522629 - BID Facility

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Summary of Proposed Investment

Project Number

522629

Company Name

INTERNATIONAL FINANCE CORPORATION

Date SPI Disclosed

Jan 16, 2004

Country

World Region

Industry

Infrastructure

Projected Board Date

Feb 20, 2004

Status

Pending Approval

Sector

Other

Department

Middle East and North Africa

Environmental Category

C - No Impact

Project Description

IFC and the USAID propose to create the Balkans Infrastructure Development Facility (BID Facility), a multi-donor facility that will assist in development of private infrastructure in the Balkans region, enhance private sector participation and investments in infrastructure projects, and facilitate public private partnerships. The BID Facility would help committed public entities (such as local governments and municipalities etc.) identify, analyze, structure, and develop viable and attractive infrastructure projects suitable for private sector investment and participation mainly in water and sanitation, transport, and energy sectors. The BID Facility will help prepare infrastructure project proposals which have a reasonable potential to successfully attract private sector participation and financing. The BID Facility will function as a revolving fund and will support project preparation funding throughout the project development process, from feasibility through transaction structuring, negotiation and financial closure. At times, IFC may consider BID Facility projects for financing, but IFC would not be obligated to consider or provide such financing.

The Facility will be IFC managed and will initially begin operations with an office in Sofia, Bulgaria with a small core team of specialists supported by project specific consultants. The BID Facility will be governed by a Board of Donor Representatives which will set the overall policies, guidelines and direction of the Facility.

Sponsor / Cost / Location

Development Impact

IFC’s Role:
IFC will manage the BID Facility. IFC has partnered with USAID which initiated the BID Facility effort. Given IFC’s close relationship with international donors, IFC led the fund-raising efforts and obtained necessary in-principle commitments from the donors. IFC also worked closely with USAID in preparing the BID Facility’s business plan and took the lead in having discussions with the donors. IFC has worldwide experience in privatization transactions and in infrastructure investments. As an IFC-managed facility, the BID Facility will significantly benefit from IFC’s experience, expertise, contact network and relationships with both the public and the private sector sponsors, beneficiary governments, and international institutions. In addition, the Facility will draw on IFC’s extensive facility establishment, management, support and administration experience for effective operation of the BID Facility. The BID Facility will also benefit from the World Bank Group’s resources and experience on broader policy aspects of private sector infrastructure development.

Development Impact:
Infrastructure is one of the key strategic areas of priority for IFC. Access to reliable and affordable infrastructure remains one of the cornerstones of economic development, poverty alleviation and improved living standards. In Southeast Europe, given the scale of the growing need to provide adequate infrastructure to support rapid economic development, the investment needs can not be met by governments alone and greater private sector participation (PSP) in infrastructure is considered necessary. Infrastructure PSP in the region has also been constrained by a weak enabling environment and a limited number of transactions that are structured to attract private sector investors.

The BID Facility would have a significant development impact by helping increase PSP in infrastructure in the region. Through the revolving fund structure (due to cost-reimbursement upon successful closure) of the Facility, the impact could be multiplied and carried over a longer period. Through the Facility, the private sector investors and management companies will gain access to better prepared projects with lower initial project preparation and transaction costs. The public agencies will gain access to a Facility that helps them make their projects more attractive to the private sector. The BID Facility’s focus on undertaking projects with good potential to have PSP and reach financial closure will also encourage local governments and municipalities to consider PSP options and reduce dependence on scarce central government budgets.

This is a Category C project, according to IFC’s Procedure for Environmental and Social Review of Projects because the facility itself will have no adverse environmental and social impact. The projects to be undertaken by the Facility will seek to comply with local and World Bank Group environmental and social guidelines.
Location of environmental documents In locally affected community

Contacts

For Inquiries About the Project, Contact

njain@ifc.org or gcaloia@ifc.org

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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