Independent credit rating The due diligence process undertaken by an independent agency for the
rating of a project can significantly enhance the investors’ and lenders’ confidence in
the project. The due diligence process undertaken by the rating agency, among
other things, assesses various aspects of the project, the risks involved and its
business case. In consideration of these matters, the independent rating agency
establishes the creditworthiness of the project. However, it may not always be
possible to have independent credit rating for all projects (for example, if there is no
previous experience of a similar project in the country).
The creditworthiness of a project is very important to debt financing. With a
good credit rating a project can qualify for debt finance at a lower cost. The lower
cost of borrowing can significantly enhance the financial viability of a project. A
project with good credit rating can also be bond financed. As the cost of bond
financing is generally lower than that of commercial borrowing from banks and
financial institutions, bond financing can significantly enhance the financial
performance of a project.
Establishing the procurement process, evaluation committee and setting the evaluation criteria The procurement of a PPP contract is generally much more complex than the
procurement of conventional public sector projects and, depending on the complexity
of the project, it may require much longer time. There are tasks that need to be
completed before initiating the formal procurement process. These tasks may
include the following:
• Deciding the whole procurement process including identification of stages
at which government approval is required (if not already defined);
• Establishment of evaluation criteria and committees;
• Setting a timeframe and deliverables; and
• Establishing a contract negotiation team.
Once these tasks are completed and cleared by the government, the implementing
agency can consider initiating the contract procurement process.
