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Understanding Power Purchase Agreements

Sources:

Power Africa

African Legal Support Facility (ALSF)

Commercial Law Development Program (CLDP)

Authors:

Mohamed Badissy

Mahib Cisse​

Patrick M. Dougherty

Alex Evans

Nnaemeka Ewelukwa

Jay Govender

Ryan T. Ketchum

Allen B. Leuta

Anastas P. Mbawala

Eluma Obibuaku

Toyin Ojo

Tim Scales

Amir Shaikh

Michael Tam

Date:

3 November 2014

This handbook is intended to provide governments, utilities, investors and other interested stakeholders with a guide to understand (1) the power market and contractual framework of a power purchase agreement (PPA) that operates in that market, (2) the considerations involved in securing financing for a power project, (3) the tariff structure, purchase obligations and other key financial provisions of a PPA, (4) credit support and security issues for both the seller and buyer under the PPA, (5) the risks associated with an independent power project and how such risks are typically allocated and mitigated under the PPA and (6) other key provisions in the PPA, with a particular focus on provisions related to default and termination.