The Development phase or “pre-FEED” (Front-End-Engineering-Design) covers specific activities such as strategy, evaluation, planning and definition from “Concept-To-Operations” with emphasis on capital expenditure (CAPEX) and operating expenditure (OPEX) with prime goal to improve asset performance, increase value, reducing costs and lowering risks.
Most of these major capital projects typically undergo structured project finance (non-recourse, limited recourse, total recourse) and the important pre-Financing phase specifically covers; Feasibility, Permits & Clearances and Contracts. Project developers undertake a considerable number of studies, reports and analysis during the Feasibility phase covering technical, economic, financial, commercial, regulatory, environmental and social aspects. These activities, in turn, have a direct impact on securing Permits & Clearances as well as various transactional Contracts which are “sacro-sanct” with “back-to-back” arrangements.
In summary, the Development phase is vital to enhancing “bankability” of major capital projects while ensuring syndication of equity and debt leading to successful Financial Closure.