PwC-GRID

PricewaterhouseCoopers(PwC)

World's second-largest professional services firm.

It had total revenues of $26.6 billion in 2010More than 161,000 people in 154 countries

in firms across the PwC network .In India, PwC has nearly 4,000 professionals

PwC India Provides services in Consulting, Deals, Forensic Services, Government Reforms and Infrastructure Development (GRID),IFRS Reporting, Internal Audit Advisory Services, Sustainability, Tax and Regulatory Services

Government Reforms and Infrastructure Development (GRID)

One of the fastest growing sectors in PwC.Biggest advisory services targeted at the

government sector.GRID practice contributed a revenue of Rs63

crore in fiscal 2010. In the current year, it is projected to

generate a revenue of around Rs77 crore, which is about one-fourth of the total projected revenue of PwC’s advisory practice.

Government Reforms and Infrastructure Development (GRID)-Market

The government market is targeted at five levels:

- International multilateral/ bilateral organisations & funding agencies

- National/central government departments or ministries

- Regional/state governments - Local/municipal governments - Quasi-government bodies

Government Reforms and Infrastructure Development (GRID)-Practices

Energy & Utilities (Power, Oil and Gas)Infrastructure (Urban Infrastructure,

Transport Infrastructure and Industrial Clusters)

Social Sector (Health, Education, and Livelihoods)

State Level Governance Reforms and Public Finance

Public Sector Restructuring and Reforms

Government Reforms and Infrastructure Development (GRID)-Services

Policy DevelopmentPerformance ImprovementInstitutional Strengthening and Capacity BuildingAccounting and Financial Management SystemsHuman Resource DevelopmentChange Management and Organization

DevelopmentPublic-Private-PartnershipsRegulatory ReformFeasibility Studies

Summer Project-Objective

To find optimal balance of risk and revenue share among all project participants

To understand how Model Concession Agreement (MCA) will help in speedy allocation of project.

Project Structuring and Risk Allocation in Project Finance

Project Structuring

Defining Overall Project Boundary or Scope –Asset parameters –Service parameters –Payoff parametersDetailing the boundary for each stakeholder in the

projectTo achieve the project objectives by defining the

following for each stakeholder- –Accountability –Payoffs –Risks

Basic element of Infrastructure Financing

Risk Allocation in Project Finance

Financial Engineering and Structuring must be done at the beginning of project

Lenders, Terms of Loan (Tenors and Rates of Interest), mix of debt and equity, and user charges can all be modelled to determine the financial viability of the project.

Projects have two types of risk- –Exogenous risks –Endogenous risks

Principles of Risk Allocation

Endogenous risks should be borne by the stakeholder, which is in best position to control and mitigate those risks.

Exogenous risks should be borne by those who can most efficiently bear it, typically

–Insurance

Risk Mitigation ToolsCapital Markets –Insurance –BondsContracts –Legally enforceable agreementSelf enforcing agreements – Reputation

– Mutual dependence

Expected Learning

Business plansFinancial ModellingMarket assessmentPPP project structureProject finance

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