The State Assets Management Agency of the Republic of Uzbekistan (hereinafter – the UzSAMA/The Customer) announces the selection of a Technical consultant (hereinafter – Consultant) to develop a privatization strategy and roadmap for its implementation (hereinafter – Project) of Navoiyazot JSC (hereinafter – Asset) 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) 3 April, 2023.

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 department of the State Assets Management Agency of the Republic of Uzbekistan;

Tel.: +998-71-259-20-23; e-mail: tender@davaktiv.uz,

Shokhabbos Abduazimov, Deputy head of department of the State Assets Management Agency of the Republic of Uzbekistan;

Tel.: +998-71-259-20-91; e-mail: tender@davaktiv.uz.

Under this Project, the International Finance Corporation (IFC) is being attracted as a strategic consultant, as well as a separate selection process was announced to attract a Lead Consultant for financial, tax and legal due diligence.

As part of the Project, the task of the Technical Consultant is to provide technical, environmental and social due diligence and to support the Lead Consultant in all related issues.

It is expected that the work on the Transaction will be carried out in close cooperation between the representatives of the Technical Consultant, IFC, Leading Consultant, the Client 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 from 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.

The text of this Request is published in Uzbek, Russian and English languages, in case of discrepancies preference is given to the English version of the text.

Request for Proposals (RfP)  for Technical consultant on the development of a privatization strategy and roadmap for its implementation of Navoiyazot JSC

The Resolution of the President of the Republic of Uzbekistan “On approval of the targeted program for strategic development of the chemical and gas chemical industry” dated October 10, 2022 No. PP-388 stipulates inter-alia preparation of state’s and Uzkimyosanoat JSC shares in the authorized capital of Navoiazot JSC for privatization. The privatization of Navoiazot JSC is considered either as privatization of the whole Company or of the possible separate unbundled units and/or production chains of the Company and/or unbundled infrastructure and services operated by an independent seasoned private operator. In order to implement it the following tasks must be conducted:

• Technical Due Diligence
• Environmental and Social Due Diligence

In connection with this, UzSAMA is searching, through an open-bid competitive process, for a Consultancy firm (hereinafter referred to as the "Technical Consultant") that will support UzSAMA’s team and the Lead Advisor of the Project in implementing the aforementioned tasks.

The Technical Consultant will also support the Lead Advisor on the following tasks:

• Soft Market Sounding
• Primary Market Sounding for the Company as a whole as well as for the possible unbundled plant units and/or production chains and/or infrastructure and services
• Benchmarking the cost of production competitiveness of the Company’s assets versus its competitors
• Development of a privatization strategy (to privatize state’s and JSC “Uzkimyosanoat” shares in the authorized capital of Navoiazot JSC) and a roadmap for its implementation.

Privatization of the Company’s assets as a whole as well as for the possible unbundled plant units and/or production chains and/or infrastructure and services is aimed at achieving the following tasks:

• Further improvement of operational efficiency and financial condition of Navoiazot JSC;
• Establish necessary conditions for further sustainable development and modernization of assets (infrastructure, services and production units), for introduction of modern technologies, financial sustainability and “know-how” expertise;
• Establish prerequisites for a potential increase in the return on assets to ensure payments of principal, interest and taxes to the state budget;
• Increase volume of private investment in the country for the further development of the chemical sector;
• Increase efficiency of using financial, natural and human resources;
• Reduce impact of the company on the environment and supporting the social and economic development of Navoi region.

Briefly about the asset

Navoiazot JSC is one of the largest enterprises of chemical industry of Uzbekistan, specializing in the processing of natural gas, the production of mineral fertilizers, chemical reagents for gold miners, low-tonnage chemical products.

Navoiazot JSC, producing more than 30% of chemical products of Uzbekistan and considered as one of the base segments of Uzkimyosanoat JSC, covers almost all branches of industry, transport, agriculture, fuel and energy complex, as well as services, science and education.

Navoiazot JSC is actively involved in foreign trade operations and by the end of 2021 the company exported 6.9 billion UZS worth products to European and Central Asian countries. Also by the end of 2021 the company has net income at the amount of 3.1 trillion UZS, net income at the amount of 6.2 billion UZS and charter capital at the amount of 6.0 billion UZS.

The central office of the company is located at A. Temur street, Mirabad district 5, Navoi city.

Scope of procured services:

Scope of the Consultant's services under this Project will be divided into 2 (two) stages of implementation:

Stage 1: Detailed technical due diligence and environmental and social assessment of Navoiazot JSC, conducted with the purpose to assess the necessity and subsequent possibility/feasibility of unbundling of the current interconnected infrastructure, production processes and facilities, general services (“shared services”) into legally-separate production units with their further privatization.

1. Technical Due Diligence:

1. Technical due diligence and assessment of all technological processes and equipment with evaluation of the necessity and subsequent possibility/feasibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or infrastructure and services:

1. conduct a comprehensive survey of entire technological process, the technical condition and efficiency of work and depreciation of the equipment used.
2. review and comment on plant operating rates over the last five years – identifying the root cause of any significant disruptions in production. This will include commenting on any historical shortage of feedstock or utilities.
3. for each plant review the delivered cost of production (for core export market) relative to peers (leaders and laggards) – commenting on the main source of competitive advantage / disadvantage, e.g., process technology used, feedstock cost, utility cost, scale etc.
4. review historical capex spend and comment on adequacy of historical maintenance capex spend and comment on adequacy of future projected/budgeted capex – highlighting any major expenditures required in the next five years.
5. evaluate possibility of dividing the technological process into separate unbundled plant units and / or production chains.
6. for each group of plant units, production chains, evaluate and comment on the interdependence with the infrastructure and supply lines for feedstock and materials (steam, electricity, natural gas, and so on).

2. Technical due diligence and assessment of general infrastructure and services:

1. conduct a survey and assess conditions of general infrastructure and services, as well as auxiliary social facilities.
2. develop proposals for further transformation of infrastructure facilities, facilities that support infrastructure and provide general services.
3. develop proposals for further transfer of social facilities not related to production, based on PD-388 dated October 10, 2022.

3. The result of the technical assessment will be a Technical Due Diligence report, which must contain the following items:

1. overall assessment of the technical condition of the Company's production units and each plant unit on a standalone basis;
2. evaluation of amortization of the technological units;
3. description of infrastructure current condition and assessment of the expansion requirements of the infrastructure to increase Company’s production capacity;
4. assessment of the infrastructure and services on the subject of economic and operational viability to function as legally-separate unbundled entity servicing Company’s production units under operation management agreement;
5. assessment of the effectiveness of business solutions, processes and logistics operations within the Company and assessment of the effectiveness of its current business relationship with its suppliers and customers;
6. assessment of optimality and sufficiency of raw material supplies;
7. assessment of the needs for investments to upgrade the most vital and capital-intensive technological production lines to increase productivity;
8. optimal grouping of plant units and production chains/infrastructure and services that are subject to privatization/concession, potentially bundled as follows:
   • group of plant units for the production of ammonia, line III;
   • group of plant units for the production of mineral fertilizers;
   • group of plant units for the production of organic synthesis and nitron fiber;
   • group of plant units for production of CS and LTCP (caustic soda and low-tonnage chemical products);
   • group of plant units for production sector of polyvinyl chloride (PVC), caustic soda (CS) and methanol (M);
   • group of plant units of the ammonia and carbamide production complex;
   • and other main plant units, as well as auxiliary workshops;
   • infrastructure and services.

The Consultant's recommendations to the respective privatization strategy should include potential risks and measures to reduce the risks on environmental and social outcomes (e.g. questions related to the number of employees, collective agreements and etc.)

2. Environmental and Social Due Diligence:

 1. The Environmental and Social Due Diligence (“ESDD”) should be aligned with the scope of the Technical Due Diligence and will aim to:

1. assess Navoiazot JSC’s E&S compliance against applicable national legislation and permitting requirements, as well as the internationally recognized standards, collectively referred to as Applicable Standards (see below).
2. identify and assess relevant regional and strategic environmental and social assessments or studies that affect the Project.
3. review existing environmental and social management systems, policies and practices.
4. identify key environmental and social issues of concern including, but not limited to i) adequacy of the existing impact assessments and mitigation; ii) labor and working conditions, including OHS practices; iii) supply chain management; iv) pollution controls for wastewater and emissions; v) resources and water use efficiency; vi) management of hazardous materials and waste; vii) GHG emissions; viii) fire and emergency response, including community health and safety in such events; ix) product transportation risks; (x) security management; xi) stakeholder engagement, including grievance management.
5. investigate possible historical environmental and social issues, such as potential contamination of soil and/or groundwater, community/NGO grievances, legal disputes.
6. summarize current and potential future environmental and social impacts and risks, as well as opportunities associated with the Navoiazot JSC privatization. This should include existing and required infrastructure development/ associated facilities. Present high-level E&S assessment for all considered privatization alternatives and covering priority topics such as retrenchment, human rights, occupational and community health and safety, resource use and energy efficiency, pollution prevention, GHG emissions, and biodiversity to name a few.
7. assess and define sustainable approach to retrenchment and labor management. With current workforce of ~9,000 people, the risks and impacts of restructuring induced redundancies are potentially high, and the strategies for their minimization should be proposed.  
8. analyze technological processes against Best Available Technologies for the sector (i.e. EU IPPC BREF), presenting industry best practice emissions and energy requirements. Based on the results of the assessment, provide a preliminary investment plan in conjunction with the scenarios defined by the technical due diligence.
9. identify potential environmental opportunities or potential for improvement in the current operations, which can be categorized as:
   • climate change mitigation (reduction of greenhouse gas emissions);
   • climate change adaptation (enhancement of climate change resilience);
   • other environmental benefits (including improved resource efficiency, reduced local pollution, improved resilience and restoration of ecosystems).

2. Review existing supply chains and contractor management (e.g. suppliers of main materials and resources including energy) and identification of relevant environmental, social, labor and/or reputational issues.

3. Identify the main stakeholders groups and current stakeholders engagement activities. Check historical responsiveness to public comments, complaints and questions; and

4. Highlight the need for any additional studies (e.g. Quantitative Risk Assessment, Hazard Operability Study, Phase 2 Contamination Assessment, Environmental and Social Impact Assessment, Biodiversity Assessment, etc.).

5. The “Applicable Standards” for the ESDD include the following:

1. National Environmental, Health, Safety and Social (EHSS) laws and regulations, including permitting requirements;
2. Relevant international conventions and protocols ratified by the Republic of Uzbekistan;
3. International Finance Corporation Performance Standards (IFC PSs, 2012), or comparable E&S safeguards adopted by Multilateral Development Banks (MDBs);
4. Equator Principles IV (2020);
5. OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (2016) (the “Common Approaches”).

6. The ESDD should be undertaken based on both documentation review and a site visit, which should include visual observations of relevant areas directly and indirectly affected by the facility, meetings with relevant individuals/ entities associated with the facility to discuss the E&S issues and to obtain any additional information required.

7. The ESDD Report should clearly present the results and conclusions of the detailed review of the E&S aspects and include the following key components as a minimum:

1. Description of the main assets and supporting, associated facilities;
2. Overview of the applicable standards and identification of the main gaps between the local legislative requirements and the international standards;
3. Local EHSS permitting status and identification of the outstanding permits/licenses;
4. High level Environmental and Social Assessment;
5. Environmental and Social compliance review;
6. BAT Assessment;
7. Environmental & Social Action Plan (ESAP).

3. Market sounding:

1. The Technical Consultant will provide inputs as appropriate into the following tasks which are driven by the Lead Advisor.

1. assessment of interest and terms and conditions demand from regional and international strategic investors for the acquisition/concession of the Company as a whole and/or as unbundled plant units and/or production chains and/or infrastructure and services;
2. analysis of the indicative value of the sale, depending on the responses received from the interested investors;
3. comment on the most important remedial actions needed to increase the population of viable investors and actions required to improve the valuation.

2. Conclusions of all due diligence work (technical, financial, legal) will be resulted in a report provided by the Lead Advisor that should contain the following items:

1. recommendations on the Company’s development strategy;
2. recommendations on the Company development strategy as a whole or potential unbundling of assets and on the possible grouping of plant units and production chains and/or infrastructure and services;
3. recommendations for improving investment attractiveness of each group of plant units and/or production chains and/or infrastructure and services, taking into account the results of preliminary market sounding;
4. recommendations on existing loan facilities (including government guaranteed loans), including consideration of the possibility of further restructuring.

The Technical Consultant will work closely with the Lead Advisor on the development of the report which should incorporate the key findings and conclusions of the Technical Due Diligence report.

Stage 2: Development of privatization strategy and roadmap for its implementation of Navoiazot JSC:

1. Based on the results of the results of Stage 1, the Technical Consultant will support as appropriate the Lead Advisor on proposing a vision for the Company's further development strategy and privatization and “roadmap”, reflecting the following issues:

1. development of proposals for the Company’s development;
2. identify main stages, their sequence and approximate time frame terms;
3. recommendations on Navoiazot JSC privatization and/or concession methods: share of the sale/ Company as a whole and/or individual groups of plant units / production chains and separately infrastructure and services. For each method, provide the validation, rationale for the feasibility of the chosen method, as well as calculation of the range / indicative cost of the sale;
4. determination of the assets and infrastructure management structure from the beginning to the end of the process (who and how will manage before the transfer to the investor);
5. development of proposals for administering or closure of unprofitable production lines (and, possibly, production lines that cannot be privatized);
6. recommendations on possible changes in the legal framework that would allow the privatization of assets (support Lead Advisory as might be required);
7. recommendations on addressing key environmental and social concerns identified during the Stage 1;
8. if a sale by IPO is recommended by the Lead Advisor, its opinion shall include:
   • clear and unambiguous recommendations on the size of the holding of shares of each company for sale within the framework of the IPO and the stock exchange (floor) for the IPO;
   • Recommendations on identifying the size of a potential premium/discount on the sale price when bringing a company into a competitive environment, taking into account a comparative analysis of the company's value and the value of comparable public companies;
   • Overview of the potential market demand for an IPO by looking at recent peer listings.

2. If the proposed privatization strategy for Navoiazot JSC consists of certain groups of plant units/production chains, the proposal should also determine:

1. action plan for unbundling of Navoiazot JSC into simpler and more understandable groups of plant units/production chains/production units for investors;
2. recommendations on the allocation of assets related to general infrastructure and services, and further interaction with groups of plant units and/or production chains;
3. recommendations for administering and/or transfer of social facilities.

3. The analysis should determine the range of asset values depending on the chosen privatization strategy (either by a group of plant units/production chains, or by the company as a whole).

4. The Technical Consultant's recommendations to the respective privatization strategy should include potential risks and measures to reduce the risks on environmental and social outcomes (e.g. questions related to the number of employees, collective agreements and etc.)

5. If a decision is made that the assets are not ready for privatization, the Lead Advisor must draw up a roadmap reflecting the following main points:

1. justification of the conclusion that the assets are not ready for sale, including an analysis of the financial condition, the presence of tax, legal and environmental risks;
2. recommendations regarding non-core assets, including social facilities that can be sold separately from the main asset;
3. recommendations for improving the financial condition of assets;
4. recommendations on possible changes in the legal framework that would allow the privatization of assets (support Lead Advisory as might be required);
5. the Lead Advisor should provide a calculation of the economic effect of keeping the asset in state ownership based on the costs and budgets associated with owning the asset, as well as an analysis of the reasons that indicate the impossibility of selling company in the medium/long term.
6. the Technical Consultant will support the above activities as appropriate.

Interim reporting and communication

The Technical Consultant is expected to maintain regular communications with the Project Committee members involved in the Project during the performance of its duties and its interactions with other relevant stakeholders. All interim and final outputs must be delivered within the deadlines set by each Stage and must meet the standards deemed acceptable to the Project Committee. The Technical Consultant will always coordinate its interview visits with the appropriate Project Committee members. In the process of monitoring the work in progress, the Project Committee has the right to request, and the Technical Consultant is to immediately provide any and all information related to the Project, including information about the progress of the Project, etc. The Technical Consultant is to promptly replace any member of the Technical Consultant’s team whom Project Committee considers unfit or otherwise unsatisfactory for the job(s) assigned to him/her. In this case, the need for staff replacement does not give the Technical Consultant the right to extend the deadline for the deliverables.  

Expected output:

The Technical Due Diligence report on the results of the analysis of the above assets in Russian and English is provided - editable in PDF format.

All deliverables are subject to approval by the Project Committee and are deemed to be final/completed based upon Project Committee’s approval. The UzSAMA reserves 10 working days for providing written comments in either English or Russian language on the deliverables.

The Technical Consultant should observe the following guidelines for all deliverables: 

• They should be technically correct and free of programming, grammar and calculation errors;
• The presentation materials developed by the Technical Consultant should convey their messages clearly and concisely with one message per slide (where applicable);
• Any data and/or calculations must be provided in Microsoft Excel format (without using macros) in Russian and English;
• If some parts of the files or software should be locked to avoid unintended modifications or to protect key parameters/calculations, the passwords/permits should be provided to UzSAMA and Project Committee members;
• All deliverables in the form of written materials and tools are to be submitted to electronically. The electronic versions must be editable and readable without restrictions.

Consultant’s qualification requirements:

1. For the provision of services, the Consultant must provide a list of work (services) performed and specialists involved.

2. The Consultant must be considered as one of the leading international companies in the field of technical advisory for the chemicals and fertilizers sectors.

3. To render services, the Consultant, members of his team or consortium, must have relevant experience in the market of purchased services and in the industry:

1. proven experience in conducting technical due diligence for transactions/investments in existing plants or in building new plants in the chemicals and fertilizers sectors and sound experience in developing investment theses and plans;
2. the leaders of the Consultant’s project team shall consist of industry experts with a minimum of 15 years of relevant work experience in the chemicals and fertilizer sectors, including fertilizer and chemical manufacturing, and with advanced knowledge across these value chains;
3. the Consultant’s project team members shall include senior industry experts with advanced degrees in the relevant disciplines (e.g., chemical engineering) with at least 10 years of relevant work experience;
4. the Consultant's team must have experience in providing relevant advisory services in the Republic of Uzbekistan or the CIS.

4. The work experience of the Consultant is confirmed by a brief description of the services performed and signed by the Chief Supervisor of the Consultant. For member companies of the international network, it is allowed to indicate the experience of several legal entities affiliated with the Contractor on the principle of membership in a single international network.

5. Professional qualification of the project team is confirmed by the following documents: resumes of specialists, copies of diplomas and / or certificates and / or certificates, or copies of extracts from Internet resources.

6. The Consultant has the right to engage a subcontractor and / or form a consortium to implement the terms of reference, however, the responsibility for the performance of all tasks lies with the Consultant. The list of the personnel and resumes of the involved subcontractors shall be included in the Consultant's proposal and may not be changed after the conclusion of the contract.

Deadline for task completion:

6-8 months from the date of signing the contract.

Specific inputs to be provided by UzSAMA

UzSAMA is to make all reasonable efforts to provide the following to the Technical Consultant during this assignment:

• Guidance – the UzSAMA team is to do its best to provide the guidance needed throughout the assignment and it expects to work closely with the Technical Consultant towards ensuring that the deliverables are aligned with its expectations, as well as with UzSAMA’s instruments and processes. Regular updates and progress review calls are to be expected;
• Documentation on previous engagements on fertilizer projects – the UzSAMA team will provide copies of all relevant (and non-confidential) documentation in its possession.
• Primary data and information may be provided in either of the three languages Uzbek, Russian and English as available.

Special terms and conditions/confidentiality statement

The Project requires a local presence in the country to collect field data, conduct interviews, present interim findings to the Project Committee team, and to write final recommendations to various teams and counterparts. The Technical Consultant should demonstrate their ability to mobilize the needed in-country expertise to carry out the assignment.

Ownership of all data, reports, and other deliverables will be retained fully and solely by UzSAMA and shall become the property of UzSAMA, IFC and the World Bank Group (WBG). All data and information received from UzSAMA, IFC and the WBG and other relevant stakeholders for this assignment are to be treated confidentially and are only to be used in connection with the execution of these Terms of Reference.

All intellectual property rights arising from the execution of these Terms of Reference are assigned to UzSAMA and IFC. The contents of the written materials obtained and used in this assignment may not be disclosed to any third parties without the expressed advance written authorization of UzSAMA and IFC.