Title: Understanding Power Project Financing

Contributor: African Legal Support Facility (ALSF)

Language: English

Type: Document

Nature: Other PPP Reference

Published: December 20, 2019

Region: Sub-Saharan Africa

Country: Africa

Sector: Energy and Power

Topic: Pro-poor

Keywords: ALSF, Energy and Power, Energy and Power Core

Document Link(s):

Document Summary:

Commercial Law Development Program (CLP) in partnership with the African Legal Support Facility, February 2016  - Second handbook in Power Africa's "Understanding" series, Understanding Power Project Financing . The handbook is intended to provide decision-makers with an overview of the structuring of private investments and financing for power projects and insight into the important supporting role that governments play. 

Document Details:

This handbook aims to serve as a practical resource for governments, utilities, investors, and other interested stakeholders by pointing to each party’s challenges and outlining what motivates the decision-making process. As such, this book seeks to provide a roadmap for navigating through this impasse.

The handbook starts out with an overview of the different financing alternatives for power transactions and the advantages and disadvantages of each. The text then proceeds into a deeper analysis of the mechanics of project finance and its relevance to implementing power projects.

Thereafter it delves into some of the key challenges which include:

  • the role of and rationale for credit enhancement in mitigating perceived and actual risks in order to attract public and private sources of financing and;
  • sovereign and non-sovereign forms of credit enhancement and their respective mechanics and implications. This further includes a discussion on risk scoping and assessment, risk allocation, and the impact of risk on pricing, as well as a detailed consideration of the key stakeholders.

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Updated: October 25, 2021