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MEANING
A project in business is defined as a collaborative enterprise, frequently involving research or design, that is carefully planned to achieve a particular aim. Infrastructure includes the capital required to produce economic services from utilities (gas, electricity, water etc.) and transport works (roads, bridges, etc.) and is central to promoting economic activity.
INFRASTERACTURE PROJECTS
These project are : Capital Intensive. Huge Sunk Cost: Includes retrospective (past) costs that have already been incurred and cannot be recovered. It can be either fixed or variable (depending on volume). Long Operational Time. In earlier times, the ownership of the project in I India was to be managed by the government. But in current times , the private participation is also being encouraged.
OWNERSHIP OF PROJECT
Types of Ownership : BOOT : Build, Own, Operate and Transfer : The private firm owns the project till the end of concession period. BOT : Build, Operate, Transfer : Project is owned by the government and the private sector recovers its investment by charging a levy on its users during the concession period.
PROJECT CONFIGURATION
Projects are implemented in a Special Purpose Vehicle (SPV). A SPV is a legal entity (a limited company of some type or a limited partnership) created to fulfill narrow, specific or temporary objectives. SPVs are used by companies to isolate the firm from financial risk. SPV enters in to a contractual agreement with all the project parties (contractor, offtakers, operators, government etc.)
PROJECT PARTIES
PROJECT SPONSERS : Set Up project Vehicle. PRJECT VEHICLE : Delivering and Implementing the project. PROJECT LENDERS : Finance the Project. EPC CONTRACT0R: Design of the project and its procurement. OPERATION AND MANAGEMENT CONTARCTOR (O&M) : Operation and maintenance of plant according to Industry. GOVERNMENT : Provides concession to SPV and legal status to the Project.
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