1. IFC Power
March 2009
Sarajevo, Bosnia and Herzegovina

2. The IFC advantage: A wide range of services and products for its Clients
Variety of products: greenfield projects, corporate loans, acquisition finance and refinancings, partial credit guarantees on loans and bonds, securitization of future cash flows, and a new product for IDA countries (infraventures)
Competitive maturity and pricing: Fixed/floating rates, currency of choice, commercial rates, repayment tailored to cash flow, long maturities (up to 20 years), etc.
Political Risk Mitigation: through our affiliation with the World Bank
Long-term Partnership: IFC works closely with partners in an affected project to address issues

3. Track record Projects: 129 projects in 44 emerging markets countries
15,000 MW private generating capacity
101 generation projects
10 transmission projects
17 distribution companies
Financing:
$ 3.5 billion committed in generation, T & D
$ 2.5 billion raised through syndication
$ 16 billion aggregate project values

4. Track record Corporate Finance Expansions / Revamping
Restructuring / Refinancing
Project Finance
IPP / Greenfield
Equity / Quasi Equity

5. Infaventure context: Great Need for Bankable Infrastructure Projects
Huge critical infrastructure needs in IDA countries, (especially in Sub-Saharan Africa and post-conflict countries). Globally:
1.6 bn lack access to electricity, 1.0 bn lack access to all weather roads, 1.1 bn lack clean water and 2.4 bn lack access to sanitation
95% of those without access are in Asia and Africa; 1.4m children die p/a from water-borne diseases
Governments aware but unable to address these needs on their own
70% of all infrastructure spending in developing countries in 1990s financed by governments or public utilities’ own resources
Investment needs estimated at $479 bn for years between
Renewed interest in infrastructure development but while needs are high, sector is underfinanced in most developing countries.

6. Private funds available but very few bankable projects
Great interest from DFIs and private financiers to fund “bankable” infrastructure projects
18 EM infrastructure-focused private equity funds raised $7 bn from ; in 2007, 16 funds raised +/-$30 bn
But, number of “bankable” projects is limited, especially in frontier countries and difficult sectors
Water and sanitation, roads and power
Sponsors with successful track records of bringing projects to full financing stage are also limited and/or few of them willing to take early stage risks in frontier countries

7. Constraints to Private Infrastructure Development
Overdue sectoral reforms to be implemented by government including
Establishing a stable macroeconomic environment
Establishing a legal framework for concessions, contract enforcement, bankruptcy and lender remedies
Establishing a stable regulatory framework recognizing project’s lifecycle needs
Developing a domestic debt market
State-owned utilities are not performing: poor generation performance, lack of investment, high level of losses, low collections
Tariffs do not always reflect full cost recovery, especially in sensitive sectors like water and sanitation
Perception of high country risk
Persistent lack of funds and experienced professionals dedicated to early stage project development

8. What is Infrastructure Project Development
What is Infrastructure Project Development? How does it differ from project financing?
Earliest stages of project life cycle – sometimes at conceptual stage
Risk capital and human resources to move project from concept to financial close
Project and prototype feasibility studies; pilot tests
Financial modeling
Economic, social, technical and environmental studies
Negotiation of financial and legal terms
Selection and supervision of project participants
Negotiation of project documents
Obtaining required permits
Sourcing project’s equity and debt financing

9. IFC Experience: Pre-IFC InfraVentures
To date, IFC’s active involvement in project development has been ad hoc (e.g., Kounoune, Pamir)
IFC’s involvement in project development not adequately compensated
Experienced staff not dedicated to project development, staff incentives not aligned with project development
Approval procedure not consistent with early stage project development practices
High risk profile different from IFC’s mainstream investments

10. IFC’s Additionality in Project Development
IFC’s identity in market
Convening power of the World Bank Group
IFC’s access to all WBG instruments and services
IFC senior staff depth and breadth of experience
Track record of “hands-on” project development with sponsors in most challenging environments
IFC’s involvement reassures all project participants
IFC’s global presence

11. IFC Response: IFC InfraVentures
Fund Composition and Objective
$100 million over 5 years in IDA countries
Up to US$ 4 million per project
Dedicated, experienced senior professionals
Fund staff to act proactively as project developers, principally with co-developer, or as “surrogate” sponsor
Objective of bringing more projects to financial close and implementation

12. IFC Response: IFC InfraVentures
Early Stage Risk Capital
Risk capital (not grant funding) for full range of project development activities
Risk capital (and sweat equity) to be compensated at financial close through stake in equity or development fee
Risk capital to be made available in the form of different instruments
IFC to seek right to arrange and participate in project financing

13. IFC Response: InfraVentures
Efficient Processes and Access to other resources
Streamlined processes for approval of use of funds to projects meeting eligibility criteria
Projects to be “handed over” to mainstream business lines at financing stage
Leverage other IFC’s and World Bank’s staff and resources
Cooperation with other private and donor-funded project development initiatives
Possible use of Trust Funds for external consultants

14. Project Eligibility Criteria
Must be private or PPP infrastructure project in IDA country/region
Must be at early stages of development
Meet IFC Additionality guidelines
Type of projects include :
Sponsor has agreement with Government
Projects being tendered
Projects not requiring contract with Government
“Post-conflict country” initiatives
InfraVentures acts as a surrogate sponsor in the initial stages
Projects that could reach financial close within a few years
Must have high development impact

15. THANK YOU FOR YOUR ATTENTION