TABLE OF CONTENTS This chapter summarizes the key provisions usually found in the Project Contracts that may be signed by the Project Company apart from the Project Agreement discussed in the last chapter, namely
Construction contract (cf. 7.1)
Operation and maintenance (O & M) contracts (cf. 7.2)
Fuel or other input supply contract (cf. 7.3)
Permits not a contract as such but an important underpinning for all the Project Contracts (cf. 7.4)
Government Support Agreement (cf. 7.5)
Insurance (cf. 7.6)
Direct Agreements, which link the lenders to the Project Contracts (cf. 7.7)
As already mentioned (cf. 2.4), all of these contractual building blocks are not found in every project financing, but one or more of them usually are, and it is important to understand their general scope, purpose, and structure as they usually form a major element of the foundation on which the project financing is built.
In the conventional contracting procedure for a major project, the project developer has a consulting engineer draw up the design for the project, based on which a bid for the construction is invited with detailed drawings, bill of quantities, etc.; any specific equipment required is procured separately. But even if the Sponsors have the experience to arrange the work under separate contracts and coordinate different responsibilities between different parties, this is not usually acceptable to lenders in project finance who want there to be "one-stop" responsibility for completing the project satisfactorily, since they do not want the Project Company to be caught in the middle of disputes as to who is responsible for...
