Table 5 Political risk perception by...

Table 5

Political risk perception by interviewees

Political risk factors	Quotations
1 – Corruption and bribes	(a) “We have to follow our code of conduct…and it can be a reason that a project never materializes [for us]"; (b) “This was a hot topic during project development and sales… project owner did special training arrangements for us to understand this topic [about the project country]”; (c) “We force our [local] partners to comply to those rules [Energy Co.’s code of conduct]”; (d) “If our competitors [in countries with this high risk] do not follow the same [European] rules then we are out… there is saying that ‘kind kids care waiting and left without”; (e) “It was directly negotiated project [an example] with an SOE. [due to some compliance issues] it was decided that Energy Co. will not make direct deal with SOE”
2 – Delay in approval of permits	(a) “[In countries with high corruption] we do not want to do this”; (b) “They keep in asking you different documents so the approvals etc. will be delayed”; (c) “You want your permit approved but there is always an official way and there is also a ‘faster way’ to it…but for us there is one way to do it and that is to do it by the book”
3 – Nationalism or confiscation	(a) “It is important to consider [already during development phase]”; (b) “There are some historical examples… in country [name] it may not a problem anymore”
4 – Profit remittance and exchange restrictions	(a) “If the country runs out of foreign exchange [reserves] so you cannot take back you cash from the country…so you have to have ways to mitigate this. You do this during project development phase otherwise those will affect you later on”; (b) “You need to take into account what are the national limitations in transferring funds to our home country bank accounts for example, I have heard that in [country name] they implemented that you cannot transfer money outside the country and if you manage to transfer then there are very high taxes”
5 – Import restrictions	(a) “They want us to find local suppliers for non-critical items, and if those materials are available locally then there are quality-related challenges which need extra arrangements from our side…They have a way to blacklist foreign countries if the local content of certain % is not used”; (b) “They ask different things [to include] in the [import documentation name]… an indirect way to restrict”
6 – Discriminatory taxation/change in tax regulations	(a) “Taxation is a big risk even having local office, we still need to verify if they are entitled to do this as a local company”; (b) “Country decides they have a problem of managing the fiscal budget. So they raise taxes and your profit as investor decreases and it can reduce your ROI, unless you mitigate this risk in development phase"
7 – Political regime change	(a) “It is difficult you have to trust that the agreement you signed will [with]stand”; (b) “The new projects should be up and running in very short periods [less time is available for implementation], and before the next elections”; (c) “Next year there are elections…they [politicians] are busy with the energy industry to make new plans, so getting new projects is difficult”; (d) “It is political risk due to which many projects go on hold or [otherwise] the project business slows down when the new governments come into power”
8 – Restriction on the number of expats	(a) “We had to make [employment] contracts of foreigners [with our branch office] and then also had to hire locals too”
9 – Contract repudiation	(a) “Usually the need for electric power is increasing [in emerging markets]. So, we do not see this as a risk factor”; (b) “Hardly ever, but there are delays in starting of the signed contract. It happened once in my experience… customer was not able to arrange equity in the agreed currency”
10 – Excessive demands and variations in project from the host government over time (contract violations)	(a) “They do understand that they have power... when it comes to commercial part they have [country's] annual budget they are ties to. Sometimes depending on their budget figures, they start to find errors in our invoice, such as the difference of few decimals. They typically do not tell us immediately [as per the contract]… and we never get what is official [way]"; (b) “If the team are not knowledgeable then the bidder suffers because then they [regulators] can ask make unnecessary requirements and may try to use the space for situation which is not in compliance with certain rules”; (c) “… Yes [in country] contract is helpful when there is extreme conflict”; (d) “Letter of credit losses its meaning, for example, when the invoice has to be approved the customer in some countries like some of our customers are government owned company. In that case ways for limitation are very limited”
11 – Enforced renegotiations of contract by the host government	(a) “[signed] contract is not important for them… you have to have courage to sit with them to discuss again and again …”; (b) “They renegotiate all the time. It is their way of working”
12 – Unstable government policies impacting the project	(a) Government policy is a trigger for developing [energy infrastructure] projects…“This develop trust or distrust....”; (b) “But for the projects in sales pipeline, the political policies uncertainty then the investment decisions are hold”; (c) “They have track record for handling foreign investors: clear rules with proven [implemented] projects”
13 – Unstable local transportation rules and regulations	(a) “We outsource the whole transportation of our equipment to an international firm. But they were not prepared because that company was not understanding the local requirements”; (b) “Every regional office had their own way of working… each time you have different dimension to the communication. The SOE stakeholders were not aligned and they were control freaks and want to have you on knife edge”
14 – Terrorism at site location	(a) “We did some studies and involved our security manager [local office support] to make plan”; (b) “and also sometimes that which part of the country you are doing project. For example, in case project [name of project] …”
15-Risk of labor unions/labor protests	(a) “We usually do it during project development phase and get inputs from various [potential] sub-contractors”; (b) “Every year [period name] there is a raise of salaries but due to […] there were layoffs instead of wage raise. We can't do anything but to plan our project [works] accordingly…we also involved consortium leader for this”
16 – Outbreak of inter-state war	(a) “It is something you consider [already during project development], but you do not spend much time on it”
17 – Social violence/strikes	(a) “… Then everything stops. It is not easy to move…For project [name] meeting, I was in [county name] when people come out on rods for strike. I asked the customer to please come to my hotel because I cannot move outside”
18 – Weakly enforced laws and regulations	(a) “It is a problem not impact on our business because energy sector regulations are clear and enforced”; (b) “We always try to use a neutral country for applicable law. We prefer that it is the buyer country legislation is not applicable. We try to avoid the need to go to the local court …”
19 – Anti-project demonstrations by public	(a) “If you are developing a project, you leave it to a later stage. [But] if the site is such a region then you have to consider how to move people out [in such situations]”; (b) “The local community started to though rocks and stopped us [to continue work]. Project work was suspended for seven days”
20 – Security problems/risk of violent attack on project site	(a) “The first most important think come to my mind is the people you are going to bring to that country”; (b) “We stay at designated areas [in the city] and then the timing and schedules of our local travel and routing need to altered… Don't expose yourself much”

Political risk factors	Quotations
1 – Corruption and bribes	(a) “We have to follow our code of conduct…and it can be a reason that a project never materializes [for us]"; (b) “This was a hot topic during project development and sales… project owner did special training arrangements for us to understand this topic [about the project country]”; (c) “We force our [local] partners to comply to those rules [Energy Co.’s code of conduct]”; (d) “If our competitors [in countries with this high risk] do not follow the same [European] rules then we are out… there is saying that ‘kind kids care waiting and left without”; (e) “It was directly negotiated project [an example] with an SOE. [due to some compliance issues] it was decided that Energy Co. will not make direct deal with SOE”
2 – Delay in approval of permits	(a) “[In countries with high corruption] we do not want to do this”; (b) “They keep in asking you different documents so the approvals etc. will be delayed”; (c) “You want your permit approved but there is always an official way and there is also a ‘faster way’ to it…but for us there is one way to do it and that is to do it by the book”
3 – Nationalism or confiscation	(a) “It is important to consider [already during development phase]”; (b) “There are some historical examples… in country [name] it may not a problem anymore”
4 – Profit remittance and exchange restrictions	(a) “If the country runs out of foreign exchange [reserves] so you cannot take back you cash from the country…so you have to have ways to mitigate this. You do this during project development phase otherwise those will affect you later on”; (b) “You need to take into account what are the national limitations in transferring funds to our home country bank accounts for example, I have heard that in [country name] they implemented that you cannot transfer money outside the country and if you manage to transfer then there are very high taxes”
5 – Import restrictions	(a) “They want us to find local suppliers for non-critical items, and if those materials are available locally then there are quality-related challenges which need extra arrangements from our side…They have a way to blacklist foreign countries if the local content of certain % is not used”; (b) “They ask different things [to include] in the [import documentation name]… an indirect way to restrict”
6 – Discriminatory taxation/change in tax regulations	(a) “Taxation is a big risk even having local office, we still need to verify if they are entitled to do this as a local company”; (b) “Country decides they have a problem of managing the fiscal budget. So they raise taxes and your profit as investor decreases and it can reduce your ROI, unless you mitigate this risk in development phase"
7 – Political regime change	(a) “It is difficult you have to trust that the agreement you signed will [with]stand”; (b) “The new projects should be up and running in very short periods [less time is available for implementation], and before the next elections”; (c) “Next year there are elections…they [politicians] are busy with the energy industry to make new plans, so getting new projects is difficult”; (d) “It is political risk due to which many projects go on hold or [otherwise] the project business slows down when the new governments come into power”
8 – Restriction on the number of expats	(a) “We had to make [employment] contracts of foreigners [with our branch office] and then also had to hire locals too”
9 – Contract repudiation	(a) “Usually the need for electric power is increasing [in emerging markets]. So, we do not see this as a risk factor”; (b) “Hardly ever, but there are delays in starting of the signed contract. It happened once in my experience… customer was not able to arrange equity in the agreed currency”
10 – Excessive demands and variations in project from the host government over time (contract violations)	(a) “They do understand that they have power... when it comes to commercial part they have [country's] annual budget they are ties to. Sometimes depending on their budget figures, they start to find errors in our invoice, such as the difference of few decimals. They typically do not tell us immediately [as per the contract]… and we never get what is official [way]"; (b) “If the team are not knowledgeable then the bidder suffers because then they [regulators] can ask make unnecessary requirements and may try to use the space for situation which is not in compliance with certain rules”; (c) “… Yes [in country] contract is helpful when there is extreme conflict”; (d) “Letter of credit losses its meaning, for example, when the invoice has to be approved the customer in some countries like some of our customers are government owned company. In that case ways for limitation are very limited”
11 – Enforced renegotiations of contract by the host government	(a) “[signed] contract is not important for them… you have to have courage to sit with them to discuss again and again …”; (b) “They renegotiate all the time. It is their way of working”
12 – Unstable government policies impacting the project	(a) Government policy is a trigger for developing [energy infrastructure] projects…“This develop trust or distrust....”; (b) “But for the projects in sales pipeline, the political policies uncertainty then the investment decisions are hold”; (c) “They have track record for handling foreign investors: clear rules with proven [implemented] projects”
13 – Unstable local transportation rules and regulations	(a) “We outsource the whole transportation of our equipment to an international firm. But they were not prepared because that company was not understanding the local requirements”; (b) “Every regional office had their own way of working… each time you have different dimension to the communication. The SOE stakeholders were not aligned and they were control freaks and want to have you on knife edge”
14 – Terrorism at site location	(a) “We did some studies and involved our security manager [local office support] to make plan”; (b) “and also sometimes that which part of the country you are doing project. For example, in case project [name of project] …”
15-Risk of labor unions/labor protests	(a) “We usually do it during project development phase and get inputs from various [potential] sub-contractors”; (b) “Every year [period name] there is a raise of salaries but due to […] there were layoffs instead of wage raise. We can't do anything but to plan our project [works] accordingly…we also involved consortium leader for this”
16 – Outbreak of inter-state war	(a) “It is something you consider [already during project development], but you do not spend much time on it”
17 – Social violence/strikes	(a) “… Then everything stops. It is not easy to move…For project [name] meeting, I was in [county name] when people come out on rods for strike. I asked the customer to please come to my hotel because I cannot move outside”
18 – Weakly enforced laws and regulations	(a) “It is a problem not impact on our business because energy sector regulations are clear and enforced”; (b) “We always try to use a neutral country for applicable law. We prefer that it is the buyer country legislation is not applicable. We try to avoid the need to go to the local court …”
19 – Anti-project demonstrations by public	(a) “If you are developing a project, you leave it to a later stage. [But] if the site is such a region then you have to consider how to move people out [in such situations]”; (b) “The local community started to though rocks and stopped us [to continue work]. Project work was suspended for seven days”
20 – Security problems/risk of violent attack on project site	(a) “The first most important think come to my mind is the people you are going to bring to that country”; (b) “We stay at designated areas [in the city] and then the timing and schedules of our local travel and routing need to altered… Don't expose yourself much”

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