Principles of Project Finance

guarantor to take over an asset on

which an insurance claim or guaran-

tee has been paid. See §7.6.4;

§11.3.4; §11.4.1

subsovereign risks Risks relating to

a public-sector body other than the

Host Government. See §10.7.2

substitution Right under a Direct

Agreement for the lenders to substi-

tute a new entity to take over the

Project Company’s rights and obli-

gations under a Project Contract.

See §7.7

Support Services Agreement A

contract between the Project Com-

pany and one or more Sponsors to

provide back-up technical support,

spare parts, etc. See §8.7.2

swap provider A bank providing an

interest rate swap to the Project

Company. See §9.2.1; §13.13.1

syndication The process by which

the Lead Managers reduce their un-

derwriting by placing part of the

loan with other banks. See §5.1.7

synthetic lease A form of lease

(mainly in the United States) in

which ownership of the equipment

remains with the lessee for tax pur-

poses, but with the lessor for ac-

counting purposes. See §3.4

TA Technical Adviser. See Lenders’

Engineer.

tail Continuing project revenues after

repayment of the debt; cf. reserve

tail. See §12.9.4; §13.2

Take-and-pay contract A contract

under which the purchaser pays an

agreed price for the product pur-

chased, but is not obliged to pur-

chase. See §6.1.1; §7.3.1

Take-or-pay contract A contract

Glossary and Abbreviations 343

under which the purchaser must buy

the product or make a payment in

lieu. See §6.1.1; §7.3.1

target repayments A flexible repay-

ment structure to allow for tempo-

rary cash flow deficiencies. See

§13.2.4

Tariff Payments under a Project

Agreement; see Availability Charge

and Variable Charge, or Unitary

Charge. See §6.1.5: §6.1.6

term Duration of a Project Contract

or the period until the final repay-

ment date of the debt. See §6.3;

§13.2.1

term sheet Heads of terms for the

project finance. See §5.1.6

Termination Sum The compensa-

tion payable by the Offtaker or Con-

tracting Authority for the early ter-

mination of a Project Agreement.

See §6.8

Third-Party Liability Insurance In-

surance against damage or injury

caused by the project to third par-

ties. See §7.6.1; §7.6.2

third-party risks Risks that failures

by parties not involved with the

Project Contracts may affect the

completion or operation of the proj-

ect. See §8.5.8; §8.9.1; §8.9.5

Throughput Contract A Project

Agreement for the use of a pipeline.

See §6.1.1

tied financing See export credits.

Tolling Contract An Input Supply

Contract in which the fuel or raw

material is supplied free, and the

Project Company is paid for pro-

cessing it. See §7.3.1

Transportation Contract See

Throughput Contract.