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Simple English definitions for legal terms
single-purpose project
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A quick definition of single-purpose project:
A single-purpose project is a building or facility that is created for one specific purpose only. This could be something like generating electricity or processing chemicals. These types of projects are usually very large, complex, and expensive. They are often funded through project financing, which means that a special entity is created just for the project. This entity is responsible for developing, owning, and operating the facility. The goal is to limit the number of creditors and protect the project's lenders.
A more thorough explanation:
A single-purpose project is a facility that is designed, built, and used for one specific purpose only. This could be anything from generating electricity to mining minerals. These projects are typically large, complex, and expensive.
One common way to fund single-purpose projects is through project financing. This involves creating a special-purpose entity that is solely responsible for developing, owning, and operating the facility. By limiting the number of creditors, this provides protection for the project's lenders.
- A power plant that generates electricity
- A chemical-processing plant that produces a specific chemical
- A mine that extracts a particular mineral
- A toll road that charges drivers for using it
These examples illustrate the concept of a single-purpose project because each facility is designed and used for one specific purpose only. For example, a power plant is built solely to generate electricity, while a mine is constructed to extract a particular mineral. These projects require significant investment and are typically funded through project financing.