Effective Finance Business Partnering: Driving Strategy Based on Insight

Euromoney Learning Solutions

Euromoney Learning Solutions

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Who should attend

  • Finance managers, controllers and analysts
  • Business and operations managers
  • Finance, business and operations directors
  • Interested stakeholders

About the course

Understand how the role of senior finance professionals is key to driving business strategy

The concept of finance business partnering, the idea of finance professionals being involved in business decision making, strategy development and driving performance is not new, it has been witnessed for decades. However, due to the unique circumstances of different organisations, the deployment of such activity can vary significantly. Business partnering may or may not be a priority, and finance departments may or may not have the ability to deliver it. But what’s interesting is just how many finance leaders, irrespective of the size of their organisation, now recognise the approach as being critical to long term value creation.

This highly interactive programme provides practical insights on the power of finance business partnering and the challenges of investing time and resources on this value creating concept. Using real cases, it crucially covers how finance teams can obtain buy-in and support from board directors and business managers across the organisation to improve alignment between strategy, sales, marketing and operations and ultimately help optimise overall business performance and profitability.

*Attend this course and learn: *

  • How finance business partnering can help drive strategy and positively impact on business performance so that both financial and strategic targets can be achieved
  • How finance and business management can be more co-ordinated to overcome multiple barriers and become successful business partners
  • How finance can become a core part of the management team, using financial and business information to influence decisions and shape outcomes
  • How finance can help business interpret and transform data into valuable commercial insights that drives improvement
  • How to develop a compelling action plan to embed finance business partnering across the organisation and to continually measure its successful deployment
  • How to build commercial credibility and become respected finance business partner

Agenda

Day 1

The Context Of The IPP Within The Power Sector

  • Power Market Structures from Horizontal and Vertical Unbundling to Privatization
  • Difference of Single Buyer PPA and Wholesale market PPA
  • Importance of Energy System Planning and Public Procurement of IPPs
  • Competiveness and Transparency within Tenders and Unsolicited Proposals
  • Local content and potential conflicts of interest

CASE STUDIES:

  • Mexico power sector reform: from zero to heroe
  • Vietnam's IPPs Sector Toward Market Liberalisation
  • South Africa best practice IPP procurement program or not?

Context of the PPA within the project set-up

  • Main risks of an IPP during developing, construction and operation
  • Role of project contracts to mitigate risks
  • Why a PPA at all and the fit into the overall project set-up
  • Understanding the link to Project Finance
  • Lenders requirements and debt ratios

CASE STUDY: Financial Structure of Oman Sohar2 Natural Gas IPP

Overall structure of a PPA

  • Definition of commercial terms
  • Risk to bankability
  • Obligations and Undertakings of each party
  • Conditions Precedents to be on the safe side
  • PPA Definitions and Annexes

GROUP WORK: Seller & Buyer Role Play getting to terms

PPA Timing and Milestones

  • From Signing to Expiry Date
  • Scheduled Dates, Actual Dates and Events
  • Changing Rights and Obligations at each dates
  • Release of obligations in certain events
  • Pre-COD and Post-COD periods
  • Periods to exercise rights, notify and cure
  • Termination rights not meeting milestones

GROUP WORK: Analysis & Comparison of two PPA timelines as the core framework for allocating risk between seller and buyer

Day 2

Pre-Commercial Operation Date Period

Order of execution of other project contracts * Back to back requirements with the EPC contractor * Development bonds, Performance Bonds and Letter of credits * Fine tuning with the Fuel Supply Agreement and Interconnection Agreement * Bankable Insurance program for the IPP and EPC contractor * Delays caused by lack of utilities, equipment, grid connection and conditions of site * Definitions of achieved, declared, contracted and minimum capacities * Delay and Performance Liquidated Damages – calculation and different structures * Testing & Handover procedures and risk to achieve COD on time * Declaration of Commercial Operation Date – an idea becomes reality * Deemed COD, Capacity and Energy – as-of clauses to keep going

Post-Commercial Operation Date Period

Delivery Point, Metering and Losses – the devil is in the detail * Invoicing, Billing and Payments procedures or show me the money * Impact on working capital requirements and bankability * Availability, Planned Maintenance Outages and requested changes * Timing and Charges for Black, Cold, Warm and Hot start * Requirements for heat rate, fuel specifications, quality and storage * Prudent Utility Practice, emergency procedures and manufacturer warranties * Non-discriminatory economic dispatch and conflict of interest * Allowed Grid Unavailability Periods, Curtailment and Deemed Energy provisions

Events beyond Business-As-Usual

  • Dispute Resolution, Cure Periods and Arbitration
  • Lenders Step-in Rights
  • Political and Natural Force Majeure Events
  • Changes of Law and Stabilization clauses
  • Consequences of Force Majeure and Changes of Law
  • Seller or Buyer Event of Default
  • Termination rights of PPA by either side
  • Put and Call options and buyout pricing methodology

GROUP EXERCISE: Structured Risk Allocation between Seller and Buyer

Throughout the day delegates will work through a long list of questions on each topic to identify the risk taking on by the Seller and Buyer respectively by analysing sample clauses from a range of fuel based and renewable PPAs.

Day 3

PPA Tariff Structures

  • Understanding Levelized Cost of Electricity, Cost of Capital and their impact on tariffs
  • Tariff Structures for fuel based and intermittent power generation technologies
  • Take-or-Pay versus Take-and-Pay contracts
  • Capacity and Energy Charge and Pass-Through Clauses
  • The rational for indexation and escalation of local, foreign inflation and currencies
  • Seasonal weighting factors in a PPA
  • Locational Marginal Pricing and grid charges
  • Competitive Tenders for Tariffs with Cost Openers
  • Marginal Cost and the Merit Order Effect in competitive wholesale electricity markets
  • Contract for Differences, Sleeved and Synthetic PPA structures

CASE STUDY: Split tariff and indexation in Egypt and Bangladesh PPAs

GROUP EXERCISES: Tariff simulation and sensitivity analysis of key variables for various types of remuneration schemes

OFFTAKER’s CREDIT WORTHINESS and CREDIT ENHANCEMENT INSTRUMENTS

  • Quasi fiscal deficit and non-cost reflective tariffs within emerging markets
  • Corporate offtakers as the new kids on the block
  • Credit Support for Offtaker and Project Company's Obligations
  • Escrow Accounts and Structural measures as liquidity facilities
  • Government guarantees and limitations in obtaining them
  • Partial Risk Guarantee and the requirements of an indemnity agreement
  • Political Risk Insurance covering debt and equity providers
  • Currency Convertibility risk and difficulties to mitigate them
  • Currency risk hedging and risk guarantee fund
  • Local currency lending
  • Export Credit Agencies, Developments Finance Institutions and Multilateral Banks

CASE STUDIES:

  • Indonesian Infrastructure Guarantee Fund buffering PLN payments
  • Azura-Edu gas power project– the white unicorn in Nigeria
  • AES Tiete: Expansion plant in Brazil
  • Bujagali Hydro Power project in Uganda from trouble to
  • GuarantCo and TCX going where nobody dares to go
  • Lake Turkana Wind project – it had to happen…late
  • TermoEmcali Colombia Natural Gas Project
  • IFC and the Tata Mundra Power Plant in India
  • …plus selective other case studies according to upcoming discussions!

Experts

Raj Gandhi

Raj Gandhi - days 1-3:GGV London works with clients in the UK and internationally focusing entirely on solutions and knowledge transfer. It has also forged relationships with prominent institutions such as Euromoney, ACT, ACCA, ICAEW and the IoD to deliver executive training that empowers partici...

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Effective Finance Business Partnering: Driving Strategy Based on Insight at Euromoney Learning Solutions

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