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Rule #8 of the PPPs - The shortcut with lawyers at the other end
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Rule 8 of PPPs: Never go around the SPV. That shortcut has lawyers at the other end. I know why agencies do it. The SPV needs to consult the contractor. Then the shareholders. Then the Board. Then the lenders. Then the lawyers. What should take five minutes takes three weeks. So, someone decides to be practical: “Let’s speak directly with the contractor.” Wrong. Look. The contractor builds the project. The SPV owns the promise. The SPV holds the Project Agreement. The SPV carries the obligations. And only the SPV can properly assess how a Change affects construction, operations, lifecycle costs, finance, insurance and risk. Period. The contractor may agree to something the SPV cannot deliver. The agency may believe a position has been accepted when it has not. The lenders may refuse to approve it. Or the SPV may simply say: “We never agreed to that.” And if you find that frustrating… just wait until you see what the operator says… I once had a boss that said to me: Direct technical discussions are fine, but just be there. Sorry lovers of efficiency… But for any Change or commercial negotiation, the SPV must remain in the room. Yes, the governance can be frustrating. But you cannot take the lenders’ money and then complain about the lenders’ governance. If the process is too slow, fix the process. Do not bypass the party holding the contract. Because if the SPV is not in the room, you are probably negotiating with the wrong party. Use this information at your own risk. To discuss about your project… click below. ONLY 3 SEATS - First arrived, first served.
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Vicente Valencia
Weekly insights on how to perform when it matters | High-stakes decisions. Real situations. No BS. | 👇JOIN +2k readers 👇
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