In the landscape of Public-Private Partnerships (PPPs), Viability Gap Funding (VGF) and Public Sector Support Mechanisms are crucial financial instruments employed by governments to bridge the gap between a project's financial viability and its socio-economic desirability, thereby enabling the delivery of essential infrastructure and public services that might otherwise remain unfunded. Many public interest projects, while offering significant societal benefits, may not generate sufficient commercial returns to attract private investment on a standalone basis, necessitating targeted public financial support to make them bankable and attractive to the private sector. This comprehensive training course is meticulously designed to equip public sector officials, financial advisors, project developers, and policymakers with the advanced knowledge and practical skills required to understand the rationale, design, and implementation of VGF and other public support mechanisms, ensuring their effective and fiscally responsible deployment to unlock critical PPP projects. Without a clear understanding of Viability Gap Funding (VGF) and Public Sector Support Mechanisms, governments risk under-delivering on vital infrastructure, misallocating public funds, or failing to leverage private sector efficiencies for public good, underscoring the vital need for specialized expertise in this critical domain.

Duration: 10 Days

Target Audience

• Public Sector Officials from Ministries of Finance, Planning, and PPP Units
• Project Developers and Sponsors
• Financial Analysts and Modellers
• Investment Bankers and Fund Managers
• Commercial and Development Bank Professionals
• Legal Professionals specializing in project finance and public procurement
• Consultants specializing in financial advisory for PPPs
• Infrastructure Policy Makers
• Auditors and Oversight Body Personnel
• Professionals involved in public investment programming and appraisal

Objectives

• Understand the rationale and purpose of Viability Gap Funding (VGF) in PPPs.
• Learn about the various types of public sector support mechanisms for PPPs.
• Acquire skills in identifying projects suitable for VGF and other support.
• Comprehend techniques for calculating and structuring VGF effectively.
• Explore strategies for designing and implementing other public support mechanisms (e.g., guarantees, land).
• Understand the importance of fiscal implications and contingent liabilities of public support.
• Gain insights into legal and contractual aspects of VGF and support agreements.
• Develop a practical understanding of Value for Money (VfM) considerations for public support.
• Master negotiation strategies for VGF and other support terms.
• Acquire skills in monitoring and managing public sector support throughout the project lifecycle.
• Learn to apply international best practices and guidelines for VGF.
• Comprehend techniques for ensuring transparency and accountability in public support.
• Explore strategies for balancing public interest with private sector incentives.
• Understand the importance of risk allocation in the context of public support.
• Develop the ability to design and implement fiscally responsible public support frameworks for PPPs.

Course Content

Module 1: Introduction to Viability Gap Funding (VGF)

• Definition and core concept of Viability Gap Funding (VGF).
• Rationale for VGF: bridging the gap between economic benefits and financial viability.
• When is VGF necessary in PPPs? (e.g., socially desirable but commercially unviable projects).
• Distinguishing VGF from subsidies and other forms of public finance.
• Overview of countries that utilize VGF.

Module 2: Types of Public Sector Support Mechanisms

• Direct financial support: VGF (capital grants), availability payments, shadow tolls.
• Indirect financial support: tax incentives, exemptions, subordinated loans.
• Risk mitigation support: guarantees (revenue, political, foreign exchange), indemnities.
• In-kind support: land provision, existing asset transfer, regulatory facilitation.
• Case studies illustrating various support mechanisms.

Module 3: Identifying Projects Suitable for VGF

• Criteria for VGF eligibility: high socio-economic benefits, limited commercial viability.
• Sectoral applicability of VGF (e.g., social infrastructure, regional connectivity).
• Preliminary assessment of project financial viability and funding gap.
• Strategic alignment with national development priorities.
• Avoiding VGF for commercially viable projects.

Module 4: Calculating and Structuring VGF

• Methodologies for calculating the optimal VGF amount.
• VGF as a percentage of project cost or as a fixed sum.
• Disbursement mechanisms for VGF (upfront, milestone-based, deferred).
• Conditions for VGF disbursement and claw-back provisions.
• Financial modeling for VGF calculation and impact assessment.

Module 5: Designing Availability Payment Mechanisms

• Rationale for availability payments in PPPs.
• Structure of availability payment mechanisms.
• Performance-based deductions and incentives.
• Indexation and adjustment mechanisms for availability payments.
• Legal and contractual aspects of availability payment agreements.

Module 6: Government Guarantees and Contingent Liabilities

• Types of government guarantees (e.g., minimum revenue, debt service, political risk).
• Legal enforceability and implications of guarantees.
• Fiscal impact and accounting treatment of contingent liabilities.
• Risk assessment and pricing of government guarantees.
• Designing legally sound and fiscally responsible guarantees.

Module 7: In-Kind Support and Asset Contributions

• Legal and valuation aspects of land provision by the public sector.
• Transfer of existing assets to the private partner.
• Regulatory facilitation and streamlined approvals as support.
• Legal implications of in-kind contributions.
• Case studies of asset contributions in PPPs.

Module 8: Legal and Contractual Aspects of Public Support

• Incorporating VGF and other support mechanisms into the PPP contract.
• Drafting specific clauses for grants, guarantees, and other support.
• Conditions precedent for public support.
• Default and termination provisions related to public support.
• Ensuring legal enforceability of support commitments.

Module 9: Fiscal Implications and Management of Public Support

• Impact of VGF and guarantees on government budgets and debt.
• Public financial management frameworks for contingent liabilities.
• Transparency and reporting requirements for public support.
• Establishing a central oversight mechanism for public support.
• Ensuring long-term fiscal sustainability of PPP programs with support.

Module 10: Value for Money (VfM) and Public Support

• How VGF and other support mechanisms impact VfM assessment.
• Ensuring that public support still delivers optimal VfM.
• Avoiding excessive private sector returns due to public support.
• Balancing project viability with public affordability.
• VfM considerations in determining the level and type of support.

Module 11: Negotiation Strategies for Public Support

• Preparing for negotiations on VGF and other support terms.
• Understanding the private sector's perspective on required support.
• Balancing public interest with private sector bankability.
• Strategies for optimizing the level and structure of public support.
• Case studies of successful negotiations for VGF.

Module 12: Monitoring and Management of Public Support

• Establishing mechanisms to monitor the utilization and impact of VGF.
• Tracking performance of projects receiving public support.
• Ensuring compliance with conditions for support disbursement.
• Periodic review of the effectiveness of support mechanisms.
• Adapting support mechanisms to changing project or market conditions.

Module 13: Transparency and Accountability in Public Support

• Public disclosure of VGF amounts and other support provided.
• Reporting on the rationale and benefits of public support.
• Independent audit of public support mechanisms.
• Preventing misuse or diversion of public funds.
• Building public trust in the use of public resources for PPPs.

Module 14: International Best Practices and Guidelines for VGF

• Review of international guidelines on VGF and public support (e.g., World Bank, ADB).
• Comparative analysis of VGF frameworks in different countries.
• Lessons learned from successful and challenging VGF implementations.
• Adapting international best practices to local contexts.
• Discussion of innovative support mechanisms.

Module 15: Case Studies and Future Trends in Public Support

• In-depth analysis of specific projects that benefited from VGF or other support.
• Discussion of challenges and solutions in real-world applications.
• Emerging trends: green VGF, social VGF, performance-based VGF.
• The role of blended finance in complementing traditional VGF.
• Workshop: Designing a public support package for a hypothetical PPP project.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.