An unprecedented global crisis like the COVID-19 pandemic brings forth a need to be aware of changing global dynamics and a need to be proactive. While these circumstances are less than ideal, K&M is working diligently to provide a number of services to its clients so as to ensure productivity and financial stability as well as to minimize risks.
COVID-19 hastens the need for project financiers and borrowers to consider the implications of their financial documents. In regard to complex infrastructure projects like power plants, delays or interruptions in construction or effects on the commercial operation of the project can have significant implications for the project’s financial performance, which in turn may affect the project company’s ability to meet the required debt coverage ratios and repay the debt.
As lenders’ technical advisor, K&M’s Technical Services Team, led by Lenny Golbin, is assisting financial sector clients in Jamaica to analyze the possible impacts of the global health crisis on the performance of gas-fired power plants and other industries there. The scope of work includes a general review of the current status of the project and the internal and external factors related to the COVID-19 pandemic that could reasonably affect the planned performance of the project and contribute to an increased risk of debt repayment for the lenders. The risk assessment includes factors such as construction risks, off-takers demand risk, operational risk, fuel and other critical supplies delivery risk, contractual risk, and others. A quantitative analysis of sensitivities to different scenarios in the financial model of the project is also being prepared.
Additionally, K&M’s Policy and Regulation Team, led by Nils Janson, is pleased to be working with water utilities and governments in Latin America and the Caribbean to quantify the impacts of COVID-19 and to identify mechanisms to mitigate these impacts.