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WorksheetsModule 7-Risk, Due Diligence & Credit Enhancements
Total questions: 48
Worksheet time: 24mins
Technology-specific risks differ mainly due to differences in:
Financing structure
Cost revenue and cash flow
Contract types
Audit requirements
Thermal power projects are most sensitive to:
Hydrology risk
Fuel price risk
Transmission delay
Solar irradiation
Increase in fuel cost from USD 40/MWh to USD 55/MWh represents:
Hydrology risk
Operational risk
Fuel price risk
Construction risk
Hydro project revenues mainly depend on:
Fuel availability
Water availability
Grid availability
Staff efficiency
Low rainfall in a hydro project primarily causes:
Higher CAPEX
Lower generation and revenue
Higher tariffs
Lower OPEX
If planned hydro generation is 1000 GWh but actual is 750 GWh, revenue will:
Increase
Remain same
Decrease
Double
Solar power output is mainly affected by:
Fuel cost
Weather conditions
Hydrology risk
Staff availability
Transmission project delays mainly result in:
Higher tariffs
Early revenue
Revenue delay
Lower costs
Construction risks generally occur:
After COD
Before COD
During operations
After repayment
EPC cost increase from USD 200M to USD 225M is an example of:
Operational risk
Market risk
Construction risk
Hydrology risk
Construction risks usually include:
Fuel price changes
Cost overruns and delays
Equipment failure
Tariff reduction
Operational risks occur mainly:
Before COD
After COD
During EPC only
At financing stage
Lower plant availability after COD represents:
Construction risk
Operational risk
Financial risk
Legal risk
Expected availability 95% but actual 85% mainly affects:
CAPEX
OPEX
Revenue
Debt tenor
Operational risks directly impact:
Design quality
Long-term cash flows
Contract signing
Loan approval
Which risk is unique to thermal plants?
Hydrology risk
Fuel price risk
Transmission risk
Weather risk
Hydro projects are most exposed to:
Fuel risk
Water availability risk
Grid risk
Exchange risk
Transmission projects mainly face risk of:
Fuel escalation
Power evacuation delay
Low availability
Water shortage
Due diligence is conducted mainly to:
Increase profit
Identify and manage risks
Delay projects
Reduce staff
Key due diligence focus areas include:
Technical financial and legal
Only technical
Only financial
Only legal
Technical due diligence checks whether:
Tariffs are affordable
Project can be built and perform
Loans are approved
Contracts are signed
Lower-than-designed plant availability is a:
Technical strength
Technical concern
Financial benefit
No issue
Technical weakness usually leads to:
Higher revenue
Financial weakness
Lower CAPEX
Better returns
Financial due diligence focuses on:
Design standards
CAPEX OPEX and repayment ability
Staffing levels
Grid codes
Annual revenue USD 18M OPEX USD 14M debt USD 5M indicates:
Cash surplus
Cash shortfall
Strong viability
No issue
Financial due diligence ensures the project is:
Technically sound
Affordable and sustainable
Legally compliant
Politically safe
Legal due diligence mainly reviews:
Staff contracts
Equipment design
Project contracts and guarantees
Operating costs
Absence of liquidated damages in EPC contract exposes utility to:
Lower cost
Higher revenue
Delay risk
Better performance
Without LDs, delay costs are borne by:
contractor
Lender
Utility
Government
Commercial due diligence protects against:
Technical failure
Unexpected obligations
Weather risk
Operational issues
Poor contract terms usually create:
Lower risk
Financial risk
Operational benefit
Higher tariffs
Credit enhancement tools mainly aim to:
Increase profit
Reduce lender and utility risk
Speed construction
Lower tariffs
Advance Payment Guarantee protects against:
Performance failure
Delay
Advance payment loss
Revenue risk
Advance Payment Guarantee is usually issued by:
Utility bank
Contractor bank
Government
Auditor
If advance paid is USD 10M and contractor fails, APG allows claim of:
USD 5M
USD 8M
USD 10M
USD 15M
Performance Guarantee mainly protects against:
Advance misuse
Non-performance and delay
Revenue loss
Exchange risk
Performance Guarantee is usually around:
2% of contract
5% of contract
10% of contract
20% of contract
Contract value USD 200M with 10% PG gives maximum claim of:
USD 10M
USD 15M
USD 20M
USD 25M
Retention money mainly covers:
Advance risk
Defect correction risk
Revenue risk
Loan risk
Retention is normally applied as:
Fixed sum
Percentage of contract value
Loan amount
Operating cost
Contract value USD 150M retention 5% equals:
USD 5M
USD 6M
USD 7.5M
USD 10M
Retention applies mainly during:
Construction
Defect liability period
Financing stage
Planning stage
Retention guarantee is an alternative to:
Performance guarantee
Cash retention
Advance payment
Insurance
Export Packing Credit helps contractors to:
Increase margins
Finance equipment before payment
Reduce taxes
Pay LDs
Export Packing Credit is repaid when:
Loan is approved
Equipment shipped
Milestone payment received
Project ends
Export Packing Credit mainly addresses:
Utility cash flow
Contractor cash flow gap
Lender risk
Government risk
Credit enhancements collectively improve:
Risk exposure
Bankability of projects
Construction duration
Staff productivity
The main purpose of risk management in projects is to:
Eliminate all risks
Identify and mitigate risks
Increase costs
Delay decisions
