You may kindly recall your approval for me to attend a 3-day PPP training organized by Power Africa, a subsidiary of USAID in collaboration with BPE on 24th-26th April 2024, at Envoy Hotel, 35 Diplomatic CBD, Abuja.
The Objectives of the training are;
1. To familiarize stakeholders on Accessing Climate Finance for Renewable Energy Projects
2. To bring to fore in clarity a better understanding of PPP & Innovative Models
3. Widen stakeholder’s knowledge on PPP Contract Structuring, Post Contract Management and Monitor Contract Negotiations.
ATTENDANCE
The program was attended by:
• Representatives of power program
• Staffs of BPE
• Federal MDAS
• State MDAS
• State IPAS (Kaduna, Ogun, Taraba, Gombe)
Day 1
1. Context Setting and Climate Finance fundamentals
2. Exploring Climate Finance mechanism across Project life cycle
3. Appraising and preparing projects to access Climate Finance
4. Global subnational climate fund TA facility (Case study 1)
5. GCF PPP TA Facility (Case study 2)
6. GCF Readiness and preparation TA Facility (Case study 3)
7. GGC Guarantee Facility (Case Study 4)
8. FCDO Guarantee Facility (Case Study 5)
Day 2
1. Climate Finance Case Study – GGC Guarantee Facility 2. Context Setting and PPPS Fundamentals
2. Structuring and Implementing PPPs in frontier market
3. Innovative PPP Case study 1 – Rewa Solar Park
4. Innovative PPP Case study 2 – India Rooftop Solar
5. Innovative PPP Case study 3 – Uganda Get fit program 7. PPP Risks and Mitigation Strategies.
DAY 3
1. PPP Contract Negotiation Module 3
2. Module 3 PPP Contract Negotiations
3. Module 5: PPP performance Management and Monitoring
4. Module 4: PPP Contract Financing
5. Critical Success factors in PPP projects.
TRAINING PROCESS
The training process involved individual, plenary session, case studies, and group exercises as well as input from the Facilitator.
There were many opportunities to raise questions or concerns throughout the programme. The following were used:
• Presentations
• Discussions
• Group work
• Case study
Day 1
The workshop started at about 10:00am with the representative of Power Africa giving the opening remarks.
He welcomed all participants. He emphasized that the 3-day program will cover Climate Financing, PPP in Nigeria and Contract Structuring.
He called on the participants to participate fully and actively to gain as much knowledge as possible.
Similarly, Mr Tunde B.A urged all participant to be active in the session, exchange insights on the implementation of PPP Projects Successfully across our Nation. Together let us embark on the journey with determination and shared commitment into building a new Nigeria.
She then explained that if we are to relieve Nigeria of the energy crisis we are in, we want to do it in a cleanest way possible. Hence, we should focus on renewable energy projects.
How we can prepare projects in such a way that we can capitalize and attract private sector both local & foreign capital.
How to successfully access technical facilities and guarantee facility from the public sector perspective, such that we try to de-risk the project substantiality and help capitalize commercial capital.
Key note is that Climate Finance is being budgeted for at the end of projects and why?
Key note is that Climate Finance is being budgeted for at the end of project which is why most of the renewable energy project fail to be eligible of Climate Finance Assistance.
3. How can BPE partner with EnaGee at this stage?
The GCF concept note should have key elements, Work sheet 1 Case study (State A) Group Work – Develop concept note, clearly defining the target customers, drivers for the engagement and the intended outcomes.
The next session started with Mrs Christine delivering a presentation on Carbon market, where we discussed on Case study 4 – GGC Guarantee Facility, Case study 5- CDO Guarantee Facility.
The final presentation of the day was on Recap and Reflections.
DAY 2
After the opening prayer, participants were asked to submit survey responses on Day 2.
The Facilitator described that a lot of Government agencies are struggling to adequately do project preparation.
So we went through the active Facilities but little was said of Guarantee Facility.
Private or commercial investors are looking for Guarantee to de- risk off the capital they are bringing in.
GFA it’s how you unlock the value of institutional local currency in the Country.
Afterwards Mrs Christine made presentation on Context Setting & PPP Fundamentals.
Structuring & implementing PPPs in Frontier Markets. Key Notes:
• De-risking PPP is critical to generate private sector interest e.g including TA Facility or credit guarantee
• Monitoring and reporting framework should be developed and aligned with the project goals.
Work sheet 1 – Case study, proceed to structure the PPP arrangements, paying close attention to the following key considerations:
Should we use a BOT, BOOT or BOO Model?
What government stakeholders do we need to engage and for what Should our tender be CBA or MEAT?
How will you structure your approval process
? Timelines? Steps? Diligence, What are you exit considerations?
Interactive session moderated by the Facilitator, she made an input on innovative PPP Case study Rewa Solar Park, Innovative PPP Case study 2- India Roof top Solar, Innovative PPP Case study 3 – Uganda Get Fit Program
The participants were divided into groups. Each group was asked to assess the risks that State C faces and develop appropriate mitigation strategies to address these risks.
1a. What are some of the risk that State C faces?
1b. What are some of the mitigation strategies State C can look into?
DAY 3
The opening prayer was said by the Facilitator. Mrs Chinenye with her team was invited to take us through Day 3.
She briefly spoke about project life cycle, GCA Project Facility and GCF Project Facility, stressing on how they work and how you can access them.
Looking at Case study 1 (project 1)
Do you think a PPP structure is the best or traditional procurement?
Key considerations when you want to adopt a PPP
1. Whatever you do must fall within the enabling Law. What kind of transactions to consider within the Law not to end up in a situation where the project is declared null or void.
2. To what extent as a guarantor can you exact control over the project.
3. Internal Capacity – does the Government have what it takes.
4. What extent do you want to bear the risk?
5. Timing considerations – some project take time from procurements, assessment etc
6. The nature of the project as well. Some are large size and require enormous capital as well
7. Does Government have what it takes to execute the project.
Reflecting on the contractual structure one can adopt (BOT, BOO, BOOT).
She made presentation on the contractual module, where she explained management contract PPP, Service contract PPP, Lease contract PPP and Concession.The features of each of these and how they work.
The next session started with Mrs Chinenye delivering a presentation on risk management. She asked, what kind of risk have you seen to be very difficult for Guarantor to take to Government agencies to manage.Risk management is extremely important in PPP. Who owns, who designs, who has the risk responsibility, who has the financial responsibility.
Risk management is extremely important in PPP. Who owns, who designs, who has the risk responsibility, who has the financial responsibility.
She stressed on Project Specific Risks and Economic General Risk. Others briefly highlighted are demand risk, supply risk, foreign exchange risk, interest rate, duration and the regulatory environment.
Class Discussion: The Sponsors of Project Institutes are seeking financing in the sum of $50,000,000 from a syndicate of International lenders.
Given the current volatility of the Naira, what risk does this pose for the project and are there any way to mitigate any such risk?
To what extent is the right of exclusivity essential to the viability of Project 2? Provide an analogy on the implication of a non-exclusive right being granted to the Concessionaire
vii. Communication & Reporting Procedure
viii. Communication Procedures
ix. Contractual Notices
x. Contractors documents
xi. Reporting Requirement & Procedure
xii. Issues; Escalation Procedure
xiii. Key Contractual Provisions
v. Risk Management
xvii. Underperformance/Default Contractual Actions
xviii. Change Management Process
xix. Insurance
xx. Guarantees and Securities
xxi. Payment plan/Procedures
xxii. Record Management
xxiii. Key Stakeholders Engagement Plan
xxiv. Contract Closure Procedures
xxv. Price Adjustment Procedures
xxvi. Interface Management
He encouraged participants to implement what we have learnt and stressed that to further drive PPP project, sub national delegates should include in their team PPP (State) Experts and lawyers for most appropriate result.
BENEFITS
I was interviewed by BPE team which gave me an opportunity to showcase the efforts of His Excellency Hon Rtd Umar Mohammed Bago in transforming Niger State into a Green Economy Hub.
The Head, Institute of PPP during the meeting with the State Government Representative extend willingness from the BPE team to render technical assistance to the State especially in terms of consultancy.
States that become proactive in terms of collaboration with BPE can gain themselves Hot lines
RECOMENDATIONS
When investors express interest to invest in energy sector, we should advise them to key into GCF facility to be incentivize or support their investment better.
We should collaborate with Niger State PPP Agency to ensure renewable energy projects are smoothly carried out.
Owing to the obvious benefit of this training.
I recommend that copies of the key presentations should be given to other staffs to provide them with updates.
In view of the above, this is submitted for your kind approval Ma.
Aisha Umar
Head, Investment Facilitation
Niger State Investment Promotion Agency
+234 809 711 1607
nispa@nigerstate.gov.ng