THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE

PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.

IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

IPP TRANSACTION ADVISOR

TERMS OF REFERENCE

Terms of reference for transaction advisor services to the Government of [ ] for the
[insert description of the project] (the “Project”).

Contents
1. Introduction
2. Scope of work
3. Background
4. PPP feasibility study deliverables
5. PPP procurement deliverables (if applicable)
6. Transaction advisor skill, experience, remuneration
and management by the MINISTRY
Appendix A: Background and supporting
documentation

1. Introduction
The Ministry of [ ] (MINISTRY) has identified the need [describe project], to [describe
objectives]. This project is also in line with the institution's strategic vision of [describe
strategic vision].
The MINISTRY wishes to explore the feasibility of this project as a public-private
partnership (PPP) in terms of [LEGISLATION]. The MINISTRY thus intends to procure
the services of a consortium of experienced transaction advisors to assist it through the
phases of the PPP project cycle. These terms of reference invite proposals from a
transaction advisor representing a team of suitably qualified and experienced financial,
technical and legal advisors to help the MINISTRY:

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
htp://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

Phase 1: Undertake a comprehensive feasibility study for the Project.
Phase 2: If required afterwards, provide advisory services for the procurement of
the project.
The scope of work is divided into these two parts. The transaction advisor needs to
submit a single bid, in the formats prescribed in these terms of reference. (Reference to
'the transaction advisor' includes the entire advisory team, or relevant members, under the
management of a single lead advisor who shall contract with the MINISTRY.)

2. Scope of work
This is the first [independent power project] (“IPP”) to be implemented under
[LEGISLATION]. It is intended to be used as a model for future project development.
Therefore, when performing the following scope of work, the transaction advisor shall
provide its services in a manner propitious to replication by the MINISTRY for other
projects.

2.1 PART 1: FEASIBILITY STUDY

The transaction advisor will be required to produce a comprehensive feasibility study for
the Project using a public sector comparator and PPP reference models. This must enable
the MINISTRY to determine:
 full project cycle costs
 affordability limits
 risks and their costs
 optimal value-for-money methods of delivery.
Section 4 below sets out the deliverables required of the transaction advisor for the
feasibility study.

2.2 PART 2: PPP PROCUREMENT

If, on the basis of the feasibility study, a PPP solution is decided on, and if the
MINISTRY requires it, the transaction advisor will provide the necessary technical, legal
and financial advisory support for the procurement of a private partner. This must be in
compliance with all elements of [LEGISLATION] and all implementing regulations.
The procurement deliverables are set out in Section 5.

Page 2 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

3. Background
3.1 MANDATE

The MINISTRY 's mandate is [describe mandate].

3.2 OBJECTIVES

The objectives for this project are [describe objectives].

3.3 BACKGROUND DOCUMENTATION AND PREPARATORY WORK

The transaction advisor will have to become familiar with all background documentation
and preparatory work conducted to date and shall be responsible for carrying out initial
technical, financial and legal framework reviews that are deemed necessary for a
successful completion of the transactions, including, but not limited to:
o Relevant existing reports, studies, audits, etc. necessary to become familiar with
the [geothermal and ]electricity sectors in [COUNTRY].
o All information pertaining to electricity market structure.
o Existing financial forecasts, historical financial performance and technical
operating history for [POWER UTILITY] and existing [power generation]
arrangements in [COUNTRY].
o Existing Electricity Laws and regulatory functions.
o Responsibilities and relationships of MINISTRY and [POWER UTILITY] with
other government entities at different levels .
o The reports annexed to this ToR.
A preliminary needs analysis (pre-feasibility study) has been undertaken, establishing
[describe what the needs analysis has established, including any initial costings]. The
MINISTRY has identified the following challenges which it faces in pursuing the project:
[list challenges].
The legal and policy framework for the project is [describe legal and policy framework].

3.4 PROJECT BUDGET

The base-line budget currently available for operating expenditure for the project has
been identified as [insert amount] in the [insert year] financial year, escalating by
CPI[X]. In addition, a capital budget of [insert amount] for expenditure over the [three]
years [insert years] has been secured.

Page 3 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

4. PPP feasibility study deliverables
The transaction advisor is required to produce, in close liaison with the MINISTRY, a
comprehensive feasibility study for Project. The feasibility study needs to clearly
demonstrate affordability for the full project cycle and propose the optimal value-for-
money solution for the MINISTRY to achieve its desired outcomes.
The feasibility study is to be conducted in compliance with [applicable standards].

4.1 COMPONENTS OF THE FEASIBILITY STUDY

The feasibility study must include the following:

 Introduction
o Covering letter from the accounting officer/authority
o Executive summary
o Introduction
o Project background
o Approach and methodology to the feasibility study
 Section 1 - Needs analysis, including
o Institution's strategic objectives
o Budget
o Institutional analysis
o Output specifications
o Scope of the project
 Section 2 - Solution options analysis, including
o Options considered
o Evaluation and assessment of each option
o Assessing Government role in the proposed PPP project, whether that role
corresponds with the Government‟s legal obligations, maintains sufficient
power to protect the Government‟s interests and corresponds to the
proposed corporate structure of the project vehicle and how in practice the
Government role will be established in the project vehicle (e.g. voting
rights, pre-emption rights, golden shares and the protection of minority
shareholders)
o Developing and providing detail to the legal architecture and design of the
transaction, identifying e.g. the (i) type of PPP contract to be used (e.g.
concession, BOT or management contract) (ii) investment commitments to
Page 4 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

be required, their nature and management, (iii) investment plan, how,
where and when investments will be made (iii) type of public sector
support required, including terms and conditions and (iv) corporate
structure for the investment and commercial management including nature
of the SPV holding the concession, etc.
o Summary of evaluation and assessment of all options considered
o Review of risk allocation assumptions to assess whether those risks can be
allocated (e.g. legally) to the private sector (e.g. land acquisition,
collection of tariffs from individual consumers and safety monitoring).
o Review of project assumptions and whether they are practically and
legally viable, e.g. management of staff rights and benefits and whether
there might be legal limitations to how staff can be treated.
o Assess the financial management and accounting structures proposed to
identify efficiency gains available through other structural mechanisms,
e.g. taxation of revenues and accounting methods for depreciation of
assets.
o Identifying other contractual and commercial relationships in the sector or
related to the sector and how those relationships will interface with the
PPP project.
o Assess risk management structures for potential efficiency gains through
alternative structures or modifications.
o Assess the financial feasibility and provide valuation of revenues
according to the different options and based on various assumptions used
in the forecasts including those of demand and pricing should be stated
clearly.
o Advise on a financial (capital) structure for mobilizing debt.
o Confirming legality of budgeting assumptions and the management of
revenue flows (e.g. are there restrictions on the use of monies collected for
use with public services).
o Assessing risk allocation approaches to ensure that they correspond with
private sector appetite and lender requirements. This should be done
before bidding to avoid failure of the bidding process and the costly and
reputationally damaging recommencement of the tendering process.
o Assessing chosen approach to PPP and whether any aspect of that
approach will conflict with available or required procurement, contracting
and financing structures.
o Recommendation of a preferred option
 Section 3 - Project due diligence, including
Page 5 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

o Legal aspects, including
 Land access/rights
 Use rights
 Regulatory matters
 Approvals required
 Vires of grantor
 Key challenges to risk allocation as law
o Identify licensing, permitting and other legal risks that need to be
addressed and allocated under the chosen approach.
o Ensuring all necessary approvals and permissions are obtained for PPP
processes before commencement of tender process, in particular to allow
the relevant Government entity to sign the tender documents and the PPP
contract.
o Site enablement
o Socio-economic and environmental
o Initial market testing
 Section 4 - Value assessment, including
o PSC model
 Technical definition of project
 Discussion on costs (direct and indirect) and assumptions made on
cost estimates
 Discussion on revenue (if relevant) and assumptions made on
revenue estimates
 Discussion on all model assumptions made in the construction of
the model, including inflation rate, discount rate, depreciation, and
budgets
 Summary of results from the base PSC model: NPV, FIRR, DSCR
o PPP reference
 Technical definition of project
 Discussion on costs (direct and indirect) and assumptions made on
cost estimates
 Discussion on revenue (if relevant) and assumptions made on
revenue estimates
 Discussion on proposed PPP type
Page 6 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

 Proposed PPP project structure and sources of funding
 Payment mechanism
 Discussion on all model assumptions made in the construction of
the model, including inflation rate, discount rate, depreciation, tax
and VAT
 Summary of results from the PPP-reference model: NPV
o Risk assessment
 Comprehensive risk matrix for all project risks (The following are
some of the risks that need to be considered (this is a non-
exhaustive list): Technical risk especially hydrology risk and
geophysical/geological risk; Market Risk (i.e., demand, cost of
alternate sources); Counterparty risk (especially payment risks by
[POWER UTILITY]); Completion risk; Operation Risk; Price and
tariff risk; Political risk; Legal risks; Fiscal/macroeconomic risks;
Regulatory risk; Environmental risks; Force Majeure risks.)
– identify the risks that the Project would face;
– who among the stakeholders (governments, investors, IFIs
and other financiers) would be negatively affected in the
event of the risk materializing;
– summary of the institution's retained and transferable risks;
– The NPV of all risks (retained and transferable) to be added
onto the base PSC model;
– The NPV of all retained risks to be added onto the PPP
reference model.
 The review should contain recommendations on the mitigation
mechanisms for each of the identified risks to be implemented by
the party identified to bear that risk . In doing so, assessment and
applicability and economy of various risk mitigation mechanisms
should be carried out, including but not limited to: (a) private
mechanisms such as commercial insurance; (b) specific developed
country mechanisms such as export credit insurance and
investment insurance available from national agencies (e.g.,
Overseas Private Investment Corporation OPIC of US); (c) risk
mitigation and insurance mechanisms from IFIs, including partial
risk and partial credit guarantee mechanisms; (d) the risk
mitigation instruments available from World Bank Group‟s
Multilateral Investment Guarantee Agency (MIGA); and (d) any
special mechanisms that have been developed/deployed around the

Page 7 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

world in a high risk contexts and their applicability and adaptation
for the current context.
o Risk-adjusted PPP-reference
 Summary of results: NPV, key indicators
 Sensitivity analyses
 Statement of affordability
 Statement of value for money
 Recommended procurement choice
o Information verification
 Summary of documents attached in Annexure 1 to verify
information that is the baseline for the feasibility study report
 Section 5 - Economic valuation, including
o Introduction and evaluation approach
o Assumptions
o Valuation results
o Macroeconomic Impact - This should analyze the: (a) revenues that would
accrue to the Government through (i) value-added taxes; (ii) other taxes
and levies as contributions to specific funds (e.g- Social Fund); (iii)
corporate taxes; (iv) municipal taxes; (v) customs duties and excise levies
on equipment and services imported/ purchased; (vi) guarantee/on-lending
margins charged by Government; (b) impact on Governments overall debt
and debt service position; and (c) employment generation, regional
development, betterment of people directly effected etc;
o Market Analysis – Economic aspects of the target markets: demand
projections for the length of the project period (minimum [20] years);
alternative options to meet the projected demand; the competitiveness of
the Project vis-à-vis [COUNTRY]‟s marginal cost of generation; the share
of the Project in meeting the power capacity demand, and share of the
Project in meeting energy demand; and
o Project Level Analysis - Project cost-benefit analysis, including net
present value (NPV), financial internal rate of return (FIRR) and economic
internal rate of return (EIRR).
 Section 6 - Procurement plan
 Annexure 1: Statements for information verification and sign off from each
advisor to the project
 Annexure 2: PSC model
Page 8 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

 Annexure 3: PPP reference model
 Annexure 4: Risk assessment and comprehensive risk matrix
 Annexure 5: Document list (list of all documents related to the project, where they
are kept, and who is responsible for ensuring that they are updated)
 Annexure 6: Attach as annexure all other documents that have informed the
feasibility study and that are of decision-making relevance to the project.

4.2 PRESENTATION OF THE FEASIBILITY STUDY

The feasibility study, comprising all the above deliverables, must be compiled in a single
report in Word format (with relevant annexures), and delivered as both electronic and
hard copy documents. All financial models must be in Excel format, and must clearly set
out all assumptions made, sensitivity analyses carried out, and model outputs. The
financial models must be sufficiently adaptable for use by others at later stages. The
feasibility study must be presented with a thorough executive summary and must be
accompanied by a PowerPoint presentation that encapsulates all the key features of the
study. The executive summary and PowerPoint presentation must be compiled in such a
manner that they can be used by the MINISTRY's management for decision-making
purposes.

4.3 SUBMISSION REQUIREMENTS FOR THE FEASIBILITY STUDY REPORT

If the MINISTRY decides to pursue a PPP solution for the Project, the feasibility study
must be of a standard that will be accepted by relevant authorities for the purposes of the
MINISTRY obtaining approval. The transaction advisor is therefore advised to be fully
familiar with the requirements of the relevant authorities.

5. PPP procurement deliverables (if applicable)

If the MINISTRY decides on a PPP procurement solution, the transaction advisor is
required to work with the MINISTRY to manage the procurement process for securing
contracts with a private party. All this needs to be in accordance with the systems and
standards set out for PPPs in relevant laws and regulations.
The transaction advisor will then have to deliver the following:

5.1 APPROVAL AND ADMINISTRATION OF THE BIDDING PROCESS

The transaction advisor must prepare a complete set of procurement documents,

complying with public sector procurement law, policies and guidelines, and in
accordance with the tendering systems of the MINISTRY. The documentation must be
consistent with the results of the feasibility study and enable the MINISTRY to obtain
relevant approvals.

Page 9 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

The transaction advisor must also give the MINISTRY all the necessary drafting, bidder
communication and administrative support necessary for the entire procurement process
to be conducted in accordance with law and policy, and to the highest standards of
efficiency, quality and integrity.

(a) Detailed procurement plan

The transaction adviser will design a complete procurement plan and process, Based on
applicable procurement requirements, including
 Advice on mechanisms to maximize competition while avoiding unrealistic bids
and project vulnerability from overly aggressive bidding.
 Reviewing information to be provided by the Government to bidders to manage
liabilities.
 Technical review, including
o review of general functional/technical solutions,
o assessment of the estimated capital and operating costs
o review the proposals and compare them with current best practice,
highlighting areas where the proposed solutions will increase risk (and
therefore price) and making suggestions for changes in current proposals.
o Capacity of the site, and appropriateness for the technology and
performance required of the Project,
o weather conditions, status of land availability, status of permissions and
permits, traffic
o management and construction management constraints etc.
o service levels and operating costs
o preparation of all alignment drawings and specifications (to the extent not
provided in the feasibility study)
o review of project data, including ground conditions and geotechnics.
o review of capital cost estimates from feasibility study, benchmarking
against out turn costs /published cost estimate data on other projects.
o review of operability of scheme in relation to technical specification,
infrastructure, off-take demand and required levels of output, availability
and safety.
o commentary on integration with - and linkages to network
o environmental impact assessments and proposed mitigation measures.
 Designing pre-qualification and bidding procedures
Page 10 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

 Designing key aspects of the tender procedure, for example deciding whether and
to what extent to accept variant and non-conforming bids, how many bidders must
bid before the process is valid, what rules to set in relation to the assessment of
bids (scoring regimes, timing of bids and rejecting of excessively low bids) and
how to maximize competition without sacrificing quality of bids.
 Outlining tender documentation
 Outlining the PPP contract (including all annexes) that implements the chosen
PPP approach:
o applying the risk matrix developed during the feasibility study, but
updated to address all project issues and market context,
o developing and implementing a detailed financial model and developing
the contract to fit the requirements of the model,
o explaining to the Government whether and to what extent certain
provisions could be amended without disturbing the key risk allocation
goals of the Government,
o The Government may need to obtain debt or provide a loan to the project
company or to provide some other financial instrument (e.g. guarantee or
subsidy) to make the PPP project financial viable or more cost effective.
The transaction adviser will provide advice on structuring of such
instruments, their drafting, negotiation and implementation (e.g. setting up
trusts and escrow accounts, arrangements with security sharing and
management and other aspects of financial management and ensuring
compliance with financial covenants).
 All advice compliant with applicable law and considering any constraints or
opportunities associated with applicable law.
 A 2 day „workshop‟ with Government, [POWER UTILITY] and MINISTRY
officials to discuss policy decisions and risk transfer issues, followed by 1 further
more extensive „workshop‟ to agree final project design.

(b) Pre-qualification

The transaction advisor must design and administer a pre-qualification (request for
qualification (RFQ)) process with the intention of:
 ensuring that the MINISTRY 's exact interest is communicated clearly to the
market
 determining the extent and nature of interest in the private sector
 pre-qualifying a competitive number of competent consortia in an equitable and
transparent way.

Page 11 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

The desired result is that every pre-qualified bidder is capable of providing the facilities
and services required by the MINISTRY. The transaction advisor must:
 prepare all the necessary RFQ documentation, including advertising material;
 set up and administer the process by which the MINISTRY can pre-qualify the
parties, including responding to questions and interfacing with bidders; and
 help the MINISTRY evaluate and pre-qualify bidders.
As part of this process, the transaction advisor shall develop a tightly focused
promotional campaign for the Project, including short press briefings, advertisement
inserts to be published in international trade publications and business newspapers,
followed up by the targeted marketing of the selected generation and distribution
companies through organizing Road Shows and Seminars for potential investors as well
as initiating direct communications with them.

(c) Bid evaluation criteria and bid process design

The transaction advisor must:

 set up a bid evaluation system and criteria;
 design a suitable bid process that will ensure comparable bids;
 devise effective systems for communicating with bidders; and
 inspire market confidence.
If appropriate, a system that allows for variant bids may be designed.

(d) Request for proposals (RFP)

The transaction advisor must prepare an RFP document in accordance with best industry
practice and applicable laws and regulations, consistent with the results of the feasibility
study. The RFP must concisely set out:
 the output specifications of the MINISTRY
 requirements for compliant bids
 a risk profile as established in the feasibility study
 the payment mechanism
 the bid process
 evaluation criteria
 bidder communication systems.

Page 12 of 18

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

(e) A draft PPP agreement

The transaction advisor must prepare a draft PPP agreement, in close liaison with the
MINISTRY management, implementing the risk allocation regime and using best
practice to maximize competition and keep pricing low, while protecting the
MINISTRY‟s interests with a view to project implementation and manageability over the
term of the project. The agreement will include all necessary annexes and subsidiary
documentation, e.g. performance specification, project scope, client‟s requirements,
technical specification, Project performance monitoring regime, code of construction
practice, requirements for network integration, etc.

(f) MINISTRY Approval

The transaction advisor must compile all the documentation necessary for the
MINISTRY to obtain necessary approvals to enable the procurement process to begin.

(g) Administration of the bidding process

The transaction advisor is to provide all necessary administrative support to the

MINISTRY for the efficient and professional management of the bidding process. This
includes managing a data room and other dissemination of project data to bidders,
facilitating structured engagement between the MINISTRY and bidders, helping the
MINISTRY communicate effectively with bidders, including responding to bidder
queries, managing bidder conferences and responding to communications with bidders to
manage Government liabilities, and receiving bids.

5.2 EVALUATION OF BIDS, DEMONSTRATING VALUE FOR MONEY [WHERE

POSSIBLE UNDER PROCUREMENT RULES]

(a) Evaluation of bids

The authorized staff of the MINISTRY, helped by the transaction advisor, must evaluate
bids.
A best and final offer (BAFO) process may be required. When costing this phase of work
the transaction advisor must allow for the possibility of administering BAFO processes.
If there is no BAFO process, the transaction advisor's remuneration will be adjusted
accordingly.

(b) The value-for-money report and approval

Value for money must be demonstrated by comparing the net present value (NPV) of the
bids received with the NPV of the PSC for [describe the project], with a suitable
adjustment for risk assumed.

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 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

The results of the bidding and evaluation of bids must be presented in a single value-for-
money report (with relevant annexes) that demonstrates clearly how value for money will
be achieved with the preferred bidder. The report must clearly indicate the preferred and
second-ranked bidders and provide motivations.
The value-for-money report must be in a suitable format and of a suitable standard for the
MINISTRY to get necessary approvals.

5.3 PPP AGREEMENT NEGOTIATIONS, PPP AGREEMENT MANAGEMENT PLAN

The transaction advisor must assist the MINISTRY in final negotiations with the
preferred bidder. This will involve
 preparing suitable negotiations teams,
 categorizing issues appropriately, developing timelines for completion,
 planning negotiation tactics,
 reviewing proposed sub-contracts, in particular with the construction contractor
and operator, to the extent forms of these contracts have not been included in the
PPP contract or the tender documents,
 advising on proposed changes to the agreed form sub-contracts,
 review of preferred bidder satisfaction of the conditions precedent to the PPP
contract, often including the validity of licenses and permissions obtained by the
preferred bidder, formation of corporate vehicles in the form required, financial
close of the project financing, and implementation of the commercial
requirements for performance of the project,
 relationship with second and third place bidders, including managing bid bonds
and on-going discussions to prepare for the eventual withdrawal of the preferred
bidder,
 processes for reaching agreement,
 the above will normally involve a second set of negotiations with the lenders
arguing similar points as those raised by the preferred bidder during the tender
process and new issues often focused on financial covenants and protections.
This may involve extended discussions of Government financial participation to
protect the lenders from specific risks. The legal service providers should be
involved in these discussions,
 review and negotiation of the financial documentation which will often have a
direct effect on the rights and obligations of the Government,
 legal opinion that transaction is binding on its terms,
 legal opinion on security and financial management structure, and

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PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

 legal opinion on revenue structure and current regulatory mechanism.
The transaction advisor must ensure that all agreements reached are incorporated into all
the financial, commercial and legal documentation, and must assist with drafting the
necessary and related correspondence.
The final terms of the agreement, each as negotiated with the preferred bidder, must be
submitted by the MINISTRY, along with the PPP agreement management plan for the
Project, for approval. The transaction advisor is responsible for compiling the necessary
submissions for the MINISTRY to obtain this approval, including a comprehensive legal
due diligence of the accounting officer/authority has been completed. This will relate to
legal compliance, competence and capacity to enter into the PPP agreement.

5.4 PPP AGREEMENT SIGNATURE, CLOSE-OUT REPORT AND CASE STUDY, AND
FINANCIAL CLOSURE

The transaction advisor must help the MINISTRY with all functions related to signing
the final agreement through to financial close. The transaction advisor must also compile
a comprehensive close-out report and case study, and must incorporate any additional
factors that may be required by the MINISTRY. The close-out report will be a
confidential document of the MINISTRY. The case study will become a public
document, made available on various government websites.
The transaction advisor must, in close liaison with the MINISTRY, draft a
comprehensive PPP management plan for the MINISTRY, in accordance with the
provisions of the PPP agreement, to help the MINISTRY in the management of the
Project and its risks, rights and obligations after financial close. The management plan
will be delivered no later than 20 days before financial close. This will be followed by a 5
day „workshop‟ with MINISTRY project team to discuss project implementation and
management of MINISTRY rights and obligations over the term of the Project, followed
by 1 further „workshop‟ as follow-up.
Financial closure signifies that all the procurement deliverables have been successfully
completed, and that the transaction advisor's work is finished, if applicable.

6. Transaction advisor skill, experience, remuneration and

management by the MINISTRY
6.1 NECESSARY TRANSACTION ADVISOR SKILLS AND EXPERIENCE

The transaction advisor will comprise a team, managed by a single lead advisor. The
members of the team will have the skill and experience necessary to undertake the range
of tasks set out in this terms of reference. Each individual on the team must be personally
available to do the work as and when required. The lead advisor will be held accountable,
in terms of the transaction advisor contract, for ensuring project deliverables and for the
professional conduct and integrity of the team.
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PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

The skills and experience required in the transaction advisory team are as follows:
 financial analysis, with relevant PPP and project finance experience through to
financial close
 PPP procurement and structuring
 legal, with relevant law and experience in the drafting and negotiating of PPP
agreements
 technical due diligence and advice on PPP structuring and contracts
 Project planning management
 Project facilities management
 relevant expertise in [geothermal exploration], power generation and IPPs
 negotiations
 contract management
 project management.

6.2 REMUNERATION SCHEDULE AND DISBURSEMENT ARRANGEMENTS

The total sum budgeted by the MINISTRY for remuneration of professional services
under these terms of reference is [insert amount]. Bidders are advised to bid within this
figure, and to allocate resources according to the remuneration schedule below.
Remuneration of the transaction advisor will be payable in [Rupiah], on a fixed price for
each of 2.1 and 2.2 above (corresponding to PPP Feasibility Study and Procurement of
the project cycle). The procurement portion of the work may or may not transpire at the
end of the feasibility study, and should be costed accordingly.

(a) Remuneration schedule

The following remuneration schedule is set for each part of the contract. Bidders should
adhere to these in their proposals, within the total budget given. Deliverables completed
per the remuneration schedule will be approved by the project officer, after which
invoices may be submitted for payment as per the remuneration schedule. The
MINISTRY will pay within 30 days of receiving the approved invoice.

Task Date Fee

Feasibility study, draft delivered to MINISTRY
Feasibility study, final version delivered to
MINISTRY

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PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

Task Date Fee
Commence pre-qualification
Pre-qualification announced
Bidding commenced
Bid submitted
Preferred bidders selected
BAFO submission
Award
Financial close

(b) Disbursement arrangements

Out-of-pocket expenses will be paid by the MINISTRY at cost within an agreed ceiling.
All claims for travel and other legitimate disbursement expenditure must be pre-approved
by the project officer before they are incurred. An email system for these approvals will
be set up when the transaction advisor contract is signed. Pre-approved project
expenditure on international travel, related reasonable accommodation costs, expenditure
on document reproduction, translation and interpreter services or any other legitimate
pre-approved project disbursement expenditure will be reimbursed at cost. Other
legitimate Project costs such as telephone, fax, photocopies and internet access will be
reimbursed at cost. Payment will be made within 30 days of the MINISTRY receiving
approved and substantiated invoices, and does not form part of the remuneration
schedule. Bidders are required to propose a ceiling for such disbursements. This ceiling
will not be evaluated as part of the price proposal.

6.3 MANAGEMENT OF TRANSACTION ADVISOR BY THE MINISTRY

The transaction advisor will be appointed by the MINISTRY. A project officer has been
appointed by the MINISTRY to take full responsibility for managing the transaction
advisor's work and for ensuring delivery on the project. The project officer is [insert
name of project officer], and can be contacted at [insert contact details].
The project officer has established a project team to engage regularly with the transaction
advisor for efficiently completing the various delivery items. The project team will meet
at least monthly and the transaction advisor will report progress at these meetings, as
instructed by the project officer.
The project officer will confirm that the transaction advisor has satisfactorily completed
each deliverable before invoices can be submitted to the MINISTRY for payment.

Page 17 of 18

PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008
 THIS DOCUMENT HAS BEEN PREPARED FOR THE PURPOSES OF THE
PPP IN INFRASTRUCTURE RESOURCE CENTER FOR CONTRACTS, LAWS AND REGULATIONS.
IT IS FOR GENERAL GUIDANCE PURPOSES ONLY AND SHOULD NOT BE USED AS A SUBSTITUTE
FOR SPECIFIC LEGAL ADVICE FOR A PROJECT.

Terms of Reference – IPP Transaction Advisor

The Activities are anticipated to take place between [ ] and [ ]. The
Activities will be carried out in [LOCATION]. It is anticipated that the team-leader and
co-team leader of the Consultant‟s team will be located in [LOCATION] for the vast
majority of the duration of the contract.
Within 20 working days of the signing of the contract, the transaction advisor shall
submit an Inception Report giving a detailed work plan and assignments for each
individual in the team.
The transaction advisor shall submit Interim Reports each two weeks describing progress
of work, updated work schedule, and any key constraints encountered by the transaction
advisor in the performance of the activities.
Proposed Implementation Schedule
Task Date
Feasibility study, draft delivered to MINISTRY
Feasibility study, final version delivered to MINISTRY
Commence pre-qualification
Pre-qualification announced
Bidding commenced
Bid submitted
Preferred bidders selected
BAFO submission
Award
Financial close

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PPP in Infrastructure Resource Center for Contracts, Laws and Regulations (PPPIRC) Victoria Rigby Delmon, LEGPS
http://www.worldbank.org/ppp December 2008