Page 198 - UUBO PE Summit 2020 - Materials

MAKING A CASE FOR INVESTING IN

NIGERIAN PROJECTS: RISKS & MITIGANTS

• Understand the Project Pricing structure (tariff): tariff in the
power sector, tariff in the gas sector; telecoms tariff; tariff under
concessions- toll roads; for real estate projects the tariff would be
the rentals

• Key Issues which investors should take into account when investing
in a Nigerian project:

• Understand how the pricing structure impacts on operations, returns,
maintenance, return on investment, and, ultimately, the value of the
investment at the time of exit.
• Is the tariff regulated and/or prescribed by law and regulation?

• If prescribed by law, are there any historical arbitrary changes to the
tariff methodology?

• If not prescribed by law, do relevant offtake agreements have robust
provisions that address payment and changes to tariff on account of
macro economic indices such as inflation, devaluation etc
• Do these offtake agreements have tenors which match the life of the
investment-whether loan or equity?

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