When a major new transport project is to be funded privately or concessioned, the lending banks need to be sure that the promoters' scheme is sound. A process of due diligence is normally carried out, where the bank engages its own advisors to check the promoters' work, and to note any risks associated with the project.
Somague and Via GTI tendered to the Portuguese Government for a light rail project on the South bank of the Tagus river. The lead bank supporting them, ING Barings, commissioned Babties, assisted by the Railway Consultancy, to carry out the due diligence work. Our element of the work was to examine critically the demand forecasts for this new tram system, being built in an area of high population density but currently-low car ownership. Further to examination of data, documents and models, and a detailed site visit, we identified a number of risks in the modelling, and some weaknesses in input data, and advised the bank of the impact that these might have.
This tram system is now under construction and due for completion in 2006, although unfortunately by one of our client's competitors!
Last updated: Sunday, 18th December 2016
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