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    PPP For Infrastructure Projects: Case: Dabhol Power Plant Date: 31 January, 2018

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    VaibhavBhavsar
    The document summarizes the Dabhol Power Plant PPP project in India and identifies reasons for its failure. It discusses: 1) How project risks like political, legal, and financial risks were allocated between the different stakeholders including Enron and MSEB. Key risks like feasibility were not properly assessed. 2) Risk management strategies adopted including price guarantees but lack of transparency and unilateral contract terms contributed to problems. 3) The project failed due to an unfair deal solely favoring Enron, lack of competitive bidding, improper stakeholder engagement and financial appraisal, and unreasonable purchase commitments from MSEB.

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    PPP For Infrastructure Projects: Case: Dabhol Power Plant Date: 31 January, 2018

    Uploaded by

    VaibhavBhavsar
    134 views5 pages
    The document summarizes the Dabhol Power Plant PPP project in India and identifies reasons for its failure. It discusses: 1) How project risks like political, legal, and financial risks were allocated between the different stakeholders including Enron and MSEB. Key risks like feasibility were not properly assessed. 2) Risk management strategies adopted including price guarantees but lack of transparency and unilateral contract terms contributed to problems. 3) The project failed due to an unfair deal solely favoring Enron, lack of competitive bidding, improper stakeholder engagement and financial appraisal, and unreasonable purchase commitments from MSEB.

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    dabhol power plant-governance problems

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    dabhol power plant

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    The document summarizes the Dabhol Power Plant PPP project in India and identifies reasons for its failure. It discusses: 1) How project risks like political, legal, and financial risks were allocated between the different stakeholders including Enron and MSEB. Key risks like feasibility were not properly assessed. 2) Risk management strategies adopted including price guarantees but lack of transparency and unilateral contract terms contributed to problems. 3) The project failed due to an unfair deal solely favoring Enron, lack of competitive bidding, improper stakeholder engagement and financial appraisal, and unreasonable purchase commitments from MSEB.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    134 views5 pages

    PPP For Infrastructure Projects: Case: Dabhol Power Plant Date: 31 January, 2018

    Uploaded by

    VaibhavBhavsar
    The document summarizes the Dabhol Power Plant PPP project in India and identifies reasons for its failure. It discusses: 1) How project risks like political, legal, and financial risks were allocated between the different stakeholders including Enron and MSEB. Key risks like feasibility were not properly assessed. 2) Risk management strategies adopted including price guarantees but lack of transparency and unilateral contract terms contributed to problems. 3) The project failed due to an unfair deal solely favoring Enron, lack of competitive bidding, improper stakeholder engagement and financial appraisal, and unreasonable purchase commitments from MSEB.

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    PPP FOR

    INFRASTRUCTURE
    PROJECTS
    Case : Dabhol Power Plant
    Date : 31st January, 2018

    Presented By :
    Ajay Jadhav (PT101117)
    Rishabh Shah (PT102017)
    Saurabh Dugad (PT100917)
    Vaibhav Bhavsar (PT100517)
    RISK ALLOCATION FRAMEWORK & LACUNAE
    Risk Allocation Framework
    Type of Risk Description Allocation
    Political Risk Change in Govt. Enron
    Corrupt Practices of govt authorities MSEB Lacunae Improvement
    Central Govt.,
    Legal Risk Implementation of Liberalization for foreign investment
    MSEB Project Allocation was done
    Financial Risk Fiscal Space of Govt. MSEB on the basis of personal Competitive Bidding should be
    Investment from Private party-100 % DPC interest of an organization carried out.
    Feasibility Risk Check on the background of Concessionnaire MSEB Fast Implementation and
    Projection of Demand MSEB signing of MoU
    Site Location DPC
    Commercial Risk Guarantee of Minimum Power Purchase MSEB No Feasibility analysis by
    MSEB Any project should be carried
    Technical Risk Technology involved to run the Power plant DPC-
    out with proper feasibility study
    Insufficient technical know-how of MSEB MSEB and appraisal.
    Procurement Risk No Proper competitive biddung MSEB Power Purchase Agreement
    Supply Chain management of LNG Enron was one sided
    Development of Transport System Enron Corrupt Practices Law Enforcement
    Involving Local Distributors on later stage MSEB Lack of technical know how
    Construction Risk Delay in the construction activities Enron in MSEB Involving Consultants
    Phasewise Construction Enron
    Currency Risk
    Payments in US Currency MSEB
    (Macro Economic)
    Tarrif Sustainability Change in Tariff due to change in technology DPC

    20-02-2018 PPP FOR INFRASTRUCTURE PROJECTS 2


    RISK MANAGEMENT STRATEGIES
    Stakeholder Risk Mitigation measure Improvement measures
    •Final priceof the power would
    depend on US dollar-rupee
    exchange rate, oil price levels and
    plant load factor
    Commercial risk
    •CounterGuarantee from GOI that if
    MSEB defaulted on payment, it
    For would be paid by GOI
    Concessionnaire

    Lobbying efforts by Enron to obtain


    Legal risk
    approvals at exceptional speed

    Maintaining transparency regarding project


    with all parties concerned
    Political risk No mitigation measure adopted
    Govt. reneging their commitments can be a
    risk.
    Financial Risk Local Currency Financing
    For Public
    Sector Proper Demand analysis before project
    Commercial risk
    implementation

    20-02-2018 PPP FOR INFRASTRUCTURE PROJECTS 3


    WHY DABHOL PROJECT FAILED ?

    There was an absence of Competitive bidding

    Only Enron’s concerns addressed in MoU and PPA

    Lack of proper stakeholder management

    Too fast project implementation without proper financial appraisal and technical analysis and assistance

    MSEB’s promise to purchase electricity at plant load factor 90% and at much higher rate than other states

    Unfair deal- Only in favour of Enron

    20-02-2018 PPP FOR INFRASTRUCTURE PROJECTS 4


    ENABLERS TO IMPROVE STRUCTURING & OPERATION

    Risk management plan(Methodology, roles and responsibilities, Budgeting, Timing) and mitigation measures

    Involving SMEs (Subject matter experts) in project area concerned

    Inclusion of competitive bidding, exploring company profile

    Foreign company forming consortium with local firm including SOEs

    Fuel source to be specified beforehand

    Pre-emptive stakeholder management strategies

    Structuring contract tenure to match fuel supply requirements with service commitments

    20-02-2018 PPP FOR INFRASTRUCTURE PROJECTS 5

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