project appraisal: methods and procedures - efcanet.org files/pdf/15-06... · poor quality projects...
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15 June 07 EIB-R. van Zonneveld 1
Project Appraisal: Methods and Procedures
René van ZonneveldSenior Technical AdvisorProjects Directorate, EIB
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Internationalbodies and Recommendationsagreements
European Opinion
External Commission levels
National OpinionGovernment
Start InfoPromoter of repayment to be
of loan suppliedFirst Signature
informal Appraisal of loan Time axiscontact agreement
Prelim. Disburse- Moni- Completion Ex-post Services screening ment(s) toring exercise exercise
by EV Appraisal Loan
Management authorisat. proposal AnnualEIB Committee to Board report
levels Loan Board of approval Report
Directors Specific
Board of RecommendationsGovernors
Poor quality projects includes includes are various loanRemarks: to be ruled out site Technical conditions
at early stage visit Description fulfilled?by technical as annex A
expert
Project Appraisal Process
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Eligibility Legal framework Regional development Policies, public acceptance Rational use of energy,efficiency Licensing, safety Environmental protection Environmental compatibility etc Procurement
Promoter's standing Investment cost Management capability Local and foreign currencies Business strategy Phasing of expenditure Financial robustness Margins for var.contingencies Access to loan securities Cost justification
Market prospects Procurement Demand pattern Techn.characterist./procedures
Degree of competition PROJECT Geographical location Tariff level and structure Promoter's experience Product quality (stage of development at the Co-lender's requirements time of appraisal varies)
Technology and Design Time schedule Viability and performance Preparat.of feasibility studies Adaptation to technic.progress Environmental studies Local-specific requirements Licensing requirements Appropriate technical capacity Time needed for procurement Life expectancy Local conditions (climatic etc)
Economic+financial Environmental compatibility viability Impact analysis,mitigat.measures Cost effectiveness Direct, indir.,long-distance effects Financial intern. rate of return Prevention vs."end-of-pipe"Economic intern. rate of return Compliance with intern.standards Pay-back period etc Least-polluting technology
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KEY ELEMENTS FOR APPRAISAL
EligibilityRegional DevelopmentRational use of energy, efficiencyEnvironmental protectionR&Detc
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KEY ELEMENTS FOR APPRAISAL
Legal FrameworkPolicies, public acceptanceLicensing, safetyEnvironmental compatibilityProcurement
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KEY ELEMENTS FOR APPRAISAL
Promoter’s standingManagement capabilityBusiness strategyFinancial robustnessAccess to loan securities
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KEY ELEMENTS FOR APPRAISAL
Technology and DesignProject DefinitionViability and performanceAdaptation to technical progressLocal-specific requirementsAppropriate technical capacityLife expectancy
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KEY ELEMENTS FOR APPRAISAL
Time SchedulePreparation of feasibility studiesEnvironmental studiesLicensing requirementsTime needed for procurementLocal conditions (climatic, etc)
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KEY ELEMENTS FOR APPRAISAL
ProcurementTechn. characteristics-proceduresGeographical locationPromoter’s experienceCo-lender’s requirements
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KEY ELEMENTS FOR APPRAISAL
ProcurementTo follow: Guide to Procurement
(Febr.2004)Inside EU->EU DirectivesOutside EU-> Main Mechanisms of the EU Directives
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KEY ELEMENTS FOR APPRAISAL
Investment CostLocal and foreign currenciesPhasing of expenditureMargins for var. contingenciesCost justification
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KEY ELEMENTS FOR APPRAISAL
Environmental and Social CompatibilityImpact analysis, mitigation measuresDirect, indirect, long-distance effectsPrevention vs. « end-of-pipe »Compliance with international standardsLeast-polluting technology
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KEY ELEMENTS FOR APPRAISAL
Market prospectsDemand patternDegree of competitionTariff level and structureProduct quality
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KEY ELEMENTS FOR APPRAISAL
Economic+Financial ViabilityCost effectivenessFinancial internal rate of returnEconomic internal rate of returnPay-back period, etc
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Special Issues in Project Preparation, Appraisal, Implementation and Completion
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Special Issues in Project Appraisal, Making Technical Expertise Available
During project preparationFeasibility Studies-ToRFeasibility Studies-CommentsFinancial EngineeringEnvironmental and Social Aspects
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Special Issues in Project Appraisal, Making Technical Expertise Available
During AppraisalReview of Project DesignPhasing of Project ImplementationSupervision MechanismsOptimize Finance PlansOptimize Procurement StrategiesReview of profitability aspects and tariffs
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Special Issues in Project Appraisal, Making Technical Expertise Available
During ImplementationEstablishment of Project Implementation Units; involvement of ConsultantsReview of Procurement Procedures and Evaluation ProcessIdentification of Implementation Difficulties and Remedial Measures
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Special Issues in Project Appraisal, Making Technical Expertise Available
Project CompletionProject Review with PromoterEstablishment of Lessons LearntIdentification of Follow-up projects
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Special Issues in Project Appraisal, Making Technical Expertise Available
Under certain circumstances the EIB could participate in providing technicalassistance
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Special Issues in Project Appraisal, Making Technical Expertise Available
After identification of a feasible project, promoters should involve financiers at an early stage
Detailed project preparation, including review of Carbon Credit IssuesSpecial Requirements on Environment and ProcurementGuaranteesInsuranceRisk MitigationAcceptability of financial and economic profitability levels