Principles of Project Finance

bonus is calculated so as to share the extra revenue from better operation between

the Project Company and the O&M Contractor.

§7.2.5 M

AJOR

M

AINTENANCE

C

ONTRACT

In some cases the manufacturer may be willing to assume responsibility for

performance and maintenance of major elements of the project in a project (e.g.,

for the turbines in a power station) against payment of fixed maintenance fees over

a period of time.

The benefit of this type of arrangement is that it fixes maintenance costs for

such items, and so helps in long-term budgeting. However, as with an O&M Con-

tract, the manufacturer may be unwilling to compensate the Project Company for

consequential loss (i.e., loss of revenue or payment of penalties) if the plant is not

maintained adequately