This assignment is an opportunity for you to reflect on and integrate the materials covered through a simplified
case. The materials covered include the characteristics of project finance and how a typical proposal can be
ABC Pty Ltd intends to form a special purpose vehicle (SPV) to be incorporated in Australia. This will involve building
new water treatment facilities. ABC Pty Ltd intends to undertake the development of the proposed water treatment
facilities through a project financing approach. The constructed facilities will be used as the business solution in
providing clean water solutions to the local community.
The following are some of the in-principle agreements with the various parties after much negotiation:
1. The project is to be developed using a BOT arrangement where WaterSolution will finance and build,
operate and transfer the facilities back to the state government at the end of 20 years.
2. There are three off-take agreements:
a. to sell CallWater Pty Ltd 450,000 cubic litre of treated water per day at a fixed price of $0.025 per cubic
litre. This agreement will expire at the end of 20 years. The contract allows for the price to increase by 7% per