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

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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.

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

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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.

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APPENDIX 1: Terms of References

A. PRIVATISATION AGENCY

Terms of Reference The terms of reference for the Privatisation Agency are as follows:  To be responsible for the complete reporting of privatisation

activities to the Cabinet;  To prepare, for the approval of the Cabinet, an annual plan for the

divestment of companies and equity interests;  To monitor progress against this plan and report on progress to

the Cabinet;  To prepare, for the approval of the Cabinet, procedures and rules

governing the conduct of privatisations, in line with this policy;  To ensure that privatisations are conducted in accordance with

the approved procedures and rules, and to report to the Cabinet on any instances in which the procedures and rules are not followed;

 To assist with conducting or commissioning the necessary studies and analyses which will offer government the opportunity to make informed decisions;

 To carry out privatisation activities wholly or jointly with other government agencies and offer consultancy services when required;

 To co-ordinate and support the work of the Enterprise Teams;

 To co-ordinate requests for funding from international agencies as these relate to privatisation activities;

 To compile and archive all information on GOJ privatisations;

 To manage the privatisation escrow account on behalf of the GOJ.

The Privatisation Agency supports the work of the Enterprise Team by: • Co-ordinating communication between all the parties involved in

the privatisation; • Ensuring that the Enterprise Team conducts the privatisation in a

manner consistent with this policy, and with approved rules and procedures;

• Providing secretarial and administrative support – draft minutes, agendas, prepare meeting notes, schedule and host meetings of the Enterprise Team, etc;

• Being a centralised point of contact for information on the Privatisation transaction;

• Providing technical advice via internal archives and/or external consultants (where necessary); The external consultant provides guidance, training, process support & technical advice as needed;

I

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4

APPENDIX 2: OPERATIONAL GUIDELINES FOR THE PRIVATISATION OF GOJ ASSETS

OPERATIONAL GUIDELINES LEVEL 1 LEVEL 2 LEVEL 3

A S

S E

T S

All Strategic Assets or Assets which are either valued or for which revenues are anticipated in excess of US$50M

Assets which are either valued or for which revenues are anticipated within the range of US$5M -US$50M

Assets which are either valued or for which revenues are anticipated less than US$5M

G U

ID E

L IN

E S

1. Cabinet Approvals:  To privatise

(addition to list)Approval of

privatisation strategy and modality

Approval of preferred bidder

Final negotiated privatisation terms and conditions

2. Ministerial Approvals:  Appointment of

Enterprise Teams 3. Transaction to be

executed by the Enterprise Team with Secretariat support from Privatisation Agency.

4. Privatisation Agency Board and /or relevant Ministry or Agency to approve strategy and modality prior to submission to Cabinet.

5. Reporting: Monthly reporting to Cabinet through the Privatisation Agency

6. Modality (Strategic

1. Cabinet Approvals:  To privatise (addition

to list)Final negotiated

privatisation terms and conditions

2. Cabinet Approvals for: Approval of the privatisation strategy or modality

Approval of the preferred bidder

3. Ministerial Approvals:

Appointment of Enterprise Teams

4. Transaction to be executed by the Enterprise Team with Secretariat support from Privatisation Agency.

5. Reporting: Quarterly reporting to Cabinet through the Privatisation Agency

6. Modality: Not specified

1. Cabinet Approvals:  To privatise (addition

to list) 2. Cabinet Approvals:

Final Negotiated Terms

3. Ministerial Approvals:  Appointment of

Enterprise TeamsApproval of

strategy/modalityApproval of Preferred

Bidder 4. Process to be managed

by Ministry/Agency and monitored by the Privatisation Agency

5. Reporting: Quarterly reporting to Cabinet through the Privatisation Agency

6. Modality: Not Specified

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Page 5

Government of Jamaica Policy and Institutional Framework for the Implementation of Public Private Partnerships Revised December 2017

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TABLE OF CONTENTS

List if Acronyms .................................................................................................................................... iii Executive Summary .............................................................................................................................. 1 1.0 Introduction ................................................................................................................................... 4 1.0.1 Background ......................................................................................................................... 4 1.0.2 Defining PPPs...................................................................................................................... 4 1.0.3 Essential Characteristics of a PPP ..................................................................................... 5 2.0 Role of Public Private Partnerships in Economic Revitalization ................................ 7

2.0.1 Public Sector Investment Planning and PPP+Project+Development">PPP Project Development ................................ 7 2.0.1.1 Definition of a Public Investment ................................................................................................ 7 2.0.1.2 Enhanced Fiscal Rules - PPP Accounting Treatment .......................................................... 7 2.0.1.3 Public Sector Investment Programme (PSIP)........................................................................ 8 2.0.1.4 Accounting for PPPs .......................................................................................................................... 8 2.0.2 Role of PPPs In Public Transformation .................................................................................... 9

3.0 Policy Framework ...................................................................................................................... 11 3.0.1 Policy Objective ................................................................................................................ 11 3.0.2 Policy Application............................................................................................................. 11 3.0.3 Guiding Principles of the PPP+Programme">PPP Programme ..................................................................... 11 4.0 Institutional and Administrative Framework ................................................................. 13 4.0.1 Overview of PPP Institutional Structures....................................................................... 13 4.0.2 Strategic Oversight for the PPP+Programme">PPP Programme .................................................................. 13

4.0.2.1 Cabinet ................................................................................................................................. 13 4.0.2.2 Privatisation Committee of Cabinet ................................................................................... 14 4.0.2.3 Strategy Committee............................................................................................................. 14 4.0.2.4 Operating Entities ..............................................................................................................15 a)

Privatisation Agency and PPP Unit ........................................................................................ 15 b) Ministry of Finance and Planning PPP Node......................................................................... 16

4.0.2.5 Operational Support Teams ............................................................................................... 17 a) Enterprise Team ...................................................................................................................... 17 b) Project Team............................................................................................................................ 19 c) Contract Management Team .................................................................................................. 20

4.0.2.6 Roles of Existing Entities .................................................................................................... 20

5.0 Reporting Requirements ......................................................................................................... 22 5.0.1 Reporting to Privatisation Committee of Cabinet ......................................................... 22 6.0 PPP Development Process ...................................................................................................... 23 6.0.1 Stages of PPP Development and Implementation ......................................................... 23 6.0.2 Reviews and Approvals.................................................................................................... 26 6.0.3 Gateway Review ............................................................................................................... 27 7.0 PPP Criteria .................................................................................................................................. 28 8.0 Contract Management .............................................................................................................. 29 8.0.1 Renegotiation.................................................................................................................... 29 9.0 Unsolicited Proposals ............................................................................................................... 30

9.0.3.3 Swiss Challenge System .................................................................................................. 30

10.0 Probity Management .............................................................................................................. 33

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