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OPIM 5894 Advanced Project management Chad Cameroon Pipeline case

OPIM 5894 Advanced Project management Chad Cameroon Pipeline case. Team 1. http://users.business.uconn.edu/snair/opim5894.html. Chad Cameroon Pipeline case. Why do you think the financing of the Field System is using equity and the Export System using debt?

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OPIM 5894 Advanced Project management Chad Cameroon Pipeline case

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  1. OPIM 5894 Advanced Project managementChad Cameroon Pipeline case Team 1 http://users.business.uconn.edu/snair/opim5894.html

  2. Chad Cameroon Pipeline case • Why do you think the financing of the Field System is using equity and the Export System using debt? • Field System is the primary asset. • Develop asset allows for collateral for future financing. • Export System is the cost-effective transportation method. • Alternate method of transportation could be developed if needed (sample: Cameroon). • Primarily being funded by the Government. Prof. Suresh Nair, University of Connecticut

  3. Chad Cameroon Pipeline case • Analyze the risks and returns to Chad, Cameroon and the Private Sponsors (Exhibits 4a, 4b)? • Chad and Cameroon have low financial risks. • Chad and Cameroon have high social environmental risks. • Private Sponsors have substantial financial risks but are capped. Prof. Suresh Nair, University of Connecticut

  4. Chad Cameroon Pipeline case • How were the returns calculated? • Based of projected production volumes and estimated price/barrel. • Host countries have fixed incomes based on royalty and pipeline taxes. • Are the risks and returns fair from each party’s perspective? • Private Sponsors and host countries – Returns are in line with risks. • IFC is in line with mission statement but not financial calculations. Prof. Suresh Nair, University of Connecticut

  5. Chad Cameroon Pipeline case • What is the World Bank/IFC’s role in this deal? • Alleviate poverty in undeveloped countries. • Bridge gap between high-risk projects in private investors by mitigating risk. • Experience dealing with governments specifically with economic development projects. • Are they likely to be successful? • Generally successful (70% of projects achieve their objectives with an average return of 22%). Prof. Suresh Nair, University of Connecticut

  6. Chad Cameroon Pipeline case • Will the Revenue Management Plan work? • No. • High risk of corruption after disbursement of funds. • Governments have the opportunity to reallocate revenue after five years. • Inexperienced oversight of committee government and Chadian government. Prof. Suresh Nair, University of Connecticut

  7. Chad Cameroon Pipeline case • Are there aspects of the plan that you think should be changed? • Funds need to be managed from start to finish by the IFC • Small-phased disbursement amounts for specific developed projects. • Change allocation revenue to a ten-year cycle. • Cap percentage change of allocations. • Add board member oversight by NGO sponsor. • Add subpoena and reporting power. Prof. Suresh Nair, University of Connecticut

  8. Chad Cameroon Pipeline case • Would you approve the deal as a World Bank/IFC board member? • Based on changes, YES. Prof. Suresh Nair, University of Connecticut

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