The proposed Infrastructure PPP TA fits closely with the objectives of the CPS. It directly addresses the strategic area of Building Core Infrastructure to Connect Communities to Markets. This strategic area focuses on developing core infrastructure to enhance access to services, employment, and markets as well as facilitating rapid and cost-efficient movement of people and goods. The Project Development Objectives (PDO) of the proposed Infrastructure PPP TA & expected key results include: 1) Improving t he GoTL’s capacity in evaluating and prioritizing the pipeline of infrastructure projects: Key line ministries and ministry officials will attain basic knowledge in planning and developing public infrastructure. The WB will support the MoF, MPS, and the PPP Unit, as well as other line ministries and agencies which are involved in infrastructure investments (i.e., MoTC, MPW, Timor Gap, and others) to conduct an initial evaluation of the pipeline of projects, determine which projects should be developed in priority, and which projects among those could be PPP candidates and under what conditions, and advise on the next steps needed to develop and implement these potential PPP projects. Immediate support will be provided to the Tibar Bay Project to ensure that the GoTL has the necessary capacity to fulfill all public sector obligations under the project, including financial obligations (in particular how to optimally fund the public capital subsidy), and performance obligations (i.e., issuance of permits, consents, rights of way, monitoring, etc.). 2) Developing Standard Operating Procedures (SOPs) for the development, implementation, & monitoring of future PPPs: Key outcomes will include building expertise and experience of a core group of senior officials as project directors who are able to deliver & manage PPP projects and cascade such knowledge across other ministries/line agencies in Timor Leste. Given the importance of Tibar Bay, 3 senior officials are expected to be nominated from each of MoTC, the PPP Unit, and the MPS. In line with the request and needs of the GoTL, additional personnel from other relevant ministries and agencies (i.e., MPW, Timor GAP, etc.) could also be considered. 3) Preparing standardized documents & model contracts for future PPP transactions: Sets of standardized documents, risk allocation matrices and contracts are envisaged to be used by different line ministries in developing and implementing the GoTL’s PPP pipeline.

The proposed TA is composed of three activities: (i) Infrastructure planning, evaluation and prioritization support; (ii) PPP Transactions Support starting with Tibar Bay; and (iii) Capacity building for managing PPP contracts. A breakdown of each of these activities is as follows: 1) Infrastructure planning, evaluation and prioritization support: - Review existing pipeline of infrastructure projects; - Determine which projects should be developed in priority; - Evaluate projects and determine which should be public sector projects and which can be PPPs; - Identify necessary conditions required for successful implementation of PPPs; - Develop SOPs for PPPs for evaluation, implementation and monitoring; - Develop standardized documents and model contracts for PPPs. 2) PPP Transaction support for honoring of public obligations, starting with Tibar Bay Project: Outputs For Tibar Bay PPP: -Advise on the most optimal funding option for the public subsidy and explore sources of funding (i.e., from Infrastructure Fund, Petroleum Fund, borrowings, others) -Identify all public sector performance obligations under the Concession Agreement and work with the PPP Unit, MoTC, APORTIL (the landlord port authority) in ensuring that they have the necessary capacity to perform these obligations Outputs For Dili Airport PPP: - Advise GoTL’s regarding its obligations (financial and performance) to Dili Airport in a similar manner to Tibar Bay 3) Capacity building for managing PPP contracts. Staff will undergo training that would be relevant in the project planning as well as contract management of the Tibar Bay and Airport PPP projects. Outputs for this component include: a) Strengthening of MoF, MPS and PPP Unit’s capacity to understand Project Finance and the various options available to GoTL in raising public sector funding (debt, equity, bonds, etc.). b) Support to APORTIL: - In its role as Port Authority and regulator: build capacity to monitor operations of future concessionaire of Tibar Bay; - In its role as operator of Dili Port while Tibar Bay is being constructed: planning for future transformation into a ferry and passenger operations port once cargo and container operations are transferred to Tibar Bay. c) Infrastructure Planning and Project Management: a) Build know-how and processes of key line ministries and ministry officials to improve the planning of public infrastructure; and b) enhance expertise and experience of a core group of officials as Project Directors who are able to manage PPP projects and cascade the contract/project management knowledge across other ministries/line agencies in Timor Leste.