ZET - JamaicaGazette.com
Jamaica Government News and Information
Ministries, Departments and Agencies

Page 42

Government of Jamaica Policy Framework and Procedures Manual for the Privatisation of Government Assets October 2012 (Revised December 2017)

35

Privatisation expenses funded by the Privatisation Escrow Account are to be recovered from sales proceeds and deposited to the Privatisation Escrow Account

7.0.3 PROJECT PREPARATION FACILITY

An alternate source of funding for privatisation costs is the Project Preparation Facility (PPF). The PPF is funded from the World Bank under the Foundations for Competitiveness and Growth Project. The PPF will finance studies and technical assistance needed to bring large projects such as infrastructure and social sector public-private partnerships, divestments and other strategic investments to commercial and financial close. The PPF is a revolving facility, where the costs for the studies related to commercially viable transactions are ultimately borne by the successful bidders of the investment projects.

Eligible activities that will be supported include:

1. Consultant services required to prepare and bring approved projects to the market

2. Pre-feasibility and feasibility studies, including: a. Market Analysis b. Demand forecasts c. Technical designs and specifications d. Environmental and social impact analyses, and any other required

safeguard policy or other studies to protect the public interest e. Preparation of detailed cost estimates and financing plans f. Assessment of the need for direct government support in case the

project is not viable on its own g. Analysis of project delivery options

3. Preparation and analysis of financial models or cash flow projections 4. Valuation reports 5. Business Plan development 6. Transaction management services

8.0 PRIVATISATION FEES

Privatisation Fees - Remuneration for Privatisation Agency

The Privatisation Agency will charge a Privatisation fee for the services provided to the GOJ in support of the Privatisation transactions. The MDA is required to execute a Privatisation Services Agreement upon appointment of an Enterprise Team where the Privatisation Agency provides privatisation support including Transaction Management or Secretariat Services. The Privatisation Agency may charge a flat fee, a commission based fee or a combination thereof.

...
June 12, 2021


Page 43

Government of Jamaica+Policy+Framework">Jamaica Policy Framework and Procedures Manual for the Privatisation of Government Assets October 2012 (Revised December 2017)

36

Commission Based Fees The Privatisation Agency may charge a commission of between 1% to 5% of the sale proceeds of the privatisation project. In addition, a quarterly administration fee may be negotiated, as deemed necessary.

Flat Fees The Privatisation Agency may charge flat transaction fees (payable on the achievement of project milestones) and may charge a non-refundable retainer (being up to 25% of the total fees).

Monitoring Fees Where the Privatisation Agency’s Terms of Reference will include the monitoring of privatised assets, a separate monitoring fee must be negotiated with the MDA. Specifically, where lease collections are being monitored a monitoring Fee of 10% of lease income received plus out of pocket expenses which are to be reimbursed to the DBJ. In the case of the monitoring a vendor’s mortgage the monitoring fee will be negotiated with the MDA.

10.0 USE OF PRIVATISATION PROCEEDS 10.0.1 Proceeds of Privatisation

The following charges will be made against the gross privatisation proceeds:  Direct privatisation costs to the entity, including privatisation fees,

 Staff obligations – redundancy costs  Tax obligation of the company/entity being privatised  Secured debt obligations of the company being privatised including loans

from Government of Jamaica and other financial institutions or guaranteed loan of the GOJ (unless the purchasers have agreed to assume debt obligations)

 Unsecured creditors (as negotiated by the entity)

Where the privatised assets are owned by the Accountant General, net proceeds of privatised entities will be placed in an Escrow Account and may be distributed as follows:

 Provisions for budgetary support to the Ministry of Finance.  Special funds for capital projects  Paid over to the Consolidated Fund

The distribution of proceeds in this case is to be approved by the Ministry of Finance.

...
June 12, 2021


Page 44

Government of Jamaica Policy Framework and Procedures Manual for the Privatisation of Government Assets October 2012 (Revised December 2017)

37

Where the privatised assets are owned by public bodies, agencies or statutory bodies, the net privatisation proceeds will be paid over to the company owning the privatised assets, on approval of Cabinet.

11.0 REMOVAL OF AN ENTITY FROM THE PRIVATISATION LIST

There will be occasions when an asset cannot be privatised due to the lack of interest from potential investors, bids below an acceptable amount and/or changes in GOJ policy. Cabinet approval must be sought for the removal of an entity/project from the privatisation list.

A Ministry or Agency may also submit a formal request (via a Cabinet Submission) to Cabinet for an asset to be removed from the list. This request should include the rationale for the removal of the entity from the list, and in the case of a Ministry requesting the removal prior to privatisation; the rationale must be aligned with GOJ priorities and objectives. The removal from the list should be justified based on the strategic positioning and objectives of the Ministry or Agency.

...
June 12, 2021


Page 5

Government of Jamaica Policy Framework and Procedures Manual for the Privatisation of Government Assets October 2012 (Revised December 2017)

7.0.3 Project Preparation Facility ……………………………………………………...…….. 34

i

TABLE OF CONTENTS Executive Summary .....................................................................................................................................1

1.0 Background ...........................................................................................................................................5

2.0 Policy Framework...............................................................................................................................7 2.1 General Principles ........................................................................................................................... 7

2.2 Exemptions ...................................................................................................................................... 8

3.0 Institutional Framework .................................................................................................................9 4.0.2.4 Operating Entities.................................................................................................................. 9

4.0.2.5 Operational Support Teams................................................................................................ 11

4.0 Privatisation Procedures...............................................................................................................15 4.0.1 General Framework.................................................................................................................... 15

4.0.1.1 The Privatisation Process ....................................................................................................... 15

4.0.2 Unsolicited Expressions of Interest .......................................................................................... 20

4.0.3 Strategic Investments................................................................................................................. 23

4.0.4 No Satisfactory Bid Received ..................................................................................................... 24

4.0.5 Failure to Conclude Negotiations with the Preferred Bidder ................................................. 25

4.0.6 Engagement of External Consultants ........................................................................................ 25

5.0 Post-Privatisation Monitoring ....................................................................................................25 Privatisation Process Flow ................................................................................................................... 27

6.0 Privatisation Modalities.................................................................................................................28 6.1 Modalities Based on Asset Type ................................................................................................... 28

Land .................................................................................................................................................... 28

Monopolies and Near Monopolies ................................................................................................... 28

Shares/Limited Equity Holdings/Joint Ventures............................................................................ 29

Operating Entity ................................................................................................................................ 32

Assets under Long-term Lease ......................................................................................................... 32

Services to be Contracted Out/ Outsourced.................................................................................... 32

6.2 Regulatory Considerations ........................................................................................................... 32

7.0 Funding for Privatisation Programme ....................................................................................33 7.0.1 Privatisation Cost ....................................................................................................................... 33

7.0.2 Privatisation Escrow Account ............................................................................................... 35

...
June 12, 2021


Page 6

Government of Jamaica Policy Framework and Procedures Manual for the Privatisation of Government Assets October 2012 (Revised December 2017)

ii

8.0 PRIVATISATION FEES .....................................................................................................................35

8.0 Privatisation Fees .............................................................................................................................35

9.0 Use of Privatisation Proceeds ......................................................................................................36 9.0.1 Sale proceeds of Privatisation .............................................................................................. 36

10.0 Removal of an entity from the Privatisation List .............................................................37

Appendix 1: Terms of References ......................................................................................................... I Privatisation Agency ...................................................................................................................................... I Enterprise Team.............................................................................................................................................II

Appendix 2: Operational Guidelines ................................................................................................. IV

...
June 12, 2021


SEARCH