InterAmerican Development Bank

1

• Inter-American Development Bank
• Private Sector Operations in Water and Sanitation
• September 26, 2003

2

• PRIVATE SECTOR DEPARTMENT (PRI)
• Products for Infrastructure Financing

3
Eligible Sectors for Financing with PRI

• Energy
• Transportation
• Telecommunications
• Capital Markets Support
• Water and Sanitation Sector
• Water supply and distribution
• Wastewater treatment
• Solid waste management

4
PRI Financial Products

• Long Term Direct Loans (A Loans)
• Syndicated Loan Participations (B Loans)
• Credit and Political Risk Guarantees

5

• CASE STUDY PRI
• Río Bogotá Wastewater Treatment Project
• Political Risk Guarantee

6
Río Bogotá

• Problem Pollution Levels of Bogota River
• Solution
• Comprehensive series of pollution abatement
  measures including industrial polluters tax,
  multiple public sector projects with aid of MFIs
  (World Bank, IDB)
• Concessions with the private sector for the
  construction of three wastewater treatment plants
  at Salitre, Fucha and Tunjelo rivers at points of
  entry to Bogotá River

7
Private Sector Project

• 30-year BOOT Concession
• for WWTP
• International tender
• Tariff paid by District
• Technical proposal
• Awarded to Lyonnaise
• Des Eaux/ Degremont
• Total Project Cost
• US125 million

8
Key Issues
Construction Operation
Supply/ Demand
Environmental
Financial
9
Key Issues
Termination Payment
Political Risks
Convertibility
Transferability
10
Termination Payment

• Termination Scenarios
• Default of Project Company
• Unilateral Termination by District
• Unilateral Modification by District
• Unilateral Interpretation by either party
• Force Majeure
• Termination Payment
• Pre-determined formulas for compensation
• Penalties for non-performance deducted
• Minimum Termination Payment (principal and
  accrued interest)

11
IDB Partial Risk Guarantee

• Guarantee Coverage for Termination Compensation
• Shortfall in Minimum Termination Payment
• Convertibility/Transferability of Minimum
  Termination Payment
• Guarantee Coverage for convertibility/transferabil
  ity of monthly debt service payments

12
Río Bogotá Wastewater Treatment Project

• Concessionaire Bogotana de Aguas y Saneamiento
  (BAS)
• Sponsors Lyonnaise des Eaux, Degremont
• Project Description 30-year BOOT Concession
• Total Project Cost US125.0 million
• Equity US25.0 million
• US Series A Notes US30.0 million (covered by
  IDB facility)
• US Series B Notes US70.0 million
• Debt Holders US Institutional Investors (144a)
• IDB Guarantee Up to US31.25 million
• Coverage Certain early termination risks,
  convertibility and transferability of monthly
  and termination payments

13

• PORTFOLIO AND PIPELINE
• Water and Sanitation

14
Portfolio of Projects in Execution

• Argentina Aguas Argentinas Project
• Argentina Aguas Provinciales de Santa Fe
  Project
• Bolivia Aguas del Illimani Project
• Colombia Rio Bogotá Political Risk Guarantee
• Dominican Republic San Pedro Sula Water and
  Sewerage Project
• Total Project Cost US815.5 Million
• Total A Loans US133.7 Million
• Total B Loans US195.0 Million
• Total Guarantee US31.25 Million

15

• Inter-American Development Bank
• Private Sector Department (PRI)