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What a lovely clause
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These days I’m enjoying some interesting stuff. There is a clause. In particular, 13.3 of a project agreement. “Foregone Toll Income & ‘Mutual Agreement’ Extension”** I love the title. It deals with cases where the government prevents the toll road from charging the approved tariff. Then, if this happens, logically for political reasons… The government must either: Compensate the monthly Foregone Toll Income, or Grant a Concession Extension, the duration of which must be mutually agreed If after two years they still haven’t agreed or paid, it becomes a Government Default. You may be asking yourself why this is a problem. Well… at least three reasons: “Mutually agreed” is the worst phrase in PPPs. It’s a killer. Banks run away like public servants on Friday at 4pm. It means endless negotiation… until mutually agreed. Imagine that one of the parties does not agree… Lenders hate it. Sponsors hate it. Public agencies hate it. It is pure uncertainty. Don’t do it. Then… the Compensation. It requires annual budget appropriation… This means politics. Elections. Ministers changing. Budgets freezing. And the press… “why are you giving more money to the guys putting a toll… they are becoming rich”. End of the equation: Don’t do it. Then… the two-year window is a fantasy. Knowing as I know public administration, in real life, these disputes can sit unresolved for 5–10 years. You’re buying problems. I could be talking to you about these nice stories and how Vicente would fix it… but you can find that in the link below. PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
These days, I usually panic a little. Just a little. Not because of the “social commitments.” And not because of the alcohol… which, let’s be honest, doesn’t do your health any good whether it’s “only one,” “only two,” December or June. No. It’s something worse. Much worse than overeating and overdrinking. Queueing. For me, queueing is more terrifying than being forced to watch an entire season of Big Brother. Nothing good ever comes out of standing in line. Nothing. Maybe disappointment…...
A nice thing of brining my son to daycare and this being in the same building than the main NZ infrastructure agencies is that you meet lots of people. From the doors to the elevator, people having coffee, hanging out in the sofas, etc. Suddenly a “hey, Vicente”, and then… Some free consultation. Well… not as free, as the coffee is excellent, I always order one. “On me”. The usual suspects are: How can ensure competitive tension? How can I deal with claims? How can I prevent claims? How many...
I’ve been closing some insurance policies these days. For myself. Health, life, mortgage, etc. You don’t appreciate enough a good broker until you get one. If you’re serious about investing, this is your second more important broker after your mortgage broker. But I don’t want to talk to you about personal insurance. But PPP insurance. It’s probably one of those fields, most people mess up. Clients. Banks. SPVs… All parties alike. You have insurance to cover accidents on site causing...