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Financial and Economic Advisor (International)

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About Ministry of Mines and Petroleum

The long lasting conflict in Afghanistan has had a severe impact on the power sector, both directly (dilapidated generation, transmission and distribution infrastructure) and indirectly (serious management issues at the national power utility). In addition, Afghanistan still largely relies on imports from neighboring countries for its power supply, which is not only costly but also raises concerns of the security and reliability of supply. With the help of the donor community, significant efforts have been undertaken by the Government of Afghanistan (GoIRA) to reform and modernize the power sector, by both upgrading and developing infrastructure and by improving overall management of the sector.

As part of efforts to increase availability of power in the country and self-reliance, GoIRA is exploring options to develop domestic generation capacity. In this respect, discussions have been held between GoIRA and various private parties for the development of a gas-to-power plant in Mazar-e-Sharif (estimated 50MW) under an Independent Power Plant (IPP) arrangement, “Mazar IPP”. The Mazar IPP would be implemented on a direct agreement basis (without a competitive process). It would also represent the first project of its kind in Afghanistan and is, therefore, considered important in terms of precedent setting as it could serve as a model for future transactions of the same nature.

Public parties involved in discussions on the Mazar IPP have so far included the Ministry of Finance (MoF), the Ministry of Energy and Water (MEW), the Ministry of Mines and Petroleum (MoMP), Da Afghanistan Breshan Sherkat (DABS), the national power utility, and Afghan Gas Enterprise (AGE), the state-owned gas facility. Private parties involved include the International Finance Corporation (IFC) and the Ghazanfar Group (GG), a private Afghan conglomerate. A Memorandum of Understanding (MoU) was signed between the parties in connection with the Mazar IPP on May 13, 2015, and the Heads of Terms were signed between the parties on September 22, 2016 to capture key contractual terms

While structuring discussions are still on-going between the parties, the following parameters are expected:

- the Mazar IPP would be established as a corporation in Afghanistan (Project Company) and the plant constructed on private land;
- the gas needed for the plant would be supplied by AGE under a long term gas supply agreement;
- power produced would be purchased by DABS under an off-take agreement (estimated 20 years term).

To ensure the viability of the Mazar IPP, the issuance of several guarantees is also being considered, including to secure the purchase of power by DABS and certain termination payments. Such guarantees could be provided by the World Bank’s International Development Association (IDA). In addition, Political Risk Insurance is being considered to cover political risk for the sponsors, which could be provided by the Multilateral Investment Guarantee Agency (MIGA) . The structure of the Mazar IPP is not yet finalized and the required guarantees will depend upon the structure of the transaction.

It should be noted that similar to the power sector, the gas sector is currently undergoing a restructuring, involving, among others: a proposed corporatization and commercialization of AGE (with the objective of making it a market-oriented profitable company), a review of the sector legal, regulatory and institutional framework (with the objective of establishing a modern and coherent policy framework – including opening the exploration and production stages to private sector operators), a review of price and tariffs issues and the establishment of a regulator.

Given the number and complexity of issues to go ahead with the Mazar IPP, GoIRA has requested assistance from the World Bank, through the Afghanistan Extractives for Development Project (AE4D) implemented by MoMP, to hire a set of individual consultants (spanning both gas and power sector expertise as well as legal, financial and economic expertise) to support project preparation. The consultants are expected to work closely together and with MoMP as well as other public parties, including AGE, MEW, DABS and MoF during the preparation of the Mazar IPP. It is further expected that the individual consultants will work with a transaction advisory firm, to be hired during the preparation stage, who will provide additional support to GoIRA. The transaction advisory firm will take on responsibilities related to the negotiation and closing of this transaction and will also build capacity of the different public entities involved in the Mazar IPP to undertake additional PPP-type transactions in the future, which are expected to build on the structuring precedents set by the Mazar IPP.

MoMP, via the AE4D project, intends to engage the services of an experienced financial and economic advisor to assist in the implementation of this activity as well as a potential further IPP arrangement that is comparable to the Mazar IPP in its key components and pertinent matters (as further detailed below) and that is ready for implementation. These terms of reference seek to invite proposals from consultants qualified and experienced in the preparation of IPPs to provide the services described under the scope of work below.

Job Summary

While the financial and economic advisor will be hired by MoMP under AE4D, s/he will need to provide assistance to all Government stakeholders involved in the Mazar IPP and potentially another IPP (MoMP, AGE, MEW, DABS and MoF). A key task of the financial and economic advisor will be to reconcile the different views of the various stakeholders and to safeguard the interests of GoIRA.

Job Details

Date Posted: 01 Jan 2017 Reference: MoMP / AE4D / CS - IC - 06
Closing Date: 29 Jan 2017 Work Type: Unknown/Other
Number of Vacancies: 1 Gender: Any
Functional Area: Economic Growth Open Ended: NO
Nationality: Any Salary Range: As per company salary scale
Contract Type: Short Term Years of Experience: 10 Year(s)
Contract Duration: 1 Year(s) & 0 Month(s) Extension Possibility: No
Probation Period:

Duties and Responsibilities

1. Initial Stage
The structure of the Mazar IPP is still under discussion (as might be the case for a comparable IPP arrangement) – and GoIRA will be required to take positions on a series of technical (including commercial), financial and legal issues, so as to allow for these IPPs to move ahead. In this respect, the financial and economic advisor is expected to provide just-in-time assistance on such issues as the GoIRA (i.e. MoMP, AGE, MEW, DABS and MoF) will request. The financial and economic advisor may also take the initiative to raise issues that it considers important for GoIRA to address.

Assistance at the initial stage shall focus on the preparation of a financial and due diligence report for the Mazar IPP (and potentially another IPP), which should cover issues such as:

• Assessment of the financial and economic implications of various available structuring options, including a “value for money” analysis of the Mazar IPP (and potentially another IPP), to determine which structuring options provide the greatest value added for Afghanistan as a whole;
• Comparative analysis of design options (cost vs. benefits for Afghanistan – depending on its objectives for the gas and power sectors); gas price and tariffs issues (with both systemic and transaction dimensions: gas supply contract and impact over AGE and the gas sector); electricity price and tariffs issues (with both a systemic/sectoral dimension and a transactional dimension; power purchase agreement and impact over DABS and the power sector); cost of infrastructure, if any, to be supported by either AGE or DABS to implement the Mazar IPP (and potentially another IPP); existing Power Purchase Agreements concluded by DABS and impact of the IPP over those, and overall over profitability of DABS; “financial regime” applicable to the IPPs, including tax and customs, any benefits or exemptions granted – as well as any “concession fees” or other payments due to GoIRA as the case may be, etc.;
• Distributional and financial analysis to provide guidance on how to divide the rent/surplus among the different groups (government, consumers, IPP sponsor, etc.). This analysis needs to take into account the relative riskiness of each structuring option;
• Review of financial model for the Mazar IPP to be prepared by GG;
• Review of Heads of Terms. Heads of Terms for the Mazar IPP were signed on September 22, 2016 (and similar documents might be signed for a comparable IPP arrangement). While these Heads of Terms are non-binding, they are expected to guide the development of the Project Agreements. The financial and economic advisor is expected to review these Heads of Terms to familiarize herself/himself with the proposed contractual positions and obligations, including:
(i) risks to be assumed by each party;
(ii) performance standards to be achieved by the private partner;
(iii) procedures for monitoring compliance with contractual obligations;
(iv) dispute resolution mechanisms;
(v) exit and termination procedures;
(vi) force majeure procedures; and
(vii) payment regimes.




2. Transaction Stage
Once the structure for the Mazar IPP (and potentially another IPP) has been finalized and agreed, a number of agreements will need to be prepared and negotiated among the parties (the Project Agreements). While it is difficult to precisely list the Project Agreements until the final project structure(s) has been agreed upon, possible agreements include: an Energy Conversion Agreement or Power Purchase Agreement (PPA); a Gas Supply Agreement (GSA) , an Implementation Agreement (IA - to include a GoIRA sovereign guarantee along with other GoIRA support), Land Lease Agreement (LLA) and any other direct agreements needed for the project(s), i.e. connection agreement (which maybe be inside the PPA), environmental and/or water use agreement (the mode of operation of an IPP in Afghanistan – as well as any contracts to be concluded with GoIRA for this purpose – will need to be determined). A key task for the financial and economic advisor is to support GoIRA to understand the package of agreements it must put in place, depending on the deal structure which is decided, and the financial and economic impact and implications of these agreements.

Assistance at the transaction stage is expected to include:

• Review of Project Agreements: the Project Company will take responsibility for the drafting of the Project Agreements for the Mazar IPP. The financial and economic advisor would review draft Project Agreements (both initial drafts and revised versions) from a financial and economic perspective, support GoIRA in reviewing the agreements, and – in close collaboration with the legal advisor (hired at the same time as the financial and economic advisor) – provide written comments on the documentation. The review should take into account: (a) regional and international precedents; (b) local situation and its impact on project implementation and investment requirements; and (c) the nature of the Mazar IPP as the first IPP in Afghanistan, which is also expected to serve as a basis for future transactions. Specific support would include:
(i) support in understanding clearly the risks that GoIRA would assume upon entering into the agreements, the fairness of the proposed risk allocation, and the financial and economic impact and implications of these risks;
(ii) support GoIRA in its review of proposed commercial terms (based on the financial and economic analysis undertaken during the preparation phase).

Depending on the progress made during the transaction stage of the Mazar IPP (and potentially another IPP), the financial and economic advisor – in cooperation with the transaction advisory firm – may also be expected to support GoIRA in the negotiation of the final Project Agreements, in order to protect the interests of GoIRA and ensure the fairness of the final Project Agreements.


II. METHODOLOGY

Because the Mazar IPP is still under preparation, with discussions ongoing on its structure, and the selection of an additional IPP(s) has not been made, some level of flexibility is needed in the definition of the responsibilities of the financial and economic advisor– as well as for the delivery of services.

As regards the initial phase, the financial and economic advisor would be expected, as discussions on the structure advance, to advise the public stakeholders on the main parameters of the proposed transaction(s), from a financial and economic point of view, and prepare a financial and economic due diligence report to capture analysis and recommendations, from a financial and economic perspective, on the various structuring options for the Mazar IPP (and potentially another IPP).
As regards the transaction phase for the Mazar IPP, the financial and economic advisor would be expected to assist the public stakeholders in reviewing the draft Project Agreements to ensure that: (i) contractual structure and contractual terms are financially and economically viable; and (ii) the interest of the GoIRA and relevant public parties involved are properly assessed, understood and defended. This may include the preparation of opinion documents on specific issues, and written feedback on the draft Project Agreements.

III. SUBMISSION OF DELIVERABLES, TIMELINE, AND PAYMENT SCHEDULE:

The following written deliverables as expected from the financial and economic advisor:
• Initial Stage:
a. Financial and Economic Due Diligence Report

• Transaction Stage:
a. Written comments on Project Agreement drafts
b. Preparation of opinion reports, as required

All deliverables are to be provided in English. All deliverables must be in Microsoft Word format (with relevant annexure and tables in excel format where required) and must be delivered to MoMP and the World Bank Task Team Leaders, Fanny Missfeldt-Ringius at fmissfeldt@worldbank.org and Christina Paul at cpaul1@worldbank.org. All original text, figures/tables must be delivered in a format which enables modifications. All non-original work must be properly sourced and referenced. The World Bank Group team will engage regularly with the financial and economic advisor for completion and submission of the deliverables. The financial and economic advisor will be expected to attend all meetings, teleconferences and briefing sessions and respond to other communication promptly for the duration of the Assignment.

Qualifications

• The financial and economic advisor is expected to have minimum of a Bachelors/ Master’s Degree in finance, economics, accounting or related discipline. S/he must be fully conversant with all aspects of PPP. S/ It is anticipated that the skills and expertise required for this assignment will include the following:

• At least 10-15 years relevant experience in successfully leading similar assignments related to PPP/IPP structuring and contract design;
• Relevant financial and economic expertise, with relevant experience in financial and economic due diligence, project finance, gas and power issues (including power/gas sector agreements), and structuring and negotiation of PPP agreements;
• Demonstrated ability to work with government/public sector decision-makers and organizations;
• Strong oral and written communication skills in English language with a capacity to communicate effectively to a wide variety of audiences, including conducting presentations;
• Ability to manage multiple tasks effectively and a strong team player with excellent leadership and interpersonal skills and the ability to work in a high profile environment;
• Experience with working in Afghanistan or in countries where there is no PPP precedent and/or with challenging political and security situations would be strongly preferred;
• Prior experience working with international organization, such as the World Bank Group, would be considered an asset;
• Good analytical skills, and the ability to work through complex financial and economic issues;
• Good negotiation skills.

Job Location

Afghanistan - Balkh
Afghanistan - Kabul

Education:

Bachelors Degree, Economic Growth

Submission Guideline

Expressions of interest (including CV and three referees) should be sent to the email address below by no later than 15:00 hours (local time) 14 January 2017. Reference# MoMP/ AE4D / CS - IC - 06 must be quoted on all correspondence and the Expression of interest.


Ministry of Mines and Petroleum, Program Management Unit (PMU)
Attention: Mr. Abdul Waheed Khalili
Afghanistan Geological Survey Building (AGS), 2nd floor, Annex,
Close to Abdul Haq roundabout, 3rd Macrorayan, Kabul, Afghanistan.
Email:
Cell phone Nos.: +93 (0) 789 22 14 42

Submission Email

waheed.pmu@gmail.com

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