The financing and insurance package consists of three essential elements.

The first is bank financing. The bank financing, generally speaking, is on a non-recourse basis. This means they can't take action against the project's, stakeholders or shareholders. There are some situations where there's limited recourse through things like guarantees. Security by the banks has been taken on all project assets. There will be typically multiple tranches of lending, so you may have a series of different syndicated loans, and typically those tranches will be in order of maturity. You'd have tranche A paid off first, then B, then C, and so on. There will be a construction or startup facility, and that's all the financing for the construction phase, which will be the bulk of debt financing.

There's a VAT facility, VAT. Now, obviously this isn't gonna be in every country, but in countries that do charge VAT value added tax, the project will pay VAT on the construction process, but won't be able to claim it back. For most countries you will be able to claim it back once the project becomes operational. So the VAT facility is really just there because of a timing issue. To finance the payment of VAT during the construction period, and then it'll be repaid as part of the claim back during the operation period.

The standby facility is a backup facility that can be drawn on in the event of the project being delayed or other unforeseen costs. The working capital facility is really just like a normal corporate where you would be financing the working capital.

The working capital will often build up in the year prior to operation. The project will be building up raw materials in preparation for operation.

The second element is the share investment. There will generally be an equity contribution agreement, which is like a shareholder agreement, and it really outlines the rules of the game, how the shareholders will interact with each other. Typically, the shareholders will make the investment on a pro rata basis. This means as the construction gets underway, banks will put money in and there'll be a pro rata contribution of equity as well. And this will keep the leverage ratio pretty constant during the construction period. Sometimes the equity will be tranched as a subordinated loan rather than equity, and this helps the shareholders take money outta the structure, even if it has negative retained earnings but has cashflow. This stops a dividend trap being created Last, there's an insurance package as a risk reduction tool. This is typically a condition required by the debt holders. They won't finance without the insurance package. It helps take risks away from the special purpose vehicle, which the other counterparties can't manage by themselves.