• Home
  • Courses
  • About Us
  • Contact
Have any question?
(+255 27) 254 3226
training@ealawsociety.org
RegisterLogin
East Africa Law Society InstituteEast Africa Law Society Institute
  • Home
  • Courses
  • About Us
  • Contact

Public Private Partnerships in the Infrastructure Sector

  • Home
  • All courses
  • eals
  • Public Private Partnerships in the Infrastructure Sector
CoursesealsPublic Private Partnerships in the Infrastructure Sector
  • Introduction to PPP in the infrastructure sector 6

    • Lecture1.1
      What is PPP and how is the concept defined? 30 min
    • Lecture1.2
      The growth of PPP from an historical perspective 30 min
    • Lecture1.3
      The concept of privatisation in the context of PPPs 30 min
    • Lecture1.4
      Conventional procurement and PPP procurement 30 min
    • Lecture1.5
      Examples of PPP reform 30 min
    • Lecture1.6
      Summary of key characteristics and criteria of PPPs 30 min
  • Chapter 2: Structuring a PPP project 5

    • Lecture2.1
      Structuring a PPP project 30 min
    • Lecture2.2
      Project structuring: feasibility study 30 min
    • Lecture2.3
      PPP economics 30 min
    • Lecture2.4
      PPP economics 30 min
    • Lecture2.5
      Alternative PPP structure: rail project case study 30 min
  • Chapter 3: Financing an infrastructure PPP project 6

    • Lecture3.1
      Sources of financing for an infrastructure PPP project 30 min
    • Lecture3.2
      What is Project Finance? 30 min
    • Lecture3.3
      Drawbacks of using project finance in infrastructure PPP transactions 30 min
    • Lecture3.4
      Structure 30 min
    • Lecture3.5
      Key parties 30 min
    • Lecture3.6
      Timeline for financing an infrastructure PPP project 30 min
  • Chapter 4 :Documenting the transaction: anatomy of a PPP concession agreement and key risk allocation issues 11

    • Lecture4.1
      Scope and term of a PPP Concession Agreement 30 min
    • Lecture4.2
      Construction period obligations 30 min
    • Lecture4.3
      Operation period obligations 30 min
    • Lecture4.4
      Payment regimes 30 min
    • Lecture4.5
      Supervening events 30 min
    • Lecture4.6
      Termination and compensation 30 min
    • Lecture4.7
      Liability and insurance 30 min
    • Lecture4.8
      Dispute resolution 30 min
    • Lecture4.9
      Government controls 30 min
    • Lecture4.10
      Government support obligations 30 min
    • Lecture4.11
      Additional terms and conditions 30 min
  • Chapter 5: Documenting the transaction: finance documents 8

    • Lecture5.1
      Core finance documents 30 min
    • Lecture5.2
      Equity arrangements 30 min
    • Lecture5.3
      Impact on the concession agreement 30 min
    • Lecture5.4
      Direct Agreements 30 min
    • Lecture5.5
      Security 30 min
    • Lecture5.6
      Enforcement and insolvency 30 min
    • Lecture5.7
      Involvement of multilateral development banks (MDBs), development finance institutions (DFIs) and export credit agencies (ECAs) 30 min
    • Lecture5.8
      Government shareholder arrangements 30 min
  • Chapter 6:Documenting the transaction: other project documents 2

    • Lecture6.1
      Construction contract, O&M contract and interface issues 30 min
    • Lecture6.2
      Sub-contract risk pass-down 30 min
  • Chapter 7:Procurement arrangements 2

    • Lecture7.1
      A typical PPP timetable 30 min
    • Lecture7.2
      Unsolicited proposals 30 min
  • Chapter 8:Introduction to key sector issues 7

    • Lecture8.1
      Road projects 30 min
    • Lecture8.2
      Urban rail projects 30 min
    • Lecture8.3
      Freight rail projects 30 min
    • Lecture8.4
      Airport projects 30 min
    • Lecture8.5
      Port projects 30 min
    • Lecture8.6
      Accommodation projects 30 min
    • Lecture8.7
      Glossary 30 min

    Security

    At the outset of a transaction, the lenders will want to design a security package which will ensure to the greatest extent that all monies advanced will be recovered (together with interest and any other costs incurred).

    (a)        Why do lenders take security?

    (i)         “Aggressive” nature of security

    Where a borrower defaults, the lenders can take possession of the secured assets and sell them to repay the debt. This is the traditional view of security and the main reason for taking security in many types of transaction. However, in a project finance context it is not the main reason for taking security. Think about a road project – the project assets will include the road (once built) but there is not much value in a half-built road, or a ready market to purchase it (especially given any potential restrictions on the identity of the project company e.g. the requirement for it to be a local entity). The project company may have other assets e.g. land moving equipment, but these may be leased or not worth very much compared to the amount of senior debt outstanding.

    (ii)       “Defensive” nature of security

    If the lenders take security over an asset, this reduces the risk of other creditors obtaining an interest in project assets or bringing disruptive action, such as insolvency proceedings, as they would rank behind the secured lender in any such action. This is a principal motive for security in a project finance transaction as, often, and especially during the construction phase, the value of the assets will be less than the outstanding debt.

    (iii)      Management and control

    Security may (depending on the jurisdiction) entitle the lenders to:

    (A)       take ownership of the project company and manage the project;
    (B)       give the lenders the opportunity to negotiate with contractual counterparties in the event of a default in order to restructure the project or seek support e.g. from the government; and/or
    (C)       appoint an insolvency practitioner to the project company which gives the lenders greater control over the insolvency proceedings.

    (b)        Types of security

    The security package on a project finance transaction will depend on a number of factors: the nature of the project assets (e.g. whether the asset is tangible or intangible; moveable or immoveable) and location of the project assets – is the asset located “onshore” (i.e. situated in, or governed by, the law of the jurisdiction where the project is located) or “offshore” (all other assets)?

    Security granted by the project company will typically cover:

    Onshore assets Offshore assets
    Land interests in relation to the project
    site
    Rights under construction and supply contracts
    Equipment Rights under contractor guarantees and performance bonds
    Bank accounts Bank accounts
    Rights under concession agreement Completion support
    Rights under offtake agreement Construction and supply contracts
    Insurance (if locally placed) Insurances/reinsurance
      Shareholder loans

     

    In addition, the lenders will expect to receive security over:

    (i)         the shares in the project company in order to exercise the management purpose of the security mentioned above; and

    (ii)        any shareholder loans – in order to discharge the shareholder debt on enforcement to more easily effect a sale of the project company on enforcement.

    This security will be granted either by a holding company or the project investors depending on the structure of the project. As mentioned above, it is not uncommon to include a holding company between the project company and the project investors for tax structuring purposes or because the project investors are restricted by the terms of their own corporate borrowing from granting security.

    (c)        Project investors’ support

    In some limited circumstances the project investors might give some form of support in addition to the required equity contribution (see section 5.3(a) and (b) above). This may be some form of completion or cost overrun guarantee and it will depend on the nature of the project, the jurisdiction and the amount of risk of completion being delayed. They are typically used on projects which utilise untested technology.

    The support may be backed by a bank letter of credit, a guarantee of the project investors or it may be an increased equity contribution if standby or cost overrun facilities are required.

    Prev Direct Agreements
    Next Enforcement and insolvency

    Leave A Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    logo-eduma-the-best-lms-wordpress-theme

    (+255 27) 254 3226

    hello@ealawsociety.org

    Company

    • About Us
    • Blog
    • Contact

    Links

    • Courses
    • Events
    • Gallery
    • FAQs

    Support

    • Documentation
    • Forums
    • Partners
    • Accreditation

    Recommend

    • Law Society of Kenya
    • Tanganyika Law Society
    • Uganda Law Society
    • Rwanda Bar Association

    East Africa Law Society Institute by Perception Concepts limited.

    • Home
    • Courses
    • About Us
    • Contact
    No apps configured. Please contact your administrator.

    Login with your site account

    No apps configured. Please contact your administrator.

    Lost your password?

    Not a member yet? Register now

    Register a new account

    Are you a member? Login now

    Modal title

    Message modal