Background and initiative
This 1,320 MW power plant was offered for bids to develop, build, own, and operate an existing power plant, doubling its output by expanding with new power units and upgrading the existing power production and fuel supply facilities. EIC principals led the project as a sponsor and partnered with GPFAC principals as financial advisor to submit the winning bid and then close this project (first IPP in Africa). It is an excellent example of EIC-GPFAC cooperation to achieve a successful outcome.
Project Development and financing
EIC principals assembled a highly experienced team composed of project developers, project finance experts, lawyers, and engineers. The team was supplemented with external counsel, independent engineers, and other subject-matter experts. GPFAC principals proposed, designed, and implemented a global financing solution and developed the complex financial model for the project.
Challenges
Apart from navigating the complex commercial and legal issues associated with the commercial contracts, the project faced formidable challenges. One of the biggest challenges was the credit of the off-taker and the unprecedented size of the project for the country. The final solution required a complex arrangement to escrow the nation-wide receivables of the utility to ensure the structure for acceptability by the lenders. The other challenge was coordinating the diverse global sources of financing under a common underwriting platform. These financing sources included export credit agencies (Switzerland, US, and Italy), World Bank, Overseas Private Investment Corporation, and leading commercial banks worldwide.
Role of EIC / GPFAC principals
- Project sponsor and developer
- Investor (50% equity, around 190 MUSD, from former affiliate)
- Mobilization of remaining equity (190 MUSD)
- Mobilization of senior debt (900 MUSD, of which 120 MUSD through affiliate)
Key Success Factors
- Competence across disciplines
- Commercial judgment and understanding of commercial contracts
- Deep understanding of commercial banks and global financial institutions
- Ability to ring-fence and manage conflicts of interest
- Advanced financial modeling expertise
