Risk Coverage - Hydropower Development - Revision history

Ranisha at 09:44, 14 August 2014

2014-08-14T09:44:58Z

Show changes

Ranisha: /* Overview */

2014-07-08T10:31:27Z

Overview

Ranisha at 10:29, 8 July 2014

2014-07-08T10:29:55Z

Fungai Cecilia Sandamu at 11:20, 12 July 2013

2013-07-12T11:20:37Z

Show changes

Wiki Gardener at 11:54, 22 November 2012

2012-11-22T11:54:32Z

Wiki Gardener: moved Risk coverage to Risk Coverage - Hydropower Development

2012-11-22T11:54:04Z

moved Risk coverage to Risk Coverage - Hydropower Development

Wiki Gardener at 11:53, 22 November 2012

2012-11-22T11:53:28Z

Wiki Gardener at 11:50, 22 November 2012

2012-11-22T11:50:07Z

Show changes

Anna Natascha Pfisterer at 15:45, 24 March 2011

2011-03-24T15:45:51Z

Show changes

Michel andre at 11:38, 27 May 2010

2010-05-27T11:38:55Z

@@ Line 1: / Line 1: @@
 = Overview<br/> =
@@ Line 7: / Line 8: @@
 <u>Risks can be classified under:</u>
-*[[Risk coverage#Common Risks|common risks]] shared equally between the public and the private sector and depending largely on the nature of the development, and
+*[[Risk_Coverage_-_Hydropower_Development#Common_Risks|common risks]] shared equally between the public and the private sector and depending largely on the nature of the development, and
-*[[Risk coverage#Interface Risks|interface risks]] specific to a private developer working with or licensed by the public hand
+*[[Risk_Coverage_-_Hydropower_Development#Interface_Risks|interface risks]] specific to a private developer working with or licensed by the public hand
 <br/>
 = Common Risks<br/> =

@@ Line 168: / Line 168: @@
 *the assessment of environmental impact which may be seen in different light by the two parties.
 These matters require resolution through cooperation between the public and the private hand but they can impose serious risks for the success of a private venture if they are not effectively dealt with.
 <br/>
@@ Line 178: / Line 178: @@
 <references />
 [[Category:Hydro]]

← Older revision		Revision as of 11:54, 22 November 2012
Line 145:		Line 145:


−	=== Fees and ~~rates~~ ===	+	=== Fees and Rates<br/> ===

	Licence fees or other conditional public contributions can discourage private enterprise and can form a risk if they are on an upwardly escalating scale. The rates at which power is permitted to be sold by a private generator are critical for his commercial performance. Government intervention on rates is experienced in many countries and can form one of the principal, and recurring, matters of dispute between the public and private sectors. The concept of 'permitted return' is common even in economically advanced countries and is one of the risks from which the private investor is unlikely to escape. His remedy is to structure his financial input to the project in such a way that his exposure to profitability regulation is minimized. The risk to which any non-governmental operator of a power generating or distributing facility cannot fail to be exposed is sometimes also termed a pricing or revenue risk and results from different conceptions of what is a 'reasonable return'. Prior to private-sector involvement, rates of stand-alone schemes in isolated areas were often subsidized directly by the public purse or indirectly from revenue surpluses of centralised areas or by cross-subsidization. Consumer reaction will naturally be adverse once such subsidies fall away and pressure will be brought on the government to regulate for rates to be brought back to their subsidized level. Direct participation of consumer groups in isolated schemes can help in such situations by bringing about awareness of the need to replace subsidies by higher electricity charges, i.e. to replace social pricing by some form of commercial pricing.		Licence fees or other conditional public contributions can discourage private enterprise and can form a risk if they are on an upwardly escalating scale. The rates at which power is permitted to be sold by a private generator are critical for his commercial performance. Government intervention on rates is experienced in many countries and can form one of the principal, and recurring, matters of dispute between the public and private sectors. The concept of 'permitted return' is common even in economically advanced countries and is one of the risks from which the private investor is unlikely to escape. His remedy is to structure his financial input to the project in such a way that his exposure to profitability regulation is minimized. The risk to which any non-governmental operator of a power generating or distributing facility cannot fail to be exposed is sometimes also termed a pricing or revenue risk and results from different conceptions of what is a 'reasonable return'. Prior to private-sector involvement, rates of stand-alone schemes in isolated areas were often subsidized directly by the public purse or indirectly from revenue surpluses of centralised areas or by cross-subsidization. Consumer reaction will naturally be adverse once such subsidies fall away and pressure will be brought on the government to regulate for rates to be brought back to their subsidized level. Direct participation of consumer groups in isolated schemes can help in such situations by bringing about awareness of the need to replace subsidies by higher electricity charges, i.e. to replace social pricing by some form of commercial pricing.
−

@@ Line 7: / Line 7: @@
 <u>Risks can be classified under:</u>
-*'''common risks''' shared equally between the public and the private sector and depending largely on the nature of the development, and
+*[[Risk_coverage#Common_Risks|'''common risks''']] shared equally between the public and the private sector and depending largely on the nature of the development, and
-*'''interface risks''' specific to a private developer working with or licensed by the public hand
+*[[Risk_coverage#Interface_Risks|'''interface risks''']] specific to a private developer working with or licensed by the public hand
@@ Line 28: / Line 28: @@
 === Market-related risk ===
 Many schemes, especially stand-alone plants, have to face a market-related risk.
 <u>Even in cases where a careful market survey has been carried out, there may be uncertainty on:</u>
@@ Line 57: / Line 57: @@
 === Force Majeure Risk<br/> ===
 There is thus a force majeure risk which has to be evaluated when a turnkey contract is placed; contractors may wish to pitch contract terms fairly widely whereas the developer and his financial backers will naturally wish the terms to be well constrained.
 <u>It has also to be recognized that force majeure may be claimed by contractors for any delays incurred which are not under their control, for example delays due to:</u>
@@ Line 165: / Line 165: @@
 == Legislative and Legal Risks ==
-Entry of a non-governmental party into a government-owned and controlled industry is not possible unless the government opens up the industry through appropriate legislation, or at least implements the already frequently mentioned 'enabling measures'. To what extent such measures can simply be expressed in statements of intent or published policy documents or have to be enshrined in legislation depends on the statutory situation in the particular country; it depends also on whether the government wishes to make a single exception by admitting say a single BOT deal or whether it is to be an across-the-board opening up of the industry. Nevertheless, electricity supply has become an essential part of the national infrastructure in all countries and it affects a large and growing proportion of the population. Governments are therefore anxious to ensure that whatever standards may have applied to the public sector industry are maintained by the private sector. Indeed, governments expect that the new influx of funds will result in standards to be raised. Non-governmental parties will expect their entry into the industry to be subject to a series of governmental constraints expressed through legislation or law. They must accept the risk that government perception, and hence legislation or law, may change in time and may have an adverse effect on their operations by becoming more restrictive. The situation in industrialized countries has shown that there is an ongoing debate between the public and private sectors over the way in which regulations are interpreted and operations are carried out, and sometimes also perhaps a lack of understanding of the role of one of the parties. <u></u>
+Entry of a non-governmental party into a government-owned and controlled industry is not possible unless the government opens up the industry through appropriate legislation, or at least implements the already frequently mentioned 'enabling measures'. To what extent such measures can simply be expressed in statements of intent or published policy documents or have to be enshrined in legislation depends on the statutory situation in the particular country; it depends also on whether the government wishes to make a single exception by admitting say a single BOT deal or whether it is to be an across-the-board opening up of the industry. Nevertheless, electricity supply has become an essential part of the national infrastructure in all countries and it affects a large and growing proportion of the population. Governments are therefore anxious to ensure that whatever standards may have applied to the public sector industry are maintained by the private sector. Indeed, governments expect that the new influx of funds will result in standards to be raised. Non-governmental parties will expect their entry into the industry to be subject to a series of governmental constraints expressed through legislation or law. They must accept the risk that government perception, and hence legislation or law, may change in time and may have an adverse effect on their operations by becoming more restrictive. The situation in industrialized countries has shown that there is an ongoing debate between the public and private sectors over the way in which regulations are interpreted and operations are carried out, and sometimes also perhaps a lack of understanding of the role of one of the parties.
 <u>Particular points at issue include the following:</u>

@@ Line 140: / Line 140: @@
 *the assessment of environmental impact which may be seen in different light by the two parties.
-These matters require resolution through cooperation between the public and the private hand but they can impose serious risks for the success of a private venture if they are not effectively dealt with.
+These matters require resolution through cooperation between the public and the private hand but they can impose serious risks for the success of a private venture if they are not effectively dealt with.&nbsp; <br>
 [[Category:Hydro]]