Project agreement: the main agreement for each PFI project, the project agreement governs the relationship, rights and obligations between the Authority and Projectco for the duration of the project. It can also be called a concession agreement. Partial contracts: Projectco has contracted several subcontractors to cushion the risks it takes under the project agreement. It is customary for Projectco not to perform any of the most important activities, but rather to be a vehicle for the design of project contracts – hence the term “assignment vehicle.” Direct agreements are also commonly referred to as “tripartite agreements,” reflecting the fact that they are an agreement between three parties, i.e. the Authority`s insurance agreements, which have proven to be an extension of the approach that underlies the direct agreement of lenders. Guarantee agreements are concluded between the Authority and the contractors who enter into a contract with Projectco. The objective is that if projectco does not meet its contractual obligations during the construction phase, the support of Projectco`s corresponding mission can guarantee the completion of the project. In addition, the Authority may take over Projectco`s operating contract at the end of the project. Construction contract: Projectco will enter into the construction contract with the contractor under which Projectco`s construction obligations from the project contract will be transferred to the contractor. Direct agreement often involves changes to the underlying project documents. This is particularly the case for concession contracts in which the project company obtains the concession before the lenders make a strong commitment.
Funding often follows the award of the concession and lenders may require changes to the risk allocation in the concession contract in order to make the project bankable. Host Government/adjudicating authority: the government of the country where the project is based will likely be involved in granting authorisations and authorisations, both at the beginning and for the duration of a project. The awarding entity is the contracting authority that enters into the project agreement with Projectco. In addition to the agreement of the counterparty who does not have the right to terminate if it has the right to do so in accordance with the project document, it will also accept that the intervention process may be initiated by lenders who respond to a notification of failure of the project company under the facility agreement, since the guarantee or acceleration of the loan is assured. A direct agreement is an agreement that gives the project`s funders direct rights to some of the project`s important documents. These rights are explained in direct agreements in project financing operations – turnkey provisions. In addition to this guarantee, project lenders generally expect direct contractual relationships with counterparties with key project documents. This goal is achieved through direct agreements. The ability of lenders to terminate, during the specified period or after a failure under the facility agreement, the possibility of designating a company that will assume the rights and obligations of the project company in the project document; The direct agreement of the lenders: this is a three-way agreement between the Authority, Projectco and the lenders, under which the Authority agrees to grant lenders a deadline for the early termination of the project agreement.