1 / 7

Structuring Today Strengthening Tomorrow

Structuring Today Strengthening Tomorrow. High Level Executive Dialogue 2013 . The Six Golden Rules*. 1. Follow the money Know who is buying and if/how/when they will pay 2. Care for your project Never let it out of your hands, especially not to consultants

rollin
Download Presentation

Structuring Today Strengthening Tomorrow

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Structuring Today Strengthening Tomorrow High Level Executive Dialogue 2013

  2. The Six Golden Rules* • 1. Follow the money • Know who is buying and if/how/when they will pay • 2. Care for your project • Never let it out of your hands, especially not to consultants • 3. Ask all the hard questions • Even if you don’t like the answers; if you don’t ask often and early they will come back to bite you later • 4. Go fast • Delays cost money: higher development costs and lower returns • 5. Do everything in parallel • Things left till later mean other things may have to be redone • 6. Governments do not behave like businesses • All parastatals are irrational and slow, and civil servants are only interested in keeping their jobs * With apologies to Bob Hemphill

  3. A Case Study - Rabai • 90MW diesel-engine plant burning HFO, Mombasa • Aldwych and BWSC of Denmark won international competitive tender in 2005, won rebid in 2006 • PPA signed February 2007 • Total project cost: €113 million; all European DFI debt • First use of “GOK letter”, which falls short of a sovereign guarantee of payment • Financial close Oct 2008, first power to grid Sep 2009, completed on time and on budget May 2010 • Most efficient thermal plant on Kenyan system Confidential – not for circulation

  4. Rabai and the Six Rules • Follow the money • Power tariffs in Kenya are cost-reflective • Rabai was the fourth IPP to be developed in Kenya and the customer (Kenya Power) had a good payment record • The comfort letter attracted equity (including bridge financing from PAIDF) and competitively priced debt • Care for your project • The partnership with BWSC (as both shareholder and EPC contractor) worked well and still works well today • Aldwych kept control of the financial model • Ask all the hard questions • Aldwych didn’t shirk from tackling head-on the legal challenges to the project and the fall-out from the 2007 violence • Worked through 2008 financial crisis with lender group Confidential – not for circulation

  5. Rabai and the Six Rules • Go Fast • We tried… but see previous Rule • Nevertheless, once the obstacles were removed we did go fast • BWSC had faith in project; engines in production pre-FC • Do everything in parallel • We nearly dropped the ball on this one: insurance, as ever, became critical path • We also had a late scramble to secure an acceptable fuel supply contract • Governments do not behave like businesses • The Government understood project finance • A robust legal framework for IPPs meant that government employees were comfortable in taking decisions Confidential – not for circulation

  6. Rules for Elsewhere • Follow the money • Often there is none: bankrupt state utilities need support, but they also need your product (in this case, power) • Care for your project • How to rescue projects developed by inexperienced sponsors, who believe it’s “their” project – and it is • Ask all the hard questions • This is doubly hard with original sponsors: the last thing they want is the “wrong” answer • Go fast • … but don’t cut corners. It never pays in the end • Do everything in parallel • This sometimes means going back and redoing to get it right • Governments are not businesses • Project finance is a mountain to climb even for those of us who run businesses: have sympathy and patience! Confidential – not for circulation

  7. Structuring Today Strengthening Tomorrow High Level Executive Dialogue 2013

More Related