The cost of borrowing funds to construct the Facilities is a major expense of the Contractor. It may be that, due to changing market conditions or an improved credit rating of the project due to its success, the credit terms which the Contractor can obtain improve through the life of the Contract. Obtaining such improved credit terms is known as a "Refinancing".
The Contractor may not refinance without the consent of the Board. If the Board gives its consent, in broad terms, the Contract states that, generally, the proceeds or savings which result from a Refinancing should be split equally between the Contractor and the Board. This recognises that the Board plays a significant part in the success of the project which, in turn, allows more favourable finance terms to be obtained.
In an NPD project, an "independent director" (a public sector appointee) may be able to initiate, and ultimately force through, a refinancing of the Contractor's project debt. Such provisions contrast with non-NPD projects, where the Contractor will have sole control over the initiation of a refinancing. The proceeds or savings of the refinancing initiated by the independent director will still be shared between the Contractor and the Board.