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TABLE OF CONTENTS
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I. GUIDELINES FOR IMPLEMENTING ASSET RECYCLING

II. ANNEX IN ASSET RECYCLING

1. Airport Module

• TOR for Transaction Advisors for Airport Development

• Risk Matrix for Airports

2. Power Generation Module

3. Toll Roads Module

4. Ports Module

5. Sample Term Sheet

6. Bid Parameters

7. Bundling and Unbundling Criteria

8. Climate Finance in Asset Recycling

9. Islamic Finance and Asset Recycling

• Introduction: Islamic Finance in Asset Recycling

• Key Considerations of Islamic Finance in Assets Recycling

• Overview of Assets Recycling Through Islamic Finance

• Assets Recycling Process in Islamic Finance

• Case Studies on Islamic Finance for Asset Recycling

• Way Forward for Countries to Tap Into Asset Recycling Through Islamic Finance

10. Elements for Governance of Project Company (JV)

III. CASE STUDIES

IV. TOOLS AND REFERENCES

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Risk Matrix for Airports

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Checklist of issues to consider when preparing or reviewing sector-specific asset recycling guidelines for airport sector as well as key variables to monitor on climate risks and impacts.

Sample risk matrix – Airports

Risk
Description
Public
Private 
Shared
Mitigation
Operating Risk
 
 
 
Inadequate performance 
 
The risk of service quality provided by the concessionaire not meeting contracted service standards or availability  
 
x
 
Ensuring the appointment of a competent operator who could remediate any inadequacies in performance. 
O&M costs overrun 
Risk of O&M costs being higher than forecast or budgeted .  
 
x
 
Appointment of competent operator and management putting into place timely remedial steps. 
Life cycle costs overrun
Risk of lifecycle costs being higher than forecast or budgeted 
 
x
 
Appointment of competent operator and management putting into place timely remedial steps to manage increased costs; passing of increased costs to end-users within the parameters of fee and charges setting regime
Utilities costs overrun  
Risks of utility costs being higher than estimated or budgeted due to inefficiencies or increased charges 
 
x
 
Appointment of competent operator; proactive asset management to ensure that assets are maintained in a manner that optimises costs. 
Latent Defects and Existing Liabilities 
Risks of latent defects and existing liabilities in the airport assets 
 
 
x
Conduct adequate technical due diligence; the Private Sector to bear the risk up to a certain threshold beyond which the risk will be borne by the Public sector.  
Demand/ Revenue Risks  
 
Demand and traffic risk 
Actual traffic at the airport is lower than forecast causing a shortfall in actual aeronautical revenue against budgeted revenue  
 
x
 
 
Ensure that traffic survey and forecast are conducted by competent advisers; defer timing of capacity-driven capital expenditure program; re-deployment of staff and re-calibration of level and intensity of operational functions, 
Non-aeronautical revenue risk  
The concessionaire fails to attract tenants or patronage at retail concessions is lower than budgeted causing a shortfall in actual vs. budget non-aeronautical revenue 
 
x
 
 
Comprehensive feasibility study to be conducted, including detailed review of Government objectives and plan; due planning and marketing initiatives. 
Failure to collect airport charges 
Due to failure or non-optimality of collection system from passengers and airlines 
 
x
 
 
Proven collection system and good operational performance. 
Charges setting risk 
Risk that fees and charges indexation does not match inflation or cost increases and escalations, thereby impacting margins or that the Relevant Authority does not approve escalation as per agreed fee and charges escalation mechanism  
 
 
x
 
Clear regulations or contract terms that regulate the rate and adjustments of fees. 
Financial 
 
Failure to achieve financial close 
Inability to achieve financial close due to market uncertainty or the project capital structure is not optimal 
 
x
 
 
Good coordination with potential and credible lenders. 
Foreign exchange rate risk
Fluctuation of foreign exchange rate 
 
x
 
 
Financing in local currency to the extent possible; taking into accounts currency fluctuation hedging instruments; such as future contract and currency options. 
Inflation and interest rate risk 
Increase of inflation rate used for estimating life- cycle costs and interest rate 
 
x
 
 
Fee and charges indexation factor; interest rate hedging. 
Change in law/ regulation 
 
General change in law  
Change in law such as taxation which impacts all businesses and industries 
 
x
 
 
General change in law risk should be borne by the concessionaire.   
Discriminatory or project specific change in law Change in project-specific law or regulation such as fee and charges setting  x     Mediation, negotiation; political risk insurance; 
Force Majeure 
 
Natural disasters 
The occurrence of natural disasters disrupting operations 
 
 
x
 
Insurance, to extent possible.
 
Climate mitigation and adaptation plan.
 
Emergency Preparedness and Response plan (EPR plan) / Disaster Risk Management plan (DRM plan). 
 
Incorporate Qualified Climate Risk Events.
Political force majeure 
Events of war, riots, civil disturbance 
 
 
x
 
Insurance, to extent possible; termination with compensation if settlement cannot be reached. 
Prolonged force majeure 
If above prolongs for 6 to 12 months, may cause economic problems to the affected party (esp. if insurance does not exist) 
 
 
x
Either party should be able to terminate the contract and trigger an early termination. 
E&S Risks and Climate Risks
E&S risks management 
Airport development and operation create many E&S impacts and risks, which if not appropriately managed, can result in impact on the social and natural environment.
 
Changes to noise emission pattern and increased complaints. 
Changes in ecosystems and associated risks.
 
Reduced air quality. 
 
Changes in ecosystems and distributions of wildlife and wildlife attractants. 
 
x
 
The party in charge for construction and Operation and Maintenance (O&M) should have undertaken E&S Studies prepared management plans to mitigate any adverse impacts and risks and consistent with applicable laws. 
 
Reducing the use of electricity by using renewable energy and reducing fuel consumption by using environmentally friendly ground support equipment and transportation. 
 
Sustainable landing and take-off cycle of aircraft(s) and ground support operations, single engine taxiing. 
 
Targeted charges to airlines based on noise measurement. Restrictions on flight operations during night time. 
 
Design and implementation of noise control measures (e.g. noise barriers along the boundaries of the airport such as earthen mounds, walls). 
 
Solid waste management plan.
 
Integrated vegetation management (IVM). 
 
Wildlife hazard management plan (WHMP), including e.g. bio-acoustic technology. 
 
Facilitate ecosystem-based adaptation. 
 
Use of supplementary cementitious materials (SCM) in concrete runways and use of recycled aggregates in taxiway and apron construction. 
 
Achieve the environmental sustainability of passenger terminals (e.g. Recyclable food packaging, beverage containers and utensils. Composting and/or food procurement practices aimed at minimizing waste. LED and other types of energy-efficient lighting to reduce electricity usage.) 
Risk of noncompliance on the E&S aspect of the concession agreement. 
 
 
 
x
The parties to review compliance of the E&S aspect of the Concession Agreement, during construction and O&M. 
Climate risks *
Deterioration of runway surface integrity through softening and aircraft rutting. 
 
Flood risks to airports due to increased precipitation and/or sea level rise.
  
Lift of aircraft reduced due to higher temperatures.
 
Temperature change affect navigational signals and satellite coverage.
 
Electrical power supply failed during strong winds and storms.
 
Increasing wildlife-strike risks due to changes in the local ecosystem. 
 
Use of airport as shelter or as hub for relief operations. 
 
x
 
Enhanced runway design criteria (e.g. increase height above sea-level of runaway to withstand a 1-in-100 year storm surge event).
 
Integrate climate resilience in maintenance regimes and runaway surface specifications. 
 
Improve emergency repair procedures.
 
Upgrade drainage systems. 
 
Installed permeable pavement to drain storm water. 
 
Installation and closure of flood/tidal gates and flood-storage basins within the site. 
 
Ensure access roadways are navigable for employees and emergency vehicles during flood events. 
 
Standards for buildings including climate adaptation. 
 
Integrated adaptation planning into airport master plan. 
 
Electrical substations upgraded. 
Increase runaway length. 
 
Develop a Flight Rescheduling Control System (FRCS) to handle the airlines’ rescheduling requests, with a view to quickly resuming normal airport operations once extreme weather has abated.
 
Thunderstorm Warning System. 

  * Based on "WB (2016) - Emerging Trends in Mainstreaming Climate Resilience in Large Scale, Multi-sector Infrastructure PPPs and based on “ACI Resolution 3/2018 on resilience and adaptation to climate change” and based on “Sydney Airport 2021 Response to the Task Force on Climate-related Financial Disclosures”  

Key variables to monitor on climate risks and its impacts, for airport assets:  

  • Runway Pavement cracking / potholes (runway area affected) 

  • Wildfires Events in 100km surrounding area (# of events) 

  • Maximum temperature and deviation vs. average monthly max temperature (in °C) 

  • Sea level rise (in meters) 

  • Flooding (airport area affected) 

  • Intense precipitation events (in milimetres)  

  • Wind speed (in km/hour)  

TABLE OF CONTENTS

I. GUIDELINES FOR IMPLEMENTING ASSET RECYCLING

II. ANNEX IN ASSET RECYCLING

1. Airport Module

• TOR for Transaction Advisors for Airport Development

• Risk Matrix for Airports

2. Power Generation Module

3. Toll Roads Module

4. Ports Module

5. Sample Term Sheet

6. Bid Parameters

7. Bundling and Unbundling Criteria

8. Climate Finance in Asset Recycling

9. Islamic Finance and Asset Recycling

• Introduction: Islamic Finance in Asset Recycling

• Key Considerations of Islamic Finance in Assets Recycling

• Overview of Assets Recycling Through Islamic Finance

• Assets Recycling Process in Islamic Finance

• Case Studies on Islamic Finance for Asset Recycling

• Way Forward for Countries to Tap Into Asset Recycling Through Islamic Finance

10. Elements for Governance of Project Company (JV)

III. CASE STUDIES

IV. TOOLS AND REFERENCES

Find Full Outline

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Additional Resources

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Note(s):

The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.