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Steve Mills

Glossary
December 14, 2021

Representations & Warranties

Clauses in project financing agreements where the Borrower – and potentially also the Sponsor(s) – confirm the accuracy and sufficiency of information or assurances provided to the lenders. Certain representations and warranties are deemed to be repeated at each drawdown or roll-over of a loan. If it can be shown…
Steve Mills
Glossary
December 13, 2021

Regulator

A state-appointed individual or body with oversight powers in industries such as gas, water and electricity generation / distribution – where the services are provided by one supplier (e.g. a power grid operator) or a very limited number of suppliers. The role of the regulator usually includes ensuring that monopoly…
Steve Mills
Glossary
December 10, 2021

Project Life Cover Ratio (PLCR)

The ratio of the net present value of CFADS during the remaining project life to the amount of the loan which is still outstanding at the time the calculation is made. Much used in the sculpting of debt capacity in upstream oil &gas lending, but also used as an additional…
Steve Mills
Glossary
December 9, 2021

Project Documents

The commercial contracts and other agreements relating to a project to which the lenders are NOT party and which have been identified as “Project Documents” in the loan and security agreements. Once a document has been classified as such, it will be impacted by provisions in the loan documents, including…
Steve Mills
Glossary
December 8, 2021

Principles for Responsible Investments (PRI)

The world’s leading organisation for responsible investment. The PRI is truly independent and acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole. The PRI is supported by the United Nations.
Steve Mills
Glossary
December 7, 2021

Price Deck

The price assumption being used at a particular point in time by a bank financing oil & gas projects for projected production which is not subject to a hedge such as a swap, option or collar. The price deck assumption will be revised by a lender on a regular basis…
Steve Mills
Glossary
December 6, 2021

Prepayment Penalty / Fee

A fee which requires a payment by the Borrower to the parties financing a project (typically banks) in the event that all or a part of a financing is repaid by the borrower in advance of its scheduled final maturity date. The payment is typically a percentage of the amount repaid. If…
Steve Mills
Glossary
December 3, 2021

Power Purchase Agreement (PPA)

A structured – typically long-term – offtake arrangement between a power-generator SPV and a power Offtaker. The offtaker may be a public or private sector entity. A wide range of such instruments exists, but the PPA incorporating a Capacity Payment tends to be the offtake structure of choice in project-financed…
Steve Mills
Glossary
December 2, 2021

Political Risk Insurance (PRI)

A type of insurance which covers the risk that losses will be caused by country or political issues, such as: Political violence - revolution, insurrection, civil unrest, terrorism or war; Governmental expropriation or confiscation of assets; Governmental frustration or repudiation of contracts; Wrongful calling of letters of credit or similar…
Steve Mills
Glossary
December 1, 2021

Performance Bond

When a contractor’s tender for a construction project is successful, he will be released from his obligations under his Bid Bond once he has submitted a performance bond as security for completion of the work. If the contractor fails to construct the project according to the specifications laid out by…
Steve Mills