TEV Study & LIE Report
A Techno-Economic Viability (TEV) study involves a comprehensive assessment of a project, integrating both technical and financial aspects to determine its feasibility and economic sustainability. This study consolidates relevant data on technological feasibility and economic viability into one or more criteria, which serve as the basis for recommending whether the project should be approved, modified, or rejected.
The primary objective of a Techno-Economic Viability (TEV) study is to provide lenders with a clear understanding of the risks associated with a project, enabling them to make informed decisions about its acceptability.
The study evaluates various risk factors, including technological, market, regulatory, and financial risks. A thorough and critical analysis of these parameters is crucial for conducting an effective TEV study and ensuring its accuracy and reliability.
Techno-Economic Viability (TEV) Study and Lender’s Independent Engineer’s (LIE) Report**
1. Technical Feasibility
Land Assessment: Evaluate the availability and suitability of land for the project.
Infrastructure Assessment: Assess the suitability and availability of infrastructure required for the company’s operations.
Skilled Manpower: Analyze the availability of skilled labor for the project.
Existing Capacity: Review the current capacity and its alignment with project requirements.
Market Potential:
– Study the present and future market scenario.
– Assess the existing marketing infrastructure.
– Conduct demand-supply analysis.
– Evaluate competition in the field.
2. Financial Viability
Cash Flow and Profitability:Assess future cash flows and profitability of the project.
Financial Projections: Evaluate financial viability based on:
– Income and cost projections.
– Cash flow analysis.
– Key financial metrics such as IRR (Internal Rate of Return), DSCR (Debt Service Coverage Ratio), DP (Debt Profile), and MPBF (Maximum Permissible Bank Finance).
Sensitivity Analysis: Conduct sensitivity analysis to evaluate the project’s resilience to changes in key variables.
3. Management Capabilities
4. SWOT Analysis
Lender’s Independent Engineer’s (LIE) Report
The LIE report is a technical due diligence report prepared by an Independent Engineer (selected by the lender) to review the technical and financial aspects of the project. The scope includes:
1. Project Cost Review
2. Contract Vetting
– Review contracts for various works awarded by the company, including:
– Liquidated damages.
– Performance guarantees.
– Reasonableness of contract prices.
3. Regulatory and Compliance Review
– Review necessary approvals, clearances, and permits required for:
– Construction.
– Operation and maintenance of the project.
4. Technical Inputs Review
Review technical inputs (e.g., output, efficiency, O&M expenses, availability) used in the financial model by the lender and developer/owner to justify project financing.
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This structured approach ensures a comprehensive evaluation of the project’s technical, financial, and regulatory aspects, aiding lenders in making informed decisions.