working with the european bank for reconstruction and...

Working with the European Bank for

Reconstruction and Development

Power & Energy Utilities (PEU)

Presentation to Spanish Confederation of Employers' Organizations (CEOE)

AGENDA

I. Overview of EBRD

II. Power & Energy Utilities: Focus and Experience

III. Working with EBRD

IV. Spain and the EBRD

V. Conclusions

2

Where we operateJanuary 2013

3

Benefits of working with the EBRD

• Flexible deal structure

• Debt finance to both public and private sector

• Syndication under preferred creditor status

• Catalyst to access additional debt

• Support of strategic investors

• Perception of quality investment

• Sector expertise through Board of Directors

• Good corporate governance

• Catalyst to access additional equity

• Positioning as neutral party

• Strong, internationally recognized partner with long term perspective

• Mitigation of political and regulatory risks

• Policy dialogue with government and regulators

• Grant-funded technical assistance

• Finance and operations monitoring

Shareholder’s

Value

EBRD value-added

EquityFinancing

LT DebtFinancing

Shareholder

Value

-

EBRDValue-added

EquityDebt

4

EBRD Facilities

• Project finance loans

• Corporate loans with specified use of proceeds

• Tenor of 10-15 years

• Margin benchmarked to market

• Fixed rate and/or local currency possible

• EBRD can directly finance up to 35% of an enterprise's long term capital (or project costs for greenfield projects); additional funds mobilised through syndication

• EBRD equity stake typically below 20-25% (meaningful, but minority)

• Investment through capital increase

• Invest in Funds to address smaller projects or larger stakes

• Exit through IPO, trade sale or put/call agreement

• Political and regulatory risk mitigation

LOANS EQUITY

5

Main features of financing to PEU Projects

AGENDA

I. Overview of EBRD




V. Conclusions

6

SEMED

2%

Turkey

6%

Russia

21%

Central

Europe &

Baltics

19%

Eastern

Europe &

Caucasus

17%

Central Asia

8% Southeastern

Europe

27%

Financing by Region

PEU Financing by Region and Sector

Natural Gas

Distribution

2% Renewable

Power

21%

Conventional

Power

Generation

57%

Electric Power

Transmission

8%

Electric

Power

Distribution

12%

Financing by Sector

Unaudited as at 31 December 2012. Note: Renewable power does not include large hydro.Financing by Region since 1991. Financing by Sector since 2009.

Selected PEU Transactions

Russia / Turkey Central AsiaCentral & SE

EuropeEE & Caucasus SEMED

Thermal Generation

- LUKOIL/TGK-8 Rehabilitation (2009)

- RusHydro Bond Issue (2010)

- CAEPCO (2009)

- Aktobe CHP rehabilitation (2010)

- AES SogrinskCHP (2011)

- Lietuvos Elektrine(2010)

- Latvenergo CHP (2010)

- Petrom Power Plant (2009)

- IPP4 Al-Manakher(2012)

Renewable Energy

- Rotor Wind Farm (2009)

- Bares Wind Farm (2012)

- Salkhit Wind Farm (2012)

- Saturn Biomass (2009)

- Suvorovo Wind (2010)

-Margonin Wind (2010)

- Porogi Solar PV (2012)

- Eco-optima wind (2012)

- Graanul Invest Biomass (2011)

Transmission

- Federal Grid Company Bond Issue(2011)

- KEGOC Modernisation II Loan (2008)

- KEGOC Osakarovka (2011)

- Black Sea Energy Transmission System Energy (2010)

- South Ukraine Transmission Project (2010)

Electricity & Gas

Distribution

- Federal Grid Company (2010)

- SEDAS (2010)

- IZGAZ (2009)

- Sugd - Energy Loss Reduction (2011)

- ENEA Privatisation (2008)

- Energa SA (2010)

- Gas Rimini (2010)

- OSSH efficiency improvement (2011)

- Electric Networks of Armenia (2009)

- Moldova Electricity Distribution Upgrade (2009)

- ONE: Rural Electrification and Smart Metering (2013)

- Wind farm portfolio - Iberdrola Renovables - EUR 50 mln �

Bulgaria

Turkey

Poland

Project

Hungary

EBRD InvestmentSponsor Debt Equity

- St. Nikola 156 MW

- Suvorovo 60 MW

- AES

- Grupo Enhol

- EUR 70 mln

- EUR 60 mln

�

�

- Tychowo 50 MW

- Wind farm portfolio

- Margonin 120 MW

- Golice 38 MW

- Kukinia 53 MW

- Global RPI

- Iberdrola Renovables

- EDP Renovaveis

- Acciona Energy

- RP Global

- EUR 30 mln (in PLN)





�

�

Regional- Enercap RE Fund

- FreEnergy

- Various

- Nelja Energia

- EUR 25 mln

- EUR 19 mln

�

�

�

Mongolia

EBRD: Selected wind farms financed through 2012

�

Romania

- Salkhit 50 MW - Newcom - EUR 36 mln ��

�

- Cernavoda 138 MW

- Pestera 90 MW

- Vutcani & Sariochi 57 MW

- Chirogeni 80MW

- EDPR

- EDPR

- EDPR

- Various

- EUR 57 mln

- EUR 37 mln

- EUR 20 mln

- EUR 31 mln

�

�

�

�

- Rotor 135 MW

- Bares 142.5 MW

- Zorlu Enerji

- Enerjisa

- EUR 45 mln

- EUR 100 mln

�

�

9

AGENDA

I. Overview of EBRD




V. Conclusions

10

• Financing with the EBRDEBRD’s core activity, offers a wide range of financial instruments and takes a flexible approach in structuring its financial products.

• Project Procurement of Goods and ServicesProjects financed by the EBRD generate tendering oportunities, which willbe procured directly by the client but governed by the Banks ProcurementPolicies.

• Project Support and Consultancy ServicesSelection and engagement of consultants for the needs of the Bank and its Clients through the Bank.

19/04/2013

EBRD Opportunities

Three main ways to work with the EBRD:

Financing with the EBRD: Project Cycle

• EBRD has a 3-stage approval process before a Project can reach the Board:

• Concept review (PCR).

• Structure review (PSR).

• Final review (PFR).

• Provided all necessary information is available, a project from Origination to Board Approval may take between 3 to 12 months.

• Consultancy opportunities may arise before or after Signature of the transaction.

EBRD Procurement Policies and Rules

Introduction

Principles and Considerations

Procurement Rules for Public Sector Operations

Procurement in Private Sector Operations

Procurement of Consultant Services

The client is responsible for all aspects of the procurement of

contracts.

It invites, receives and evaluates tenders and awards contracts which in are concluded between the client and the supplier or contractor. The EBRD is not a party to the contract. EBRD may advise and assist clients as required.

The procurement is done under EBRD policies:

Supporting transparent and open procurement of goods and services for

projects in the Public Sector:

• Competitive tenders to ensure sound provision of goods and services to EBRD-financed projects, as defined in the Procurement Policy and Rules: http://www.ebrd.com/pages/workingwithus/procurement/project/policies.shtml

Supporting competitively tendered Public-Private Partnerships:

• Tendering procedures acceptable to the Bank as set out in the Bank’s concession policy: http://www.ebrd.com/downloads/procurement/concess.pdf

Ensuring the use of appropriate procurement methods and acceptable commercial practices in the Private Sector

19/04/2013

Project Procurement of Goods and Services

Timeline of open tendering process

Who is awarded the contract?

Goods and Works

• The Tenderer whose tender has been determined to be the lowest evaluated tender and is substantially responsive to the tender documents

Project Support and Consultancy Services

1. Due Diligences Assignments related to Investments. These are usually covered by the Client or proceeds of the loan: Technical, Commercial, Legal, Economic and Environmental.

2. Lender’s engineering: an engineer or engineer firm act on behalf of the Bank for technically complex projects.

3. Project Implementation: Bid preparation/ PIU assistance.

4. Donor-Funded Technical Cooperation Assignments (TC): help to prepare the way for EBRD projects, to strengthen public institutions and to improve standards of corporate governance.

5. Policy dialogue: regulatory development, market design, strategic environmental assessment, corporate development, tariff reform, etc.

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Consulting Services

• The participant with the best evaluated proposal in accordance with the selection method used

Six selection methods:

• Quality and Cost Based Selection (QCBS)

• Quality Based Selection (QBS)

• Least Cost Based Selection (LCBS)

• Fixed Budget Selection (FBS)

• Consultants Qualifications Selection (QCS)

• Single Source Selection (SSS)

Who is awarded the contract

AGENDA

I. Overview of EBRD




V. Conclusions

19

Spain-EBRD Cooperation:Project Financing

• Total value of projects with Spanish-EBRD involvement: €13.02 billion

• Current value of joint Spain-EBRD investment: €3.37 billion (end-2012):

‒ EBRD investment: €2.12 billion

‒ Spanish investment: €1.25 billion

• The major beneficiary region is Central Eastern Europe (Poland, Romania, Hungary).

• Dominant investment sectors:

‒ Energy (€1.86 billion)

‒ Industry, Commerce and Agribusiness (€0.68 billion)

‒ Infrastructure (€0.50 billion)

‒ Financial Institutions (€0.33 billion)

Spain-EBRD Cooperation:Technical Cooperation

• Since 1992, Spain has contributed through the Ministry of Economy and ICEX more than €25.9 million to EBRD’s Technical Cooperation (TC) funds, concentrating its efforts on municipal and environmental infrastructure, transport and energy efficiency, particularly Central and Eastern Europe and Turkey.

• A total of €1.3 million Spanish donor funds have been disbursed to date, targeting the municipal, environmental and energy efficiency sectors in Bulgaria, Romania and Turkey.

• Spain is also an important contributor to multi-donor funds such as:

‒ Western Balkans Investment Framework

‒ Early Transition Countries (ETC) Fund.

‒ Multilateral Carbon Credit Fund

‒ Green Carbon Fund

• In 2011 and 2012, Spain financed a number of staff positions in the Bank’s support of areas (e.g. TC portfolio manager, in-house experts in Sustainable Energy, Transport , Municipal and Environmental infrastructure, and Energy).

Spain-EBRD Cooperation:Procurement and Consultancy

Procurement of Goods and Services for Projects

• Between 2008 to 2012, Spanish entities won 15 contracts for a total value of €73 million.

• In 2012, Spanish entities submitted 11 tenders and won 4 contracts of value €29 million. Participation in tenders by Spanish entities was mainly in the municipal and environmental sector.

Consultancy Services

• In 2012 the EBRD and its clients awarded 43 consultancy contracts with a total value of €3.46 million to Spanish consultants.

• Main areas of expertise were power and energy, sustainable energy and municipal infrastructure sectors.

AGENDA

I. Overview of EBRD




V. Conclusions

23

Conclusions

19/04/2013

� EBRD is an international financial institution, created in 1991 with the aim of

fostering transition to market economies by applying sound banking principles.

The Bank must be additional in all of its activities.

� EBRD has a multi-sector, multi-product approach: has dedicated teams and in-

house specialists covering a wide range of sectors, including Energy and

Infrastructure.

� EBRD works with both public and private sector clients including concessionaries.

� EBRD lends under commercial terms (i.e. terms tend to be aligned with the

market), but has the capacity to mobilize TC and donor funds and special-purpose

concessional funds alongside standard financing.

� EBRD-financed operations generate opportunities for procurement of goods and services as well as consulting opportunities, where EBRD aims to promote

competitive and transparent tenders. Consulting opportunities arise typically at

project preparation and implementation.

� Proactively monitor our website for notifications

(http://www.ebrd.com/pages/workingwithus.shtml).

Conclusions – A word of advice

� “Sell” your expertise to Clients and Operation Leaders in an early Stage. Carefully read Technical Cooperation and Business Opportunities Sections from Project Summary Documents (PSD). Inform Operation Leaders (appear on PSD) a summary of your capability. Gain confidence of Operation Leaders by proactively contracting small assignments (under EUR 75k)

� Form association with reputable firms to enhance overall success of the JV/consortium. Cooperate with qualified local partners.

� Assign local language-speaking international experts, in particular for CIS assignments

� Check EBRD website for business opportunities.

� Get to know the EBRD procurement rules

� Focus on Spanish-tied TC assignments (Spanish donors have been one of the greatest supporters for PEU TCs)

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EBRD contacts

Raúl C. Rosales

Senior Banker

Tel: +44 (0)20 7338 7428

E-mail: [email protected]

Nandita Parshad

Director, Power & Energy

Tel: +44 (0)20 7338 6537

Email: [email protected]

Veljko Sikirica

Senior Procurement Specialist

Tel: +44 (0)20 7338 6884


Pablo Gallego

Business Development

Tel: +44 (0)20 7338 6361
