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July 2014NEW

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SELECT CURRENT TRANSACTIONS$3.5 Billion Urea/Methanol FacilityBrass Fertilizer Company Limited and a Danish Consortium led by Haldor Topsøe A/S have signed an agreement to participate in the design and construction of a $3.5 billion urea, methanol and gas processing plant on Brass Island, Bayelsa State, Nigeria. Taylor-DeJongh is the financial advisor for the project, with support from local partner TAV Associates.

The project is the largest new private sector investment in the Niger Delta region of Nigeria, creating 15,000 jobs during the construction phase, with the potential to create over 5,000 permanent jobs upon completion. The plant is expected to be operational in 2018. The proposed plant will utilize natural gas via a dedicated pipeline that will produce 3,850 MT/day of urea and 5,000 MT/day of methanol. Gas feedstock is to be provided through a direct supply from Shell’s OML 33 field and will be treated and processed by Brass Gas Limited. Project management consulting for the urea/methanol plant will be performed by Engineers India Limited (EIL). The shortlisted EPC and O&M contractors will be selected shortly. Helm AG, a leading global chemicals marketer, has been confirmed as an offtaker.

Joint Oil BlockTDJ is advising Sonde Resources as the firm progresses its process to explore and evaluate potential strategic alternatives to enhance shareholder value with regard to the Joint Oil Block, offshore Tunisia and Libya. Taylor-DeJongh has been engaged in discussions with several potential international and Middle Eastern investors. TDJ is also managing the Virtual Data Room (VDR) on behalf of Sonde and selected interested companies are pres-

ently reviewing information in the VDR. Sonde is the 100% WI holder in the Joint Oil Block which includes part of the Zarat Field, the largest undeveloped field in Tunisia and the most significant discovery since Miskar in 1975.

Uganda: Bids Received for Role of Lead Investor for 60,000 BPD RefineryFour shortlisted firms/consortia submitted proposals to the Government of Uganda for the role of Lead Investor for the development and operation of the 60,000 barrels per day (BPD) oil refinery and related downstream infrastructure in the country. The PPP refinery will be the first of its kind in the country and represents one of the largest private sector investment projects in the nation’s history.

The four shortlisted firms/consortia that have submitted proposals are led by: China Petroleum Pipeline Bureau (CPPB), Marubeni Corporation, RT – Global Resources, and SK Group. TDJ is leading the transaction advisory team supporting the Ministry of Energy & Mineral Development.

Robert Kasande of the Ministry of Energy & Mineral Development (bottom right), with TDJ’s Terry Newendorp, Ibrahim Mardam-Bey, and John Sachs

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TDJ’S AWARDS

Regarding NTE,

“TDJ contributed

in-depth

understanding of

the interrelationship

between private

and public sources

of capital and the

structuring of

innovative complex

transactions”

noted CEO Terry

Newendorp

“Best Project Finance Advisor, Africa,” 3rd Year in a RowTaylor-DeJongh continues to underscore its reputation for expertise in African project finance transactions, having been named once again the Best Project Finance Advisor, Africa, by EMEA Finance magazine. This is the third consecutive year, and the fourth time since 2007, that Taylor-DeJongh has won this prestigious award. The firm has a long history advising on energy and infrastructure projects in Africa, having advised on more than 90 projects in 32 countries since the 1990s. In 2013, the firm worked on projects in the Republic of Congo, Egypt, Mauritania, Nigeria, Tanzania and Uganda. EMEA Finance highlighted several of TDJ’s projects in announcing the award – including an advisory on the development and financing of a gas-fired power project in Mauritania for SPEG and the development and financing of Uganda’s first greenfield oil refinery.

North American Transport Deal of the Year Infrastructure Investor magazine has named the Texas North Tarrant Express Segments 3A and 3B project as the North American Transport Deal of the Year. TDJ was the financial advisor to US Dept. of Transportation TIFIA program, as a core lender to the transaction. The project was selected for this award because it “showed the public and private sides in the US working in harmony, on both project delivery and financing.” The dual delivery method, where responsibility for the construction was split between the private concessionaire and the public sponsor, requires a creative project structuring solution and careful balancing of risk allocation between the two key parties, matched by an appropriate mix of public and private funds. The judges for Infrastructure Investor commented that the project is impressive in that it presented new concepts and investors, and that the structure is different and complex.

From left to right:Christopher Moore, Publisher &CEO of EMEA Finance,Terry Newendorp, Chairman & CEO of Taylor-DeJongh, and Tim Burke, Editor at EMEA Finance

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Gas ConversionProposals for gas-conversion projects in the United States are growing rapidly as gas prices remain competi-tive to oil driven by the shale gas boom. Developers expect this price differential to continue in the medium term and are planning more than 50 projects, most of them small and mid-scale, to produce higher value products from natural gas, such as on gas-to-fertilizer, direct-reduced iron (DRI) and dimethyl ether (DME). Only those projects that are well structured technically, commercially and financially will be built.

Managing Director Ramesh Raman spoke to developers of gas conversion projects at the GTL North America workshop on “Financing GTL Projects” in Houston in early June. Mr. Raman focused on project finance structures and attributes for gas conversion projects required to make projects financeable. He described various commercial structures and their bankability implications and highlighted the lenders’ perspective in GTL project financing.

Floating Liquefied Natural Gas (FLNG)The race to build LNG plants across the globe has given rise to a wide spread in capital costs. Newer inte-grated facilities fall between $1,000-1,800/tpa on the cost curve (USD/tons per annum), while liquefaction only projects come in at costs between $600-1,200/tpa. Floating LNG (FLNG) has been described as one solution to achieve a lower overall cost, although two of the three more advanced projects sit among the higher cost LNG projects, as they are larger and offshore. The barge-type FLNG projects are notably smaller in scale, but sit among the lower cost tier. On the basis of USD/tpa, the Lavaca Bay FLNG and Exmar/Pacific Rubiales FLNG projects are cost competitive with the Sabine Pass LNG project. Achieving competitive costs and bucking the trend in growing capital costs will prove crucial as LNG projects are built in sub-investment grade environments.

CEO Terry Newendorp spoke on two panels at the June 9th Annual FLNG Conference in London. One—a strategic roundtable session—focused on issues and risks on the minds of financiers. Mr. Newendorp also gave his outlook on how these issues applied to the African market, where plans for large and small FLNG projects have begun to appear.

Islamic FinanceThe world’s first Islamic bond will be issued by a Western country in 2014. The United Kingdom and Luxem-bourg intend to tap the shariah-compliant sovereign markets. Hong Kong has also taken steps to introduce new legislation to allow the issuance of sukuk and is expected to enter the market this year, for a total of three first-time sovereign issuances in 2014. Analysts are predicting a record year for sukuk demand, sup-ported by sovereign issuances to finance infrastructure projects, mainly in Malaysia, Saudi Arabia, and the UAE. Even though the non-Islamic sovereign issuances will be very modest when compared to the global sukuk market size (the UK has planned £200m for its first sukuk, less than 1% of the $137bn forecasted market in 2014), they will be significant in attracting other countries to tap Islamic finance markets and broadening the range of debt available to investors.

Group President Ibrahim Mardam-Bey gave an outlook on the sukuk markets and high-lighted the opportunities of government financing using Islamic finance, in a Peer Group Dia-logue organized by The World Bank and the IFC, on June 3rd. Sovereign debt managers of more than 15 countries, including representatives from government Treasuries, Central Banks, and Ministries of Finance, participated in an active dialogue. Participant countries included Malaysia, Saudi Arabia, Brazil, Hungary, Kenya and Turkey.

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With the recent passage of the Water Resources Reform and Development Act (WRRDA), there is growing acknowledgement by our lawmakers that public funding cannot be the only source of finance for the massive investment needed in the infrastructure in the United States. Congress recently adopted the WRRDA, which provides for additional financing opportunities for waterway and port projects. Modelled after the TIFIA program, WRRDA authorized the Water Infrastructure Finance and Innovation Act (WIFIA) credit program to finance the construction and repair of waterway and port projects across the U.S. WRRDA was signed into law by the President on June 10. This program represents an important next step in expanding the financing solutions available for the country’s water infrastructure needs.

In addition, the recent increased success of the TIFIA (Transportation Infrastructure Finance and Innovation Act) and PABs (Private Activity Bonds) programs for enabling increased private invest-ment in transportation infrastructure has been demonstrated by the volume and number of closed P3 deals in the market. As of May 2014, TIFIA had approved 45 projects with total TIFIA assistance of $17.1bn (inclusive of retired credit agreements), including the Goethals Bridge Replacement Project in New Jersey and New York ($473.7m), US 36 Managed Lanes/BRT: Phase 2 in Colorado ($60m), Port of Miami Tunnel in Florida ($341m) and North Tarrant Express (Segments 3A and 3B) in Texas ($531m). As of April 18 2014, more than $4.6bn in U.S. DOT PABs had been issued for 11 projects, and allocations approved by DOT totaled over $5.2bn for seven additional projects. All but two of these projects are P3 schemes, including the recent Ohio River Bridges East End Crossing ($676.8m, the largest issuance to-date) and Goethals Bridge ($460.9m) projects, and the only US mass transit P3 project to achieve financial close to-date, the Denver FasTracks Eagle Project ($397.8m).

The proposed $302bn surface transportation bill recently sent by President Obama to the U.S. Con-gress speaks to the success of the U.S. DOT’s TIFIA and PABs programs. While the current trans-portation bill, Moving Ahead for Progress-21 (MAP-21), is scheduled to expire in September 2014, when Congress will pass a new surface transportation bill is unclear. In addition, the Highway Trust Fund (HTF), the main transportation funding source in the United States, is projected to run out of funds sometime in August. Industry stakeholders and legislators are searching for new ways to fund transportation infrastructure projects.

The US P3 market will continue to grow only if these financing tools continue to evolve to provide enhanced opportunities. The combination of private equity and debt financing from TIFIA, PABs and WIFIA provide the necessary capital needed to fund the multitude of transportation and water infra-structure projects under development in the U.S.

Taylor-DeJongh has been advising on P3 projects for decades. In the past seven years, the firm has assisted with bringing four P3 projects and four TIFIA/MARAD loan guarantee advisories to financial close, with one other P3 and two other TIFIA projects expected to reach financial close in the next 12 months. Contact us for assistance with your or your client’s needs in developing innovative and creative financial structures for your projects.

What’s Next for P3s in the United States?