by the sponsor of the concessionaire before to
create the concessionaire company.
• Tramo 2: Investment Plan
• Tramo 3: Payment from the Government

14. Economic Policy Reform and
Competitiveness Project
Urban Road Concession: East-West
Urban System
Results
•Investments: US$385 million
•Lenght: 42 kilometers
•Reduce gas emission
•Reduce contamination
•Reduce congestion
•Reduce travel time from Las
Condes to the Santiago Airport
•Implementation of the electronic toll road system “free flow” which let to the
users go through the road without stop to pay tolls.
•The number of accidents in the road is very low and it reach 8 in average per
month.

15. Economic Policy Reform and
Competitiveness Project

16. Economic Policy Reform and
Competitiveness Project

17. Economic Policy Reform and
Los Proyectos – Sistema Oriente - Poniente
Competitiveness Project

18. Economic Policy Reform and
Competitiveness Project

19. Economic Policy Reform and
Competitiveness Project
Urban Roads Bidding Results

20. Economic Policy Reform and
Competitiveness Project
3. Urban Infrastructure
Development

21. Economic Policy Reform and
Competitiveness Project
Urban PPP Projects in Chile
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22. Economic Policy Reform and
Competitiveness Project
Urban PPP Projects in Chile

23. Inkosi Albert Luthuli Hospital Reform and
Economic Policy
 Value to government: R4.5 billion Competitiveness Project
 Signed: Dec 2001
 Term: 15 years
 BEE: equity 40%; subcontracting 40%
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24. Economic Policy Reform and
Competitiveness Project
Montería Water PPP: The
first Water PPP in
PANAMA
Montería VENEZUELA Colombia
MONTERIA – year 2000
• Population: 300,000
(80% Low Income)
• Water production: 600 lps.
Bogota
• Non revenue water: 55 %
COLOMBIA • Metering: 0.7 %
• Revenues: $4 M
• Water Coverage: 70 %
• Connections: 36,500
ECUADOR
• Sewerage Coverage: 30 %
BRASIL • Connections: 14,600
PERU
• Capital investments: $70-80 mill
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25. Economic Policy Reform and
Competitiveness Project
4. Mongolian Urban Infrastructure
Challenges

26. Economic Policy Reform and
Competitiveness Project
Energy CHP5 PPP Project
Heating demand is expected for increase by 1000 GCal and electricity demand- by 700 MW
by 2020.
First stage, requirement to construct and operate first unit of Co-generating Heating Plant #5
(CHP- 5) in Ulaanbaatar with heating capacity of 700 GCal and generating electricity 300 MW
is faced by 2012.
International Competitive Bid was announced for procurement of Ulaanbaatar CHP-5 by
former Ministry of Fuel and Energy on August 01, 2008, requesting from Bidders to submit
proposals to construct and operate coal fired CHP with terms of IPP or BOT or BOO including
Feasibility Study, Environmental assessment and Design Drawings.
The technical proposal was opened on January 15, 2009. In spite of 26 Bidders were
expressed their interest to participate in this Bid, only one Bidder- China Datang Corporation
submitted it’s proposal.
The Bid Evaluation Committee, appointed by the Ministry of Mineral Resources and Energy is
working on the selection of the Bid proposal. On evaluation of technical proposal, the
financial proposal of the Bidder was opened on April 20, 2009. Decision from the Bid
Evaluation Committee is not yet issued at this moment.

27. Economic Policy Reform and
Competitiveness Project
Mongolia Challenges
• Urban Roads Infrastructure
• Energy Infrastructure
• Parking Infrastructure
• Public Buildings
• Water System
• Waste Management and Infrastructure
• Jails

28. Economic Policy Reform and
Competitiveness Project
Parking PPP Infrastructure