In public-private partnership (PPP) projects in India, financial
closure indicates the commencement of the concession period.
Financial closure is defined as a stage when all the conditions of
a financing agreement are fulfilled prior to the initial
availability of funds. Financial closure is attained when all the
tie-ups with banks and financial institutions for funds are made,
and all the conditions precedent under the financing agreements to
initial drawing of debt is satisfied.
The date on which the conditions precedent set out in the
concession agreement are met and financial closure is achieved is
the appointed date. The appointed date is deemed to be the start
date of the concession period, and the concessionaire is permitted
to begin construction of the project from that date. Typically,
concession agreements provide anywhere between 180 and 240 days
after signing the concession agreement to achieve financial
closure.
