partnership

TABLE C.1, Continued

STAKEHOLDER

Informal transportation operators Taxi operators Incumbent operator 1 Incumbent operator 2 Incumbent operator 3 Bus manufacturers

Local infrastructure companies International infrastructure companies National transportation operators International transportation operators National banks

International banks

National investment funds

International investment funds

Source: World Bank. OBJECTIVE RESTRICTIONS

by the end of the planning stage, a project structure should be conceptualized. the questions outlined in box c.1 can help to inform this process.

BOX C.1

Questions to ask when considering an urban bus public-private partnership

Technical elements: Is this the most adequate solution to achieve the project’s objectives?

• is this project aligned with the mobility and land use strategy for the area? • is there a clear diagnosis of the current service deficiencies? • Will the project reduce the generalized cost of travel for transportation users compared with the existing system (for example, by reducing transfer and waiting times at stations and stops)? • are other expected outcomes clearly defined? • is there a consensus among stakeholders on expectations from the project? • Does this project allow for future changes to the system (for example, does it allow for new bus routes or a metro line to be integrated into the system in the future)? • What technical alternatives are considered to deliver better results or similar results more effi-

ciently? is the proposed solution the best technical alternative? • is there a clear description of the components and technical features of the project? • is the project likely to attract required private sector skills locally or internationally? • are preliminary cost estimates aligned with local and international experience? • are the key stakeholders identified, including their objectives and restrictions? are these consistent with the project?

Fiscal capacity: Can the public entity afford the project?

• are the proposed user fares consistent with local policy and context? are transportation tariffs controlled? how are they updated? • are the demand projections sound and credible, given the local context?

continued

Box C.1, continued

• are the financial cost assumptions consistent with the sector and similar projects? • are there sources of funds for the urban transportation sector subsidies? What are the existing subsidies for the urban transport sector? • Which are the main sources of revenue for transit service operations and capital investment at each level of government (federal, state, municipality)? • What percentage of income does the lowest quintile spend on urban transportation? • What are the financial position and creditworthiness of the responsible public entities? Do they have access to financing? Do they have indebtedness capacity? is the municipal budget capable of supporting subsidies in a pessimistic scenario?

Institutional and regulatory elements: Are there an enabling environment and capable institutions?

• is there a credible regulatory body? • is there a specific applicable regulation for public-private partnerships (PPPs)? • is there relevant experience in developing successful PPPs in the sector? • Does the government have a track record of compliance with PPP-related obligations? • Does the legal body provide enforceable elements for lenders, such as step-in rights? • how do the main stakeholders perceive political risk in the country and in the project area? • is the regulatory framework restrictive? is it preventing the entry of new operators into the market? • is there a transportation authority or institutional focal point for structuring of contract management? • Does the local institution in charge of the project have adequate capacity to comply with its obligations, as defined in the preliminary project structure? • Does the local institution in charge of the project have previous experience structuring, procuring, and managing a PPP? • Does the local institution have plans to hire transaction advisers for structuring the project and various transactions?

TOOLS FOR THE PREPARATION STAGE

This section offers tools for each step in the preparation of a project.

Preparing information

Planners should start with the preliminary project structure defined in the planning and identification stage and review the map of stakeholders’ objectives and restrictions.

Listing risks

using the list of risks as a reference, planners should list all risks that apply, given the preliminary project structure. in doing so, they will (a) discard those risks that do not apply to the proposed preliminary structure and (b) brainstorm other, potential, risks that could affect the project. in brainstorming about potential risks, planners should consider specific contextual features. a map of stakeholders and objectives can also be useful for identifying additional risks.

Allocating risks

afterward, planners should allocate risks according to the preliminary project structure and assess risk allocation. When allocating risks, planners should reassess whether the party bearing the risk is the most suitable to manage it. For this step, the list of stakeholders’ objectives and restrictions is particularly useful.

Analyzing and mitigating risks

For each risk, planners must assess the expected impact if the risk materializes and its probability of occurrence and discuss mitigation strategies consistent with the risk allocation.

Grouping components

Once that is done, policy makers can assess whether functions and risks need to be analyzed individually for different components or groups of components of the project. if that is the case, they must go through these steps for each component.

Using the Excel template

The risks set out in the analytical framework have been mapped into an excelbased risk matrix (table c.2 provides a sample). This matrix provides a structure for assigning risks and tracking them across various aspects of the project. it also informs policy makers of potential mitigation strategies, the sources of these risks, and the impacts the risks can have on a project should they materialize. The risk matrix is organized in spreadsheets according to the different components of an urban bus project. The first element is a “contents and Guide” sheet, which describes the contents of the risk matrix and provides more guidance on how to use it. The second element is a risk matrix for each project component and a general risk matrix for the entire project. The risk matrix includes the following project components:

• exclusive lanes • bridges • stops • stations • multimodal stations • Depots • control centers • Fare collection • Feeder buses • Trunk buses.

The sheet for each project component presents definitions of specific risks, examples relevant to the project component, the optimal allocation of risks, the potential impact of risks, the probability of risks materializing, risk mitigation strategies, and risk severity. Table c.2 shows a sample of the risk matrix. Table c.3 presents a template for listing funding sources and financing instruments for each component. Table c.4 presents a template for the essential elements of an operation concession contract.