If a project’s political risks are not sufficiently mitigated in the ways described
in Chapter 10 to satisfy private-sector lenders, the Project Company may be able
to obtain:
Guarantees or insurance for political risks (“political risk cover”), thus leav-
ing private-sector lenders with only the commercial risks on the project (e.g.,
project completion)
Guarantees or insurance that cover all risks, both political and commercial,
thus leaving lenders to provide finance with no risk on the project itself (“full
Direct loans to the Project Company from public-sector (national or multi-
lateral) lenders that are prepared to accept political risks not acceptable to
private-sector lenders; such entities may also accept the commercial risks in-
volved in the project and thus take the full risk on the project, or require these
to be wholly or partially covered by commercial bank guarantees.
Similarly, political risk cover may be obtained by investors (but obviously not
cover for commercial risks).
The main sources of political risk cover, full cover, or direct loans are:
Export credits (i.e., guarantees or insurance to lenders or direct loans to the
Project Company) tied to export sales to the Project Company (cf. §11.3),
Chapter 11
Political Risk Guarantees,
Insurance, and Finance
Information and data on the ECAs, IFIs, and other organizations discussed in this chapter can gen-
erally be found on their websites, links to which are maintained at www.yescombe.com.

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