early 2002 and then re-emerged six months later (see Volume II – Resources and
Infrastructure).Market risk, operating risk
The Andacollo gold mine in Chile was closed earlier than projected and its parent, Dayton
Mining, merged because of higher-than-expected production costs and lower-than-expected
gold prices (see Volume II – Resources and Infrastructure).Counterparty risk, political risk
TermoEmcali, a natural-gas-fired power plant that serves Cali, Colombia’s second largest
city, has been a successful project aside from a minor construction delay. Its problems stem
from the financial difficulty of Emcali, its sole offtaker, which relates to a weak underlying
economy and financial mismanagement (see Chapter 3).Counterparty risk, construction risk
The Casecnan Water & Energy project in the Philippines is viable under the ownership of
MidAmerican Energy Holdings despite a construction delay, but its original engineering, pro-
curement and construction (EPC) contract contractor defaulted, and Korea First Bank refused
to honour its standby letter of credit backing the contractor’s obligations. The bank finally
paid MidAmerican after a prolonged legal battle in US courts (see Chapter 15).Lessons learned
The case studies in Volume I – Power and Water andVolume II – Resources and Infrastructure
allow for the identification of certain lessons that may benefit future sponsors and investors
of project financing. Among the lessons learned from the 38 case studies in these volumes are
the following.Negotiating process
Brandon Blaylock of the GE Capital Services Structured Finance Group believes that project
participants in emerging-market projects must be prepared to both learn and teach. A suc-
cessful project requires close teamwork among all project participants, and sensitivity to each
other’s issues and needs. As those involved in concurrent IPP ventures in other developing
countries would agree, financing takes longer than expected in any first-of-its-kind project,
especially when there are difficult risk-allocation issues. Often the process is just as impor-
tant as the substance.Local community sensitivity and sustainable development programmes
The success of the Chad–Cameroon pipeline project (see Volume II – Resources and
Infrastructure), the Quezon Power project in the Philippines (see Chapter 11), and the
Tanzanian gold mine projects (see Volume II – Resources and Infrastructure) depended part-POWER AND WATERIntroduction.qxp 6/4/07 7:04 PM Page 24