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Power plant template

Use for power co discussions
by

Stanley Boots

on 24 March 2014

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Transcript of Power plant template

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Feasibility
The ASA typically does not have resources to conduct the feasibility study
Therefore, the investor typically conducts the feasibility study in accordance with the rules that were developed under the law on construction
The investor bears the risk for the results of the study
Commence contract negotiation
The ASA typically does not have enough budget to hire professional advisers
Therefore, it typically relies on the investor to draft the documentation based on past deals, if any
The ASA must seek opinions from other ministries and higher level approval for all new issues
The negotiation phase is taking 5+ years
After the contract is initialed, the investor applies for the investor certificate
The IC approving body can review the entire dossier and raise questions
This process should not exceed 45 days but typically goes much longer
A contract could go back into negotiation
Financial close
Typically, lenders cannot pre-approve terms of the loan until the contract is fully negotiated and the investment certificate has been issued
A long negotiation process can dramatically change the cost of the project and terms of the financing structure
If the project contract contains unmitigated risks the lenders simply won't lend
Project screening
ASA often finds it difficult to determine whether a project will be attractive to investors, cost effective for the State and financially viable
Typically there is significant discussion between the ASA and the potential investors
Potential investors spend considerable time and resources trying to position for the deal
MOU
The ASA and investor enter an MOU to give the investor an (almost) exclusive right to prepare and negotiate the project
The MOU allow the investor to commence feasibility studies
Typical project preparation and development under current BOT regime
Investment certificate stage
PPP Project Screening
The ASA has three options:
Identify PPP project list
Identify projects that are open to investor proposals
Allow investors to propose new projects not listed by the ASA
The ASA controls the project screening
The ASA may obtain support from the PDF or other support mechanisms
PPP
Under the PPP competitive process there is no MOU stage
The ASA goes directly into the Project Proposal (pre-feasibility) stage
PPP
The ASA is responsible for the feasibility study, but has the options to:
conduct the study from its own budget
make use of the Project Development Facility
permit the unsolicited project proponent to conduct the study
PPP
The contract is based on the "optimal" structure determined during the feasibility study phase
The project contract is developed and pre-approved PRIOR to investors being invited to participate
The ASA has the benefit of using PDF funds to hire advisers to prepare and market-test the contract
PPP
Much the same
The intent of the PPP Decree is to reduce the need of the ASA and IC approving bodies to revisit the details of the project
The project details should already be pre-approved
PPP
Full transcript