Calculation of Risk Premium

The table below calculates the estimated risk premium:

Column 1

Column 2

Column 3

Column 4

Systematic Risk type

Weighting (Scale 1 - 5)

Estimated Portion of Project Risk Premium*

Allocation of risk based on Step 1 analysis

Risk Premium Transferred to Private Sector %

Based on relative importance

Project Risk Premium is 2.7% (per Step 3)

0<= Number <=1

Column 2 x Column 3

Demand

4.0

1.08%

0.1

0.11%

Inflation

3.0

0.81%

0.4

0.32%

Asset Residual value

1.0

0.27%

0.0

0.00%

Financial distress / insolvency

2.0

0.54%

0.9

0.49%

TOTAL PREMIUM

10 .0

2.7%

0.92%

*(Risk weighting/Total Col 1)* Project Risk Premium