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Streaming for this event is in English. Simultaneous translation is available in Burmese, Indonesian, Portuguese, Thai, Turkish and Vietnamese.

25 February - Session 5: Project Finance & Procurement

Summary

The delivery of bankable city scale projects requires the development of a viable resilient, risk-managed business case together with access to capital which may come from a variety of sources including national government, multilateral government banks and/or the private sector. Such projects also require an enabling policy environment together with a knowledge of financing and associated procurement mechanisms (eg Public Private Partnership, Public Service Concession etc). For policies, programmes, or projects to be financially sustainable, revenue generation is necessary and may include such mechanisms as land value capture, land tax etc, while from a consumer’s perspective, affordability and access to credit is also a critical consideration, especially access to housing finance and suitable mortgage products.

This session considers various methods for securing project finance, ranging from municipal bonds to own sourced revenue, together with the way in which to present bankable projects for funding. It included an overview of HM Treasury Five Case Model and was delivered by the International Growth Centre and HM Treasury Infrastructure & Projects Authority together with input from the International Finance Corporation.

Key Takeaways

  • Opportunity to increase own sourced revenue by improving compliance, incentivisation building narratives around common purpose. Where the money comes from matters. Own sourced revenue tends to generate expenditure which benefits citizens more and can be leveraged to attract ext. finance. Match funding source to project type & beneficiaries.
  • Funding does not equal financing, eg need to finance CAPEX to attract longer term funding for CAPEX & OPEX. But only 44% of countries allow borrowing by local government. Beware of unsolicited approaches. Focus on outcomes and impact.

Principal Contributors

Mr Oliver Harman, Cities Economist, International Growth Centre

Oliver Harman is a Cities Economist for Cities that Work, an International Growth Centre initiative based at the Blavatnik School of Government, University of Oxford. The initiative works to develop a network of economists, urban planning practitioners and policymakers to translate economic research into clear urban policy guidance. In this role and previous Oliver has engaged with local government Ministries and Mayoral teams across Africa, Asia, Latin America & Caribbean and Europe. Specific work includes local government reform in Guyana, urban resilience in Ghana, post-disaster policy in Mozambique and municipal finance in Malawi, Senegal, Somaliland and Uganda as well as inclusive growth in his hometown, Oxford. He has undertaken capacity building on municipal finance in both Guyana and U.K. Oliver was the focal point for IGC’s collaboration with the Foreign and Commonwealth Office’s during the strategic development phase of the ‘Global Future Cities’ programme as well as the European Commission’s ‘Enhancing the financial position of cities’ programme

 

Ms Karineh Grigorian, Commercial Manager, HM Treasury IPA

Karineh has been with IPA’s International Team (previously known as Infrastructure UK at HM Treasury) since January 2014. In her role as a Commercial Specialist, she is involved with a number International technical advisory projects including working with overseas governments to train and provide infrastructure capacity building, as well as providing infrastructure policy advice to HM Treasury. Her current work involves providing advisory support to the FCDO Prosperity Fund’s Global Infrastructure Programme, which draws on the HM Treasury’s Green Book “5 Case Model” for Project Preparation and Appraisal.  Karineh is an APMG accredited Better Business Cases Reviewer and Practitioner. Karineh’s previous roles have been with a number of major UK PPP projects, as well as Secondment at the National Audit Office’s PPP unit. Her roles include the London Underground’s PPP ‘Contract Reviews Team’ and the National Air Traffic Services (NATS) Strategy & Regulation unit.  Together with her work in the private sector consulting, Karineh has experience of public policy, commercial strategy and economic regulatory issues in PPPs and infrastructure projects. Karineh is an IPA certified ‘Subject Matter Expert’ on PPPs as well as a ‘High Risk’ Assurance Reviewer for Government’s GMPP major projects portfolio.

Mr Denis Obarcanin, Infrastructure Advisory, International Finance Corporation

Mr. Denis Obarcanin has managed strategic partnerships with major cities such as Izmir, Antalya, Kyiv, Mariupol and Lviv to support their urban transformations through comprehensive financing and advisory solutions that leverage the private sector. Particular focus includes public transport, utilities and smart city solutions. Mr. Obarcanin has more than 15 years of experience in the infrastructure sector across Europe, SE Asia, Australia and has recently moved to Singapore to help build the Asia Cities business. Before joining IFC, he held various positions in infrastructure related organizations.

Learning outcomes

By the end of the session, participants were:

  • able to explain a range of available funding models and their respective merits
  • able to describe the 5-Case Method of business case preparation
  • better equipped to critically reflect on their ability to develop bankable projects with clear outcomes

Contributors noted the three pillars of local government finance – own-sourced revenue, intergovernmental transfers and external finance – and discussed the distinction between funding and finance. Contributors also noted that own-sourced revenue tends to lead to expenditure that is more beneficial to citizens and it can be used to attract external finance. Participants were encouraged to explore the value of the Five Case Model of business case preparation and how it can be used as a way of helping to attract project funding. The International Finance Corporation described what they are looking for in a project, noting that this invariably includes a requirement for a sound, evidence-backed business case.

Presentations

Links to further information