Introduction to the Pre-FS
This section provides an overview of the Pre-feasibility Study (Pre-FS), the process to compile a Pre-FS, the stakeholders involved in preparing or guiding the preparation of a Pre-FS, and the actvities that complete the preparation stage of a KPBU/PPP project.
A KPBU/PPP project originates when the minister or head of institution or regional head or State-Owned Enterprise (SoE) directorate, acting as the Government Contracting Agency (GCA), initiates the infrastructure provision for collaboration with an Implementing Business Entity (IBE) under the PPP scheme. Such PPPs are called government-initiated or solicited PPPs. As per Ministerial regulations 07/2023, such PPPs can be implemented for the types of infrastructure listed in the Preliminary Study (hyperlink) (PS) section of this toolkit.
Government-initiated PPPs are executed systematically in stages including (a) PPP planning (b) PPP preparation (c) PPP transaction and (d) PPP management of contract.
The GCA is responsible to begin the PPP process with the first stage of PPP planning including the PS preparation and its supporting activities. The GCA prepares a Pre-FS and conducts supporting activities when the GCA-initiated/ solicited PPP project has progressed to the preparation phase after an approval of the PS. Hence the Pre-FS follows the PS. Thereny, the Pre-FS is an output of the preparatory stage of the proposed infrastructure provision.
A Pre-FS is important because:
- It assesses the feasibility of and prepares the infrastructure provision for IBE partnership and for the transaction stage and
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It helps draws conclusions on:
- PPP funding sources
- Identification of contractual, regulatory, and institutional frameworks
- Technical aspects of PPP design
- Proposed government support/ guarantee required
- Risk identification, mitigation recommendations, allocation
- Form of return on business investment.
A Pre-FS is applicable to a solicited PPP only. A privately-initiated (unsolicited) project requires a feasibility study and supporting documents produced by the Business Entity/IBE.
Since a Pre-FS confirms the considerations and preliminary indications of a GCA’s PS, it is prepared only after the PS is approved.
A systematic and sequential approach to preparing the Pre-FS for a solicited PPP results in a complete, well-put together, and uniform study in line with Ministerial regulations 07/2023. As per prescribed timelines in Ministerial Regulations 7/2023, a GCA should take 5 to 8 months to complete a Pre-FS.
A systematic and sequential approach to preparing the Pre-FS for a solicited PPP results in a complete, well-put together, and uniform study in line with Ministerial regulations 07/2023. As per prescribed timelines in Ministerial Regulations 7/2023, a GCA should take 5 to 8 months to complete a Pre-FS.
The stakeholders in Pre-FS preparation are described in a matrix here (hyperlink). The approach to prepare a Pre-FS is described here
Legal basis
The GCA ensures that the Pre-FS is prepared by considering the use of the legal basis described below. This helps prepare the KPBU solicited project in accordance with the prevailing and relevant laws and regulations.
| SN | Regulation / Law | Relevance |
|---|---|---|
| 1 | Presidential Regulation No. 38 of 2015 | Government cooperation with business entities in the provision of infrastructure |
| 2 | Ministerial Regulation No. 7 of 2023 | Implementation of cooperation between the Government and business entities in the provision of infrastructure |
| 3 | Sector law Sector regulation | Implementation of PPP/KPBU in the sector of the infrastructure provision. For example: (a) Law No. 17 of 2023 concerning health (b) Government Regulation No. 47 of 2021 relating to implementation of projects in the hospital sector (c) Regulation of the Minister of Health No. 30 of 2019 concerning hospital classification and licensing. |
| 4 | Sector policy | Policy support in the sector for PPP/KPBU projects |
FAQ Project Preparation Toolkit
A comprehensive guide to conducting feasibility studies, aligning policies, and creating actionable project plans.
- The PPP Project Preparation stage includes the Pre-Feasibility Study (Pre-FS). The PPP Project Preparation Toolkit has tools, templates, and checklists that help develop the Pre-FS.
- A Pre-FS is a study that follows the PS and is an output of the preparatory stage of the proposed infrastructure provision.
- A Pre-FS assesses the feasibility and prepares the infrastructure provision for partnership with Business Entity
- A Pre-FS, along with its supporting activities is applicable to a Government-initiated PPP. It is called a solicited PPP.
- A privately-initiated (unsolicited) project requires a feasibility study and supporting documents produced by the Business Entity.
- A Pre-FS confirms the considerations and preliminary indications of a GCA’s PS studies.
- The GCA does a Pre-FS when the GCA-initiated PPP project has progressed to the preparation phase after an approval of the PS.
- The Ministerial Regulations 7/2023 prescribe that a Pre-Fs could take 5 to 8 months to complete.
- Based on the results of the preliminary study, the minister/head of the institution/regional head/SoE directorate/director of Regional SOE shall be appointed as the GCA. Or the GCA may delegate authority to the organisational unit under its level. GCA or delegated authority shall initiate and prepares a Pre-FS or PFS.
- PPP node shall assist GCA in preparing the Pre-FS, in supporting activities, in coordinating with the Preparatory Agency, in market sounding and public consultation, submit periodic reports to GCA on implementation of the preparation stage, collect documentation produced in the preparation stage, and formulate policies, synchronise, and coordinate in the preparation stage.
- PPP Preparation Agency shall provide financing and assistance in preparation of PPP to the transaction stage.
- Process Advisor (similar to Transaction Advisor) assists GCA in drafting of PPP Agreement, market sounding, activities related to IBE procurement and fulfillment of financing at preparation stage.
- PPP funding sources
- Identification of contractual, regulatory, and institutional frameworks
- Technical aspects of PPP design
- Proposed Government support/ guarantee required
- Risk identification, mitigation recommendations, , allocation
- Form of return on business investment And helps the project be prepared for transaction stage
A Pre-FS is important because it helps draws conclusions on: