The State Assets Management Agency of the Republic of Uzbekistan (hereinafter – the UzSAMA/The Customer) announces the selection of a professional consulting company (hereinafter – Consultant) to develop a strategy for the privatization of the JSC “Thermal Power Stations” in accordance with the relevant privatization programs.
All interested local and foreign applicants are invited to submit their commercial proposals based on this Request for Proposals (RfP) no later than 18:00 PM (Tashkent time) 20 September 2022.
If a joint proposal is submitted, a key consultant must be named who is also responsible for coordinating the work of the consulting partner involved.
Interested Consultants are asked to deliver a commercial offer to the contact addresses listed below:
Shokhrukh Okhunov, Head of the department for ensuring the coordinated actions of the State Assets Management Agency of the Republic of Uzbekistan;
Tel.: +998-71-259-21-87; e-mail: tender@davaktiv.uz.
It is expected that the work on the Transaction will be carried out in close cooperation between the representatives of the Consultant, the Customer and the Asset, if necessary, with a visit to the Asset and providing practical assistance to the Asset team in data collection.
Disclaimer
This request does not constitute a commitment to submit an offer, the Customer does not give any obligation to accept any offer or conclude any contract in accordance with this Request. Accordingly, this Request does not imply the conclusion of a contract by virtue of the publication of this Request and/or receipt of applications in connection with it, or through negotiations or discussions with one or more selection participants regarding the Project.
The materials and information contained in this document are intended to serve as a preliminary summary of only the most important aspects of the Project and a general indication of the scope of work that can be expected the Consultant in developing the privatisation strategy.
Selectors cannot and should not rely on anything other than the sole limited purpose of preparing initial presentations and proposals for the Purchaser in connection with the selection process.
Request for Proposals on the development of a strategy for the privatization of JSC “Thermal Power Stations” (RfP)
Introduction
In order to implement the Development Strategy of the New Uzbekistan for 2022-2026, in particular, by ensuring competition in the economy, creating equal conditions for business entities, accelerating the full transition to market relations, increasing the competitiveness of the national economy, as well as increasing the volume of private investment, Decree of the President of the Republic of Uzbekistan No. PD—101 dated April 8, 2022 provides for (clause 10 a):
"to begin work by the end of 2022 on the privatization of 51 percent state share or more in JSC "Thermal Power Plants""
In this regard, the State Assets Management Agency of the Republic of Uzbekistan intends to attract, on the basis of a competitive procedure, a consultant to develop a strategy for the privatization of JSC “Thermal Power Plants” (hereinafter – “Consultant”).
Privatization of assets in the electric power sector is aimed at to achieve:
- creation of competition in the sector and reduction of state participation in it;
- increase in the efficiency of natural, financial and human resources utilization, and human resources;
- increase in the volume of private investments for the development of the sector.
Briefly about the asset
JSC Thermal Power Plants carries out the task of generating electricity and provides a certain amount of electricity and heat to meet the needs of the economy and the population of the country.
The company has 6 thermal power plants, 3 thermal power centers and 3 organizations providing services to enterprises of the industry.
In 2021, the enterprises of the JSC Thermal Power Plants produced 60.5 bln. kWh of electricity and 5.6 million Gcal of heat energy.
In 2022, the enterprises of the company are planning to generate 55.9 billion kWh of electricity and 5.1 million Gcal of thermal energy.
At the end of 2021, the company had a net profit of UZS 360.1 billion and a share capital of UZS 13.2 trillion.
The company's head office is located in Tashkent, Chilanzar district, 23 Bunyodkor street.
Scope of the Consultant’s services:
The scope of the Consultant’s services under this Project will be divided into 2 phases.
Phase 1: Analysis of the electric power sector of the Republic of Uzbekistan:
1. Perform an analysis of the electric power sector market in the Republic of Uzbekistan, including:
1.1. Analysis of production capacity by primary energy source;
1.2. A review of the technical condition and operational efficiency of the largest electric generating assets;
1.3. Analysis of the level of concentration of electric generating companies, and possible restructuring in order to increase the investment attractiveness of the assets;
1.4. Analysis of the current tariff system.
2. Review the current legal and regulatory framework of the Republic of Uzbekistan governing the activities of companies in the electric power sector and make recommendations to improve the legal and regulatory framework for further development of competition in the sector.
3. Review the electric power sector reform measures already announced by the state authorities of Uzbekistan and analyse the potential impact of these measures on increased competition in the sector (with a particular focus on the generation sector), as well as on the process of asset privatisation.
4. Review international practices and country-specific (at least three) electric energy market regulation models.
5. Based on all the analysis undertaken, propose recommendations for a model best suited to the Republic of Uzbekistan and the current state of its electric power sector, including recommendations for updating the "Concept for Electricity Supply of the Republic of Uzbekistan for 2020-2030" and improving tariff policy. The recommendations should focus on the development of a reliable and competitive electric power sector capable of supplying electric power at affordable prices.
As part of Phase 1, a Working Group will be established, including representatives of relevant ministries and agencies, as well as leading entities of the electric power sector. The main task of the Working Group will be to provide the Consultant with the necessary information on the current state of the sector and to discuss the hypotheses and conclusions with the Consultant.
Based on the results of Phase 1, the Consultant shall submit an analytical report including analysis and recommendations as per paragraphs 1-5. The report shall be prepared in English and Russian in PDF format.
Phase 2: Development of a strategy for the privatisation of TPS.
The Consultant shall proceed to Phase 2 after the Client has approved the report for Phase 1.
The Client reserves the right to adjust the scope of work for Phase 2 (including downwards) depending on the results of Phase 1. However, changes in the scope of work and the Consultant's fee shall not be increased without the conclusion of a supplement to the Contract between the Client and the Consultant.
The scope of work for Phase 2 will include:
1. Pre-investment diagnostics of TPS, including:
1.1 Analysis of the organisational structure of the Company and its constituent structural enterprises;
1.2 Analysis of the financial condition and financial results of the Company for the last 3 years, both consolidated and by station;
1.3 Analysis of key performance indicators and their comparison with those of similar companies in other countries (with a focus on CIS countries);
1.4 Analysis of the Company's compliance with the requirements of international stock exchanges and capital markets.
2. Provide recommendations regarding the sale of the state-owned share of TPS. The Consultant's opinion should include an analysis of the feasibility of selling the share at consolidated level, with a recommendation of the optimal sale share and possible indicative sale value.
3. In case the Consultant concludes that the sale of the state-owned share of TPS at consolidated level is not feasible, the Consultant shall provide recommendations for further sale of the state-owned share at individual asset level. In doing so, all subsidiaries shall be segmented into three groups:
- Enterprises already prepared for privatisation (Group "1);
- Enterprises that have to undergo pre-sale preparation (Group "2);
- Enterprises whose privatisation is not feasible (Group "3").
4. For each of the Group 1 entities, the Consultant shall draw up a Privatisation Road Map reflecting the following issues:
a) Justification of the feasibility of the sale and a proposal for the optimum sale share;
b) Analysis of indicative value;
c) Recommendation on the best way to sell the assets (IPO or sale to a strategic investor);
d) Recommendations on further organisation of the process and possible timing of the sale.
In the event that an IPO sale is recommended by the Consultant, the Consultant's opinion shall include:
- Clear and definite recommendations on the size of each company's stake for the IPO and the stock exchange (platform) for the IPO;
- Advice on determining the size of the potential premium/discount on the realisable value of the company, taking into account a comparative analysis of the company's value and the value of comparable public companies;
- Overview of potential market demand for IPOs by reviewing recent offerings by comparable companies.
5. For each of the Group 2 entities the Consultant shall draw up a Privatisation Road Map reflecting the following issues:
a) Rationale for the conclusion that the asset is currently not ready for sale, including an analysis of the financial condition of the enterprise, the presence of tax, legal and environmental risks;
b) Recommendations on possible changes to the legal framework that would allow the asset to be privatised (if necessary);
c) Recommendations for non-core assets that may be sold separately from the underlying asset.
6. For each of the state share options discussed previously, the Consultant evaluates the effect of privatisation on the country's economy in terms of an indicative amount of cash proceeds.
7. For Group 3, the Consultant should provide an analysis of the reasons that indicate that it is not feasible to sell the enterprises in the medium/long term and an estimate of the economic effect of keeping the asset in state ownership.
The outputs of Phase 2 are:
- A pre-investment diagnosis of TPS with an analysis of the feasibility of privatising the state share at the consolidated or asset level;
- Roadmaps for the sale of the state share at consolidated or asset level.
All documents should be provided in Russian and English in PDF format.
The implementation / mainstreaming phase of the recommendations proposed in Steps 1 and 2 is not foreseen in this terms of reference.
Requirements for the Consultant:
1. The Consultant shall demonstrate sufficient experience in the implementation of consultancy services for the electric power sector and present the key team members assigned to the tasks described. The team shall include at least 1 person who meets at least one of the following conditions:
- personal involvement as a decision maker, consultant or member of the authorities of the electric power entity in the transformation of the electric power sector previously operating under a command-administrative system;
- experience in managing at least 5 projects in the sphere of tariff regulation in the energy sector of CIS countries; experience of participation in working groups of government bodies, expert councils on energy development and tariff regulation.
2. The consultant should demonstrate sufficient experience in consulting services for the fuel and energy sector (at least 10 fuel and energy sector facilities in the last 5 years in the CIS market).
3. The consultant shall have demonstrated sufficient experience in M&A transactions, including transactions within privatisation processes. The consultant should have a minimum of 10 closing experience. The members of the consultant's team should have experience in advising companies on privatisation matters.
4. The Consultant shall ensure that he/she has sufficient material and human resources to carry out the task in a timely manner. The Consultant's project team shall have:
- at least three (3) specialists with technical education in the area of energy;
- at least 3 (three) specialists with an international CFA (Chartered Financial Analyst) qualification and at least 5 (five) years' experience in finance;
- at least 10 (ten) internationally qualified specialists holding an ACCA (Association of Chartered Certified Accountants), higher education, at least 5 (five) years of work experience in the field of finance;
- at least 1 (one) specialist with an international qualification of RICS and at least 10 (ten) years' experience in finance.
The consultant may subsequently be engaged as a consultant for the privatisation of the asset in accordance with the decision of the competent authority.
