peter gray partner clyde & co december 2010 banque africaine d’import – export critical...
TRANSCRIPT
Peter GrayPartnerClyde & CoDecember 2010
Banque Africaine D’Import – Export
Critical Issues in Power Project Financing in Africa
African Export – Import Bank
IntroductionIntroduction 1. Commercial Break
2. So what’s happening?
3. Power project structure – a reminder
4. Essentials for deal closure
5. Trust – the forgotten factor
6. Governments need to …
7. Private sector needs to …
8. Lenders need to …
9. Everyone needs …
10. Questions
Commercial BreakCommercial Break
International firm specialising in trade matters
800 lawyers in 24 offices
Shanghai to San Francisco – all 5 continents
Nominated law firm of 2010 twice
Biggest user of the UK’s commercial court
500 arbitrations running
“Clyde & Co cuts a hugely impressive figure … the firm has bloomed into a genuinely distinctive practice that boasts considerable global reach”Legal Week 19 November 2010
Power Project Structure – a reminder
Power Project Structure – a reminder
Government
Fuel SupplierElectricity Utility
Project Company
EPC Contractor Shareholders
Commercial Banks
Multilateral Lending Agency
Export Credit Agency
(Intercreditor Deed)
(Debt)
(Security)
(Concession, Implementation Agreement)
(EPC)(Equity)
(Sub Debt)
(Direct Agreements)
(FSA)
(Direct Agreement)
(Shareholder Support)
(PPA)
Our international network of offices
Our international network of offices
Our international network is supplemented by relationships with correspondent law firms in over 120 countries
A significant part of our practice involves work of an international nature
SAN FRANCISCO
CARACAS
RIO DE JANEIRO
LONDON& GUILDFORD
NANTES BELGRADE
MOSCOW
ST PETERSBURG
PIRAEUS
DOHA
ABU DHABIDUBAI
SINGAPORE
HONG KONGSHANGHAI
MUMBAIBANGALORE
RIYADH
DAR ES SALAAM
NEW YORK & NEW JERSEY
Associated Offices
Clyde & Co Offices
PARIS
NEW DELHI
So what’s happening?So what’s happening?
Power projects in Africa:
Completed in 2010 1.43 gigawatts
Underway 0.36 gigawatts
Planned 14.58 gigawatts
All these figures are probably understated, but at current closure rates we are looking at 10 years to close the existing pipeline of projects
Essentials for deal closure Essentials for deal closure
Government identifies need for power and has political support
Private sector prepared to deliver Project is bankable Banks are able to lend Risk allocation works Environmental Other implicit issues:
domestic political and economic stability efficient and fair legal system satisfactory infrastructure corruption under control no cheating efficient bureaucracy Good quality advisers (price/quality arbitrage)
Trust/good working relationship
Trust – the forgotten factorTrust – the forgotten factor Value of detailed signed contract
Day-to-day working issues
Different experience levels
Balanced share of benefits
Long haul commitment
No claims culture
Transparency
Responsibility
Governments need to …Governments need to …
Be joined up – only negotiate each issue once
4Ps
Be clear about their concerns
Understand investor concerns
Have in place an effective legal and regulatory system
Ensure broad based political support
Have a realistic timetable
Appoint a champion
Private sector needs to …Private sector needs to …
Sort out consortium issues up front
Be transparent with objectives and concerns
Understand Government concerns
Validate the technical solution
Don’t sidestep difficult issues
Do its homework – due diligence
Lenders need to …Lenders need to …
Be clear about risk concerns
Don’t over promise lending capacity
Don’t change the wish list
Be honest about deal breakers
Everyone needs …
Good advisers
THANK YOU FOR YOUR TIME
QUESTIONS?
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© Clyde & Co LLP 2010