(a) Public guarantees by the Contracting Authority or other government agency for the repayment of loans (can be limited to certain events) by such a company. Such guarantees usually have lower costs than loan guarantees provided by commercial lenders.
(b) Loan guarantees are generally not recorded as expenses until such time as a claim is made, but may represent a substantial contingent liability (significant exposure in the event of total failure by the Project Company).
(c) Limitation: to a fixed sum or to a percentage of the total project costs/defined circumstances under which guarantees can be extended (e.g. prior exhaustion of all other remedies available to lenders under the project agreement, the loan agreement or a direct agreement with the Contracting Authority).