Selecting the Right Partners and the Right Board: The Foundation of Bankable Power Projects

Power projects are often presented as a combination of technical design, financial modelling, and contractual structuring. These elements are essential and rightly receive significant attention during project development.

However, experience consistently shows that the success or failure of a power project is determined just as much by the quality of the partnerships behind it, and the effectiveness of the governance structure that guides it.

It is possible to have a technically sound project, supported by a well-structured financing plan, and still encounter significant delays or even failure. In many such cases, the underlying issue is not the structure of the project itself, but the alignment or otherwise among the parties involved.

This leads to a central proposition:

Partner selection and board composition are foundational decisions that shape the trajectory of a power project from inception to operation.

When Projects Stall: The Often Overlooked Cause

In the course of developing power projects, certain patterns tend to emerge.

Projects may progress steadily through feasibility, commercial structuring, and even advanced stages of negotiation. Yet, at critical points such as the execution of key agreements or the commencement of financing, progress may slow or halt altogether.

There have been instances where projects that were on the verge of signing Power Purchase Agreements have stalled due to disagreements among sponsors. In other cases, disputes between joint venture partners have escalated into litigation and arbitration, with direct implications for project timelines and operations.

These situations rarely arise because the project is not viable. More often, they arise because the parties involved are not sufficiently aligned in their objectives, expectations, or approach to governance.

A singular focus on profitability or capital contribution can obscure this risk. Power projects are long-term undertakings. They require enduring partnerships that can withstand pressure, adapt to change, and remain aligned over time.

A Structured Basis for Partner Selection

The selection of project partners should therefore be approached with the same level of discipline as financial structuring or risk allocation.

The Right Partner Framework provides a useful basis for evaluating potential stakeholders across five key dimensions.

1. Vision Alignment

Partners should share a common understanding of:

• The purpose and objectives of the project

• The expected timeline for development and operation

• The risk profile and return expectations

Differences in these areas may not be immediately apparent, but they tend to surface during key decision points, particularly where additional capital is required, timelines shift, or exit opportunities arise.

2. Execution Stamina

Power projects require sustained engagement over extended periods.

Partners must demonstrate the capacity to:

• Commit financial and human resources over the project lifecycle

• Remain engaged through delays, restructuring, or unforeseen challenges

• Maintain institutional focus on project delivery

A partner that lacks execution stamina can introduce significant risk, particularly during critical phases such as construction or financing.

3. Relevant Experience

Experience should be directly applicable to the specific project.

This includes:

• Familiarity with project finance structures

• Experience in similar infrastructure or energy projects

• Understanding of regulatory and market dynamics

General experience, while valuable, may not be sufficient in the context of complex power projects.

4. Innovation Capacity

Power projects do not proceed exactly as planned.

Regulatory changes, commercial constraints, and technical challenges are common. In a particular project, a last-minute policy decision by the government had significant impact on project risk allocation that took over one year to satisfactorily resolve. Partners should therefore be able to:

• Develop practical solutions to emerging issues

• Adapt to evolving circumstances

• Contribute constructively to restructuring efforts where required

Rigid approaches can become constraints rather than strengths.

5. Cultural Fit

Cultural alignment is often underestimated but remains critical.

Differences in:

• Decision-making processes

• Communication styles

• Governance expectations

can create friction that delays progress and complicates decision-making.

The key question is whether the partners can work together effectively under pressure.

Practical Safeguards in Partner Selection

While frameworks provide structure, practical discipline is equally important.

Alignment on Investment Objectives

Partners should be aligned on:

• Investment horizon

• Approach to financing

• Expected returns

Misalignment in these areas is one of the most common causes of disputes in infrastructure projects.

Due Diligence Beyond Reputation

Reputation alone is not a sufficient basis for partner selection.

It is important to assess:

• Track record in previous projects

• History of disputes with partners, contractors, or lenders

• Demonstrated ability to deliver under complex conditions

This level of diligence can help identify potential issues before they become material.

Clarity in Governance and Agreements

Partnership and Joint Venture agreements should clearly define:

• Roles and responsibilities

• Decision-making thresholds

• Mechanisms for resolving disputes

Clarity at the outset provides a structured basis for managing differences as they arise.

A Considered Approach to Equity Participation

Not every contributor to a project should necessarily be an equity partner.

Where there is uncertainty regarding long-term alignment, it may be more appropriate to involve certain parties at the board or advisory level rather than as shareholders.

This approach provides flexibility and reduces the risk of long-term governance challenges.

The Role of the Board in Project Success

If partner selection determines who participates in the project, the board determines how the project is governed.

The board serves as the central platform for:

• Strategic direction

• Oversight of project execution

• Resolution of issues as they arise

In complex infrastructure projects, the board is not a ceremonial body. It is an active decision-making forum that must balance multiple interests while maintaining focus on the project’s objectives.

A well-composed board reinforces alignment. A poorly structured board can amplify disagreements and delay progress.

Principles for Effective Board Composition

Alignment with Project Objectives

Board members should have a clear understanding of the project’s long-term objectives and be aligned with its strategic direction.

Complementary Expertise

An effective board brings together a range of relevant capabilities, including:

• Financial and project finance expertise

• Technical and operational knowledge

• Legal and regulatory insight

• Commercial understanding

This diversity of expertise supports well-informed decision-making.

Balanced Representation and Independence

While sponsor representation is necessary, there should also be provision for independent perspectives that enhance objectivity and strengthen governance.

Efficient Decision-Making Processes

Board structures should support timely decision-making, particularly during critical phases such as financing and construction.

Delays at board level can have significant implications for project timelines and costs.

Commitment and Engagement

Board members should be able to devote sufficient time and attention to the project.

Active engagement is essential to effective oversight.

Integrating Partner Selection and Governance

The most effective projects approach partner selection and board composition as interconnected decisions.

• Partners are selected not only for their capability, but also for their approach to governance

• Board composition is designed to reflect the skills and balance required for effective decision-making

• Governance structures are established early and tested against potential scenarios

This integrated approach enhances:

• Financing credibility

• Contract negotiation outcomes

• Risk allocation effectiveness

• Overall project delivery

Conclusion

Power projects are long-term commitments that require more than technical design and financial structuring.

They require:

• Carefully selected partners who are aligned in purpose and capable of sustained engagement

• Governance structures that support effective decision-making

• Boards that combine expertise, balance, and discipline

The selection of the right partners establishes the foundation of the project, while the composition of the right board ensures that this foundation is sustained throughout the project lifecycle.

Where both are properly addressed, projects are more likely to progress efficiently, achieve financial close, and deliver long-term value.

Where they are not, even well-structured projects may encounter avoidable challenges.

Strong projects are built on aligned partnerships and guided by effective governance.