ANALISIS DE CASOS TRIBUTARIOS

For the research to proceed in the upcoming phases, a set of criteria has to be selected. As discussed above, banks usually asses a project themselves, whereby bond finance relies on external ratings by CRAs. Project risks, cover ratios, and the bankability play an important role, and lead to a variety of assessment criteria mentioned in academic literature and CRA publications. Several considerations are taken into account, when choosing the criteria used for this research. First of all, banks are the main source (85% in 2005) of debt finance and provide most of the capital (E. R. Yescombe, 2007). Second, banks are involved in the project way earlier in the process and play a more important role, not only in providing, but also in arranging the project finance. As explained earlier, they can act as lead arranger, can be involved in contract negotiations, and are generally involved in the project due to the due diligence process. Consequently, the criteria applied by banks are assumed to be more important to a successful project finance and a successful project in general compared to the criteria set by CRAs. Further, those criteria are not independent from each other and most of the criteria, used by CRAs, are taken into account by the banks anyways. Another important consideration for the choice of criteria, is related to RQ1 b) of the research looking at ‘Which of those criteria can be influenced by the contracting authority throughout the decision-making process?’. This is an important distinction since some criteria, for example the country’s legal framework, the economic environment, currency issues and many more, cannot be influenced by decisions taken by the public authorities in early project stages. Consequently, they are not considered in the following research phases. In addition, the set of criteria is kept flexible during the first two phases of the research, and if the interviews in phase two indicate a need for change in the criteria, this change can be implemented easily. The following table 13 provides an overview of the selected criteria, groups them into six main-criteria, and describes them briefly. As mentioned in the research strategy, this set of criteria is validated by experts in the field of light rail PPP within the first round of interview.

Table 13: Lenders’ criteria grouped into six main-criteria

Main-criteria Criteria Explanation

Economic and political environment

1. Political

environment

The lenders favour a project with strong political support and a project in line with policy goals in a stable political environment (Delmon, 2005; Laishram & Kalidindi, 2009).

2. Public opinion A project should be accepted and ideally supported by the

common public opinion (Davis & Euromoney Publications PLC, 2003).

Legal and regulatory environment

3. Procurement

process

The lenders asses the tender procedure and are interested in the setting of a realistic target date for financial closure (S. Q. Wang, Tiong, Ting, & Ashley, 2000).

4. Intervention right Lenders asses their possibility to intervene if the project is not

going as planned (Delmon, 2005; EBRD, 2007; Farquharson et al., 2011).

Project specificity 5. Project definition The projects should be clearly defined and desirable (Delmon, 2005; Laishram & Kalidindi, 2009)

6. Feasibility

studies

Studies, assessing the projects feasibility, are of great importance to the lenders (Delmon, 2005; Laishram & Kalidindi, 2009, 2009).

7. Capacity of the

technology

The capacity of the technology should be appropriate for the site and the planned use (Delmon, 2005). Further, The degree to which a technology is successfully used already in commercial projects is important (Laishram & Kalidindi, 2009).

8. Site acquisition

and access

Main-criteria Criteria Explanation

9. License, permits,

and

authorizations

Lenders attach great importance to the availability of all necessary licenses, permits and authorizations needed for the project. Pending issues are deterring factors for project delays. Protections provided to the SPV can protect the project from cost overruns or delays in case of changes in the required permits. (Delmon, 2005; Laishram & Kalidindi, 2009; Shou Qing Wang et al., 2000)

Project financial structure

10. EPC contractor’s

credibility

Since the EPC contractor directly influences the completion risk of a PPP project (Gatti, 2013), the lenders asses the track record of the EPC contractors, their technical, managerial and financial capabilities and their experience in the industry and their involvement in similar projects (Farquharson et al., 2011; Laishram & Kalidindi, 2009).

11. Financial structure

The financial structure includes elements such as the debt service cover ratio, the debt equity ratio, a debt service reserve, the commercial plan, the forecast of revenue streams and the sensitivity of those cash flow estimations to different scenarios (Delmon, 2005; Farquharson et al., 2011, 2011; Laishram & Kalidindi, 2009; Shou Qing Wang et al., 2000). Zhu and Chua also mentioned the high importance of the price and adjustment mechanisms, the attractiveness of the main loan agreement, sound financial analysis and minimal financial risk to the clients, based on the results of Zhang Xuegig (Zhang Xueqing, 2005a, 2005b; Zhu & Chua, 2018)

12. Financial flexibility

Lenders prefer a high financial flexibility, meaning that the project promoter is able to accumulate resources from a variety of sources (Delmon, 2005; Laishram & Kalidindi, 2009; Zhang Xueqing, 2005a, 2005b) .

Third party risk allocation

13. Insurance arrangement

The SPV’s insurance scheme is crucial to their financial capability and should avoid overlapping or gaps in the coverage (Delmon, 2005; Farquharson et al., 2011, 2011; Laishram & Kalidindi, 2009; Regan et al., 2011; Zhang Xueqing, 2005b, 2005a; Zhu & Chua, 2018).

14. Environmental and other legal/ regulatory issues

Lenders assess the availability of mechanisms that protect the SPV from sanctions or compensation based on environmental regulations and environmental damage (Delmon, 2005).

Contract arrangement

15. Concession agreement

The concession contract between the SPV and the public authorities contributes to an adequate allocation of risks and is therefore of high importance to the lenders (Gatti, 2013). As mentioned above, in the scope of this research it is the DBFM(O) contract. A rather flexible contract structure is assumed to be beneficial in multiple ways (Roosjen, 2013).

16. Concession period

The concession period is related the occurrence of risks, especially for longer periods (Askar Mohamed M. & Gab-Allah Ahmed A., 2002; Delmon, 2000; Schaufelberger John E. & Wipadapisut Isr, 2003) and relates to the duration of the maintenance (and operation), agreed upon in the DBFM(O) contract.

17. Support agreement/ guarantee

Support agreement or guarantees are issued by the contracting authorities, decrease the risk for the SPV and therefore increase the attractiveness of the project to lenders (Shou Qing Wang et al., 2000; Zhang Xueqing, 2005a, 2005b).

18. Termination provisions

The termination provision is assessed by lenders because they set the rules and conditions for an early contract termination and define the termination payments and therefor protect the lenders from losses (Ehrhardt, 2004; E. R. Yescombe, 2007). In the EPEC guidelines the reasons for early terminations are described (EPEC, 2011) and further a review of European practice including the provisions is provided (EPEC, 2013).

19. Construction contract

The EPC contracts determine the allocation of risks from the SPV to the contractors by the means of back-to-back contracting. Therefore, the lenders asses those contracts very carefully to ensure the risk allocation is adequate (APMG, 2018;

Main-criteria Criteria Explanation

Delmon, 2000; Laishram & Kalidindi, 2009; Roosjen, 2013; Zhang Xueqing, 2005b).

20. Operation and maintenance agreement

The maintenance (DBFM) or maintenance and operation contracts (DBFMO) are also determining the risk allocation and are therefore important to the lenders (Delmon, 2000; Laishram & Kalidindi, 2009; Zhang Xueqing, 2005b).

21. Direct agreement Direct agreement contracts are made between the lenders and

key subcontractors and are used as a legal instrument that reserves the lenders the right to interfere directly in the project and the SPV’s relationships to third parties in the case of a crisis (Gatti, 2013; Hebly & Klijn, 2016; “Lender Issues - Taking Security/Step-in Rights/Government Support | Public private partnership,” n.d.).

22. Catastrophic risk The lenders asses the catastrophic risk, the mitigation and the

impacts on cash flows (Delmon, 2000; Qian, 2012; Tiong & Qian, 2008; S. Q. Wang et al., 2000).

23. Arbitration Adequate dispute resolutions should be in place and are

identified as a critical risk to a PPP project (Davis & Euromoney Publications PLC, 2003; EPEC, 2011; Zhu & Chua, 2018). Source: P. Hoss, dimensions and criteria adopted from Zhu and Chua, other sources mentioned in the table (Zhu &

Chua, 2018)