Agreement To Finance Project
We are the only “principal” who participates in the financing of projects and is not a real participant in the agreement, so the stakeholders usually give us some leeway, given that we are an impartial arbiter of project funding documents and are only bound to a successful project. The key to protecting project sponsors from recourse liability is the development of well-developed project financing documents. To protect our clients, we negotiate project financing documents on their behalf to ensure they are well thought out and written. Project sponsor: the person who plays an active role in the management of the project. The project promoter owns Projectco and obtains a profit, either due to projectco`s ownership or through management contracts, if the project is successful. The proponent often has to cover certain liabilities or risks of the project by providing guarantees or by entering into management or service contracts. In the first PFI projects, it was customary to have separate agreements for different phases of the project, such as for example. B a development agreement for the design and construction phase and an operations management or facility management agreement for the operation phase. Today, however, it is more common to have a single project agreement covering all aspects of the project. 1.
Fixed or variable delivery: the supplier undertakes to provide the project company with a fixed quantity of deliveries according to an agreed schedule or a variable delivery between an agreed maximum and a minimum. Delivery can be made under a take-or-pay or a take-and-pay. A delivery contract is concluded between the project company and the supplier of the necessary raw material/fuel. Concession instruments are available in most projects involving a government or sovereign authority, such as.B. infrastructure projects, and are always executed by a national, regional or local government. Find out more about concession instruments in project financing documents. Construction Contract: Projectco enters into the construction contract with the contractor under which Projectco`s construction obligations in the project contract will be transferred to the contractor. Project financing is the long-term financing of infrastructure and industrial projects, based on the project`s expected cash flows and not on the balance sheets of its promoters.
Typically, a project finance structure includes a number of investors called “sponsors” and a “consortium” of banks or other credit institutions that provide loans for the operation. These are typically non-recourse loans that are secured by the project`s asset funds and fully paid for by the project`s cash flows and not by the general assets or creditworthiness of the project sponsors, a decision supported in part by financial modelling.  see project funding model. . . .