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Page 1: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution
Page 3: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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

Page 4: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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.

Page 5: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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)

Page 6: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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.

Page 7: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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

Page 8: Power Project From Lenders Perspective...Power Project From Lenders Perspective 2 Fuel Supply Contract Power Generation (MODEC Scope) Transmission (Enhancement and Addition) Distribution

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