Project finance training proposal for the African Development Bank
Description of project
The African Development Bank wished to train 20 staff members in core project finance skills and techniques. InfraPPP, together with its training partner, Four Quadrant Project Finance, had provided online project finance training (e-learning) to project finance banks, law firms, DFIs, advisers, and sponsors. They were delighted to submit that proposal for the African Development Bank's consideration.
Services provided
A. Project Finance Foundations Course (e-learning)
The Project Finance Foundations course comprehensively covered project finance skills and techniques. Commencing from first principles, the course systematically built skills and knowledge required to structure, analyse and/or assess complex project finance transactions over 7 core modules. The 7 modules were:
Module
# Module Name Topics Covered Comments
1 Introduction to Project Finance What is Project Finance, Project Risks, Creating “bankable” cash flow, Life Stages of a Project, Public Sector Procurement, Project Finance Participants, Advantages of Project Finance, Disadvantages of Project Finance.
Included:
• quizzes at the end of most sections;
• an overall assessment at the end of the module;
• a workbook that summarises the key points;
• additional resources;
• the module also included links to some relevant video content.
2 Project Risks A Framework for Risk Management, Main project risks including Construction Risk, Force Majeure Risk, Political Risks, Infrastructure Risk, Interest Rate Risk, Currency Risk, Inflation Risk, Revenue/ Demand Risk, Operating Risk, Input Supply Risk, Legal Risk, Environmental Risk, Refinancing Risk, Technology Risk, Contract Mismatch Risk and Participant Risk. Factors that influence risk allocation between Project participants.
As above
3 Financing Projects Designing the Finance Package, Sources of Finance, Due Diligence, Understanding Project Finance Models, Debt and Equity Metrics (e.g., LLCR, PLCR, DSCR, Average Life, IRR), Debt Sizing, Structuring Bank Debt, Structuring Bond Finance, ECA Finance, Multilateral Funding, Loan Covenants, Security and Inter-Creditor Issues.
As above
4 Revenue Agreements Categories of Revenue Agreements, Risk Profiles of different types of Revenue Agreements, Key commercial terms of Off-take Contracts including: Term of Contract, Conditions Precedent, Construction Milestones, Consequences of Delay, Design and Construction Obligations, Operating Protocols, Tariff Structure, Performance Testing and Tariff Adjustments, Expansions and Modifications, Insurance Requirements, Force Majeure, Step-In Rights, Change in Ownership, Change of Law, Default and Termination.
All the above and in addition:
• “Lender” checklist for an Off-take Agreement.
• Simulated negotiation exercise where the learner is required to respond to several “negotiation points” with the help of an adviser and feedback is provided.
5 EPC, O&M and Input Supply Agreements Construction Contracts
Types of Construction Contracts, Key commercial terms found in EPC Contracts including Contract Scope, Contract Price and Payments, Completion and Liquidated Damages, Security, Events of Default and Termination, Dispute Resolution, Construction Phase Insurances, EPC Checklist, Other Commercial Terms.
O&M Contracts
Types of O&M Contracts, Key commercial terms found in O&M Contracts including O&M Contractor Roles, Project Company Roles and Responsibilities, Fee Structures, Performance and Liquidated Damages, Events of Default and Termination, Operating Phase Insurances, O&M Contract Checklist, Other Terms.
Input Supply Contracts
Input Supply Contracts, Key commercial terms found in Input Supply Agreements including Start Date and Term, Contract Volumes and Flexibility, Quality, Price and Payments, Events of default and termination, Fuel Supply Contract Checklist, Other Terms.
• As for Module 1-3
• Checklists for EPC, O&M and Input Supply Agreements
• Simulated negotiation exercise where the learner is required to respond to several “negotiation points” with the help of an adviser and feedback is provided.
6 Finance Documentation Letter of Interest, Key terms of a Commitment Letter, Key clauses in a Term Sheet, Commercial Terms found in a Credit Facility, Working Capital Facility, Security Trust Deed, Security Documents, ISDA’s and Hedge Documents. As for Modules 1-3
Comprehensive bank term sheet.
7 Project Finance Sectors
Power sector including transmission and distribution, PPA and Merchant Plants, Renewable Energy Sector, Transportation Sectors including Toll Roads, Rail, Airports, Oil & Gas Sector, Mining and Social infrastructure Sectors.
• As for Modules 1-3
• Detailed “Project Feasibility & Financing” checklist.