Risks and Mitigants

Market Risk

• Volume risk
• Price risk

• Long-term product off-take or marketing agreements with credible entities
• Market due diligence
• Projected local demand growth for refined products.

Payment

• Payment default from off-takers

• Credit worthy off-takers, advance payment for products sale
• Corporate guarantees
• Back-stop from government.

Operations

• Under performance
• Technical Issues
• Cost over-runs

• Experienced operator familiar with technology and conditions in the local market
• Due diligence considerations are elements which will need to be independently reviewed to ensure that they meet project finance standards.
• Alignment of interest among Sponsors/lenders.

Environmental

• Pollution / environmental claims
• Public opposition

• Public consultation
• Environmental and social management plan
• Covenants in financing documentation.

Macro-Economic
Risk

• Interest Rate, Exchange Rate, and Inflation

• Hedging
• Financing / Revenues / Cost matching
• Cover Ratios

Force Majeure

• Natural FM (acts of God, etc.)
• Political FM (strikes, war, etc.)

• Insurance
• Alignment of interest with government and communities