Execution
Risks & Mitigations
Six risks worth naming. Each has a named mitigation built into the deal structure.
| Risk | What it looks like | Mitigation |
|---|---|---|
| Naira depreciation | Naira to ₦2,000+/USD; PPA real value erodes | USD-indexed PPAs with monthly reference rate; carbon credit USD revenue; offshore buffer for loan repayments |
| Anchor customer default | A Tier-1 PPA stops paying in years 4 to 10 | Portfolio of 8 to 12 anchors by year 5; no single customer above 15% of revenue; political risk insurance on largest two |
| LASERC framework instability | Lagos State electricity law modified or contested | State-level political engagement program through co-investor; federal-level relationship maintained through DFI lenders |
| Construction overrun | EPC delay or cost creep beyond contingency | Fixed-price EPC contract with liquidated damages; 12% contingency budget; phased capital draws |
| Federal reform reversal | Post-2027 administration weakens Electricity Act | Existing PPAs grandfathered under the original Act; portfolio diversified to multiple states by year 5 |
| Technology degradation | Battery cycle life worse than spec | Tier-1 supplier with manufacturer warranty; conservative degradation assumptions in financial model; replacement reserve in O&M budget |
Risks not mitigated
Two are accepted rather than mitigated. A Nigerian banking crisis that freezes naira working capital correlates with broader macro conditions and cannot be hedged at project level. A sustained Lagos industrial recession (24+ months) would impair the model but is not specifically a JCM exposure.
The big risks are designed out, not insured around
Each of the top three risks (naira, customer default, framework instability) is addressed in the deal structure itself, not in an external insurance layer. Insurance handles tail risks. The structure handles the base case.
25 / 35JCM Power · Lighting Lagos · MBA 662