El Salvador Investment Challenge (ESIC)
Second Call
1) Background
The Government of El Salvador (GOES) and the Millennium Challenge Corporation (MCC) signed a Compact for
US$365.2 million United States Dollars (US$277 million from United State Government trough the Millennium
Challenge Corporation, and US$88.2 from Government of El Salvador as Government Contribution) on September
30th 2014. This Compact, better known as FOMILENIO II, aims to improve the investment climate in El Salvador
in order to increase economic growth and reduce poverty.
To achieve these goals, the Compact funds three major projects:
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Investment Climate
Human Capital
Logistical Infrastructure
This Program entered into force on September 9, 2015, and will remain in force for five years. For its
implementation, an autonomous entity called "FOMILENIO II" was created by a special law passed by the National
Assembly of El Salvador.
The Compact states that to fulfill the main goal of reducing poverty in El Salvador in a sustainable manner, it is
necessary to increase the generation of employment through increased private investment in the country. During
consultations with the private sector, FOMILENIO II confirmed that many investment projects are not developed
due to lack of public goods and services necessary for their development, some projects lose viability because
investors themselves must finance the public goods, and sometimes public services are provided without clarity
on how this will enhance the economic development of specific areas.
Therefore, FOMILENIO II included a US$75 million fund called the El Salvador Investment Challenge (API, in
Spanish) that seeks to achieve two simultaneous objectives: (i) catalyze private investments in internationallytraded goods and services by funding public services that the private investment needs to be viable, and (ii) better
allocate limited public resources to provide public goods such as roads, lighting, sanitation, training for labor,
among others, which not only contributes to the development and competitiveness of the private sector investor
but also provide benefits to third parties.
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2) Call
The objective of this call is to formally invite private companies, cooperative associations or partnerships of legal
entities to submit expressions of interest regarding proposed private investment in El Salvador and the public
goods that these investments need API to fund to make the private investment viable. For this call, US$50 million
are set to provide public or semi-public goods. Some examples of public or semi-public goods that can be funded
by API are:
• Roads required for access to the private project that can also be used by natural or legal entities in their
surroundings.
• Wastewater treatment plant.
• Drilling wells and/or water treatment plant and supply networks.
• Works of protection and risk mitigation.
• Construction or improvement of public tourism infrastructure.
• Employee training in specialized subjects.
The provision of public components will be made by FOMILENIO II according to their procurement and purchasing
guidelines.
The expressions of interests will undergo a process to verify compliance with minimum requirements, and the
interested parties will receive at the end of this first stage an official communication with the result of that
process. Those projects that meet the requirements will be invited to submit a preliminary proposal of the
project, which must include a description of the public services that the private investment needs and their social
and economic benefits to third parties.
Companies led by women are encouraged to participate submitting their expression of interest.
The call is open from November 11th, 2015 until February 10th, 2016. During this period, interested investors
who comply with the requirements of section No. 3 of this document may submit their projects in hard and digital
copy containing the documentation requested. Expressions of interest must be submitted in the facilities of
FOMILENIO II, located in Bulevar Orden de Malta, Avenida El Boquerón No. 4-A Edificio Zafiro Nivel 1, Urbanización
Santa Elena, Antiguo Cuscatlán, La Libertad, El Salvador.
For foreign companies, sending the complete documentation by email in Spanish is allowed. The email address is:
[email protected]
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3) Eligibility Criteria
a.
Private investors
i) Legal entities or partnerships of legal entities may submit expressions of interest to API. The investor who will
finance the private investment must be part of the legal entity or partnership submitting the proposal and will
sign the memorandum of intent and investment agreement.
ii) A single private investor may be the relevant partner in a maximum of two projects per call.
iii) The private investor is responsible for establishing their eligibility and completing each stage of evaluation,
providing all required information and cooperating with interviews which may be requested by those responsible
for analyzing and evaluating the proposals.
b.
Expression of Interest
i) Each expression of interest, must contain a project involving a private investment1 and a public investment2.
Private investment must be in the internationally-traded goods and services sector, be sustainable and financed
by one or more private investors.
ii) The total amount of private investment may not be less than $ 100,000.00 US dollars.
iii) The amount of the requested public goods may not exceed $ 10 million.
iv) The amount of the private investment must be equal or exceed the amount of the total cost of the requested
public goods.
v) For purposes of calculating the leverage of private amounts covered by public investment, recurring expenses
of operating the business may not be included after having carried out the project.
vi) The amounts of private investment should reflect an increase in actual production capacity, and should not
include operating or maintenance costs.
vii) Public components will only be provided to those projects3 which can be completed during the implementation
of the Compact, in force between September 2015 and September 2020.
viii) The private proponent must have enough financial or capital resources to carry out all private investment.
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Activity funded with private funds and seeks profitability.
Goods or services that promote private investment in the internationally-traded goods and services sector
and generate substantial positive social and economic effects, external to the positive impacts perceived by
the investor, who meet the eligibility criteria stipulated in the Operations Manual of API.
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Projects: Public and private investment
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ix) Priority will be given to those private projects which submit a proposal in pre-feasibility phase.
x) The expressions of interest will be subject to the eligibility assessment process in order of presentation.
Investors will be assigned a registration code, as long as they submit the complete documentation.
c.
Exclusions
i. The following entities are considered not eligible for El Salvador Investment Challenge Fund:
1.
Political parties.
2.
Municipalities.
3.
Nonprofit Organizations (cooperative associations are not excluded).
4.
Organizations that promote, support or conduct anti-democratic policies or illegal activities.
5.
Any person or entity convicted of a drug crime or for being involved in drug trafficking, prosecuted or
convicted for crimes of sexual violence and/or trafficking.
6.
Any person or entity that is blacklisted from participation in contracts financed by the World Bank or
disqualified or suspended from participation in procurements funded by the US Federal Government.
Without limiting the foregoing, this would eliminate any proposal eligibility of an entity that was organized,
which has its principal place of business or a significant portion of its operations in any country that is
subject to sanction or restriction by the laws and policies of the United States (an “ineligible country").
7.
Companies sanctioned by the Ministry of Environmental Affairs in El Salvador on more than one occasion
in the past five years for serious environmental offenses, as defined in Articles 86 and 87 of the El Salvador
Environment Act, or failures of the Labour Code, and tax provisions.
ii.
The following are activities that cannot be developed as part of the project, either privately funded or by API
1.
Those that promote vices or illegal actions.
2.
Activities inconsistent with international human rights standards or with democratic goals of racial and
ethnic tolerance and harmony.
3.
Those that deepen gender gaps (social and/or economic), or affecting labor rights of women.
4.
Activities that violate national and international labor rights of workers.
5.
Projects whose sole result (both private investment and public) is the provision of traditional public services,
such as solid waste collection or provision of electricity (electrification).
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6.
Real estate development.
7.
Private and public investments with a realization term extend beyond the Compact implementation.
8.
Activities inconsistent with the performance standards of the IFC and that may cause significant
environmental or social, health or safety damage, as defined in the MCC environmental guidelines, or
contribute to the violation of international environmental agreements recognized and ratified by the
Government of El Salvador.
9.
Activities that may cause a substantial loss of jobs in the United States or a substantial displacement of
production in the United States as determined by the MCC, such as Call Centers.
10.
Activities related to mining.
11.
Financial investments and securities.
12.
Any other activity that violates the restrictions on the use of funds from the MCC or Government of El
Salvador stated in the Compact and the agreement for the implementation of the program.
4) Content of the Expressions of Interest
The Expressions of interest must contain at least the following documents and can be downloaded from the
website: www.fomilenioii.gob.sv:
a) Letter of Expression of Interest from the private investor.
b) Project Profile, which will provide general information about the proponent and information of the private
project.
c) Letter of Authorization to share record.
d) Sworn Declaration on compliance with the legal framework applicable.
d) Legal documents of the company (Incorporation deed and amendments, Credential of the Board of the
Company, Legal representation/Power attorney, current Business Registration Number, Tax Identification
Number and NRC of the Society, ID of the legal representative or agent).
e) Documentation that demonstrates the availability of resources to carry out the private investment proposal. It
can be a letter of credit approval, and/or an engagement letter of shareholder contributions indicating the source
of the funds.
5) Treatment of the Expressions of Interest
The expressions of interest received will be treated with strict confidentiality, and will be evaluated in order to
confirm that they are consistent with the eligibility criteria specified in paragraph 3 of this call. Once this process
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is finished, a formal communication will be sent to private investors to publicize the results of this evaluation,
either in physical form or via email to the address indicated in the project outline.
Private investors whose expressions of interest meet the criteria defined in the requirements set out in the call,
will be invited to submit a preliminary proposal to continue the process of evaluation for API.
If there is dissatisfaction with the result, the court of appeal will be the Investment Committee, by a formal letter
signed by the legal representative of the company.
Based on the document filed in the Expression of Interest, API may suspend or revoke the entire process carried
out if a violation or breach of the legal framework and regulations relevant to the project is confirmed.
Also, FOMILENIO II should undertake all necessary formalities so that any cost made by API is fully refunded in
case the process is revoked and ended.
6) Reserve of responsibility
Submitting projects or any cost for the preparation thereof does not guarantee or require the provision of public
components or other contribution from FOMILENIO II, GOES or MCC.
Whenever "Compact" is cited in this document, it refers to the second Compact signed between the GOES and
the United States Government (USG), through the MCC. Nothing contained herein shall be construed or cited
directly or indirectly as the creation or origin (alone or together with another instrument or any current or
subsequent act) of an obligation or commitment of the MCC or the Government of the United States and / or El
Salvador to provide support or assistance in regards to one or more proposed projects or to be considered
susceptible of recognition of the direct or indirect costs of preparation thereof, any proposal or any other project
agreements or program in El Salvador.
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