If an appropriate replacement is found, the obligations of the project company are permanently transferred to the replacement. The third party will be looking into who can be an appropriate substitute and does not want the replacement, for example, to be a competitor. Lenders will naturally be concerned that there are not too many restrictions on potential substitutes, especially when there are only a small number of potential replacements with the required expertise. If the counterparty agrees not to terminate the project document for a certain period of time, lenders must decide whether or not to intervene during that period. Project agreement: the main agreement for each PFI project, the project agreement governs the relationship, rights and obligations between the Authority and Projectco for the duration of the project. It can also be called a concession agreement. The contractor and the planning team offer guarantees to the AUTHORITy and lenders. Lenders generally have the first right to enter into the construction contract in place of Projectco. All rights available to the Authority are generally subject to the rights of lenders. Partial contracts: Projectco has contracted several subcontractors to cushion the risks it takes under the project agreement.

It is customary for Projectco not to perform any of the most important activities, but rather to be a vehicle for the design of project contracts – hence the term “assignment vehicle.” Direct agreement often involves changes to the underlying project documents. This is particularly the case for concession contracts in which the project company obtains the concession before the lenders make a strong commitment. Funding often follows the award of the concession and lenders may require changes to the risk allocation in the concession contract in order to make the project bankable. Agreements on government guarantees have emerged as an extension of the approach that underlies the direct agreement of lenders. Guarantee agreements are concluded between the Authority and the contractors who enter into a contract with Projectco. The objective is that if projectco does not meet its contractual obligations during the construction phase, the support of Projectco`s corresponding mission can guarantee the completion of the project. In addition, the Authority may take over Projectco`s operating contract at the end of the project. As a general rule, there is no debate as to whether, in principle, direct agreement should be reached. However, it is still common for certain provisions to be negotiated intensively and it often seems that disproportionate amounts of time are devoted to concentration on such a short agreement.