Table of Contents a) Explain why a “project” is enhanced by the allocation of risks? 2 b) Explain and give 4 examples of projects risks & how they can be allocated. 2 c) Explain why risks are ranked “High, Medium or Low”? 4 d) Explain the importance of “mitigation” when assessing risks? 4 e) R.Tinsley suggests a caveat should “ensure the 3 party is good for it” Explain 4

5. The phase in the project that the risks may occurs 4

6. Explain why risks are described as “dynamic” rather than static? 5

7. Identify and explain a project risk that is most appropriately allocated to each of I) the sponsors ii) the syndicate iii) the EPC contractor iv) a multilateral agency 5 a) Why project done under a project structure can be more highly leveraged, 5 b) Why is project finance used, list four (4) objectives that a sponsor can achieve by using project finance & give examples 5

(1) Utilize higher ; 6 (3) Finance larger projects than corporate (sponsors) credit would allow. 6

(a) Explain what is meant by One means is by way of “Guarantees” 8

(b) Explain and give four (4) examples of a guarantee & 8

(c) How do these guarantees assist in minimizing risks in project finance? 8

(a) What is meant by ‘recourse’ and ‘non-recourse’ ? 8

(b) Do all projects have this flexibility of recourse/non-recourse funding? 8

(c) Why do require “recourse” loans? Why do banks require “non- recourse” loans? Why would sponsors prefer “non-recourse” loans? 8

(f) Project financing is always non-recourse to the shareholders? 8 g) On or off balance-sheet? 8

1.Contracts.2.Trigger 3.Finance 4.Study 5. Avoided 10 c) The sponsors in developing the funding proposal seek strategies to improve the projects funding and lower its interest cost and protect themselves from “liquidity risk”? Suggest four (4) strategies by which a project’s initial financing could be improved. 14

(d) Why is it important to use a “financial advisor” when developing financing strategies? 14 1. Define what is a credit rating? 15 b) How is a credit ratings used in Project Financing? 15 c) Why a credit rating is required by banks? 15 d) At what stage in a project does one normally seek a credit rating & why at that time? 15 e) How can banks ensure a project obtains a credit rating? 16

(b) Why do projects seek to refinance (Construction) Loans(what are the benefits)? 17

Why Banks want to refinance 17

Why credit rating is important to lenders 17

Recourse/non-recourse balance sheet 19 a) How does the banking syndicate ensure that the project will reach phase 2 & 3 and will be completed on schedule? 20

Bankability is defined “as the acceptability or otherwise of a projects structure as a basis of project financing”. 20

(b) Explain and detail four (4) ways a project can be made more “bankable”? 20

(d) What is meant by term Cash flow Waterfall, How is it used? 27 1. Project finance is difficult to define. What are its essential features? 27

(Feasibility )When deciding whether or not to back a project finance proposition, what essential features do potential lenders home in on? 27

3.Why project finance (advantages)? 29

4.Disadvantages of Project Financing 29

Type of debt: 29

5. is shield and sword, why 29

Eurotunnel case study 29

Quezon Coal Plant-Philippines 31

Case : Australia Japan Cable 32

Case : Petrolera Zuata 32

Case : The Chad Cameroon Project 33

Case : Poland’s A2 Motorway 33

Case: BP Amoco: 34