SUSTAINABLE CITIES PROJECT (SCP)

Component A: Sustainable City Planning and Management Systems

Terms of Reference

Consultancy Services for

Preparation of Financial Feasibility Studies under
Sustainable Cities Project II - Additional Financing (SCP-II AF)
GROUP-4

(IB A2.C5/CW4)

1. Background

The Sustainable Cities Program (Program hereafter) builds on a Municipal Services Project (MSP) and its Additional Financing (MSP-AF), which was implemented between 2005 and 2016, together with Iller Bankası A.S. (ILBANK).

ILBANK is implementing the Program with technical and financial support from the World Bank (WB) and European Union (EU). The program aims to help municipalities: (i) respond to current and increasing demands for urban services; (ii) plan for future infrastructure service needs in a sustainable manner; (iii) mobilize financing to fund priority investments; and (iv) adhere to new spatial planning mandates and infrastructure service requirements as prescribed by the amended Metropolitan Municipality Law No 6360 in December 2012.

The main goal of the Program is to improve the planning capacity of and access to targeted municipal services in participating municipalities and utilities. It will support improvements to the environmental, economic, financial, and social sustainability of Turkish cities by improving access to priority municipal services. The program also tries to expand its support to cities, including in frontier and underserved regions, with the goal of enabling them to secure financing as well as building capacity to directly access financing from capital markets for priority infrastructure needs in the medium-to-long term.

The Program was designed as a series of projects (SOP). The SOP instrument is suitable as it allows for the provision of financing to a single borrower, ILBANK, for subnational lending to a gradually increasing number of municipalities or utilities that are interested in a sustainable cities approach to municipal development. The SOP finances demand-driven municipal and utility infrastructure investments, with eligible sectors including, but not limited to, public transport, water and wastewater, solid waste management, and energy.

Until now, the SOP includes the following series:

(a) Sustainable Cities Project 1 (SCP-I): The first Sustainable Cities Project for EUR 121.20 million IBRD loan and EUR 23.13 million European Union grant (equivalent to US$132.77 million and US$ 25.20 million, respectively) was approved in December 2016. DESKİ and MUSKİ are the Utilities using the loan for their municipal investments.  

(b) Sustainable Cities Project (SCP-II): The second Sustainable Cities Project (SCP 2) for EUR 73.5 million IBRD loan (equivalent to US$91.54 million) was approved in April 2018 and finances municipal investments in two municipalities (ASAT -Antalya and MUSKİ -Muğla). Municipalities under SCP-II also benefit from technical assistance under SCP-I, which includes capacity building for the planning and management of sustainable cities.

(c) Sustainable Cities Project-II - Additional Financing (SCP-II-AF): In May 2019, the World Bank’s Board of Executive Directors approved financing of EUE 500 million (US$ 560.6 million equivalent) to support sustainable development in Turkish cities. The Loan Agreement for SCP-II-AF for EUR 500 Million was signed on July 10, 2019 between the World Bank and ILBANK. The loan became effective on November 5, 2019. It aims for improving municipal needs on infrastructure, zero waste, transportation, energy efficiency, renewable energy, municipal social services, disaster recovery, urban renovation and restoration sectors.

2. Project Description

The emergence of the SCP-II-AF is a response to ongoing technical assistance for sustainable urban development and capital investment planning being provided under Component A of SCP-I. This exceptional demand includes identification of investments to improve public transport, water and sanitation, solid waste management, energy, environment, disaster and climate resilience and social infrastructure. The SCP-II AF will allow ILBANK to support municipalities in financing priority projects in the immediate term. It will also support ILBANK, the Government of Turkey and the World Bank to expand the sustainable cities approach both sectoral and spatially which will increase Program’s impact and development effectiveness.

The SCP-II AF will specifically aim to enhance project approaches on city resilience to disasters and climate change mitigation and risks. The AF provides the means to invest in mitigation and strengthening a range of such climate adaptation measures in cities, which are increasingly susceptible to climate change risks.

The AF will support the same components as SCP-II: Municipal Investments (Component A) and Project Management (Component B), as described below.

Component A - Municipal Investments: This component will be scaled up to finance demand-driven municipal infrastructure investments to improve access to quality, sustainable and resilient public transport, water and wastewater, solid waste management, disaster risk management, energy efficiency and renewable energy, and improve the urban environment, municipal firefighting services, and social infrastructure and services.

The table below shows the eligible sectors.

Table 1. Project Budget by sector

 

Component B - Project Management: This component will finance goods, consulting services related to day-to-day Program/project management, reporting, monitoring and evaluation (M&E), supervision and project communications.

ILBANK will be responsible for identifying eligible sub-borrowers and ensuring that the subproject eligibility criteria are met. Sub-borrowers (district municipalities, metropolitan municipalities or their affiliated utilities) in the project will have to meet the sub‐borrower eligibility criteria and be mutually agreed by ILBANK and the WB.

Subprojects should meet a set of eligibility criteria to ensure that all subprojects supported under the project are financially, economically, and technically viable and meet all safeguards requirements. ILBANK will work with sub-borrowers to appraise subprojects. The reports and studies of the proposed subprojects will be reviewed and approved by ILBANK and the Strategy and Budget Office of the Presidency in terms of technical, environmental, social, financial, and economic perspective and in accordance with the WB’s environmental and social safeguard policies. ILBANK will support the municipalities by hiring consultancy firms to carry out necessary project preparation studies. Besides financial feasibility studies including creditworthiness analysis for sub-burrowers that are defined in this Terms of Reference, tasks for preparation of technical feasibility studies for sub-projects, preparation of environmental and social safeguard documents as well as review of all these outputs will be conducted through consultancy services.

3. Objectives

The overall objective of this assignment is to carry out a comprehensive analysis of the Sub-Borrowers[1] current financial, operational and organizational performance and assessment of its creditworthiness that applied to finance the Sub-Projects[2] under Sustainable Cities Project 2-Additional Finance.

The specific objective of this assignment is the financial and economic appraisal of Municipalities/Utilities through the provision of expert's preparation of Financial Feasibility Studies (hereinafter so-called Creditworthiness Studies (CWS)).

Implementation of activities envisaged under this contract shall result in the financial and economic basis for selection (appraisal) of the Municipalities/Utilities that are economically, financially and operationally sustainable. The Consultant shall therefore assess the financial and economic soundness of Sub-Borrowers for which it is reasonable to expect that the proposed Sub-Projects shall be approved for financing by ILBANK and WB.

The CWSs must be basis for the appraisal of the Sub-Borrowers in terms of financial and economic aspects.

4. Scope of Services and Tasks

Under the scope of SCP-II AF, the name of the Municipalities/Utilities, average population served and estimated number of the CWSs have been listed in the Annex-1[3]. Consultancy services for the preparation of CWSs will be conducted under five different groups (lots). There will be five resulting contracts for this assignment that referred to the same Terms of Reference.

The CWS is an integral section of the financial analysis under the purview of financial feasibility. As such CWS assesses financial ability of the local administration borrower requesting credit from ILBANK to meet its liabilities in complete and timely manner. This assessment is made on the basis of budget performance at the back of revenue and expenditure structure, debt profile and available cash resources looking at a time series of past five years. The process starts with a baseline analysis which has two main objectives: (i) assessing the connection of the administration’s activity result for the last five years with the feasibility of the project and capacity of repayment of the credit, (ii) generating relevant data for the feasibility report that may be used in preparing the financial analysis estimations/projections.

Baseline analysis of the past evolution of the main financial indicators and subsequent assessment on the basis of budgetary performance would derive from study of below areas:

- Economic analysis of the locality covering economic and social indicators as they underlie revenue and expenditure structure of the local administration,

- Analysis of the budget revenue and expenditure realizations (in economic classification and on budgeted vs. realized amounts) of local administration as taken from published final accounts together with balance sheet and economic classification of finance excel tables,

- Review of complementary data as classified under tables by local administration on the debt profile including last FY end principal total financial debt stock (domestic and external) with repayment schedules, financial results of affiliate entities and companies including their debt position,

- Gathering of budget data in the minimum form of three year revenue-expenditure estimates, three year estimates on economic classification of finance tables, latest strategic plan and expenditure estimate breakdowns per strategic plan as produced by local administrations, 

The outputs from these steps would be used in measuring budgetary performance and debt leverage on the basis of creditworthiness ratios chief among which include;

- Operating margin (%): Operating balance/ Operating revenue

- Current margin (%): Current balance/ Current revenue

- Indebtedness (%): Principal debt stock/ Current revenue

- Debt payback (years): Principal debt stock/ Current balance

- Debt service coverage (x): Operating balance/ debt service

(Please see Annex 2 for an indicative classification of above budget items)

The consultant will develop a model to produce financial projections (including revenue, expenditure, debt estimations) and ratio analysis with the projected numbers to assess the financial sustainability and/or creditworthiness of the respective municipality and utility. The proposed model should include scenario and sensitivity analysis.

The scope of the service is to prepare Creditworthiness Studies (CWSs) for the respective Municipality/Utility. The detailed scope of Services of the Consultant under this Contract is as follows:  

Task 1. Preparation of Inception Report: The Consultant shall prepare an inception report that include creditworthiness assessment methodology, modeling proposal, list of financial tools and ratios.

Task 2. Economic Profile Analysis: The ability of municipalities/utilities to repay debt is sensitive to local economic conditions. Municipalities that raise most of their funds from local taxes are especially vulnerable to local economic conditions. Municipalities that rely primarily upon central government transfers are more exposed to the national macroeconomic conditions. One task of financial feasibility analysis is to identify the economic events which would impair the most a municipality’s/utility’s ability to repay debt and come up with solutions to mitigate such risks.

The strength of the local economy is one of the most important factors influencing creditworthiness. Own revenues and shared-taxes of municipalities, as the main source to repay financial debt, are dependent on the performance of the local economy. Demographic trends, economic diversification and growth perspectives are key aspects, which influence municipalities/utilities medium and long term revenues. Economic diversification is an important feature for a local economy. A highly diversified economic activity means that economic downturns will have a smaller impact on local output than compared to a concentrated local economy, where a few economic sectors hold a large share of total activity.

The Consultant shall run an economic analysis over the selected city including following sections:

• Economic and social infrastructure of the city
• Socioeconomic trends underpinning the demand for public services provided by municipality
• Per capita income and its volatility
• Real annual local GDP growth
• Composition of local GDP
• Local Base for National Tax Revenue, Top 10 Largest Employers
• Natural resources
• Employment growth & quality of workforce
• Review of regional plan, provincial plans, sectoral plans and institutional plans

Task 3. Financial Analysis: The financial situation of a local government is crucial for its creditworthiness, as it determines the ability to meet current obligations and debt service. Factors that have an impact on the financial position of municipalities/utilities include:

• Financial position of the municipality
• The statement of financial position
• Revenues, income and financing
• Expenses, capital expenditures and debt payments
• Sources and use of financial resources
• Debt service
• Creditworthiness ratios
• Indebtedness evaluation
• Fiscal autonomy
• Capital investment effort
• Service Sustainability
• Quality of Operations

The performance of the task will therefore include among others,

- Review of the budget revenue and expenditure realizations (in economic classification and on budgeted vs. realized amounts) of municipality/utility as taken from published final accounts together with balance sheet and economic classification of finance excel tables,

- Gathering and review of complementary data as classified under tables by municipality/utility on the debt profile including last FY end principal total financial debt stock (domestic and external), affiliate entities and companies’ debt according to disbursement, debt structure as of sources, currency, interest rate types, debt repayment schedules as of last FY end and debt repayment tables,

- Gathering of budget data in the minimum form of three year revenue-expenditure estimates, three year estimates on economic classification of finance excel tables, latest strategic plan and expenditure estimate breakdowns per strategic plan, 

- Review of intercompany flows between municipality and public sector entity and company affiliates (borrowing, capital transfer, dividend, subsidies and off-balance commitment),

- Construction of basic financial projections on the budgetary outturns, incorporating abovementioned data with future estimated indebtedness and sensitivities arising from budget implementations and financial (interest rate, foreign exchange and refinancing and ensuing liquidity stress) risks. The financial projection analysis should include sensitivity analysis and scenario analysis to better assess the financial sustainability of the respective Municipality/Utility.

The Consultant shall use financial analysis section (Section 3) of Financial Feasibility Preparation Guidelines of ILBANK for External Loan Projects.

Task 4. Submission of CW Study: The Consultant shall complete and submit the draft CW Study to municipality/utility for their comments and make requested revisions. 

Task 5. Submission of Executive Summary: The Consultant shall prepare a final copy of the CW Study including an executive summary and submit it for the approval of ILBANK.

5. Team Composition & Qualification Requirements for the Key Experts

5.1. General Requirements

The Consultant shall typically comprise a firm with experience in carrying out similar tasks, specifically to include the following minimum qualifications;

• Experience in reporting requirements and projects financed by international financing institutions,
• Experience in the preparation of Creditworthiness studies, Company Valuation Studies, Financial and Economic Feasibility Studies etc. for public or private sectors and preferably for World Bank or other IFIs financed projects 
• Experience in working with Municipalities and other Public Authorities.
• Have a background in national regulatory environment for municipal finance and creditworthiness.

 

In case Consultants are short listed for another assignment at the same time, when proposing full time staff for any of the assignments, those full-time staff shall be different for each assignment. Proposing the same full-time staff for more than one assignment at the same time may result in the rejection of the technical proposal.

 

5.2. Team Composition - Key Experts

Alternative professional staff shall not be proposed, and only one in curriculum vitae (CV) may be submitted for each position. All experts who have a crucial role in implementing the contract are referred to as key experts.

The consulting team members must demonstrate strong skills in surveys, data collection, financial analysis and modeling IT programs, doing financial and economic analysis and preparing financial reports.

The consultant’s team shall include at least the following qualified professionals who are competent to carry out the duties described within this ToR:

 

The Consultant will make available the following Key experts:

 

1. Team Leader
2. Senior Financial Expert
3. Senior Economist

 

The number of the above mentioned staff will be determined by the Consultant Firm and also approved by ILBANK to comply with the strict duration limitation of the contract. Consultant is free to propose additional professional experts as deemed necessary for successful completion of the assignment. The consultant may appoint supplement core staff with 2 temporary junior staff in each position who will be focused on data gathering or analysis depending on the timing and workload of overall project implementation. The Consultant shall provide adequate staff in terms of expertise and time allocation, as well as needed equipment in order to complete the activities required under the scope of work and to finally achieve the objectives of the project in terms of time, costs and quality. Team leader and the experts co-operate with the other consultants and join the meetings whenever required by the Client.

The consultant’s team must at least have following experience and qualifications requirements:

 

Team Leader

The team leader is responsible for the overall contract coordination and quality control of contract implementation. S/he will ensure that the engagement of experts is agreed with the Client and that they are engaged on time to deliver the project outputs.

 

• University Degree on Economics, Finance Business Administration and Master degree will be a plus.
• Minimum 8 years of relevant professional experience, comprising of 5 years of experience in related fields (such as Investment Programs, Financial and Economic Analysis of investments, Feasibility studies, etc.)
• Experiences in municipal and/or project finance and experiences in accounting and financial reporting and delivering training with outstanding analytical, synthesis, communication, and writing skills.
• Experiences in preparation of CW studies, credit analysis, Feasibility studies and/or company valuation for public or private sectors.
• Experiences in working with Turkish municipalities and public investment projects.
• Have outstanding analytical, synthesis, communication, and writing skills.
• Have a good knowledge of requirements of Turkish legislation
• Experiences in working with international donors and/or international projects
• Fluency in written and spoken English and Turkish

 

Senior Financial Expert

 

• University Degree in Economics and Finance or similar relevant qualifications
• Minimum 5 years of relevant professional experience, comprising of 3 years of experience in related fields (such as Investment Programs, Financial and Economic Analysis of investments, Feasibility studies, etc.)
• Preferably, experience in developing credit analysis
• Proven successful experience in collaboration with municipalities and international financial institutions
• Have a good knowledge of requirements of Turkish legislation with respect to Public Financial Management and Control as well as Institutional Framework for Local Administrations
• Excellent knowledge of the Turkish and English language

 

Senior Economist

 

• University Degree in economics, finance, accounting or similar relevant qualifications.
• Preferably 5 years’ experience in economic analysis, accounting, audit or finance.
• Experience in financial reporting for projects, preferably financed by Multilateral Development Banks of International Donors.
• Experience in accounting and/or financial audits.
• Knowledge of Turkish financial and accounting system will be an asset.
• Knowledge of requirements of Turkish legislation concerning issues relevant to this assignment would be an advantage.
• Fluency in Turkish and English would be an advantage.

Other experts, support staff & backstopping

The Consultant shall select and hire other experts as required according to the needs. CVs for other experts will also be submitted in the technical proposal, however technical evaluation will be conducted based on qualification of the key experts. The selection procedures used by the Consultant to select these other experts shall be transparent, and shall be based on pre-defined criteria, including professional qualifications, language skills and work experience.

All experts should have as a minimum requirement a university degree, at least three (3) years’ work experience, be fluent in English, and proven experience in the field(s) relevant for their specific projects, and work experience in Turkey will be an asset.

Cost for backstopping and support staff, as needed, are considered to be included in the financial proposal of the consultant. The Consultant should provide adequate administrative staff (i.e. secretary, translator, interpreter, accountant, document controller etc.)) needed to support the expert team in order to assure the quality of all its activities and outputs.

Consultants are reminded that communication with local Municipalities/Utilities will be in Turkish. Therefore, if necessary, the Consultant has to hire respectively qualified experts or must provide interpretation and translation services which must be covered by the contract price. The reports will be submitted in two languages (Turkish and English).

6. Institutional Arrangements for SCP

Institutional and implementation arrangements for the AF, build on the existing structure under the ongoing SCP-I and SCP-II. ILBANK is committed to rapid development and implementation of the SCP-II AF, as well as supporting municipalities to develop feasibility studies and undertake efficient procurement activities. ILBANK has set a Project Management Unit (PMU) within its International Relations Department, which will be responsible for the operation of the Program at central level. PMU is the main unit in charge of overall coordination and implementation of the Program. The PMU is led by a department head and unit managers, and it has staff capacity in business development, contract management, financial management and technical management.  

Individual sub-loans are subject to the mutual agreement of ILBANK and the World Bank, based on subproject eligibility criteria. ILBANK will hire consultancy firms for the preparation of feasibility reports/PIDs and creditworthiness studies together with the environmental and social safeguard documents. Review of these documents will be done by another consultancy firm and will be submitted for the approval of ILBANK and the review of the WB. Technical and financial feasibility studies will be assessed and approved by ILBANK based on comments of the WB. ESIA, ESMP, partial ESIA, and/or LARAP (as required) will also finalized by consultancy firm as per the procedures under related section and will be submitted to ILBANK. The documents are reviewed and cleared by ILBANK and World Bank. Following the appraisal of technical and financial feasibility studies, sub-projects for sub-loan will be mutually agreed by ILBANK and the WB. Based on this approval ILBANK will sign the Sub-Loan Agreement with Sub-Borrowers.

The sub-borrowers will be responsible for subproject investment implementation and will set up municipal Project Implementation Units (PIUs) to ensure adequate subproject implementation.  These units will secure coordination within the municipality/or its affiliated utility, and also facilitate the contacts of the consultant with appropriate local organizations. Municipalities will provide access to all available related documents, plans, drawings, data and other kind of information necessary to carry out the consultant's assignment.

For this Contract, the procurement processes in the selection of the Consultant will be under the responsibility of ILBANK (referred to as " Client ") and the Consultancy Services Contract will be signed by ILBANK as the contract party.

7. Reporting Requirements and Time Schedule for Deliverables

 

The Consultant shall prepare and submit to Client the following documents and reports:

 

Consultant will submit an inception report that include mobilization of staff and time schedule of the tasks. Packaging of the Municipalities/Utilities and time schedule of the assignment will be decided jointly by ILBANK and the Consultant based on the inception report. Upon request of ILBANK the above written schedule may be shortened in case of any urgency in Program management.

Details of reporting requirements are presented below:

• The Consultant shall submit all the documents in a timely manner to complete the services on time without any delay. The Consultant shall report each stage of the work to the Project Management Unit (PMU) at ILBANK. All documents shall be prepared in Turkish and English. The Consultant must include the costs of translation in his financial proposal. In the case of any discrepancies, the Turkish version will prevail.
• The CWSs will be prepared and submitted to the ILBANK firstly in Turkish for review purpose and discussion purposes following which the Consultants shall be required to prepare the final copy, incorporating any amendments arising from such discussions. Once approved, the Final CWSs and Executive Summary shall be submitted in both in Turkish and English languages.
• All digital copies should be editable versions: Word files, Excel sheets including formulas. The financial model shall be prepared by using MS excel. The MS excel copy of the financial model shall be provided with traceable formula format, which clearly sets out all assumptions made, sensitivity analyses carried out, and key outputs in support of the various analyses and conclusions. English version will be the main copy and in the case of any discrepancies, English version will prevail.
• The printed and bound documents and their digital versions must be identical and should allow printing of additional copies from the digital versions, if necessary, completely identical to the printed copies. The digital versions shall be made in PDF format. Aside from the PDF format, the Consultant shall also ensure and provide to the Client the complete documents in the original formats in which they were prepared, which can be altered and supplemented by the Client.
• The Client has to give his comments / approval on each of the Consultant’s deliverable within 15 working days, the latest. Upon a revision request, the consultant shall submit the final versions of documents within 10 working days after making the necessary changes. After the approval of the draft, the consultant shall submit the final version of the documents with 10 printed copies (5 Turkish copies and 5 English copies) and electronic copies in word and pdf format in five separate flash memory sticks. The final version of all deliverables shall satisfy proper editing and graphic design standards. All documents collected and prepared during/for the field studies conducted as part of the project will also be submitted to ILBANK.
• As this assignment is financed from grant funding provided under from the European Union Instrument for Pre-Accession, the consultant shall follow all necessary visibility rules defined by European Commission.

Apart from these reporting requirements the Consultant shall:

• Keep ILBANK PMU informed of progress and any issues that arise;
• Work closely with the Sub-borrowers (central municipalities, district municipalities, metropolitan municipalities or their affiliated utilities);
• Regularly and frequently consult with and inform all key stakeholders during the implementation of the Project.

An indicative Table of Budget Item Classification for Contents of the CWSs is provided in attached to these Terms of Reference (ANNEX-2). During the Inception Phase, the Client shall provide detailed instructions regarding the format and editing of the CWSs and all its attachments including font/font size of text and footnotes, indentation, format of tables, charts and figures (editing of titles, sources etc.), automatic table of contents, list of sheets for excel sheets, etc.

 

8. Client’s Input and Counterpart Personnel

ILBANK PMU will oversee the progress of the assignment and review the quality of the Consultant’s deliverables. The Consultant is obliged to closely cooperate with the Project Team, to ensure constant contact and be prepared to promptly make potential corrections in the prepared documents. The approval of the deliverables will be done by ILBANK PMU. The PMU will assist the Consultant to ensure coordination with Municipalities/Utilities while preparing reports and conducting project activities including field visits.

The PMU shall assist the Consultant to collect the necessary background documents, organize working meetings and potential presentations, as well as to ensure the necessary reviews. The PMU shall also ensure other necessary support to the Consultant in contract implementation. The consultant should inform the PMU regularly about the progress and any challenges.

The Client undertakes to submit to the Consultant the necessary input data and background documents (available to the Client) for project implementation, as well as to ensure the necessary points of contact in the Municipalities/Utilities when collecting the necessary information for the purposes of performing the activities required for the project. The preparation of the deliverables is the full responsibility of the consultant so the consultant should take the lead in identifying the necessary data, assessing their availability and validity of data and finally preparing the reports. Under the coordination of the PMU, the consultant should also benefit from other resources to fill the data gap and enhance the quality of the deliverables.

The Client shall make available to the Consultant information, reports, documents, etc., related to the execution of the Services. All documents related to the Services are, and will remain Client’s property until completion of the Services. The Consultant cannot use or dispose of his documentation without previous Client’s written consent.

The Consultant shall attend working meetings which will be held during contract implementation, upon the Client’s invitation. The Consultant shall also attend and actively partake in the presentation of individual project phases. The Consultant shall, for the needs of the meeting, take part in the preparation of documents and presentations required, take part in these, and present his work. The key staff defined in ToR shall take part in all the key meetings, as well as in the presentations of activities.

 

9. Contract Type

The contract will be signed between ILBANK and the Consultant, and payments to consultant will be made upon consultant’s submission of deliverables and approval. This assignment will be based on the lump-sum payment against the deliverables as defined in this Terms of Reference.

 

10. Duration of the Assignment

 

The estimated duration of the assignment is 10 (ten) calendar months. The Consultant shall submit all the studies in a timely manner to complete the services on time without any delay.

ANNEX-1

Draft List of Municipalities/Utilities and Estimated # of CW Studies
GROUP-4

 

 Utilities

 

 

ANNEX-2

Credit Worthiness Studies (CWS) - TEMPLATE

 

 

The Consultant shall prepare the credit worthiness study prepared for the municipality’s/utility’s current financial, operational and organizational performance by considering following sections:

(a) Economics of the City (GDP, GDP per capita, foreign trade, population and employment)

(b) Creditworthiness of the Municipality/Utility (financial position of municipality/utility; the statement of financial position; revenues, expenses, capital expenditures and debt payments; sources and use of financial resources, debt service)

Baseline analysis of the past evolution of the main financial indicators on the basis of budgetary performance and subsequent assessment would derive from above summary classification.

c) Credit Worthiness Ratios of the Municipality/Utility,

 i- Operating Balance (Surplus) Before Interest / Operating Revenue,

ii-  Current Balance (Net Operating Surplus)  / Current Revenue,

iii - Investment Balance (Surplus/deficit) Before Loan / Total Revenue,

iv- Financing Gap After Loan Proceeds / Total Revenue

(d) Indebtedness Evaluation,

i-Debt Outstanding / Operating Balance (Surplus);

ii-Debt Service / Total Current Revenue;

iii-Debt Outstanding / Budget Total;

iv-Borrowing (new debt) / Current Revenues;

v- Operating Balance / Interest Payment

vii-Operating balance /Debt service (principal + interest payment) ;

vi-Debt Outstanding / Total Current Revenue

(e) Fiscal Autonomy,

i- Own (Local) Taxes and Charges / Operating Revenue

ii- Own Source Revenue / Total revenues

iii)- Service (water related) Revenues / Operating Revenues (for Utilities)

iv)- Service Revenues / Operating Expenditures (for Utilities)

(f) Capital Investment Effort,

i- Capital investment expenditure / Total Current revenue,

ii-Capital Investment Expenditure / Total Expenditure,

iii- Current Balance / Capital investment expenditure          

(g) Service Sustainability,

i-Maintenance Works Expenditure / Operating Expenditures,

ii- Fees and Taxes Collected / Fees and Taxes Billed,

iii-Taxes Arrears Accumulated / One Year Taxes and Fees Revenues

(h) Quality of Operations,

 i-Salaries and Wages / Operating Expenditures,

ii- Actual Revenue / Planned Revenue,

iii- Arrears Due / Net Cash at the End of the Year,

iv-Financial resources (cash +cash-like)/Financial obligations (due liabilities + arrears)