PIDG Technical Assistance (PIDG TA)

The PIDG TA Team manages grant funding to support PIDG Companies’ activities, to meet a range of needs associated with the infrastructure project development cycle, including the assessment of potential investment opportunities and building capacity of host country partners and local investors. PIDG TA can also make up-front capital grants at financial close, through Viability Gap Funding (VGF), to support the construction phase of projects providing strong development impact. This funding is designed to reduce the costs of infrastructure projects to make economically viable projects financially viable in order to attract private finance.

PIDG TA also plays a central role to enable PIDG to initiate multi-company programmes and initiatives that are not specific to a particular company, and which align with PIDG strategic objectives. PIDG TA funding is almost exclusively deployed though the PIDG Companies.


TA Funding

Government-side TA

Capacity building

Through provision of training and support to people in governments, operators, local capital markets, financial institutions and quasi-public enterprises

Policy, regulatory and institutional reform

Advice and training to support the design and implementation of reforms aimed at facilitating financing by the private sector

Embedded advisors

To fund advisers to work with government officials managing the structuring and negotiation of PPPs and private investments

Infrastructure development strategies

Studies to guide governments on options for financing, including mechanisms to promote private sector involvement and local currency financing

Capital market development

To strengthen local capital markets and augment the likelihood of project financial closure or the sustainability of projects

Project-side TA

Upstream technical assistance

To cover upstream technical assistance that helps identify potential pipelines of PIDG projects, or legal/regulatory/policy obstacles.

Impact enhancement

To cover feasibility studies, the design of and/ or cost of developmental activities, aimed at enhanced social inclusion

VGF preparation grants

To help PIDG Companies prepare an early stage appraisal of the VGF subsidy requirements and an independent review of the project’s financial model to justify the size of grant

Pioneering transactions

Support for the design and implementation of pioneering projects or transactions, to reflect some measure of innovation or demonstration effects.

Post transaction support

Financial support to the PIDG Companies, directly to governments and/or private investors

Capital Grants

Capital Grants

May be used to cover the cost of unique capital expenditure or pay for certain operating costs on PIDG Projects.

Value

Value up to USDS1.5m

 

 

Application process

Capital Grants are subject to an expedited application process, and may be drawn down prior to financial close if warranted.

Viability Gap Funding

Primary objective

To help to close the financing gap, particularly in the case of service provision to poor people with limited ability to pay the full cost of services, while at the same time helping to mobilise private sector investment and ensuring that the private sector still shares in the risks of infrastructure delivery and operation.

 

Value

In excess of USD1.5m

Aim of using VGF

To deliver projects that are affordable and transformative which are replicable by other market participants.

To be eligible for VGF grants, projects should be:

  • located principally in DAC 1 and 2 Countries
  • have strong, demonstrable, development impact including, clear, strong positive impact on females or female-headed households and/or clear, strong, climate change mitigation benefits.
  • a ‘first mover’ and developmentally important

 

DevCo

Transaction Advisory Services to governments to help them structure infrastructure transactions that facilitate private sector participation in infrastructure projects.


Projects

InfraCredit – Nigeria

This project unlocked the potential in infrastructure financing in Nigeria.

GuarantCo provided a Callable Funding Facility of $50m

PIDG TA provided $1.2m in grants to cover feasibility costs and capital raising costs.

Challenge

  • Investment by Nigeria’s pension funds in infrastructure-linked bonds has been constrained by lack of precedents and insufficient credit quality to satisfy investors.

TA Solution

  • A TA grant of USD178,000 was provided to GuarantCo to cover the costs of just over half of a feasibility study for the establishment of a credit enhancement facility in Nigeria.
  • A TA grant of US$900,000 be made available to GuarantCo to cover approximately half of the seed capital required for setting up InfraCredit in partnership with NSIA.

Impact

  • Since it was established, InfraCredit Nigeria has successfully issued its first guarantee supporting a ten-year NGN10bn corporate infrastructure bond, as well as its first 15-year corporate infrastructure green bond.

Kikagati Hydro-electric Plant – Uganda/Tanzania

This project will help provide clean, renewable energy for Uganda and Tanzania.

EAIF provide $27m in debt finance over 16 years

PIDG TA provide $795k in an early stage project development grant

Challenge

  • Costs unexpectedly increased as a result of prolonged negotiations on several project documents (some due to the cross-border nature of the project), resulting in high legal costs as well as technical complications with the project design.

TA Solution

  • Two TA grants totaling USD 795,000 to assist the project sponsors with higher than anticipated technical and legal analysis and advisory costs given the specific circumstances of the (Bugoye) refinancing and the greenfield financing (Kikagati).

Impact

  • The impact of these TA activities was that Kikagati was able to reach financial close due to the support provide to cover the high level of due diligence costs to the lenders and sponsors.

Coc San run-of-river hydro - Vietnam

Development of a 30 MW run-of-river hydropower project

InfraCo Asia Investments invested $10m at financial close

PIDG TA provided $5m in viability gap funding

Challenge

  • The project was not viable because the wholesale tariff was too low to cover the project costs.
  • Initial capital was expended & the project company was unsuccessful in securing long-term debt financing. Early work in the project stalled in 2011.
  • Despite increased efficiencies and cost reductions attributable to InfraCo Asia’s involvement, the project remained financially unviable.

TA Solution

  • Evaluation of the need for a VGF grant was undertaken and reviewed by the Panel of Experts.
  • It was agreed that USD 5m of VGF would be provided to the project to help the project reach financial close.

Impact

  • Successfully took it to financial close and then completed construction to international standards
  • 130,000 people with new or improved access to sustainable power
  • 87,000 people benefit from reliable power supply
  • 76,000 tons reduction in carbon emissions p.a.

Kigali Bulk Water - Rwanda

Creating replicable model for PPP - securing complex financing to deliver water supply project

EAIF lead arranger $40m 18-year loan jointly with AfDB

PIDG TA provide $6.25m in viability gap funding

Challenge

  • Untested regulatory framework
  • Lack of availability of long term debt
  • Tariff affordability
  • Uncertainties with respect to governance framework

TA Solution

  • DevCo enabled the development of a PPP transaction
  • Evaluation of the need for a VGF grant was undertaken and reviewed by the Panel of Experts.
  • It was agreed that USD 5m of VGF would be provided to the project to help the project reach financial close.

Impact

  • The project revealed the viability of private-financed water treatment plants in SSA
  • Connecting 500,00 people in Kigali, Rwanda with reliable water supply
  • Early-stage structuring and innovative blended finance creates a benchmark for future transactions

Green Affordable Housing – Timor Leste

Transaction Advisory for a Green Affordable Housing PPP

PIDG TA provided $918k in upstream project assessment and transaction advisory services

Challenge

  • Timor Leste has a rapidly-growing population that requires access to affordable housing.
  • The government of Timor Leste required support to run a full public tendering programme.

TA Solution

  • Via DevCo, PIDG TA provided a $100k grant to outline a business case for a green housing PPP in Timor Leste.
  • Upstream assistance was provided with an assessment of the site suitability, assessment of E&S issues and regulatory requirements
  • Full transaction advisory services where provided to the government of Timor Leste with a $818k grant to DevCo.

Impact

  • The IFC is currently in the process of developing a full tendering programme for an affordable housing PPP.
  • The IFC has agreed with the Timor Leste Government to ensure that the affordable housing will be developed in such as a way as to ensure EDGE certification.

Key facts

45
TA grants were approved in 2019
40+
Pipeline of TA grants for 2020 with a focus on pre-feasibility studies and capacity building
$19.6m
committed to TA grants in 2019
$85m
committed overall to 191 TA grants


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