Project Description:
The Government of Croatia has developed a policy based on regionalisation as the primary means to achieve compliance with EU water and wastewater directives. Through regionalisation, the Government plans to improve the quality and efficiency of its water and wastewater infrastructure and services in order to fulfill the country’s environmental targets, reaching out to areas outside major cities. Through the creation of larger regional operators, Croatia plans to ensure the long term sustainability of these investments and create a greater EU grant absorption capacity.
Currently there are approximately 125 local water companies in Croatia. It is envisaged that through the regionalisation programme, undertaken during the next 2-3 years, approximately 20-25 Regional Operating Companies (“ROCs”) will be formed through the consolidation of smaller operators into larger ROCs. Typically the regionalisation will occur along county lines and will be lead by the largest water operator (the “Lead Company”) in the region, which will then absorb the smaller companies into its operations.
The current assignment is designed to build on previous EBRD work in the water sector in Croatia (. The focus of the assignment is to assess the potential of regional consolidation in the water supply/wastewater services sector through the preparation of a feasibility study for specific regionalisation programmes where the Bank is co-financing, together with EU funds, the priority water and waste water infrastructure upgrade. In particular, the assignment will include concrete merger plans, covering all legal, financial and operational aspects.
The assignment will at first focus on two regionalisation programmes with different beneficiaries. It is envisaged that following the preparation and implementation of the initial programmes, the assignment may be extended if and when additional programmes are identified and agreed with the Croatian National Authorities.
The risks are high as many of the smaller water operators are currently not managed on a commercial basis and are loss making operations. They are characterised by high levels of non revenue water due to leakages in the network, weak collection systems and insufficient maintenance. If the regionalisation is to work, it is essential that these smaller operations be effectively integrated into the ROCs with their service levels raised.
As a result, EBRD proposes to assist simultaneously two Lead Companies of the future ROCswith the support towards the re-organisation of their financial and operational activities through a Financial and Operational Performance Improvement Programme (“FOPIP”) to ensure they are more efficient. The FOPIP will in particular include business planning, Public service Contract (“PSC”) preparation, advisory on tariff reforms and collection.
The overall objective of this assignment is to (i) evaluate the feasibility of and define concrete implementation models for the regional consolidation of water and wastewater companies in Croatia and (ii) assist the Companies in their transition through performance support to ensure the highest level of operating efficiency.
It is envisaged that the selected consultant (the “Consultant”) will work on two different regionalisation programmes. These programmes will be assigned to the Consultant at the time when the specific sub-projects are signed under the Framework. The Consultant will be assigned and work with the Bank, as well as with its borrowers.
Specific objectives within each of the sub-project assignments aim at:
(a) Specifying the existing business relationship of the assigned Lead Companies with the neighbouring companies in the sector;
(b) Evaluating the current financial and operating performance of the Lead Companies and its neighbouring companies (merger/acquisition targets);
(c) Evaluating the regional consolidation potential and advantages within the water/wastewater services sector and feasibility of the consolidation;
(d) Developing concrete merger/acquisition implementation models of the existing water/wastewater services companies in the County proposing new transparent;
(e) Operational, financial and management capacity building at the proposed ROC level;
(f) Evaluating efficiency improvements, including business planning, investment programming, accounting and cost management, financial long term planning etc.;
(g) Assisting the Lead Companies in the preparation of the Public Service Contract/s within its new regionalised service area; and
(h) Advising on tariff reforms and collection improvements.
Status of Selection Process: Interested firms or groups of firms are hereby invited to submit expressions of interest.
Assignment Start Date and Duration: The Assignment is expected to start in August 2016 and has an estimated overall duration of 2 years.
Cost Estimate for the Assignment: EUR 500,000 (exclusive of VAT). Subject to availability of funding, the performance of the selected Consultant and the specific needs of the Bank, the Assignment may be extended beyond the current scope, to cover up to ten reorganisation programmes.
The Consultant must determine whether any VAT would be chargeable on the services and the basis for that determination, without taking into consideration the special status of the Bank as an IFI and state this to the Bank in their response to the Invitation for Expressions of Interest. To the extent that a Consultant incurs input VAT on goods and services purchased in connection with the provision of services (e.g. VAT on airline ticket) which is not otherwise recoverable by the consultant from the local tax authority, the gross cost to the consultant of such expenses shall be treated as a reimbursable expense.
Funding Source: It is expected that the Assignment will be financed by EBRD Shareholder Special Fund (“SSF”). Please note selection and contracting will be subject to the availability of funding.
Eligibility: There are no eligibility restrictions.
Consultant Profile: Corporate services are required. The Consultant will be a firm or a group of firms with international experience in water and wastewater sector projects procured under financing arrangements with government agencies or international financial institutions, as well as respectable track record in mergers/acquisitions. The Consultant should be well acquainted with Croatian laws and regulations. The consultant should also have experience in drafting and implementing Public Service Contracts in countries with legal framework comparable to Croatia.
The Consultant should form a team that will be able to advise and work with the Bank on up to 2 different regionalisation programmes in parallel.
The Consultant’s expert team should include key experts as follows:
- Project Manager with preferably 15 years of professional experience in the financial and operational requirements of the regionalisation process and/or merger and/or acquisition process.
- Water and Wastewater Operations Expert with preferably 10 years of professional experience in utility operations in the sector.
- Financial Expert( with preferably 10 years of professional experience in financial management of public utilities and project finance
- Legal Expert with preferably 10 years of professional experience in legal frameworks comparable to Croatia
- Merger/Acquisition Expert with preferably 10 years of professional experience in mergers/acquisitions and proposing revised shareholding structures and corporate governance principles.
Submission Requirements: In order to determine the capability and experience of Consultants seeking to be shortlisted for this Assignment, the information submitted should include the following:
1. Company/group of firms’ profile, organisation and staffing (max. 2-4 pages).
2. Details of previous project experience or similar assignments particularly undertaken in the previous five years, including information on contract value, contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided (if different from duration) , main activities, objectives.
3. CVs of key experts who could carry out the Assignment detailing qualifications, experience in similar assignments, particularly assignments undertaken in the previous five years, including information on contracting entity/client, project location/country, duration (mm/yy to mm/yy), expert months provided, assignment budget, main activities, objectives.
4. Completed Consultant Declaration Form and Contact Sheet, the template for which is available from the following web-link:
http://www.ebrd.com/pages/workingwithus/procurement/notices/csu/contact_sheet.doc.
The above information should not exceed 20 pages excluding CVs and Consultant Declaration Form and Contact Sheet.
The complete expression of interest (including CVs, Consultant Declaration and Contact Sheet) should be submitted, in English electronically through e-Selection, to reach the Bank not later than the closing date. The expression of interest shall be one file (pdf). The EBRD reserves the right to reject applications of firms submitting more than one file. Only if the permissible file size is exceeded (4MB), the Consultant may split the expression of interest into further files.
Bank Contact Person:
Elena Kolodiy
Technical Co-operation
European Bank for Reconstruction and Development
One Exchange Square
London EC2A 2JN
Tel: + 44 20 7338 6765
e-mail:kolodiyo@ebrd.com (submissions should be sent through eSelection and NOT to this email address)
Notes:
1. Following this invitation for expressions of interest, a shortlist of qualified firms will be formally invited to submit proposals. Consultant selection and contracting will be subject to availability of funding.
2. The shortlist criteria are:
(a) Firm’s previous international experience in wastewater sector projects (15%);
(b) Firm’s previous experience and track record in mergers/acquisitions (30%);
(c) Firm’s previous experience in drafting and implementing Public Service Contracts in countries with legal framework comparable to Croatia (15%);
(d) CVs of two Key experts: Project Manager and Water and Wastewater Operations Expert (25%);
(e) CVs of three Key experts: Financial Expert, Legal Expert and Merger/Acquisition Expert (15%).
