Sharing or mitigating the many risks associated
with port projects frequently gives rise to contractual
obligations and attendant financial sanctions
if one party’s or another’s obligations are
not met. Sanctions convert the risk into specific
financial obligations (payment of penalties). This,
in turn, generates the credit risk of the partner
that is unable to meet its financial obligations.
The most efficient method of ensuring that the
partners honor their financial commitments is to
require bank bonds. These are frequently demanded
from the concessionaire or by the operator
from its private partners. The amounts and call
conditions for these bonds must accurately reflect
the respective commitments of the parties.
However, the operator’s credit risk with respect to
the concessioning authority cannot be covered by
bonds, and generally remains a political risk.