Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
for electricity in the future deviates substantially from the levels projected in the LTGEP,
the ability of PPC to purchase all of the output of the Plant, at projected price levels,
could be compromised. This represents a form of commercial risk that is 100% allocated
to the private operator of the Plant.
Institutional Framework
The power sector in Malawi is organised under the Ministry of Energy and Mineral
Resources. The State-Owned Power Company SPC has historically been responsible for
the majority of Malawi’s generation and was the monopoly provider of transmission,
distribution, and retail supply of electricity in Malawi.
Under the Electricity Law and other legislation, the Indonesian electricity industry is
being reformed. SPC is being restructured with generation being provided by separate
companies. Devolution of authority is planned with SPC being restructured into
strategic business units with considerable discretion over operations and capital
investment.
PPC is a separate legal entity from SPC, but its ownership is substantially or in part SPC
and it is therefore subject to SPC influence over its decisions, and may from time-to-time
find it necessary to request assistance from SPC to meet its contractual obligations under
this and other Power Purchase Agreements (PPAs).
Private Sector Participation
The private sector has been playing, and is expected to continue to play, an increasing
role in power sector development activities. To date, IPP projects totalling around ____
MW have been implemented, and there is significant privately owned captive capacity
installed throughout the country.
In financing IPP projects, developers are customarily required to contribute equity of at
least 30% of total project cost. It is understood that developers will raise the balance of
the money required for their projects from a range of sources including commercial
banks, export credit agencies, infrastructure investment funds and other international or
domestic financial institutions.
To attract interest from proven and reputable developers, due regard is given to their
right to a reasonable return on their investment and to the legitimate security interests of
their lenders. These factors are reflected in the terms of this RFP.
Government Support
PPC intends the Project to be financed without any direct or indirect Government
guarantees. The Seller’s financiers must look to revenues earned through the effective
and efficient operation of the Plant for returns on investment and the service of debt.
Accordingly, Bidders’ Proposals shall not assume or rely on any privileges, concessions
or guarantees from the Government or Government Instrumentalities. Any assumptions
made by any bidder in preparing their bid to the contrary may be regarded as a material
deviation and may result in the rejection of the Proposal.
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 166