Athens Road

2047 Words9 Pages
2. What are the risks associated with the Athens Ring Road project? Do you believe that the concession structure proposed by Mr. Papadopoulos, as shown in case Exhibit 8 can ensure mitigation of those risks? Would you recommend any modifications to the concession structure and if so, what would those be?

Accurately assessing and mitigating any project finance risks is an utmost component which enables to deliver a successful project initiative. The complexity of such investments requires an extra careful analysis in order to avoid the breach of the initial assumptions which would eventually jeopardize the feasibility of the project. Consequently, Papadopoulos should elaborate a list which identifies the various risks that could
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As it stands, it would consume a massive investment from the Greek budget which would not be a reasonable cost to be fully supported by the government. Moreover, the government deficit was 10,2% of the GDP which in order to achieve the EMU convergence criteria of 3% should be reduced through spending cuts. Also, the credit rating of BBB granted by Fitch Rating Ldt., meant that with additional unforeseen difficulties the likelihood of Greece in paying its financial commitments would be at stake hence the creditors would require an extra premium for lending heightening the interest costs supported by Greece.
Therefore, Greek government could not afford being the only entity providing funding into Ring Road. A partnership with the private sector should be assessed and pursued as the best option of funding. On one hand it will release the total burden of the project from the government and ensure extra capital flowing from the private. On the other hand, only a thorough examination of cash flow waterfall and the proper distribution of risks through the party which is best able to manage and mitigate in the most effective manner will ensure the willingness from the private sector into the project. A cooperative relationship between both parties underpinned by a more business-friendly relation would be of vital importance to the success of Ring Road.
Forecasting Errors Risk
Being the only source of revenues, the bankability of Athens Road Ring hinges on the accuracy of
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