BISNIS Bulletin, October 2001

 

Finance Corner: U.S. Trade Development Agency

 

This is first in occasional series on financing resources for NIS projects.

 

U.S. companies interested in pursuing trade and investment opportunities in the NIS should be aware of the activities of the U.S. Trade Development Agency (TDA). TDA, an independent U.S. Government agency, provides funding for U.S. companies to conduct feasibility studies on major projects in the NIS, as well as in other developing and middle-income countries. TDA-funded feasibility studies help U.S. companies evaluate project viability, provide employment for consultants, and offer opportunities for U.S. exporters. TDA studies focus on projects in several sectors—aviation, environment, mining and minerals, oil and gas, ports, electric power, railways and mass transit, and telecommunications.

 

TDA also sponsors business briefings and reverse trade missions, called “orientation visits,” which familiarize foreign decision makers with U.S. technologies, products, and services, build business relationships, and promote U.S. exports.

 

TDA in the NIS

Since late 1991, TDA has approved funding of some $90 million for feasibility studies on more than 225 major projects in the NIS. Exports of U.S. goods and services related to those projects already total over $800 million.

 

Some recent initiatives relating to the NIS for which TDA has provided partial funding include:

† A feasibility study on Phase 1 of the Novgorod toll road project in Novgorod, Russia.

† A regional study on upgrading the air traffic control systems in the three Caucasus countries.

† A June 2001 NIS/Turkey regional information technology (IT) conference in Brussels.

† A feasibility study evaluating potential pipeline routes to carry natural gas to Kazakhstan’s northern regions.

† A feasibility study on the upgrade of the State Oil Company of Azerbaijan (SOCAR) refineries, Dubendi Port, and other oil terminals.

 

Feasibility Studies

TDA provides grant funding for studies to determine the technical, economic, and financial feasibility of major projects. Historically, most TDA projects have been public sector undertakings, planned and implemented by government ministries or agencies. However, TDA currently provides funding for both public and private sector projects, including joint ventures in which U.S. companies plan to take equity.

 

To initiate TDA consideration of a project, a request for assistance must be made directly to TDA by the appropriate NIS sponsoring entity (government or private sector). In cases where a specific U.S. company has been identified by the NIS sponsoring entity as its partner on the project, that U.S. company must submit a detailed proposal to TDA following a format which is available from TDA’s web site.

 

If a project appears promising, TDA hires a technical consultant to review the proposal, through either a Desk Study or a Definitional Mission (DM). A desk study is a review of the project by a consultant in the United States, and is utilized when there is already sufficient information available so that a visit to the host country is not needed. This is usually the case when TDA has received a detailed proposal from a U.S. company. A DM involves a short visit by the consultant to the host country to gather additional information on the project and work with the sponsoring entity to develop terms of reference and a budget for the feasibility study.

 

The Desk Study or DM ascertains whether a project meets the following TDA funding criteria: the project is a developmental priority for the host country; financing for project implementation has been identified and is available if the study confirms project feasibility; the potential for U.S. exports during project implementation is significant (potential U.S. exports of at least $10-15 million); and TDA has a facilitative role to play.

 

When TDA provides funding for a feasibility study, it signs a Grant Agreement with the NIS sponsoring entity (the Grantee), and it is the Grantee which selects the U.S. firm to conduct the study. In many cases, the Grantee already has identified a firm (typically the firm that has submitted the proposal to TDA). In other cases, a competitive selection process is undertaken by the Grantee.

 

In almost all cases, TDA only partially covers the cost of the feasibility study, with the remainder of the cost being borne by the U.S. firm conducting the study.

 

Learning about TDA

The TDA Pipeline, which is available by subscription or on  TDA’s web site, provides U.S. suppliers and manufacturers with timely information on agency-supported projects.

 

Requests for Proposals to conduct TDA-funded feasibility studies are listed in the Commerce Business Daily (CBD).  Call (202) 512-1800 for CBD subscription information.

      TDA maintains an online consultant database for small businesses. U.S. companies can register to be included in the database from TDA’s web site. The site also has information on how to become a contractor for TDA projects.

 

To find out more, contact TDA at tel: (703) 875-4357,  fax: (703) 875-4009, email: info@tda.gov, or visit www.tda.gov.