Project Finance in the FertiNitro Company Coursework

couch Finance in the FertiNitro Company - Coursework ExamplePolar is a passive sponsor of FertiNitro and is not promptly involved in the business of construction and operation of the fertilization plant. Polar is mainly a diet and beverage company with present joint ventures in companies ilk Koch and Pequiven which are the major stakeholders of FertiNitro. The total revenue enhancement generated by the Polar group is the US $1.9 billion. More than 2% of the company goes to Venezuelas non-oil GDP (Duff & Phelps, 1998, p.5). involve of the Sponsors contribution on the sick in terms of viability as a stand-alone project financeThe strategy adopted by Polar in the investment of export projects has generated profitable returns to Venezuela. The first project to invest in Polar is FertiNitro. The indirect involvement of Polar in the project of FertiNitro has resulted in existence the important mitigant to it. PDVSA swash is the subsidiary company of Polar crowd which contributes to the major portion of the gas fatality of the country made available by FertiNitro. The international exchange over the past decades has been favorable for PDVSA which gives FertiNitro some other reason to make the Polar group a part of its sponsors. The indirect participation of PDVSA in FertiNitro the foreign transfers and the risk convertibility gets minimized. PDVSA also has the leading market in urea in South America along with Pequiven which is the petrochemical wing of PDVSA. PDVSA is also responsible for offsetting the risk of the volatile market by lowering the price of the feedstock gas supply. PDVSA is the world second largest Oil and Gas Company contributes the most to the FertiNitro as the company both this instant and indirectly invests in the company. Even the internal funds of Pequiven are sponsored by PDVSA. Thus the viability of FertiNitro based on the stand-alone project financing of the Polar assembly will bring about remarkable results as the company in engages in both direct and indirect financial investment for the company. Both the cost overruns and the time overruns of the company will be under check in spite of the fact that as Polar the company contributes to the 10% of sponsorship to FertiNitro and is a passive sponsor. Following aspects of the project with relevant matters Off-taker, The Polar Group has signed an offtake agreement with both Pequiven and Koch Off takers which are both joint ventures. The Koch Off taker bears the obligation of 75% of the ammonia and 43% of an area of the company that is available for sale during the year. Similarly, the rest of the obligation of the Polar Groups off-take agreement lies with Pequiven. Certain specification of the company related to the off-taker agreement has to be abided by the mentioned companies like appointing an independent inspector regarding the approval of the off-takers who will be in charge of determining the quality of the ware to be delivered. Based on the indepen dent inspectors assessment the rejection of the non-conforming products is made or availed at a discounted rate. At the initial level of agreement, Koch will have the rights to sell the products and delivering the same in sum America while Pequiven will follow a similar act in South America, Caribbean, and primal America.