1.1 In circumstances where the Facility is procured on a "non-profit" distributing basis, the NPD delivery model should be utilised by the Board. This model, which deploys a wholly debt-based capital structure and therefore generates no 'equity' profits for private sector project participants, is now well-established in the PPP accommodation sector in Scotland.
1.2 The form of Contract utilised on an NPD deal looks little different from that utilised on a non-NPD deal and involves a broadly similar risk profile. However, Boards should note the NPD related points highlighted in section 34 (concerning refinancing) and Appendix 2 (concerning compensation on termination). Additionally, Boards should note that the Contractor entity appointed on an NPD project will function quite differently to a Contractor entity appointed on a non-NPD project. In an NPD project:
1.2.1 the Contractor will be obliged to operate as a normal 'project generating' private company, but any surpluses within the company must be passed to a nominated charity rather than to investors;
1.2.2 the Contactor's board will be controlled by directors appointed by the investors and they will be responsible for "day-to-day" management and operational matters. However, directors appointed by public sector stakeholders involved in the project will retain control in areas which relate to the protection of the key NPD principles.