STATUTORY CONTRACT COUNTERPARTIES

Long-term public support is useful only if suppliers and lenders trust the organisation signing the contract to keep paying for its full term. A statutory contract counterparty is a public company or authority established by law to manage contracts and make payments, backed by durable funding. It is most useful when governments issue 10- to 20-year contracts that outlast annual budgets and ministerial terms. The counterparty supplies continuity and administration. The support itself could take many shapes, including procurement, Contracts for Difference, guarantees, etc.

Credibility depends first on whether the body has reliable funding for the full life of its contracts and a clear mandate to sign, pay and enforce them. Its founding rules should identify who can instruct it to offer new contracts, what happens if it cannot perform, and who absorbs losses from non-delivery, reversal or buyer default. Contracts with foreign projects need enforceable terms and reliable registry records. The body also needs staff and systems to check delivery, make and recover payments, publish contracts and support audits. Reselling removals adds price risk, making limits on unsold holdings and taxpayer exposure important.

A durable counterparty can turn a government promise into legally enforceable revenue that lenders can rely on when financing a project. One specialist body can use standard contracts, retain expertise and keep payments running when governments change. This can shorten negotiations and make several CDR support programmes easier to administer consistently. If authorised to buy removals under long contracts and resell them later, it could bridge suppliers’ need for long commitments and buyers’ preference for shorter ones, although that creates a risk of resale losses.

Legal status alone cannot make a poorly funded body credible. Political interference, weak staffing or unclear responsibility can delay contracts and payments across an entire programme. A single counterparty can also concentrate failure, favour familiar suppliers or become difficult to replace. If it buys removals for resale, falling prices or weak buyer demand can leave taxpayers holding unsold units and losses.

Supervising ministries and auditors should compare signing times, payment errors, disputes and administrative cost with private finance raised and the financing terms suppliers receive. Repeated delays, funding gaps, weak audit results or no improvement in finance should trigger more funding, stronger governance, revised powers or replacement of the counterparty.

Legislators, treasuries and the proposed counterparty should agree the mandate, funding and public liability. CDR suppliers, buyers and lenders can test whether standard contracts support investment. Standards bodies, registries and lifecycle experts should connect payment to verified delivery, while auditors, competition authorities, civil society and affected communities test transparency, safeguards, conflicts and value for money.

International funds and supranational institutions can establish a shared counterparty for participating jurisdictions. National and regional or state governments can create or designate public bodies with long-term contracting powers and dependable funding. Cities can do the same where municipal law permits, usually for smaller portfolios. Each counterparty must have clear responsibility for signing contracts, making payments, managing defaults and continuing performance if its structure changes. Different levels can operate independently or share standards, but their contractual and financial responsibilities should not overlap.