International Trade

New Arena For The Project Business

< continued from page three

...now owns Unistrat, one of the most experienced specialist commercial underwriters of emerging market and developing country risks.

Atradius, the former Gerling NCM, has also expanded the range of difficult market deals that it can cover, while also continuing to operate the Dutch official export credit scheme under a contract with the government in The Hague.

Most striking of all, Ducroire Delcredere/ ONDD, the Belgian official ECA, has set up an independent commercial underwriting entity, which caters for clients in any country. The group thus puts its long-developed expertise in insurance of difficult overseas risk both at the service of Belgian exporters using the official export credit scheme and a much wider international client base of commercial insurance clients.

One of the factors that has driven the development of private market insurance is the growing tendency for many projects to be developed on a Build Operate Transfer (BOT) basis. This means that instead of a foreign customer paying a foreign contractor to build a power plant or industrial facility and then hand it over, the customer awards an investor a contract to build and then operate the facility.

The big private market insurers often play a key role in backing such projects. However, the extent to which BOT reduces the risks and financing pressures attached to a project depends on the structure of the deal.

Where the project will subsequently produce hard currency revenues – as in the case of a mine or an oil production platform – the financial risks are clearly reduced. But there is still some political exposure because it is not possible to operate most projects in conditions of instability and violence.

For example, action by local militant groups has disrupted activity at certain oil production facilities in the Niger delta in southern Nigeria. Moreover, the... continued on page five >

 

 

<< Previous page  1 2 3 4 5  Next page >>

 

Advertisement

Advertisement