Background

The capital of the Republic of Meganisia is Georgetown, a coastal city on the Atlantic seaboard with a population of 800,000. Georgetown is situated on both sides of the Demerara River and the East and West bank are at present connected by a single bridge which is located 5 km. inland from the seafront, requiring for some journeys a round-trip of up to 15km along congested urban roads. The Demerara is approximately 300 meters wide where it enters the sea.

The Western side of the city includes the principal residential zones and a 60 ha. logistics hub providing a range of support activities to the burgeoning off-shore oil and gas industries. The Eastern side includes the central business district and high-end residential areas.

The Annual Average Dairy Traffic (AADT) count for traffic using the existing bridge amounted to 8000 in 2021.

Meganisia is a low medium income country with a per capita income of approximately USD 4,800 in 2021 and a sub-investment grade country credit rating of BB-.

Retail Price inflation: 7 per cent Outstanding Public

Sector debt: 90 per cent of GDP Public

Sector Budget Deficit: 9 per cent Ministry of Transport Capital Expenditure Budget: USD 50 million.

All figures above refer to calendar year 2021

The Meganisian Dollar depreciated by 9 per cent against USD in 2020 and by 5 per cent in 2021.

The Ministry of Energy has entered into a substantial off-shore oil and gas development programme in partnership with Exxon. Exxon has developed the infrastructure logistics hub (referred to above) for the purpose of undertaking the storage, supply and assembly of supporting plant and equipment, as well as materials and services required both for its own operations and for third parties forming part of the Exxon supply chain.

Meganisia is starting to derive substantial revenues from windfall taxes and profit-sharing arrangements with Exxon since early 2022 and for this purpose the Government has established a Sovereign Wealth Fund. At present the Fund holds uncommitted cash reserves amounting to approximately USD 250 million.

Proposed Investment

Georgetown City Council and the Government of Meganisia have undertaken pre-feasibility studies to identify solutions with the objective of alleviating urban congestion and to improve the connectivity between the Western and Eastern parts of the City and to promote the economic and social development of the Western flank.

Solution (a) A new 400 m. single span two-lane bridge located close to the estuary mouth with an estimated hard construction cost of USD 300 million.

Solution (b) A fast ferry service operated by two vessels with an initial acquisition cost of USD 60 million and annual operating and maintenance costs estimated at USD 12 million.

It is estimated that the two vessels would have a capacity to carry up to 9000 vehicles in both directions per 24 hour period.

Both solution(a) and (b) would require additional outlays for the construction of access slip-roads and the reconfiguration of some essential infrastructure networks (principally electricity, water, and wastewater) and, and in the case of the ferry service, the additional cost of constructing pontoons.

QUESTION

Introduce to the model a financing plan that draws on: third party debt and equity funding; public sector subsidy or other form of support only to the extent required; and demonstrate that there is a bankable structure.

ADD REFERENCES PLEASE.