Análisis de la microarquitectura

Until recently the Netherlands government has been funding several Masterplans (Jakarta Indonesia, Beira Mozambique) with the aim of bringing NL expertise in and the creation of a strategic advisory position for the Netherlands. This method of positioning however is not without risks. First of all the position of trusted advisor is not generating any hard commitments from the beneficiary country institutions such as financial, procurement or other commitments for NL sector involvement. Other countries might offer a package of services, construction and soft loans which can be very competing and be a risk for the trusted advisor strategy. Therefore, we recommend to have a more strategic value chain approach (both at public level and at private level). This approach already should start before committing a full Masterplan study to identify key areas of interest for the NL sector and the key players who could form a consortium over or in the entire value chain (or in parts of the chain). A proposal and financing plan could then be developed for

93 Innovative financing and positioning of the water sector

those components of the Masterplan where the NL sector has a unique offer and interest. This proposition could be developed in a co-creation method with the relevant stakeholders at the beginning of the process (collective programming over the program life cycle and/or value chain).

For each of the steps in the lifecycle the services and proposition of NL should be fine-tuned. In principle the preferred way would be to build one predominantly NL consortium for the whole lifecycle so that integration of phases and life cycle cost optimization can occur. A second best would be to organize consortia for each of the phases separately, but this would result in a loss of integration and financing possibilities. This can also be shown looking at the options. With the option 1 more grants will be needed because there are always risks that the companies will not be selected for the next phase (so the companies will not put forward any equity).

The most optimal would be to generate an unsolicited proposal from an NL consortium towards a beneficiary country institution. Only in that scenario the full benefits of integrated planning, life cycle costs optimization and financing will be obtained. In other scenarios the financing will be more grants based as for each phase different NL companies might be active. For the three mentioned options the picture is then shown below.

Financing options

In order to provide for an interesting package it is a prerequisite that a flexible blend of financing resources and Atradius coverage will be made available to the Government of Indonesia (GoI) and the NL consortium partners. In this sense it will be crucial that NL instruments such as DRIVE, partners for Water (PfW) and Fund Sustainable Water and commercial banks finance (covered by Atradius) will be made flexible and are possible to be combined with international IFI or donor

1. Master plan,

sketch designs 2. Feasibility, conceptual designs & PPP prep. 3. Detailed designs & procurement 4. Imple-

mentation 5. Operate & maintenance

NL Consortium Consortium _{Consortium Consortium} Consortium

Finance (TA-grants)

Finance (TA grants & loans) Finance (blend/ DBFMO) Finance (loans/ equity/ DBFMO) Finance (loans/ equity/ DBFMO) TA, grant TA, grant

TA, grant TA, grant

DB(F)

(back up met grants, capacity building)

DBF(M)(O)

TA, grant

1. Master plan,

sketch designs 2. Feasibili-ty, concep- tual designs

3. Detailed

designs 4. Imple-mentation 5. Operate

TA, grant

TA, grant

resources such as grants and concessional loans (see picture). The reason is that the resource needs of the interesting components of NCICD are far beyond the possibilities of individual NL instruments such as DRIVE. The key to success is therefore the possibilities of the NL instruments for blending grants especially for development phases or non profitable projects), with international donors and commercial equity and loans for program components further down the lifecycle.

Conclusions and recommendations for follow up:

• Assessment and possible tweak of NL financing instruments. Early involvement at the various levels of intervention is key. The instruments (for instance DRIVE) should also allow blending with other providers of finance (grants, loans, guarantees and equity) like recipient country’s budget, donor grants and IFI and commercial loans;

• A give factor of the Indonesian government is essential for the Netherlands further involvement. Including efforts in a political lobby is essential. Activities (grants, capacity building) that support a proposition will increase the chances for success;

• Strategic partnership with countries/institutes that could mobilize large amounts of

(concessional) finance could be considered. It might be considered to collaborate with World Bank, German development bank KfW, ADB or the Koreans where they could cover some large scale expensive construction and financing parts.

Steps for follow-up:

1. Identification of interesting (sub)projects through a Roadmap Sanitation and possibly a Roadmap for Stage A. A broad NL consortium could elaborate this proposition in a co-creation approach for sanitation (November 2014 – March 2015);

2. NL Government and banks could scan the possibilities for blending of existing (PfW, FDW) and foreseen NL instruments (DRIVE) and possibilities for concessional loans to the government of Indonesia. NCICD could be used as a pilot project to shape DRIVE;

3. Support the development company/contracting authority with finance and expertise; 4. Assess the chances of a NL proposition and unsolicited proposal for the prioritized plan

components to the government of Indonesia;

5. Assess legal possibilities NL and Indonesia for unsolicited proposals; 6. Interest of donors could be assessed (WB, ADB etc.);

7. In case of positive interest and legal possibilities a proposition or bid could be elaborated.

1. Master plan,

sketch designs 2. Feasibili-ty, concep- tual designs

3. Detailed

designs 4. Imple-mentation 5. Operate

PfW, EKN, Water Mondiaal

DRR, DHK GoI (tendering)

IFI, bilateral donor (tendering)

Private financeer, SOE International

NL instruments

ORIO / DRIVE (PPP)

Fund Sustainable Water (PPP) DGGF (PPP) Private finance FMO (incl. convertible grants)

Commercial loan & Atradius coverage NGO’s

Mix Grant/loan 100% Grant

100% loan

95 Innovative financing and positioning of the water sector

7.4 Masterplan Beira