18.9.13 Protection from Competition
Depending on the nature of the BOT project, the project company may require some
assurance from the government against any politically-motivated competition.
Lenders and investors require to be protected against potential competitors in the
same field of operation during the concession period.
18.9.14 Operational Risks
Improper Operation
Plant Performance
Equipment Failure
Physical Risks
These risks are termed “Post-completion” risks and, in theory, are small when
compared with the “pre-completion” risks. As per their nature, these risks are usually
taken by the private sector, allocated between the project company, the construction
and supply firms.
18.9.15 Risk Backstopping
Risk backstopping refers to the provision of measures to mitigate the risks, and if
possible, stop them. In BOO-BOT projects, where financing relies on the “limited
recourse” concept, i.e. on the cash flow of the project, the only recourse of the
lenders is the project itself.
Hence it is important that the risks be seriously analysed, and mitigated in the best
possible way, based on past experience of similar events and projects, in the best
interest of the parties concerned.
A summary of possible risks and potential solutions is given in Table 18.2.
18.10 Project Agreements
As explained in para. 18.4.2, in BOT projects, (“Limited Recourse” concept), the
only recourse of the lenders is the project itself.
Hence it is important that the risks be seriously analysed, and mitigated by a series
of Agreements, which are also termed “Security Package” that ensure no gaps are
left, and that comprise the overall security of the project and allocate risk and reward.
The Agreements usually included in a BOT Project are listed in Table 18.3.
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18 Infrastructure Markets and the Private Sector
Depending on the nature of the BOT project, the project company may require some
assurance from the government against any politically-motivated competition.
Lenders and investors require to be protected against potential competitors in the
same field of operation during the concession period.
18.9.14 Operational Risks
Improper Operation
Plant Performance
Equipment Failure
Physical Risks
These risks are termed “Post-completion” risks and, in theory, are small when
compared with the “pre-completion” risks. As per their nature, these risks are usually
taken by the private sector, allocated between the project company, the construction
and supply firms.
18.9.15 Risk Backstopping
Risk backstopping refers to the provision of measures to mitigate the risks, and if
possible, stop them. In BOO-BOT projects, where financing relies on the “limited
recourse” concept, i.e. on the cash flow of the project, the only recourse of the
lenders is the project itself.
Hence it is important that the risks be seriously analysed, and mitigated in the best
possible way, based on past experience of similar events and projects, in the best
interest of the parties concerned.
A summary of possible risks and potential solutions is given in Table 18.2.
18.10 Project Agreements
As explained in para. 18.4.2, in BOT projects, (“Limited Recourse” concept), the
only recourse of the lenders is the project itself.
Hence it is important that the risks be seriously analysed, and mitigated by a series
of Agreements, which are also termed “Security Package” that ensure no gaps are
left, and that comprise the overall security of the project and allocate risk and reward.
The Agreements usually included in a BOT Project are listed in Table 18.3.
524
18 Infrastructure Markets and the Private Sector