Management of contract interfaces during investment implementation of thermal power projects

Abstract

The investment implementation of a thermal power project involves many stakeholders, among them the principal parties are identified as the project company, the electric utility agencies, the construction contractor, the lenders, the power purchaser, the fuel supplier and the operator. At the core of the project implementation is the project company with whom all the other parties form contractual relations. The roles and obligations of the project company and other parties are defined at the relevant contracts such as the interconnection agreement, the construction contract (EPC contract), the credit agreement, the power purchase agreement, the fuel supply agreement, and the operating and maintenance contract. The success of the project depends mainly upon the performance of the contracts by the involved parties and on the proper management of the contract interfaces by the project company.

This paper presents the main features of the above agreements and contracts, identifies the contract interface issues and associated risks, and highlights the necessity of close management by the project company of the contract interfaces, taking into account the proper allocation of risks and rationally imposing liquidated damages.