The First File must include, as a minimum, the following factors:
1. Executive Summary: (including summary of recommendation to proceed to Second File phase). The Executive Summary shall not exceed five pages in length, and should provide an overview of key aspects of the project, and a summary of why further consideration of this project as a Privatization is warranted.
2. Administrative Context: This section identifies the Entity proposing the project; the individual responsible for the First File development in the Program Work Team; the Program Work Team member who should be contacted with questions about the First File or requests for additional information, and their contact information; and the official name of the project. Note that the project name cannot subsequently be changed, as it will be used to track the project in the NCP Project Registry.
3. Project Rationale and Assessment of Need: The First File shall identify the needs the project seeks to address, and how the project addresses them. The First File shall also identify if there are alternative means of addressing this need.
This section shall explain:
a) The specific need that the project is intended to address, expressed in quantitative terms. and a discussion of how this need has been identified and quantified.
b) The relationship between the project need and the sectoral goals and objectives of Vision 2030 and/or the NTP, expressed in quantitative terms. Ideally, this relationship should be direct and measurable. If the relationship is indirect, a clear narrative rationale shall be provided explaining how this project will contribute to the Kingdom's goals and objectives. If there is no clear relationship, the First File shall explain why this project should be considered a priority for Privatization.
c) The physical parameters of the project, i.e., the number and types of facilities that are expected to be constructed, expanded, or renovated. This shall include any ancillary or support works required for the project to achieve its purpose to enable an access road for users to reach to the facilities that are planned to be constructed or renovated.
d) Identifying the anticipated recipients of the project's benefits -either directly or indirectly- and the benefits expected from the project. Direct benefits shall be expressed and quantified in the same units as the needs.
e) Identify alternative ways of meeting the project need. Alternatives should not be excluded at this stage of the study even if they are anticipated to be higher-cost approaches than the proposed project.
4. Economic Benefits: shall include an initial identification of project benefits- tangible and intangible- anticipated from the project and each identified alternative, and shall be quantified according to the current market prices coupled with anticipated negative impacts that may result of the project outputs either for users or non-users.
5. Preliminary Financial Case: shall explore the financial case for the proposed project and the identified alternatives. For each of these, it shall include indicative implementation cost estimates even in the case provided by the government at no cost, that include:
a) Project preparation costs, such as preliminary design, feasibility study, impact studies, and procurement.
b) Land acquisition.
c) Construction.
d) Plant and equipment.
e) Fixtures and fittings.
The First File shall also identify estimated annual costs associated with the operational phase of the project and each alternative.
Cost estimates shall be provided as financial values and no attempt should be made at the First File stage to make adjustments for opportunity costs. It is recognized that at this stage of project preparation there is generally no preliminary design so detailed item-by-item costing may not be possible; however, notionally estimates should nevertheless encompass all the elements of capital costs required to achieve the project's purpose, with a goal of ± 20 percent accuracy. Metrics based on previous projects may be helpful, e.g., SAR per kilometer for construction of a similar road, or costs per square meter for operation and maintenance of a similar facility. Costs of any anticipated environmental mitigation measures or social costs that may prove necessary to implement operate the project shall also be included. These estimates shall then be summarized to provide:
a) Total estimated implementation costs (indicative only and in current prices) of the project and relevant alternatives, including the main technical variants of the reference project; and
b) Basis for the cost estimates.
For the project and each identified alternative, the First File shall also provide an initial identification of the financial viability of the project if implemented as a Privatization, considering what are the potential sources and broad scaling of revenue streams to private partner, i.e., budgetary payments from the Government, user fees from consumers of the project services, a combination of these sources, and/or other revenue sources. The objective of the financial viability assessment in the First File is to tentatively indicate the potential financial viability of the proposed project and scale the potential government support required, if any. This is to be done through a Net Present Value (NPV) calculation of the project cash-flows in accordance with the First File VFM Potential Assessment, as described in Part 12 of Chapter 4 of this Manual.
6. Preliminary Assessment of Affordability: When the project or alternative will be funded wholly or in part with Government funds, the First File shall identify:
a) Adequacy of anticipated budgetary funding to cover the estimated preparation costs of the contract administration and monitoring costs of the project.
b) Adequacy of anticipated budgetary funding to cover the direct contract payments, if these will be made by the Government.
c) Potential actions required if anticipated budgetary funding is not adequate to cover the estimated government obligations necessary to implement the project.
d) Anticipated sources of funding apart from the budget.
e) Further actions or decisions required during and following project preparation to secure these additional funding sources, and possible timing.
f) Adequacy of matching funding from local government or self-financing public agencies, if any.
The First File shall also assess the potential reasonableness of service costs that will result from the project and the identified alternatives. To do so, it shall provide:
a) Estimated capital cost per end-user and/or estimated capital cost per unit of demand for the final service. This can be derived by dividing the capital costs estimate by the estimated number of end-users or the estimated demand for services, and is a useful metric for comparing alternatives;
b) Unit cost comparisons with other similar, recently completed projects or existing service providers;
c) Assessment of whether spending on the project is likely to represent a worthwhile use of public expenditure compared to alternatives (including doing nothing), given the available information on the balance between costs and potential benefits;
d) Main risks and assumptions that could potentially affect the economic viability of the project and any risk mitigation measures that might be needed; and
e) Project alternatives considered worthy of further study based on potential economic viability.
7. Privatization Rationale: The First File shall address whether it will be more advantageous to pursue the project as a Privatization or through traditional public procurement. Execution of the project as a Privatization may be possible, but this does not necessarily mean it will be the optimal solution.
While final determination of the best implementation route will generally not be possible at the First File stage, it shall include an analysis that highlights any characteristics that would suggest that Privatization should be considered as a procurement option. These might include, for example, the potential for proper allocation of risk between public and private partners to improve project outcomes, or for private sector innovation in design solutions or operational practices to add value.
Complex projects for which private entities can provide design and management solutions are good candidates for Privatization procurement, as long as: outputs and quality can be defined and monitored in a clear way; user needs are stable over time; and the project is reasonably robust to policy changes. Conversely, projects with dynamic user requirements or subject to rapid technological change may be less attractive candidates for Privatization. Lack of fiscal space for a project which might be financed entirely by the private sector and paid for by user fees may be an argument for a Privatization solution.
The First File shall set out a brief overview of the potential to achieve value for money, per the above criteria, as a Privatization as part of its assessment of the Privatization option versus other alternatives.
8. Initial Market Assessment: The First File shall document whether:
a) the required capabilities to execute the project are available in the private sector;
b) there is a large enough market to generate competition; and
c) there is experience with similar projects within the Kingdom, within the region or globally, and provide examples of those that have been successfully implemented, either in the Kingdom or elsewhere, and discuss their applicability. If no similar examples can be identified, the First File shall describe the envisioned Privatization model and explain why it is expected to be viable.
At the First File stage, it is not required that there be direct engagement with private entities to determine market capacity and interest; this may be conducted as a research effort. However, if the evidence is not conclusively in favour of existing market capacity, this shall be highlighted as an issue to be resolved at the Second File stage.
9. Issue Identification: The First File shall identify key issues which will need to be addressed for the project and each alternative. Categories of issues may include, but not be limited to:
a. Technical Issues. The First File shall document any technical issues that may be evident at this early stage. Examples of technical issues might include: need to apply untested technologies, rapidly changing technologies, need to develop new software, compatibility with existing systems, geologic or site concerns, etc. These issues will be subject to more detailed consideration at subsequent stages of the project preparation process. The consideration of technical issues shall specifically include project security, and any protective structures or measures which may be required.
b. Environmental Issues. The First File shall document any environmental issues that may be evident at this early stage. Examples of environmental issues might include existing environmental conditions at the proposed site which could create risks or increase project costs, or environmental effects produced by the project which may require mitigation. Greenhouse gas emissions are a potential consequence of certain projects; when this is the case, the First File shall take into account legal constraints on carbon emissions and consider the most appropriate mitigation measures when implementation and/or operation of the project is expected to generate an increase in emissions. These issues shall be subject to more detailed consideration at subsequent stages of the project preparation process.
c. Social and Stakeholder Issues. The First File shall document any social and stakeholder issues that may be evident at this early stage. Examples of social and stakeholder issues might include: a need to resettle residents displaced by the project; loss of income for residents misplaced by the project; need to displace existing public facilities or acquire privately-held land; increased noise, congestion, or commuting time in affected neighbourhoods; or stakeholder opposition to the proposed project. These issues shall be subject to more detailed consideration at subsequent stages of the project preparation process.
d. Legal Issues. The First File shall document any significant legal issues that may be evident at this early stage. Examples of legal issues might include overall legal feasibility; the need to amend or rescind existing legislation to enable a project; the need to enact new legislation or take regulatory actions or where expropriation of private land is required, etc. The File shall also ensure that there is clear legal authority to undertake the project, land ownership of the project site is clear; the project will not be impacted by any ongoing litigation, etc. These issues shall be subject to more detailed consideration at subsequent stages of the project preparation process.
10. Project Plan: The First File shall include a plan for the development of the Second File, providing a time schedule, resources, and budget for completion of the Second File, developed with NCP participation and concurrence.
11. Summary and Recommendation: Based upon the information provided in the First File, and any additional explanatory or back-up data which the Work Team may wish to append, the First File shall make a recommendation on whether the project should proceed to the Second File phase, and identify unresolved issues or data requirements which will need to be addressed in the Second File (if applicable).