Oil, Gas & Energy · Oil, Gas & Power
Bankability Monte Carlo of a Gas-to-Power Programme
An illustrative engagement: running an integrated Monte Carlo across gas price, FX, availability and sovereign-exposure for a domestic gas-to-power programme, aligning the tariff and sovereign support package into a structure lenders could underwrite.
Challenge
A national gas-to-power programme has been in structuring for many months. The tariff has been negotiated with the utility, the gas-supply agreement has been drafted with the upstream partner, and the sovereign guarantee has been agreed in principle with the ministry of finance — but the three have never been stress-tested together. The lender group asks for an independent bankability read before committing.
Solution
We rebuild the integrated model — upstream gas economics, midstream tolling, plant availability, tariff waterfall and sovereign exposure — as a single Monte Carlo. FX paths, gas-price distributions, availability curves calibrated to comparable IPPs, and a demand-shortfall scenario derived from utility take-or-pay history are run together. DSCR is measured across scenarios and the sovereign contingent liability is priced at the tail.
Results
Structural gaps between the gas-supply agreement and the tariff are closed before signing. The sovereign support package is re-scoped to a form the ministry of finance can carry without a contingent liability that would spook the rating agencies. Financial close is reached inside the revised timetable.
Future Applications
The integrated-Monte-Carlo approach is re-used on a second gas-to-power package and on a regional interconnector, and the sovereign-exposure pricing method becomes a reference document for the ministry's power-sector programme.
