Project Development

At an early stage it is important to identify and select only those projects that can demonstrate to have a low degree of risk and can secure reimbursement of debt.

Nevertheless, it is difficult and costly to gather information and all the professional skills that are needed to produce a reliable assessment for a "go-no-go" decision.

All aspects of the project have to be analyzed in detail: background, infrastructure, location, Engineering and technology, O&M, organization and execution plan, planning & budgeting, cash flow, IRR, DSCR, etc.). A quantitative risk analysis is performed on the basis of the Monte Carlo methodology supported by the Prima3 expert system. Short-cut selection parameters are often identified, just like the probability that the IRR and final debt fall below defined cut-off ceilings.

It is often necessary to define or review the contract frame that would ensure the feasibility of the project.

Proper securities have to be incorporated properly in all the key contracts, like Sales & Purchase agreements, EPC contracts, license agreements, etc. (see also Business Information).

The Project Structuring and Development process is outlined in the following chart:

TOPICS	BUSINESS PHASE
	Planning				Development				Operation
	Country & sector survey	Assessment of market potential	Opportunity identification	Evaluation and selection	Architecture	Structure	Appraisal	Closing	EPC	O&M
Market	Country market survey	opportunity study		C h e c k f e a s i b i l i t y & r i s k			R e v i e w & c o m p a r e
Technical & Economical	Country survey infra-structure cost	pre- feasibility study	feasibility study						Manage & Control	Manage & Control
Permits	Identify required permits				Implement	Complete
Partnership	Strategy, profiles and MOU				define agreement	share holders agreement
Business structure & legal matters	Identify legal entity structure				Define SPV profile	Define structure		Finalize contracts	Manage & Control	Manage & Control
Contractual & commercial matters	Identify clients and suppliers. Define commercial strategy.				Preliminary SPA's	preliminary contracts		Finalize contracts	Manage & Control	Manage & Control
Construction & Operation	identity contractual scheme				EPC and O&M tenders	preliminary contracts		Finalize contracts	Manage & Control	Manage & Control
Financial	identity eligible sources			Strategy	Term-sheet	finalize contracts		Finalize contracts	Draw	Reimburse