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Power Project From Lenders Perspective
2
Fuel Supply
Contract
Power Generation (MODEC Scope)
Transmission (Enhancement and Addition)
Distribution(End User Payment)
From Fuel to Paid Joules
Project Structuring
Purpose: Structure project sufficient to
attract project finance.•Finalize Shareholder Agreement & structure project vehicle (SPV)
•Negotiate Power Purchase Agreement;
•Negotiate Implementation Agreement (or other host country support agreement);
•Negotiate Interconnection Agreement;
•Negotiate for equipment & construction services, including Engineer, Procure & Construct (EPC) Agreement.
•Negotiate Operations & Maintenance Agreement;
•Develop preliminary Information Memorandum forfinancing;
•Prepare environmental/social impact n negotiations.assessment & file fordisclosure;
•Identify lenders and involve lenders
Pre-Feasibility
Purpose:Determine
project viability•Legal & regulatory assessment & identifystakeholders;
•Site assessment &
selection;
•Interconnection
assessment;•Resource analysis & data gathering (wind /solar projects);
•Due diligence on project inputs and availability;
•Estimate project capital costs (estimate accuracy +/-30%);
•Estimate project life
cycle costs;
•Est.output (KWh)and
unit price;
•Determine initial project schedule, including permitting and authorizationacquisition;
•Preliminary financial
analysis;•Initial financial plan, including sources & uses offunds;
Outcome: Develop base case option to support commitment of funding for feasibilitystudy.
Feasibility
Purpose: Refine base case to support commitment of resources to develop project & invest capital.
•Acquire right to
purchase site;•Develop plan for acquisition of rights of way for transmission;
•Finalize resource definition (data gathering andanalysis);
•Indicative project design, choice oftechnology, vendoranalysis
•Assess tax impact &
incentives;•Environmental base line data collection;
•Complete any technical studies required to supportproject;
•Update capital costs (estimate accuracy is +/- 10-20%)
•Assessment of project risks and opportunities; risk mitigation plan
•Update financial model to reflect refined project costs and inputs;
•Prepare & deliver proposal to ceding authority
Project Development
Purpose: Undertake long lead time activities and obtainauthorizations.•Obtain right to develop project from ceding authority;
•Apply for Feed in
Tariff;
• Acquire site;• Apply for necessary permits, authorizations &licenses;
•Initiate acquisition of rights of way fortransmission line;
• Develop and implement community outreach plan;
• Finalize project capital
costs;• Identify equipment vendors & EPC contractors;
• Detailed financialmodel, incl. cash flow and profitability;
•Develop financing plan, details of assets to be financed & capital structure and sources & uses of funds.
• Select and hireadvisors (legal, financial, technical)
Financing
Purpose: Structure project sufficient to
reach Financial Close.
•Confirm lenders
•Agree financing plan w/
lenders;
•Develop lender
financial model;
•Lender due diligence
on project;•Finalize & negotiate term sheets with lenders;
•Finalize credit enhancement mechanisms;
•Finalize level of
sponsor support•Agree all debt and equity subscription agreements with lenders and providers of equity;
•Agree lender security
package;
•Loan syndication;•Obtain investment committee approvals of equity and lenders;
•Meet Conditions Precedent to finance documenteffectiveness.
Outcome: Achieve Financial Close & provide Notice toProceed.
Year 1 Year 2Day 1 6 months 18 months
Stage 1 Projects
Classifying PA Projects by Stage of Development
Stage 2 Projects Stage 3 Projects
1
4
Pre-Feasibility
Stage 1 Projects
Purpose: Determine project viability
• Legal & regulatory assessment & identify stakeholders;
• Site assessment & selection
• Interconnection assessment;
• Resource analysis & data gathering (wind /solar projects);
• Due diligence on project inputs and availability;
• Estimate project capital costs (estimate accuracy +/- 30%);
• Estimate project life cycle costs;
• Est.output (KWh) and unit price;
• Determine initial project schedule, including permitting and
authorization acquisition;
• Preliminary financial analysis;
• Initial financial plan, including sources & uses of funds;
Outcome: Develop base case option to support commitment of
funding for feasibility study.
5
Purpose: Refine base case to support commitment of
resources to develop project & invest capital.
• Acquire right to purchase site;
• Develop plan for acquisition of rights of way for
transmission;
• Finalize resource definition (data gathering and
analysis);
• Indicative project design, choice of
technology, vendor analysis
• Assess tax impact & incentives;
• Environmental base line data collection;
• Complete any technical studies required to support
project;
• Update capital costs (estimate accuracy is +/- 10-
20%)
• Assessment of project risks and opportunities; risk
mitigation plan
• Update financial model to reflect refined project
costs and inputs;
• Prepare & deliver proposal to ceding authority
Feasibility
Stage 2 Projects
Project Development
Purpose: Undertake long lead time activities and
obtain authorizations.
• Obtain right to develop project from ceding
authority;
• Apply for Feed in Tariff;
• Acquire site;
• Apply for necessary permits, authorizations &
licenses;
• Initiate acquisition of rights of way for
transmission line;
• Develop and implement community outreach
plan;
• Finalize project capital costs;
• Identify equipment vendors & EPC contractors;
• Detailed financial model, incl. cash flow and
profitability;
• Develop financing plan, details of assets to be
financed & capital structure and sources & uses
of funds.
• Select and hire advisors (legal, financial, technical)
6
Project Structuring Financing
Stage 3 Projects
Purpose: Structure project sufficient to
attract project finance.
• Finalize Shareholder Agreement &
structure project vehicle (SPV)
• Negotiate Power Purchase Agreement;
• Negotiate Implementation Agreement (or
other host country support agreement);
• Negotiate Interconnection Agreement;
• Negotiate for equipment & construction
services, including Engineer, Procure &
Construct (EPC) Agreement.
• Negotiate Operations & Maintenance
Agreement;
• Develop preliminary Information
Memorandum for financing;
• Prepare environmental/social impact and
negotiations. assessment & file for
disclosure;
• Identify lenders and involve lenders
Purpose: Structure project sufficient to reach
Financial Close.
• Confirm lenders
• Agree financing plan w/ lenders;
• Develop lender financial model;
• Lender due diligence on project;
• Finalize & negotiate term sheets with lenders;
• Finalize credit enhancement mechanisms;
• Finalize level of sponsor support
• Agree all debt and equity subscription
agreements with lenders and providers of
equity;
• Agree lender security package;
• Loan syndication;
• Obtain investment committee approvals of
equity and lenders;
• Meet Conditions Precedent to finance
document effectiveness.
Outcome: Achieve Financial Close & provide Notice
to Proceed.
Critical Path to Achieve Contract Award: Competency
7
Country / Project
Selection
Regulatory / Legal
Requirements &
Receive MOU , LOI
Carry Out Technical
Studies
Site Assessment
Provide Concept
Study / FEED (Front
End Eng. Design)
Pre - Feasibility
Sourcing Financing
/ Project Finance
Preconditions
Detailed Financial
Model / Financial
Plan
Write Draft Proposal
& Feed Back from
Client/ Partners
Fulfill All Client /
Project
Requirements
Draft Required
Contracts
Negotiations with
Client & Financiers
CONTRACT
AWARD
Obstacles to Success
INTRODUCTIONS• Government / Utilities
• US and Local Partners
• USG Agencies / Banks & DFIs
FEASIBILITY STUDIES• Accurate Data – Wind measurements, How to find experts
• Fuel supply study, Access to Master Plan, Current situation/ model
OUT OF SCOPE • Legal
• Technical Scope- Transmission, etc.
• Political
Collaborating Committees
Corporate Governance
FINANCE• Country’s Credit Rating, Which DFIs play that market, Ecosystem
• Regions of Non-Payment, Where to get funds, grants, Finance Planning