4.2.3  Reach financial close

Financial close occurs when all the project and financing agreements have been signed and all the required conditions contained in them have been met to enable funds to start flowing (from loans, equity and grants) so that the project can truly start up.

Any remaining "conditions precedent" in the financing agreements need to be fulfilled before funds can be disbursed. Among them typically are the following: <1>,<2>

□  Permitting and planning approvals have been secured;

□  key land acquisition steps achieved;

□  clarification of remaining design issues;

□  finalising  and  signing  of any  remaining  key  project and  financing documents; and

□  all funding approvals are in place (e.g. all remaining issues needed to secure release of grant funding from a donor)

Finally, public authorities will need to confirm that requirements of all internal approvals have been met. These could include:

□  Confirmation of legality of procurement;

□  Approval for derogation from any standard contracting terms;

□  Value for Money check; and

□  Affordability check.

There is often a considerable amount of detailed work to do to reach financial close by the PPP company and by the public contracting authority. The effort needed should not be underestimated. The public contracting authority should manage its tasks effectively with the help of its team of advisers.