characteristics of the project as possible, whilst satisfying the requirements of the suppliers of funds. In arriving at a satisfactory financing plan, which incorporates a suitable security package, the help of an experienced finanical adviser is invaluable. Typically in a project financing the project itself is incapsulated as a separate entity which is owned by the project sponsors who may be large corporations or government bodies, or a combination of the two. Clearly the sponsors anticipate the project to be economically autonomous over its lifetime with an ability to provide a positive return to the sponsors whether directly after servicing and repaying its debt or indirectly through supplies to the project. In the case of the SPS project the sponsors might include users, governmental space research bodies, corporations which either specialise in related high technology equipment, or which currently supply generating equipment to power stations, or which currently supply fuel to power stations. Sponsors would be motivated by the desire either to capitalise on a development within the scope of their activities or to hedge their position as current suppliers to industries threatened by the SPS system. Thus, it is felt that by its transnational nature and by its size, the SPS system calls for an international project financing. I therefore propose to outline the characteristics of project financing, relating these where appropriate to this particular project's perceived requirements. Having done this I will conclude by suggesting possible sources of funds, conscious of the particularly high political risk factor and the considerable technological risk content of the project. In considering the characteristics of project financing it would be helpful first to consider the particular risks in the SPS project which are likely to concern lenders. The methods evolved for apportioning such risks where they cannot be insured against can then be reviewed and their suitability to the SPS system assessed. It should be noted that many of these methods are in effect pledges to provide additional equity in certain given circumstances. Completion risk is the risk that the project is not completed and capable of generating revenues and hence not able to commence servicing the debt by the forecast date. The probability of such a delay is clearly high in this project where the diverse advanced technologies must all be commercially developed by a set date if none is to hold back the project as a whole. Moreover, the initial, front end capital costs of the SPS project are high and therefore the effect of a delay in completion is particularly harsh due to the correspondingly high amount of rolled-up interest. Another risk which can affect the start up of any project is cost overruns during the construction period which consume all prearranged funds so that none are left for completion. Once again the recognised uncertainty of the SPS costs will make lenders deeply conscious of this risk. However, a successful method of diminishing both risks for the lenders is to include a completion agreement in the loan documents, whereby one or more creditworthy participants give the lenders a pledge that sufficient funds will be provided to ensure completion of the installations in accordance with specifications and moreover, in some cases, to repay the loans if the project is not completed by a predetermined final completion date. In view of the exceptional uncertainty surrounding certain elements of the SPS installation, it seems probable that both provisions of the completion agreement may have to be included. Economic risk (technological risk) in this case is the risk (a) that revenues should drop because either a major new and cheaper source of electricity be made available before the end of the project’s anticipated debt repayment schedule, or that existing supplies should become significantly cheaper in real terms, or the (somewhat un-
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