#1IFC INTERNATIONAL FINANCE CORPORATION WORLD BANK GROUP Mostar Sarajevo E-73 M-17 Kiseljak Visoko R-443 Corridor 5c PPP, Bosnia Investor Teaser October 2013 AC JP Autoceste FBiH#2Corridor 5c Corridor 5c follows European route E73 from Budapest to the port of Ploče (Croatia) via Sarajevo Bosnia and Herzegovina (B&H) contains the longest section of Corridor 5c with a total length of approximately 335 km Corridor 5c is a Pan- European transport corridor which enjoys strong support from the EU and IFIS ■ The project has strong support from all levels of the political spectrum in B&H D Svilaj-Odžak. 11 km Odžak-Doboj Jug. 48 km Doboj Jug Zenica sjever, 57 km Doboj Maglaj Zenica sjever-Drivuša, 11 km Zenica Drivuša - Kakanj, 16 km Kakanj - Jošanica, 37 km Jošanica - Vlakovo, 8 km Vlakovo-Tarčin, 20 km Tarčin - Konjic, 21 km Konjic - Jablanica, 15 km Konjic Jablanica Jablanica - Mostar sjever, 32 km Mostar Mostar sjever - Počitelj, 37 km Počitelj - Bijača, 21 km Ukupno: 334 km Odžak SARAJEVO 2 Corriodor 5C Мар Republika Srpska sections: - Svilaj-Doboj Jug (Karushe) Federation of BiH sections: - All other sections Constructed and open to operations: Drivusa-Kakanj (10km) - Kakanja-Josanica (37km) Pocitelj-Bijaca (5km) AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#3Corridor 5c: Status of Motorway Sections 3 Section Length, km Financing Secured Status Construction Completion Svilaj-Odzak 11.0 Yes Odzak-Karuse (Republika Srpska) 48.0 No Contractor selected PPP tender ongoing 2014 2017 Karuse-Poprikuse 38.6 No PPP tender ongoing 2018 Poprikuse-Zenica North 18.4 No Preliminary design completed N/A Zenica North-D.Gracanica 3.0 No Main design ongoing N/A D.Gracanica-Klopce 5.5 Yes Issuance of construction permit 2016 Klopce-Drivusa (Zenica South) 2.5 Yes Contractor selection 2016 Drivusa (Zenica South)-Biljesevo 6.5 Yes Under construction 2014 Biljesevo-Kakanj 10.0 Yes Open and operating 2013 Kakanj-Josanica (Sarajevo) 36.6 Yes Open and operating 2012 Josanica-Vlakovo (Sarajevo Bypass) 8.0 Yes Under construction 2014 Vlakovo-Tarcin 20.4 Yes Under construction 2014 Tarcin-Konjic 21.0 No Issuance of construction permit N/A Konjic-Mostar North 47.0 No Preliminary design completed N/A Mostar North-Pocitelj Pocitelj-Zvirovici Zvirovici-Kravice Kravice-Bijaca 37.0 No Preliminary design completed N/A 11.2 No Tender for main design ongoing N/A 5.0 Yes Under construction 2014 Total 5.1 Yes 334.8 Open and operating 2013 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#4Grantor's Scope of Work Government of the Federation of Bosnia and Herzegovina (FBiH) and Motorways Authority FBiH (Autoceste FBiH) with assistance from IFC and its advisors Arup and DLA Piper will structure a PPP transaction for design, financing, construction, operation and maintenance of a 38km long section of Corridor 5c between Karuše and Poprikuše in FBiH Comprehensive assessment of the Project (technical, environmental, legal and financial due diligence) Structuring of the PPP transaction Drafting of the tender documents, including the Concession Agreement Marketing of the Project to investors and lenders Negotiations with short-listed investors Implementation of the tender process AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group 4#5Project Snapshot Greenfield construction and subsequent operation and maintenance of a double carriageway motorway Design, finance, build, operate, maintain and transfer concession model Total length is 38.6km Preliminary construction cost has been estimated on the basis of the existing preliminary design (which is currently being optimized) - Bare construction cost: between €380M and €450M Estimate is before VAT (17%) and savings from design optimization 30 year concession term Traffic risk to be assumed by the Government Availability payment model (details to be finalized in consultation with sponsors and lenders) AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group 5#6nina Oka BOS KRUPA BOS PETROVAC NOVIGRAD DRVAR Pj 143 BON GRABOVO KOZARSKA DUBICA Sodna Dragadiaj PRIJEDOR Tuk Project Alignment HRVATSKA GRADISKA BROD SVILAJ SRRM Beri LANTASIA Den BANJA LUKA SANSKI MOST Kar Vahpolje Selagi KLJUC GLAMO Emma Rijekay MRKONJIC GRAD CELINAC JUCE MOZAK VUKOSAVLJE BERVENTA MODICA PODNOVLJE Nesage PRNJAVOR JOHORAC RUDANKA DOBOJ GRADACIC SAMAC ORASJE Pilagine SREBRENTA GRACANICA KOTOR VAROS ESLIC TUZLA MAU LURBAC DONJI VAKUE AUTRES OZIMICA POPEINUSE XIMILA TRAVNIK DGRAČANICA NOVI TRAVNI BUGOJNO VITEZ GORNJI VAKUF ZENICA DREVESA ZIVINICE OLOVO KARAN VISOKO PODLUGONTO Medai KALESUA Tris MLADAN VLASENICA HAN PLESAK Garide ZMORNIK QUELJINA SRBIJA CO 6 SOKOLAC AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#7Project Alignment, Karuše Ozimica e Doboj, Republika Srpska Federation BiH - Republika Srpska border Karuše northern end point of the project section - Sub-section 1 – Karuše-Medakovo, 4.0 km Medakovo - 7 03 Sub-section 2 - Medakovo-Ozimica, 20.9 km Ozimica C JP Autoceste FBIH IFC International Finance Corporation World Bank Group#8Project Alignment, Ozimica Poprikuše Poprikuse 13,58 km 8,06 km Ozimica Sub-section 3 - Ozimica-Poprikuše, 13.6 km 6,13 km (Zepce) Alternative alignment (objected to by the local community in Zepce) Original alignment (most likely to be adopted) Decision about final alignment will be finalized before tender completion 8 Poprikuše - southern end point of the project section AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#99 Project Design Preliminary design was prepared in 2006 Autoceste and IFC are preparing updates and recommended improvements of the design Concessionaire will produce the final optimized detailed design before starting construction Design speed varies between 80km/h (in one spot), 110km/h and 130 km/h (maximum design speed) ■ Preliminary design alignment crosses moderately difficult terrain and contains several viaducts and tunnels Various design optimization measures will be considered by Autoceste during the tender process, for example Alignment optimization Structures' design Gradient steepness Staged tunnel and/or viaduct construction (for large structures) AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#10Description of Project Sections On the basis of the current preliminary design, the project is divided in three sub-sections with the following characteristics Section n 1: Karuše - Medakovo (KM), L= 4.0km, of which bridges and viaducts - 0.4km, tunnel - 0.3km Section n 2: Medakovo - Ozimica (MO), L= 20.9km, of which bridges and viaducts - 0.9km, tunnels - 2.6km Section n 3: Ozimica - Poprikuše (OP), L= 13.6km, of which bridges and viaducts - 2.3km, tunnels - 6.4km 10 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#11Alternative Route ■ The existing regional road M17 will remain as a free alternative ■ The route provides relatively low levels of service and passes through a number of smaller towns with significant speed restrictions (40-70km/h) and other slower moving traffic (agricultural machinery, mopeds and bicycles) Karuše - Maglaj 18.91 Maglaj - Ozimica Ozimica - Zepce 10.43 5.91 Length (km) Carriageway Layout 2 x 3.75 m plus shoulders 2x1m 2 x 3.75 m plus shoulders 2x1m 2 x 3.75 m plus shoulders 2x1m Tolling Free Access Free Access Free Access 11 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#12Existing Traffic – Regional Road M17 Automatic Road Section Location of AADT AADT Traffic (regional M- Traffic 2012 2013* Counter No. 17) Counter 525 Karuše - Maglaj 5,866 6,646 Ozimice 548 Ozimice - Nemila D. Golubinja 8,088 8,944 * 2013 AADT is based on manual counts and automatic traffic counters courtesy of IPSA institute AC JP Autoceste FBIH IFC 12 International Finance Corporation World Bank Group#1313 Existing Traffic - Motorway Section Traffic on the tolled section of the Corridor 5c motorway (Kakanj-Sarajevo) has seen significant growth with summer peaks approaching 20,000 vehicles in 2013 Jan'13 Feb'13 Mar'13 Apr'13 May'13 Jun'13 Jul'13 Aug'13 Sep'13 Oct'13 Nov'13 Dec'13 Vehicles (000) 369 350 412 436 456 470 595 Total Rev. (BAM million) 1.309 1.234 1.490 1.590 1.650 1.712 2.455 Jan'12 Feb'12 Mar'12 Apr'12 May'12 Jun'12 Jul' 12 Aug'12 Sep'12 Oct'12 Nov'12 Dec'12 276 196 295 310 310 387 502 540 468 475 440 403 Vehicles (000) Total Rev. (BAM 0.717 0.536 0.793 0.817 0.785 1.348 1.868 1.898 1.677 1.649 1.542 1.385 million) Aug'11 375 Sep'11 354 347 Oct'11 Nov'11 321 Dec'11 316 Vehicles (000) Total Rev. (BAM 0.892 0.883 0.849 0.781 0.768 million) Traffic increase, 34% 79% 40% 41% 47% 21% 19% 44% 32% 37% 37% 28% Year on Year AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#14Existing Tolling Structure The following toll rates apply as of 2013 (payable in Bosnian Convertible Mark (BAM)) Vehicle Category BAM/km Category 1 0.11 Category 2 0.22 Category 3 0.33 Category 4 0.44 14 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#15Ongoing PPP Tender in Republika Srpska The 46.6km section of Corridor 5c that runs through Republika Srpska (RS) is currently being implemented as a PPP The tender process is ongoing. Prequalification of bidders is complete and final bids are due in spring 2014 A 30 year design, build, finance, operate and maintain concession The plan is tha Concessionaire will receive annual availability payments from the Republika Srpska Motorways company, which will be backed by a sovereign guarantee from the RS government The project has preliminary lender support (e.g., EBRD) 15 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#16Macroeconomic Conditions BiH has a currency board arrangement Credit rating: “B” / Stable outlook by S&P Steady progress is being made toward implementing structural reforms The banking system - predominantly owned by Austrian and Italian banks - is profitable and adequately capitalized at the aggregate level Following finalization of the state and entity budgets, progress was made towards re-engaging with the IMF, culminating in the signing of a €405 million Stand-By Arrangement 16 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#17Macroeconomic Conditions Figure 1. BiH: Selected Economic Indicators, 2007-14 17 Real GDP Growth (In percent) 10 co 8 ++ 2 N -4 2 10 12 co 10 8 6 6 4 4 2 2 0 -2 -2 -4 2007 2008 2009 2010 2011 2012 2013 2014 m + 5 -6 Fiscal Balance and Public Debt (In percent of GDP) Public Debt (rhs) Fiscal Balance Inflation (In percent) 12 10 Headline Core co 8 6 4 2 0 -2 -4 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 50 45 -2 40 -4 35 -6 0246 30 -8 25 -10 20 -12 15 10 -14 5 -16 2007 2008 2009 2010 2011 2012 2013 2014 Source: IMF Country Report, July 2013 Current Account Balance (In percent of GDP) 0 -2 -4 -6 -8 -10 -12 -14 -16 2007 2008 2009 2010 2011 2012 2013 2014 AC JP Autoceste FBiH IFC International Finance Corporation World Bank Group#18Regulatory Framework Corridor 5c Motorway Law Adopted in April 2013, the law contains measures which address, among others, the areas of construction, permits and licenses, use of land, property issues, protection of the environment, financing of construction, and technical standards specifically in relation to the Corridor 5c motorway Concession Law 5 Adopted in 2002, the Concession law provides a legal framework under which the project can be implemented, including rules for granting the concession, procurement procedures, legal status of the concessionaire and its obligations, jurisdiction, etc. Spatial Planning Law Regulates issues related to spatial planning in FBiH AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group 18#19PPPs in B&H Examples of successfully concluded PPPs in Bosnia & Herzegovina in the recent years include: Biomass District Heating - Gracanica Privatization of Energopetrol (fuel distribution and storage) Privatization of Telekom Republike Srpske Two licenses for mobile telephone services (Telecom Austria and Telecom Slovenia) AC JP Autoceste FBIH IFC 19 International Finance Corporation World Bank Group#20SWOT Strengths 1. Grantor is willing to provide availability payments 2. IFIs are interested in financing the project 3. Acceptance of tolling by drivers 4. Project is part of a European corridor Weaknesses 1. Low traffic volumes 2. No space for increasing toll rates Opportunities 1. Possibility to reduce capex and cost of O&M through the use of the DBOT model 2. MIGA's Breach of Contract guarantee 3. Synergies with the PPP project which is being structured in the RS Threats 1. Political cycle 2. High cost of construction 3. Affordability of availability payments for the Grantor 20 20 AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#21Anticipated Timeline Project implementation timeline is currently under review and will be made available in the Investment Memorandum which will be distributed in the near future. AC JP Autoceste FBIH IFC 21 International Finance Corporation World Bank Group#22Contact Details 22 22 AC JP Autoceste FBiH Mr.sci. Ensad Karić Director Dubrovačka 6 71000 Sarajevo, BiH www.jpautoceste.ba Tel.: +387 33 277 900 Fax: +387 33 277 901 E-mail: [email protected] IFC International Finance Corporation World Bank Group Oleg Kudashov Investment Officer Transaction Advisory-Infrastructure Europe and Central Asia Kralja Aleksandra 86 11000 Belgrade, Serbia Tel: +381 11 330 8957 Mob: +381 63 103 3968 Email: [email protected] AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group#23Disclaimer 23 23 This presentation is proprietary and for confidential use only. It is being issued by Autoceste FBiH and IFC solely for use by addressed recipients and their advisors. It may not be reproduced or distributed in whole or in part, or divulged to, or shared with third-parties without Autoceste FBiH and IFC's prior written consent. No other person has been authorized to give any information or make any representations with respect to the project described herein, and, if given or made, such other information or representations must not be relied upon. This presentation is for information purposes only. This presentation is intended to help recipients appraise whether the project is of interest but is not intended to provide the basis for a decision to invest. Each recipient is expected to make such independent investigation and to obtain such independent advice as he or she may deem necessary for such a decision. No representation, warranty, or undertaking (express or implied) is made and no responsibility is or will be accepted by Autoceste FBiH and IFC as to the adequacy, accuracy, completeness or reasonableness of the information contained in this presentation. The information contained herein may be amended or replaced by Autoceste FBiH or IFC at any time, without giving any prior notice, or providing any reason. Nothing herein or attached hereto is, or may be relied upon as, a promise or a representation as to the future performance or policies of the Project, or should be considered as a recommendation by Autoceste FBiH or IFC to participate in the Project. Any liability in connection with the use by any recipient of the information contained in this presentation is hereby disclaimed. AC JP Autoceste FBIH IFC International Finance Corporation World Bank Group