In the context of non-recourse project financing for an infrastructure project, why do lenders prioritize the presence of a 'Take-or-Pay' clause in the long-term offtake agreement?

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General Studies · Project Financing and Risk Mitigation

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

To transfer the market demand and volume risk from the project company to the buyer

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Answer 1

To provide the project lenders with direct management control over the Special Purpose Vehicle (SPV)

Answer 2

To prevent the promoter from diluting their equity stake during the construction phase

Answer 3

To transfer the market demand and volume risk from the project company to the buyer

Answer 4

To ensure the project remains immune to changes in corporate income tax rates

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