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Check List for Project Finance Essay

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1. Brief description of every project sponsor: company history, establishment date, legal form, ownership, subsidiaries, core activities. Data on sponsor’s experience in the host country and in the project’s industry. Explanation of how the project relates to the sponsor’s strategic direction/goals.

2. Annual reports of the past three years for every project sponsor. Additional requirements in the case of project finance for activities in existing plants: detailed structured data for the past three years and budgets for the next five years on revenues (including a breakdown of export versus domestic foreign currency revenues if any, for countries with non-convertible currency; revenue mix by customer, country, and product) and expenses (in detail; in the case of non-convertible currencies, these need to be grouped separately).

3. Summary of the project concerned, including name, location, purpose, organisational form, ownership, equity, security structure, status of licenses/approvals, local partners, marketing and distribution, financing.

4. Brief characterisation of the role of the host country. For projects with currencies that are not completely freely convertible: description of the measures to avoid convertibility and transfer risk (including escrow accounts).

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5. Schematic representation of the contract structure and the significant existing or intended contractual relationships and security.

6.List of references of the general contractor and/or most important suppliers as far as known; list of references of comparable projects to document the proven technological feasibility and the experience in the sector and host country.

7.Information on operator/management company: Company history, ownership, core activities, list of references, documentation of relevant experience in industry and host country.

8.Independent feasibility study reporting on the project’s economic and financial viability and political and environmental acceptability. Information on the level of expertise of the advisers/experts used in terms of subject area and geographic region, as it relates to the project (list of references).

9.The following information, if not already included in the feasibility study:

a) Technical description, flow sheet, layout

b) Detailed derivation of estimated operating costs (price and quantity details)

c)Procurement situation for raw materials and supplies, including corresponding contract documents

d) Description of the management, training of staff, staff costs and qualifications

e) Environmental aspects, environmental impact assessment report, required environmental approvals and environmental measures, general description of location and emphasis on its specific relevant features, socio-economic and socio-cultural aspects. Also see our detailed requirements for the environmental review.

f) Discussion of the amounts and appropriateness of the investment value and the risks regarding time and cost overruns.

g) Timetable for construction and commissioning, milestones

h) Market information on the project’s products/services, including the price and volume trends for the past 5 to 10 years; competitive situation, current and future supply and demand situation; forecast, identification and geographic location of main customers; marketing and logistics strategy; description of the planned marketing activities and off-take agreements (e.g. take-or-pay agreements)

i) Detailed project costs, broken down by main categories of the key construction and commissioning cost items, interest over construction period, financing of working capital

j) Projected procurement of funds, including source, amount, currency, time of input

k) Cash flow projection over the repayment term of the requested export-credit-insured loan (including sensitivity analysis: a realistic base scenario, an optimistic and a pessimistic scenario), explanation of how any cash deficits will be covered

l) Derivation and assumptions of the cash flow projection, including basis for sales quantity and prices, operating and administrative expenses, depreciation, amortization and impairment losses, taxes, inflation, exchange rate movements, export licenses, influence of local government.

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