We are able to assist with modelling the commercial returns and providing advice on funding options and tax optimization. We are able to facilitate asset-based finance from commercial lenders or power purchase agreements (PPAs) from independent power producers (IPPs). A summary of this “Project Finance-based” approach is provided below.
- A way to fund infrastructure projects without any requirement for capital from the client.
- Uses “Project-Finance” or “non-recourse funding”. Lender recourse is to the asset and the contracts only (depending on the client
- Set up a Special Purpose Vehicle to own the assets and ring-fence the assets and risk, offering the off taker the opportunity to co-invest.
- Contract is take-or-pay for the duration requiring careful design effort to ensure the project does not overproduce.
- Termination clauses are key to bankability.
- As markets liberalize in South Africa this will get easier (Merchant Market).
- The SPV offers a significant BBBEE scorecard opportunity.