8. Project Finace Stakeholders

Question 1

Front

Answer 1

Back

Question 2

Who are the key stakeholders in project finance?

Answer 2

1. Project Sponsors, 2. Lenders, 3. Off-takers, 4. Governments and Regulators, 5. EPC Contractors, 6. O&M Contractors, 7. Suppliers, 8. Insurance Providers, 9. Advisors/Consultants, 10. Local Communities/NGOs. (Lesson 8, p.1)

Question 3

What role do project sponsors play in project finance?

Answer 3

Project sponsors initiate, develop, and fund the project, contributing equity and taking on development risks. (Lesson 8, p.1)

Question 4

What are the key responsibilities of project sponsors?

Answer 4

1. Project Development, 2. Equity Contribution, 3. Risk Sharing, 4. Governance and Decision-Making, 5. Exit Strategy. (Lesson 8, p.1)

Question 5

What are the types of equity investors in project finance?

Answer 5

1. Strategic Investors, 2. Private Equity Firms, 3. Development Finance Institutions (DFIs), 4. Government Agencies. (Lesson 8, p.1)

Question 6

What risks do equity investors face?

Answer 6

1. Development Risk, 2. Construction Risk, 3. Operational Risk, 4. Market Risk. (Lesson 8, p.1)

Question 7

Who are the lenders in project finance?

Answer 7

1. Commercial Banks, 2. Development Finance Institutions (DFIs), 3. Export Credit Agencies (ECAs), 4. Multilateral Institutions, 5. Institutional Investors. (Lesson 8, p.2)

Question 8

What are the main debt instruments in project finance?

Answer 8

1. Senior Debt, 2. Mezzanine Debt, 3. Project Bonds, 4. Convertible Debt. (Lesson 8, p.2)

Question 9

What are the key responsibilities of lenders?

Answer 9

1. Provide capital, 2. Conduct due diligence, 3. Structure loan agreements, 4. Monitor project performance, 5. Mitigate risks. (Lesson 8, p.2)

Question 10

What risks do lenders face in project finance?

Answer 10

1. Construction Risk, 2. Operational Risk, 3. Market Risk, 4. Political Risk, 5. Foreign Exchange Risk. (Lesson 8, p.2)

Question 11

What role do off-takers play in project finance?

Answer 11

Off-takers purchase the project’s output, ensuring stable revenue streams and reducing market risk. (Lesson 8, p.3)

Question 12

What are the types of off-take agreements?

Answer 12

1. Power Purchase Agreements (PPAs), 2. Tolling Agreements, 3. Supply Agreements, 4. Capacity Agreements. (Lesson 8, p.3)

Question 13

What are the key risks faced by off-takers?

Answer 13

1. Counterparty Risk, 2. Market Risk, 3. Regulatory Risk. (Lesson 8, p.3)

Question 14

What role do governments and regulators play in project finance?

Answer 14

They establish policies, issue permits, provide financial support, and ensure regulatory compliance. (Lesson 8, p.4)

Question 15

How do governments support project finance?

Answer 15

1. Policy Frameworks, 2. Licensing and Permits, 3. Subsidies and Guarantees, 4. Public-Private Partnerships (PPPs). (Lesson 8, p.4)

Question 16

What risks do governments and regulators face in project finance?

Answer 16

1. Political Risk, 2. Regulatory Risk, 3. Public Opposition, 4. Fiscal Risk. (Lesson 8, p.4)

Question 17

What role do EPC contractors play in project finance?

Answer 17

EPC contractors handle engineering, procurement, and construction, ensuring project completion. (Lesson 8, p.5)

Question 18

What are the key elements of an EPC contract?

Answer 18

1. Fixed-Price Contract, 2. Time-Specific Completion, 3. Performance Guarantees, 4. Warranties and Maintenance. (Lesson 8, p.5)

Question 19

What risks do EPC contractors face?

Answer 19

1. Construction Delays, 2. Cost Overruns, 3. Supply Chain Disruptions, 4. Force Majeure Events. (Lesson 8, p.5)

Question 20

What role do O&M contractors play in project finance?

Answer 20

They manage operations and maintenance, ensuring efficiency, reliability, and compliance. (Lesson 8, p.6)

Question 21

What are the different types of O&M contracts?

Answer 21

1. Fixed-Price O&M Contracts, 2. Performance-Based O&M Contracts, 3. Long-Term Service Agreements (LTSAs). (Lesson 8, p.6)

Question 22

How do O&M contractors impact project finance?

Answer 22

1. Ensure stable cash flows, 2. Minimize operational risks, 3. Improve bankability, 4. Optimize asset performance. (Lesson 8, p.6)

Question 23

What role do suppliers play in project finance?

Answer 23

They provide materials, equipment, and services essential for project construction and operation. (Lesson 8, p.7)

Question 24

What risks do suppliers face in project finance?

Answer 24

1. Supply Chain Disruptions, 2. Supplier Default, 3. Quality Risks, 4. Currency and Inflation Risks. (Lesson 8, p.7)

Question 25

How do insurance providers support project finance?

Answer 25

They mitigate risks through various policies such as construction, liability, political risk, and force majeure insurance. (Lesson 8, p.8)

Question 26

What role do advisors and consultants play in project finance?

Answer 26

They provide financial, legal, and technical expertise, assisting with project structuring and risk management. (Lesson 8, p.8)

Question 27

What role do local communities and NGOs play in project finance?

Answer 27

They ensure sustainable development, provide feedback, and advocate for community interests. (Lesson 8, p.8)