MHP-Financial Feasibility Analysis Tool
Short description of the tool
I. Structure and content
The first part of the tool (first two spreadsheets) requires the manual input of key data in approximately 70 cells. This input includes basic data on costs (initial investment and maintenance / replacement costs), tariff structures, number of connections and key financial aspects. The second part (remaining 8 spreadsheets) of the tool uses automatic Excel processes to present the calculation of costs, revenues, cash flows and financing over the life-span of the project. Moreover, a general overview and a sensitivity analysis provide a variety of indicators on the project’s feasibility.
II. Target groups
The tool has been developed to accommodate the needs of three target groups: ADER (Rural Electrification Agency of Madagascar), operators of mostly insular rural electrification schemes and local banks. ADER has already implemented the tool to (a) compare several offers on one and the same project and (b) compare offers on different projects. The distinct sheet “financing” within the tool allows ADER to assess the impact of different amounts of subsidies and sources of financing for a given project so that the need for and efficiency of subsidies can be checked.
Operators use the tool to assess the financial feasibility of their projects and to present their project proposals to ADER, other donors / investors and banks. The tool enables the operators to run different project scenarios, e.g. different cost estimates and financing conditions, and thereby to get a better understanding of the strengths and weaknesses of their projects. In addition, the proposals based on the tool incorporate financial indicators required by local banks to decide on credit approvals.
Local banks benefit from more professional project proposals on the basis of the tool presented by the operators. They are willing to providing loans to the sector but due to the low quality of credit applications so far only a few applications have been approved.
III. Restrictions
It is important to note that the challenge in assembling this tool has been to create a simple but yet profound analytical tool which at the same token allows knowledge transfer and sustainability. Thus, the tool is designed to analyze a project’s economic feasibility in a simplified and semi-automatic manner, yet it does not substitute a detailed feasibility study on the basis of in-depth demand studies and detailed engineering.
Info Email by Sören:
From: David Soeren GTZ MG Sent: Wednesday, February 03, 2010 2:48 PM
Dear colleagues,
GTZ-PERER Madagascar is happy to share with you our Excel Tool for a fast but profound analysis on the financial feasibility of MHP projects.
In Madagascar, we run the tool in French but for the sake of most of you, we have also translated it into English. Furthermore, we provide you with a version of a basic case which has not been optimized so far to illustrate from where projects typically start off. We attach all those 3 versions to this e-mail, sorry for the large size of it all.
For a brief description of the structure and content of the tool, its target groups and restrictions, please have a look at the text below the footer of this e-mail.
The tool may easily be adapted to other forms of energy production as well as particular fiscal features of other jurisdictions. In Madagascar, our local partners such as the Rural Electrification Agency (ADER), operator of electrification schemes and banks assisted a lot to optimize the tool in order to reflect their practical needs.
I am happy to answer any further questions you might have on the tool. Remarks to further improve it are equally welcome.
I would like to thank Julian Frede for his assistance. We have developed the model together on the basis of my banking background and his programming skills in MS Excel . He also headed a training course with our local partners to implement the tool in Madagascar. Finally, he instructed a colleague from ADER to run the administration of the tool so that any further changes can be implemented locally. Julian works as a free-lance consultant, is fluent in both English and French and currently available to adapt the tool to the needs of other GTZ projects. Count on few days of work and the tool should fit to your particular needs. The sound general structure is in place and only minor changes should be required. You may contact Julian directly if you wish, julian.frede@yahoo.de.
I am looking forward to meeting most of you soon again at our Sector Network working group meeting hosted by Zana in Mozambique!
All the best,
Sören
Dr. Sören DAVID Conseiller principal "Promotion de l'électrification rurale par les énergies renouvelables" / Auftragsverantwortlicher Förderung der ländlichen Elektrifizierung durch Erneuerbare Energien Agence de Développement de l'Electrification Rurale (ADER) LOT II I 164 Ter - Amboniloha Ivandry - Antananarivo M: +261 (0)32 054 25 35 T: +261 (0)20 24 245 81 F: +261 (0)20 22 426 05
