What Is A Direct Agreement In Project Finance

The type of structure used depends on the type of facility included in the project and the person responsible for its operation after the completion of the construction phase. One question that can be negotiated intensively is what lenders are responsible for when they intervene. They shall be responsible for any unpaid payments and undiled obligations of which they will be informed. The extent to which they assume responsibility for unknown and unreported liabilities is often controversial. Lenders will only want to be liable for liabilities that are informed. The third party who agrees to intervene will obviously want the lenders to be responsible for everything. This mechanism allows the designated representative to exit easily. If necessary, a direct agreement may contain clauses in which the counterparty to the project document consents to the collection or assignment as security of the project company`s rights under the project document. Project Sponsor: The person who plays an active role in leading the project. The project promoter owns Projectco and receives a profit, either due to projectco 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 early PFI projects, it was common to have separate agreements for different phases of the project, such as .B. a development agreement for the design and construction phase and an operation or facilities management agreement for the operation phase. .