pf group 11 aquasure

8/12/2019 PF Group 11 Aquasure

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Presented By: Group 11

ubmitted To: Prof. Abhijeeth S.

7/21/2014


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Beginning

Our water our future campaign. Deal worth of 5.2 billion for a period of 30 years and

1 month. Reasons Drought and population growth. Financing through PPP


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Some aspects about PPP: Constrained government budgets. Encouraged efficiency in delivery of infrastructure

service. Tighter monitoring to ensure quality.

There should be real competition in PPP auction. Immovable infrastructure Bilateral monopoly. Difficult to punish non compliance by firm. Filter for White Elephants


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Partnerships Victoria- Centralized authority for PPP withintention of growing the market- Adopted PSC(Public sectorComparator).PSC:1. Raw PSC = capital cost of construction + operating cost

2. Competitive Neutrality adjustment= Tax saving from publicownership.

3. Transferable Risk = Expected cost of risk transferred to pvtprovider.

4. Retained Risk = Expected cost of risk transferred togovernment


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CAPM APPROACH

Systematic Risk HolderDiscount Rate = CAPM RATE

No systematic riskDiscount Rate = Risk free rate

*complication involved in different pattern of cash outlay.Revenue for AQUASURE

1. Monthly water security payment- Cover fixed cost2. Monthly water usage payments- As per amount

ordered.

AQUASURE was not entitiled to sell water to third party.!


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Party involved Risk

Aquasure Throughput risk

The Sponsors Resource risk, Technical risk

The state of Victoria Socio political risk, Completion risk

D & C Contractor Completion risk

O & M Contractor O & M Failures

Transmission line operator Completion Risk

Electricity and REC provider (AGL Energy Ltd.) Throughput risk

Equity Providers Resource Risk

Debt Providers Completion risk, Interest rate risk

Risks Associated With The Project


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Risk MitigatesThe key player's risks in the structuring of the project weremitigated in the following manner:

The State of Victoria:

The state would provide support by procuring alternativefunding

Procuring state supported guarantee for the debt funding

Termination of the project and payment of the relevanttermination


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Risk Mitigates Pay out of the balance of any unrefined debt Price reset mechanism in case AGL technologies became

insolvent or a defaulter after 10 years.

Design and Construction Contractor:

To avoid the risk of undersupply and risk abatement toservice payments, the plant would be built with redundancyand additional capacity with parallel processing and modulardesign.


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Risk MitigatesOperations and Maintenance Contractor:

The risks of failures were borne by O&M contractor butwere protected by joint and several guarantees by the parent

company.


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Role of The State

The state was responsible for procuring the land fordesalination plant and related infrastructure. The state provided support for financing the project through

guaranteeing the debt project.

a) Global financial crisis b) Equity investors demanding higher returns & liquidity

premium.c) The consortium could only secure A$1.925 billiond) Remaining A$1.746 billion was to be syndicated to a wider

group of banks.


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Role of The State

e) The state effectively acted as a lender-of-last-resort.


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Thank You

pf group 11 aquasure

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