Principles of Project Finance

Sponsors developing a project together usually sign a Development Agree-

ment, which covers matters such as:

• The scope and structure of the project.

• An exclusivity commitment.

• Management roles and responsibilities.

• A program for feasibility studies, appointment of advisers, negotiations with

EPC Contractors and other parties to the Project Contracts, and approaches

to lenders.

• Rules for decision making.

• Arrangements for funding of development costs or the crediting of these

costs against each Sponsor’s allocation of equity (taking account of both the

amount of the costs and the timing of when they were incurred).

• Adjustments of equity interests to reflect the timing of each Sponsor’s in-

vestment (cf. §12.12.2).

• Provisions for “reserved roles” ...