ABSTRACT
Bankable project finance is a prerequisite to attracting funding from both local and international sources. In theory or reality, project financing is a positive step if not a panacea to reducing the power supply gap in developing countries like Ghana which continues to experience an energy supply gap. With the discovery of commercial gas reserves offshore, the issue of supply risk, which hitherto had been a big problem because of the undue reliance on the West African gas pipeline, will be mitigated. It appears that the main areas of concern are the country and political risks, force majeure risks, foreign exchange risks, insurance risks, environmental risks and off-take or purchase agreement risks which pertain specifically to the investor country which cannot be easily controlled by international banks. On the other hand, issues of technology risks, site and grounds conditions risks, project planning and preparation risks, construction and project development risks are easily handled by experienced international project finance teams of international banks. This chapter seeks to answer and provide insights into the question: what institutional restructuring should be undertaken to mitigate lender risks to attract project financing into the emerging gas-power generation sector in Ghana? Firstly, expectations of project financiers in power generation plants in developing countries are considered; secondly, risk mitigating measures are developed; and finally, the measures are applied to the environments of developing countries with specific reference to Ghana.
