Submission and evaluation of proposals for private power generation projects in developing countries

This paper describes how private power development projects can be undertaken through a competitive bidding process. It identifies the key elements that are needed in the host country business environment for successful project development such as a stable macroeconomic environment, clear policies and procedures for project approval and processing. The main focus is on the development of power generation projects on a limited or non-recourse basis using a project financing approach. The paper reviews the specific risks involved for the power purchaser, the project developer and the lenders and in particular how those risks can be shared and minimized. The chapter on the security package describes the main agreements which make up the package which must formalize the various undertakings between the parties and provide assurance to lenders that their loans will be repaid. Finally, the process of seeking competitive bids is explained, along with of requests for proposals and the appropriateness of accepting unsolicited proposals. A two step selection and evaluation process is proposed. An example of a suitable bid evaluation procedure is also given.

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