BrightAfrica, an energy company, has been running solar plants in many countries across Africa. The company sells electricity to national utilities through long-term power purchase agreements (PPAs). Recently, it received a request from the government of an African country to supply 300mw electricity through a 25-year PPA. In the past, the company used a combination of corporate finance and project finance schemes to implement solar power projects, but management is unsure which scheme to use for the proposed project due to some unique characteristics of the deal and the host country's economic environment. The country has a stable political environment with a peaceful election two months ago, but the economy is struggling with inflation that is spiraling out of control and persistent output contraction. BrightAfrica has a solid balance sheet and hence can raise debts on its own account from the international capital market, but the CEO is a bit wary about the tough economic conditions in the country.

Which financing scheme would you use, what would you recommend?

What key assumptions will you make in your recommendations?

Identify the key risks and the mitigation strategies for the recommended financing technique.

Answer rating: 100% (QA)

Given the unique characteristics of the deal and the host countrys economic environment as well as B... View the full answer