Makerere University Investors Conference Tender Framework and Procurement Process: How the next stages of the procurement shall progress after the Investors Workshop

Commercial considerations

Project Structure The project structure envisioned is a Development Lease structure This shall involve the letting of the relevant Project Site by the Makerere University or Mak Holdings to a Private Sector Party who will conclude a long term commercial lease with the Makerere University or Mak Holdings, as applicable, with a view to undertaking the development (designing, financing, procurement, construction, operation and maintenance) of the relevant Project for its own account. Principle terms and conditions set out in Development Lease Agreements including obligations of Mak Holdings, performance specifications, conditions precedent and other Private sector obligations. Mak Holdings obligations: procure and deliver in a timely manner the land /Right of Way, free from any encumbrances; subject to private sector compliance with pre- defined obligations, facilitate the project development; and assist the private sector in securing necessary national government consents for the Project. Private sector obligations: Private investor to take full revenue risk, compensate Mak Holdings for the right to develop and or manage MUK properties as the case may be through: 1) Signature bonus; and 2) Annual lease Rentals.

Project Structure Mak Holdings Investor Development Lease Capital Receipt + Lease Payments Makerere University Assign & Transfer Income Signature Bonus (One-off) Annual Lease Payments (Continuous) Lease Duration = N years Value as per valuation

Proposed Risk Allocation Matrix Key Risks Description Allocation I. Development Period Risks   1. Statutory clearances Environmental Clearance, Conservation of Site and other approvals Mak Holdings/ Private Proponent 2. Availability of land free from encumbrances Land availability, encroachments, utility shifting Mak Holdings 3. Financing and financial closure Ability to secure financing Private Proponent 4. Legal & regulatory Risks Change in procurement law, approval requirements 5. Access Availability and access to material sites II. Construction Period Risks 6. Design risk Meeting minimum performance requirements 7. Quantity and price variation Change in quantities & price fluctuations 8. Quality Adherence to Quality standard 9. Local permits / clearances Securing necessary permits 10. Construction risks Cost overruns, Contractor Competence, Site Preparation, Time Over-runs & other delays 11. Completion risks Necessary design approvals, tests, completion certificates, other procedural issues

Proposed Risk Allocation Matrix Key Risks Description Allocation III Operational Period Risks 12. Revenue risks Revenue fluctuations and under or over estimation, Private Proponent   13. Demand risk – impact on operating cost Impact of usage on operation and maintenance costs 14. Industrial Relations risk Labor issues especially in context contractor staff 15. Operations & Maintenance risks Operations & maintenance requirements 16. Quality of service Performance not meeting the required standards IV. Project Life Cycle Risks 17. Legal risks Change in Law Mak Holdings / Private Proponent 18. Commercial / Financial risks Foreign Currency fluctuation, Interest rate & other financial factors 19. Debt repayment Inability to repay debt 20. Force Majeure Events Act of God or other inevitable events

Development Lease – Key Terms Contract duration / term, renewal non-automatic on mutual consent Guarantee / security deposit, % aligned with annual lease rental Lettable areas, restrictions on sublease and delegations Transfers and rights of first refusal Licences and permits Tax and insurance, local service, property and land use tax as applicable Maintenance and repair Major repairs and works Indexation and inflation adjustment Damage or expropriation Handback regime Definition of default and penalties Force majeure

Procurement Process

Procurement laws, key actors The Public Procurement and Disposal of Public Assets Act, 2003, The Public Procurement and Disposal of public Assets Regulations, 2014 Key Actors Makerere University Council Mak Holdings Board of Directors Contracts Committee Evaluation Committee

Next steps Done Sign-off PIM Obtain approvals and Issue PIM 5th Dec 2017: Investor Conference Jan 2018: Issue RfQ; Bidder Prequalification; Issue RfP; Dialogue with Bidders Jul 2018: Receive and Evaluate Proposals Sep 2018: Commercial Close Dec 2018: Financial Close

Procurement Process 5 Days 90 Days 21 Days 10 Days 30 Days Ref Milestone Anticipated Days 1 Complete Feasibility Study Complete 2 MUK Council Approval   3 Issue PIM 4 Investor Conference Dec-17 5 Investors’ Q&A 6 Issue, response and evaluation of RfQ 14 Days 7 Shortlist and issue RfPs 10 Competitive Dialogue 5 Days 11 Preparation and Submission of Proposals 90 Days 12 Evaluation of Proposals 21 Days 13 Negotiations to Commercial Close 10 Days 14 Financial Close 30 Days

Comments, Q&A, Discussions

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