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5 Allocation of Risks in Project Documentation

John Dewar, Chris Taufatofua

From: International Project Finance (3rd Edition)

Edited By: John Dewar

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 30 May 2023

Credit risk — Capital markets

This chapter discusses the allocation of risks within the project’s contractual architecture. Stakeholders and potential stakeholders in a project will typically approach risk allocation from one of two perspectives. The first perspective will be as a potential contract counterparty negotiating its involvement in the project document structure—i.e. such a counterparty will be directly involved in the risk allocation process itself. The second perspective will be as a potential lender (or sometimes equity investor) performing due diligence to assess the risk allocation under an existing or proposed project document structure so as to determine whether the project is bankable (or, in the case of a potential equity investor, whether the risk allocation justifies the making of an investment in the project).

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