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What Is A Concession Agreement In Project Finance

The concession network is a useful tool that can help simplify each party`s position on the contentious issues of an agreement. It works by listing the details that are discussed in a grid that lists each topic, the position of the parties on this topic and the minimum acceptable. Each party`s views on these issues will be different depending on what they are trying to achieve and what is ultimately most important to them. To that end, what is important to one party may or may not be so important to the other. It is helpful for a negotiator to understand what is important and what is not. The “Concession Grid” facilitates this task by providing an easy-to-understand information grid that identifies concessions, compromise opportunities and deal breakers for both parties. Insurance: Technically, insurance contracts are also project contracts, although, as a general rule, consultants specialized in the insurance sector are responsible for disapproval, as can be seen in Section 4.3. The project company must have adequate insurance coverage for risk risks, and this is a very detailed aspect of the credit contract. The insurance element is essential to the structuring of a project financing operation; However, insurance practices are highly specialized and are therefore generally considered to be an area of a separate profession. The insurance is managed by consultants and brokers with a significant separation from other legal and contractual activities in order to structure the project financing agreement. Identifying and allocating risks is an important part of project funding. A project may face a number of technical, environmental, economic and political risks, particularly in developing and emerging countries. Financial institutions and project proponents may conclude that the risks associated with the development and operation of the project are unacceptable (unfinanable).

“Several long-term contracts, such as construction, procurement, equity and concession contracts, as well as a large number of joint ownership structures, are used to coordinate incentives and discourage opportunistic behaviour by any party involved in the project. [3] Implementation models are sometimes referred to as “project preparation methods.” Funding for these projects must be distributed among several parties in order to spread the risk associated with the project while ensuring benefits for each party concerned.