5 day programme featuring 2 individually bookable modules:
- Module 1: Best Practices for Independent Power Projects (IPPs) and Power Stations
- Module 2: Financing Power Station Fuel Supplies
By attending this highly interactive and practical 5-day training school you will:
- Be introduced to Project Finance
- Gain a better understanding of best practice lending techniques for Independent Power Project Finance
- Gain a better understanding of the current trends in project finance
- Review the technical evaluations of a Power Station
- Understand how the technical issues of IPPs are translated into financial and credit risks
- Understand the finer aspects of financial modelling by identifying and quantifying the major risks that impact a project’s cash flow generation capabilities
- Gain a better understanding of credit structuring techniques, so as to effectively mitigate the credit risks of an IPP
- Review the finer aspects of legal documentation, with legal documentation techniques and tips to help you properly reflect a credit structure in the legal contract.
Course objectives
The course will enable participants with skills to identify and analyse prospective borrowers, structure credit
facilities, and prepare credit applications for formal presentation and approval by bank credit committees. These skills can be used by the origination teams and credit teams of lenders and to support organisations which run or sponsor projects.
Course overview
The credit crisis and economic down turn have made it more difficult for Independent Power Projects to secure credit. However, credit is still available for good projects and good borrowers. This practical course
on IPP project finance best practice is a useful tool for lenders and borrowers alike. The course director will walk candidates through the best practices of IPP project finance and at the end of the course candidates will be better prepared to successfully navigate through the current credit climate.
Who should attend
- Energy Investment Bankers
- Corporate Planners and Strategists
- Equity Analysts
- Investors
- Credit Analysts
Teaching methodology
Each section will be covered briefly as a module in a traditional class style, and the real learning experience will be found in the exercises within each module. Suggested solutions to each exercise will be provided and discussed. Supporting materials will be available for further in-depth learning.
Module 1
Best Practices for Independent Power Projects (IPPs) and Power Stations
3-Day Module (Days one, two and three):
Day 1
Introduction to project finance; the objectives of the parties involved in a Power Project; stages in the project finance lending; Risk Analysis – Identification; Risk Mitigation Strategies in Project Finance
Introduction to Project Finance
- Brief history of Project Finance
- Rising energy costs, the evolution of the Independent Power Stations (IPP) and modern Project Finance
- Current trends and issues in project finance
- The Project Development Process
- Criteria for a successful Project Financing
The objectives of the parties involved in a Power Project
- The parties involved and their roles/potential conflicts of interest
- Sponsor's rationale
- Lender's criteria
- Constructor's objectives
- Government's role(s)
- The role of Financial Institutions/Investors
Stages in Project Finance Lending
- Time, team, costs
- Information Memorandum/Project proposal
- Credit/Investment Committee considerations
- Due diligence and documentation:
- The role of advisors – who to involve and when?
- How to make effective use of advisors and control costs
Risk Analysis – Identification
- Risk categories:
- Commercial
- Technical
- Financial
- Political
- Risk identification – what are the key risks of concern?
- Construction period
- Operational period
- Financial
Exercise: Participants will work in teams to identify the key risks in the project financing of an independent power project.
Risk Mitigation Strategies in Project Finance
- Risk allocation techniques - the Project Finance contractual framework
- Risk mitigation techniques:
- Sponsor support & guarantees
- Financial analysis and structuring
- The use of insurance
- Due diligence
- Project Finance risk analysis – the approach of Rating Agencies and Basel II
Case Study: Participants will review the information memorandum for the Barka II Al Rusail IWPP Project and prepare a risk analysis.
Day 2
Risk Analysis Templates for Independent Power Projects; financial modelling; Key Financial Ratios - the project financier’s measures; using financial models for financial analysis & evaluation of risks
Risk Analysis Templates for Independent Power Projects
- Risk analysis templates for Independent Power Projects
Case Study Exercise: Participants will, in teams, prepare and make a brief risk analysis presentation for an Independent Power Project case study using a typical risk analysis template.
Financial Modelling
- The role of Financial Models in Project Finance
- Key elements in the structure of Project Finance spreadsheets
- Key EXCEL functions
- Financial Model assumptions - sources
- Lessons from the past – what can be learned from past transactions about the value of forecasts and feasibility studies
Case Study Exercise: Reviewing the underlying assumptions – participants review information memorandum for the Umm Al Nar Power and Water Desalination Project case study to assess the source of the underlying assumptions for the financial model.
Key Financial Ratios - The Project Financier’s Measures
- Debt Service Covers: Before/After Tax, Target Cover Ratio and Minimum Cover Ratio Loan
- Life Cover Ratio: Target Cover Ratio and Minimum Cover Ratio
Using Financial Models for Financial Analysis & Evaluation of Risks
- Determining debt capacity
- Impact of leverage
- Calculating liquidated damages/overrun/retention requirements
- Breakeven analysis
- How to choose sensitivities
- Key ratio targets
- Contrast to Sponsor’s IRR, NPV, Valuation Analyses
Case Study Exercise: Reviewing the project sensitivity – participants will review a project finance model for an independent power project to assess the sensitivity of the cover ratios to identified key risks.
The Equity Investor’s Perspective
- Understanding the equity investor’s approach to achieving returns from the project company, including operating relationships with the project company, and cash extraction through re – financing
- The growth and future development of private equity funds as investors in infrastructure projects
- Differing approaches to projects by type of investor:
- Developers
- Contractors
- Operators
- Investment funds
Case Study Exercise: Working in teams, participants will develop a financial model to determine the debt capacity for the acquisition financing of the Intergen Power Station Portfolio from Shell and Bechtel; taking into account the risk and return criteria and anticipated debt structure.
Day 3
Project Finance Legal Documentation; Impact of the Credit Crisis on Project Finance; Why Independent Power Projects (IPP) Face Difficulty – Tips for Handling Problem Projects
Project Finance Legal Documentation
- Term Sheet Development
- Role/purpose
- Layout/Length
- Content
- The “Covenant Package” – lenders’ controls and protections
- The Loan Agreement
- Security Documentation
- Inter-creditor issues and agreements
- Relationship of the lenders with key project participants–the role of “Direct” or “Tripartite Agreements”
Exercise: Participants will, in teams representing the lender and the borrower, develop the “Covenant Package” for an IPP project financing and then seek to negotiate a mutually acceptable package between the lender and the borrower.
Impact of the Credit Crisis on Project Finance
- Tenor
- Pricing
- Syndication
- Debt capacity
Why Independent Power Projects (IPP) Face Difficulty – Tips for Handling Problem Projects
- Typical reasons for failure
- Lessons which can be learnt from past project difficulties
- Potential options for dealing with problem projects
Case Study: Participants review a problem project to establish the reasons for the problems and to assess whether the problems should have been anticipated and how they could have been addressed through further risk allocation/mitigation structures.
Course Conclusions and Wrap-Up/Review
Module 2
Financing Power Station Fuel Supplies
2-Day Module (Days Four and Five): Upstream oil & gas projects – Financing Power Station Fuel Supplies
Day 4
Overview of the oil and gas sector; the lending markets; recent developments in lending; overview of the credit process
Overview of the oil and gas sector
- Brief history of the modern petroleum industry
- Oil: 20th century superpower
- World oil and gas reserves and consumption
The bank lending markets
- Understanding the origins of the established oil & gas lenders and opportunities for new lenders
- Common types of lending: reserve based lending, mezzanine debt, bonds
- Credit risk vs. equity risk
- Recent developments in oil and gas lending
Case Study: Each team will review an upstream oil and gas company, identify its financing needs and propose an appropriate financing solution.
Overview of the credit process
- Initial deal review
- Proposal
- Due diligence
- Credit approval
- Term sheet
- Legal documentation
- Deal closing
- Deal monitoring
Case Study: Each team will prepare an initial deal review of an independent oil & gas company. Findings and recommendations will be presented to the mock credit committee.
Day 5
Technical review; qualitative analysis; identifying and mitigating credit risks
Technical review
- What can the financial analyst do before calling a technical engineer?
- Reviewing the reserve report
- Assessing the development plan
Case Study: Each team will review the technical report for an oil field development, identify technical risks and propose credit risk mitigation strategies.
Qualitative analysis
- Management
- Operating and capital strategies
- Equity sponsor
- Borrower’s ability to access capital
Identifying and mitigating risks
- Development risk, including government approvals
- Reserve risk
- Commodity price risk (including supply agreements with Power Stations)
- Environmental risk
- Insurance risk
- Lender’s ability to perfect security over borrowing base assets
- Corporate structure of borrower
Case Study: Each team will undertake a credit analysis and prepare a credit application for an oil and gas company.
Financing Upstream Oil & Gas Development & Production - Course Conclusions and Wrap-Up/Review
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John Aggelakos
John Aggelakos has over 20 years banking experience in the oil and gas sector. John has an Honours BA degree from University of Toronto. John qualified as a Chartered Accountant at KPMG in Canada and Ireland before moving into Banking, where he has held key positions at BMO Nesbitt Burns, GMAC Commercial Finance, West LB and Bank of Scotland.
John’s assignments have included providing finance or acting as financial advisor to: ExxonMobil in Nigeria, Essar Global, and Qatar Gas II and Qatar Gas IV LNG projects. John now works as an independent consultant and advises banks and industry on energy issues.
Courses run by this instructor
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
10-13 Jul 2012 (London, UK)
This intensive four-day course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
Each session focuses on a particular aspect of modelling and applies it to the case model.
11-14 Sep 2012 (Singapore, Singapore)
This intensive four-day Financial Modelling in Excel for the Power Sector course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
26-28 Mar 2012 (Hong Kong, Hong Kong)
24-26 Sep 2012 (Hong Kong, Hong Kong)
This Fundamentals of Developing an Independent Power Project course will provide you with a greater understanding of: 1. The necessary conditions (legal, regulatory, market/commercial, technical, financial) for the successful development of IPPs including renewable energy projects; 2. The risk management tools and
techniques available to maximise value and to understand, calculate and manage risk in IPPs including
renewable energy projects; 3. The requirements of lenders necessary to be met to secure project financing for IPPs including renewable energy projects.
22-25 May 2012 (New York, United States)
This intensive four-day will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
29-31 May 2012 (Paris, France)
19-21 Nov 2012 (Paris, France)
This intensive three day hands-on course will provide a
comprehensive analysis of issues associated with independent electric power projects ranging from economic analysis of PPA contracts to financial modelling of projects. In working through analysis of projects, a mixture of case studies, lectures and analytical exercise will be used to evaluate electricity price forecasts, debt structuring, technology choice, cost of capital, and architecture of financial models.
20-21 Aug 2012 (Singapore, Singapore)
This Traded Electricity Markets course is a comprehensive and systematic introduction to traded electricity markets. The course will detail why and how electricity – the most challenging of all commodities – presents complexities more acute than in other traded market sectors, and how to understand, model and manage these demanding conditions. Case studies will illustrate how companies have resolved these issues, including Centrica, one of very few companies to have made a successful entry into this most difficult of markets.
25-26 Jun 2012 (London, UK)
10-11 Dec 2012 (London, UK)
This Traded Electricity Markets course is a comprehensive and systematic introduction to traded electricity markets. The course will detail why and how electricity – the most challenging of all commodities – presents complexities more acute than in other traded market sectors, and how to understand, model and manage these demanding conditions.
21-24 Aug 2012 (Lagos, Nigeria)
Many business models fail due to poor planning,
haphazard development, inherent errors and lack
the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
8-11 May 2012 (Rio de Janeiro, Brazil)
Many business models fail due to poor planning, haphazard development, inherent errors and lack the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
19-21 Mar 2012 (Singapore, Singapore)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
be able to comprehend and interpret financial information, understand the importance of cashflow, match their capital budgets to realistic targets, and accurately analyse capital investments. Most importantly, delegates will learn best practices in all of these areas.
14-18 May 2012 (Singapore, Singapore)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
3-7 Sep 2012 (London, UK)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
25-29 Jun 2012 (New York, United States)
This five-day course will give participants expertise to
assist in achieving long-term success to enhance your
company’s competitive performance.
16-18 Jul 2012 (Singapore, Singapore)
This intensive three day hands-on course will provide a
comprehensive analysis of issues associated with independent electric power projects ranging from economic analysis of PPA contracts to financial modelling of projects. In working through analysis of projects, a mixture of case studies, lectures and analytical exercise will be used to evaluate electricity price forecasts, debt structuring, technology choice, cost of capital, and architecture of financial models.
16-18 Jul 2012 (London, UK)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
be able to comprehend and interpret financial information, understand the importance of cashflow, match their capital budgets to realistic targets, and accurately analyse capital investments. Most importantly, delegates will learn best practices in all of these areas.
17-19 Dec 2012 (New York, United States)
This in-depth and practical three day course will demystify finance and cover best practices in financial analysis. By the conclusion of the course, delegates will be able to communicate easily in financial terms. They will
This course has now expired please email us to find out when the course will next be running.