1 ZIXCORP The BYOD Tug-of-War: Security versus Privacy Neil Farquharson January, 2015.
Information on Key Projects Edward Farquharson 12 December 2006.
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Transcript of Information on Key Projects Edward Farquharson 12 December 2006.
Deliverability Framework
• Policy/Rationale– Economic/policy justification
• Viability– Technically, contractually, environmentally, socially viable– Supporting infrastructure available/interfaces work/dependencies
• Bankability– Contractor interest– Market Capacity– Financing terms and conditions can be met– Credit issues
Deliverability Framework
• Affordability– Power affordable for end user taking into account capex, opex, cost of finance,
term of contract/tenor
• Deliverability– Owner has capacity to manage process– Legislation/vires in place/acceptable– Statutory approvals/permits in place– Timescales– Stakeholders
Rehabilitation/Expansion Projects Key Issues
• Policy objectives/Rationale– Solution to existing underperforming/poorly maintained facilities, but more
complex if financing is required.
• Viability – Operation
• Can be complex due to historical working practises.• Transfer of existing staff.
– Capex costs• Environmental investment costs• Unforeseen capex costs
– Latent defects
– Legacy liabilities
– Warranties
Rehabilitation/Expansion Projects Key Issues cont’d
• Bankability– Ownership
• Lenders will not permit splitting electricity sales from old capacity and new= > ownership of the whole plant must transfer to the newly financed entity= > may provide for a capital receipt which can be used to enhance credit quality
– Liability• Transfer of existing assets requires satisfactory indemnities in respect of historical
liabilities, maintenance shortfalls etc.
• Affordability– Affordability to end consumer allowing for capex and O&M costs.
• Deliverability– Owner capacity to manage process.– PPA
Kariba North Bank Extension
Location: ZambiaProject Type: 360MW Hydropower expansionEstimated Capital Cost: $300m
• Feasibility Study Completed in 2005 by Sinohydro.
• PPA with ZESCO yet to be developed.
• ZESCO: structure of credit support for ZESCO obligations yet to be developed.
• Ownership of extended facility to be determined.
• Good potential structuring possibilities around ZESCO onward power sales, natural resource companies and stable environment.
Hwange
Location: ZimbabweProject Type: Thermal project rehabilitation and
expansion from 320MW to 780MWEstimated Capital Cost: $500m
• PPA to be structured with ZESA. Terms to be agreed.
• ZESA credit support for long term obligations to be agreed.
• Fuel supply to come from Hwange Colliery operated by ZESA Joint Venture. Terms not yet agreed.
• Feasibility study required for colliery expansion in order to supply project est. capital cost $30m. Financing availability not yet determined.
• Transmission lines to Namibia for onward sales require refurbishment, estimated capital cost $20m.
Hydropower Projects - Key Issues
• Policy objectives/rationale• Significant underutilised natural resources by way of river flows.• Attractive fundamentals in era of high/volatile oil and gas prices.• Low technical risk (once built).• ‘Clean energy’/Renewable.
• Viability– Location
• Logistics: construction projects requiring mass mobilisation of equipment and manpower in remote locations.
• Significant accompanying infrastructure requirements – roads, transmission etc.• Interface risk – availability, timing, costing.
– Specific Risks• Geotechnical history of construction time and cost overruns – EPC rare.• Climate: rain volume and regularity, water flow, historic data availability.
Hydropower Projects - Key Issues cont’d
• Viability cont’d– Social/environmental
• NGOs• Permitting• EIA scope certainty.• Resettlement
– Regulation• clarity, structure, completeness, long term stability.• water use rules.
– Timing • Significant development, mobilisation and construction lead times.
Hydropower Projects – Key Issues cont’d
• Bankability– Long development and construction lead time so significant interest roll up
challenge.
– Economics require long tenor debt unavailable in commercial markets.
– Availability of multilateral funding enhancement mechanisms.
– Sensitivity of lenders and investors to environmental issues.
– Foreign exchange and interest rate exposure.
– Bankability of owner group (if applicable).
– Bankability of contractor group.
– PPA terms.
– Long term bankability of PPA and off-taker.
– PRI cover availability.
– Arbitration/dispute resolution mechanisms.
Hydropower Projects – Key Issues cont’d
• Affordability– Affordability to end consumer dependent on potentially uncertain capex
and yet to be defined finance terms and costs, especially debt maturity.
• Deliverability– Government project team – authority, budget, experience.
– Availability and suitability of advisers.
– Bidding and evaluation rules and capacity in place, transparency.
– Scope boundaries.
Inga 1 and 2
Location: Democratic Republic of CongoProject Type: Hydropower rehabilitation 1775MWEstimated Capital Cost: $600m
• PPA with SNEL to be developed. Terms yet to be agreed.
• Existing scope of MOU between SNEL and Magenergy unclear.
• Tender process for remaining units to be clarified.
• Ownership post rehabilitation currently believed to remain with SNEL.
• SNEL onward sales to neighbouring utilities to be developed.
• Transmission line capital costs estimate unclear.
OMVG
Location: GuineaProject Type: Hydropower new builds 368MWEstimated Capital Cost: Kaleta $190m; Sambangolou $300m
• PPA with Senegal, Gambia and Guinea-Bissau DistCos to be developed. Terms yet to be agreed.
• Tender process due to be launched in Jan 2007.
• Priority project of West African Energy Exchange (EEEOA) and CEDEA.
• Related transmission line of 1,677 km through four countries (West African Loop) at estimated cost of $385m to be developed.
Kafue Gorge (Lower)
Location: ZambiaProject Type: 750MW Hydropower new buildEstimated Capital Cost: $600m
• PPA with ZESCO to be developed. Terms to be agreed. Onward sales to Nampower being finalised.
• ZESCO credit support in respect of long term obligations yet to be agreed.
• Appetite of natural resource companies for power to be explored.
• Feasibility study required for conjunctive operation of plants on Zambezi to be completed.
• Tender status unclear. Status of a Chinese or Indian MOU unclear.
Key Issues: Thermal Power Projects
• Policy objectives/Rationale– Proven technologies, good investor appetite, flexibility of placement near demand,
speed of implementation.
• Viability– Standardized/modular design and build approaches – reduced capex and time.
– Power Purchase Agreement.• Well understood, but term of contract and credit worthiness of offtaker critical.
– Security of fuel supply.
– Current oil and gas prices challenge competitiveness of new build in developing world.
– De-risking any currency mismatch between fuel payments, power sales and debt repayments critical.
– Proximity to mines, if coal fired (availability/quality).
Key Issues: Thermal Power Projects cont’d
• Bankability– Well established financing structures.– Relatively short construction times.– EPC contracts.– Deep and liquid market for debt placement (country risk dependent).– Proven investor appetite and established benchmarks for risk.
• Affordability– Exposure to volatility in delivered fuel supply costs.– Shorter construction periods and lower capex component reduce impact of finance
terms.
• Deliverability– Planning, emissions, noise levels, environmental permits.– Emissions.
Kudu
Location: NamibiaProject Type: 800MW Gas fired new buildEstimated Capital Cost: $530m
• Plant size developed due to economics of fuel supply, Namibia demand some 80MW.
• PPA with Nampower to be developed dependent on ESKOM sales.
• Fuel supply from Kudu gas field, timing and price to be agreed. Field operator still to finalise commercial terms.
• Transmission line status to ESKOM to be clarified.
• Prioritisation by Nampower to be confirmed.
Key Issues: Transmission Projects
• Policy objectives/Rationale– Need to move power across regions due to hydropower focus, or need to oversize
capacity to underpin fuel field development e.g. Kudu.– Requirement for strong government support to ensure viability.
• Viability– Physical security of assets over large distances is problematic: affordable
insurance package will be key.
• Bankability– Is there a role for private sector capital? Is it an interesting asset class?– What sort of return is appropriate for a low risk business in a higher risk
environment?– Cross border sovereign issues?– PPAs require structuring similar to tolling agreements.– Financial viability of customer.
Transmission Projects – Key Issues cont’d
• Affordability– Interdependency with supply and distribution.– Line capacity.
• Deliverability– Capacity of transnational groups.– Way leaves/land acquisition – existing routes?– Differing legislation, permits.– Tariff policy.
Malawi-Mozambique Transmission Line
Location: Malawi-MozambiqueProject Type: Regional transmissionEstimated Capital Cost: $84m
• Complex PPA structure to be finalised, sale from HCB to Malawi ESCOM wheeled through EDM.
• Feasibility study status to be confirmed.
• Prioritisation of host governments to be confirmed.
• World Bank commitment in principle for $62m, terms to be clarified.
Zambia-Tanzania-Kenya Transmission
Location Zambia-Tanzania-KenyaProject Type: Regional TransmissionEstimated Capital Cost: $342m
• Nairobi (Kenya) - Arusha (Tanzania): to be public sector funded.
• Arusha (Tanzania)-Dar es Salaam: public sector.
• Dar es Salaam - Zambia link: funding not yet identified.
• Feasibility study underway by Norplan A.S., due to complete in 2007.
• PPA structure for sales to TANESCO/KPLC to be finalised.