Table 18.2 Summary of possible risks for BOT projects
Risks
Solutions
Negotiation phase
Project abandoned
Proper and sound project
Advantages to host country
Construction phase
Force majeure
Insurance
Government compensations
Political risk
Insurance
Export credit agency cover
Infrastructure
Government assurances
Completion delays
Experienced turnkey contractor
Proven technology
Performance guarantee
Performance bonus, penalties, liquidated damages
Cost overruns
Lump sum contract, fixed rates
Increased equity
Standby credit
Operation phase
Foreign exchange
Escrow accounts
Central bank assurances
Swaps
Flexible price formulae
Technical performance
Proven technology
Deficiency agreement
Performance guarantee
Contractor’s equity
Operation and maintenance
Experienced operator
Contractor or licensor involvement
Revenue flows
Market study, demand growth
Other contingencies
Contract covenants
Government support
Table 18.3 Agreements usually included in a BOT Project
No.
Agreements
1
Concession agreement/Implementation agreement
2
Shareholders agreement
3
Escrow agreement
4
Sales/purchase agreement
5
Supply agreement
6
Construction agreement
7
Operations and Maintenance (O & M) agreement
8
Insurance policies
9
Loan agreement
18.10 Project Agreements
525