Commercial Due Diligence Review of Generating and Distributing Assets
A confidential US client which provides debt and/or equity financing to power projects engaged K&M to perform a commercial due diligence review to support a loan transaction for the Inkia generation portfolio.
A confidential US client which provides debt and/or equity financing to power projects engaged K&M to perform a technical due diligence review. The technical due diligence review was for a transaction where the confidential client is providing debt financing to a holding company which has power assets in Peru and Guatemala.
For the assets in Peru, K&M performed a due diligence review of seven power plants including one gas turbine combined cycle power plant with capacity of 871 MW, three gas turbine simple cycle power plants with combined capacity of 1093 MW, and three hydropower plants with combined capacity of 933 MW. K&M reviewed operating and maintenance records, upgrade and expansion plans, inputs to the financial model, and identified major technical risks.
For the distribution company in Guatemala, K&M reviewed available information on conditions of the assets, historic operation data and key performance indicators including losses, collection rates, and service interruption statistics. K&M also identified major technical risks that could impact the company’s performance and financial projections.
K&M conducted a feasibility study for the proposed 95-150 MW Shougang Hierro Peru(SHP) power project at San Nicholas. K&M evaluated power generation alternatives to determine the most cost-effective means of meeting SHP’s future energy requirements. The evaluation considered installation of additional generating capacity on land owned by SHP at its Marcona, Peru iron ore facility. It included a review of the expected future energy demand by SHP and a review of the potential for selling excess energy production into the electricity market in Peru. It also compared several alternative generation technologies, various fuels including Orimulsion and sizes of plants by evaluating their overall life cycle costs.
K&M assisted the Ministry of Energy and Mines to identify viable project and institutional structures to attract private sector participation in the $205 million San Gaban II hydroelectric project. San Gaban is a 100 MW, high head (644m net) hydroelectric project and includes the construction of 160 km of new 138 kV transmission line. K&M assisted the Government to find the most viable project structure and sources of investment which included up to $140 million in funds from the Export-Import Bank of Japan. Specific considerations were given to private sector purchase of existing public sector assets, long-term lease to the private sector for O&M, and development of a BOO facility by the private sector.
The World Bank hired K&M advisors to support Sedapal in strengthening its investment planning and financing capacity by developing a financial model that assist decision makers in prioritizing a CAPEX plan and its corresponding financing plan. In addition, this consultancy will provide investment planning support to Sedapal to ensure the required payments to the Concession of “Obras de Cabecera” and other PPPs can be accommodated within the wider Sedapal budget, at a socially acceptable tariff and politically acceptable level of subsidy. The consultancy is also expected to provide specific recommendations to strengthen Sedapal’s planning and financing areas through the application of the World Bank’s Water Utility Turnaround Framework.
K&M is carrying out a rapid review of a US$1 billion capital investment program for Sedapal, the water and sanitation utility that provides service to Lima. The government of Peru is attempting to implement a PPP transaction to expand water supply and coverage in Lima (the “Project”). The objectives of the project are to increase coverage to an estimated 1.8 million unserved people in eight districts in Lima and improve the quality of service for another 1.8 million inhabitants in an additional six districts.
The World Bank contracted K&M to develop a financial model of Sedapal, assess the impact of the proposed project on the finances and tariffs of Sedapal, provide recommendations to the World Bank and the Government on financing the proposed project while minimizing increases of Sedapal’s tariffs, and recommend ways to prioritize Sedapal’s overall capital investment plan.
K&M has been engaged a European-based private equity firm to analyze renewable (and possibly gas) energy investment opportunities in six Latin American countries. For the first phase of the engagement, K&M analyzed each country’s energy sector in terms of market fundamentals, market design and regulation, access to PPAs, risk, level of competition, and return dynamics, and then evaluated each market based on the client’s investment criteria. K&M then presented its market conclusions and recommendations to the client. For the second part of the engagement, K&M performed a deeper-dive assessment of the two countries with the highest investment potential for the client and designed potential entry strategies. This phase also included identification of particular project investment opportunities consistent with the client’s criteria. The conclusions were presented to the client.
The World Bank has contracted K&M to assess the impact of COVID-19 on water and sanitation utilities in Peru. K&M will begin with an assessment of the impact to date by reviewing data provided by utilities. Following this review, K&M will develop a generic financial model that can be used to quantify the projected financial and operational impact on the utilities. This draft financial model will be tested by applying it to one utility in Peru. After testing the financial model, K&M will finalize the generic financial model and prepare a user manual for it. In addition, based on the results of the application of the financial model, K&M will produce recommendations for mitigating the impacts of COVID-19 on utilities in Peru.
K&M was contracted to provide the consulting services for strategic advisory support for the development of low and high enthalpy geothermal projects in selected countries in Latin America. The consultancy will provide strategic advice regarding barriers to the development of GE and provide recommendations to reduce or dismantle these barriers. As part of this assignment, K&M will conduct analyses and provide strategic advice and recommendations for four out of the following nine countries in Latin America with untapped geothermal potential: Argentina, Bolivia, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Nicaragua, and Peru. The four countries will be selected by the Inter-American Development Bank (IDB) during the execution of the consultancy.