"TGV: A new rail route but with associated risks" (with José Luís Moreira da Silva)

"José Luís Moreira da Silva, a Partner at SRS Legal, explained to Advocatus that financing is one of the main risks of this project that must be "well" considered and thought out by the bidders.
"The bidders bear almost the entire risk of financing the construction and maintenance of the new line to be built. There are some lines of support from the government and European funds, but they are relatively small compared to the total needed. It is therefore up to the bidders to raise the bulk of the necessary funds from the EIB and commercial banks. Between equity and bank loans, we're talking around 700 to 800 million euros. In other words, it's not for just any competitor," he said.
Faced with this risk, the lawyer assures us that large consortia are being formed in order to have the appropriate financial capacity and "muscle". "As this is a PPP concession, the risk falls almost entirely on the concessionaire, so they have to have the capacity to do it," he added.
[...]
On financial and project contracts, José Luís Moreira da Silva defends the need to know and be able to negotiate "well with the banks", the "contracts for the preparation of the projects", for the "expropriations", for the "construction work", for the "supervision" and "maintenance", as the most important contracts. "Good negotiation and even better execution of these contracts can result in important gains or disastrous losses," he added.
[...]
But with such large sums involved be careful that the project doesn't go wrong. For José Luís Moreira da Silva, the time factor is "paramount". "There are several risks that could jeopardize the completion of the relevant milestones, at great cost to the project. It is also necessary to know how to allocate the various project risks to the right entity, in order to spread them out and not end up with risks that are impossible or very difficult to manage," he said.
[...]
There are several opportunities that the country can take advantage of with the high-speed line. First and foremost, and according to José Luís Moreira da Silva, it is a major investment and opportunity for national companies, not just the members of the consortia, but all the SMEs "that will be subcontracted and will provide services and supplies over the initial 30-year duration of the contract. But also the acquisition of know-how, which is so important in this field".
"Portuguese companies don't have much experience in high-speed rail, unlike their Spanish counterparts, where projects of this nature are repeated. This is an important asset for the Portuguese economy," he stressed."