Académique Documents
Professionnel Documents
Culture Documents
Project Timeline
Allocation of Risk
Between AWSA and Operating Company
Mitigation Strategy
Contractual agreement between AWSA and operating company for O&M. Multiple analyses by reputable entities for traffic volume and revenue projections. Comprehensive insurance against Force Majeure. Experienced operators, road layout deters misuse.
Political Risk: Change in government A different political party takes control Effect: this could create delays due to the risk of change in heart The Government responsible for fully covering debt obligations plus NPV of cash flow Allocation of Risk Best controlled by Polish Government and AWSA. Mitigation Strategy
Use of UK law, enforceable through Polish courts. Counter guarantees by government against building competing systems, ending concession.
Financial Risk a)Currency Risk Weakening of the Zloty vs. the Euro(2.22zloty/euro in 1993 to 4zloty/euro)
Mismatch between zloty revenue and euro-denominated debt gives exposure to currency risk Allocation of Risk AWSA Mitigation Strategy The best strategy is hedge the exchange rate risk. According AWSA explanation there is no derivative available for hedging zloty/euro currency risk. So they have not gone for currency hedging They should have gone for cross-hedging the exchange-rate risk by using the forward markets of a third country's currency. If they are not hedging they should try to purchase materials from Poland suppliers when possible.
Other Financial Risk Mitigation Strategy Best controlled by Sponsor and lenders. Low senior debt(Around 26%), adequate reserves and debt coverage, flexible principle repayment,. Control of waterfall by lenders gives better cash control. Repayment of Loans on basis of worst case scenario. Available of mezzanine debt with longest possible maturity and with govt guarantee Provision for collateralized lender account to finance the future