No Nigerian infrastructure concession gets financed without a direct agreement — the tripartite instrument giving project lenders step-in rights if the sponsor defaults, and notice-and-cure rights before the grantor can terminate the underlying concession. Grantors, negotiating from a position they believe is stronger, routinely try to narrow exactly this protection.
The step-in right is the whole point
A direct agreement that gives lenders notice of default but no meaningful window or mechanism to step in and cure it, or novate the concession to a substitute operator, is close to worthless from a financing perspective — lenders will price the residual risk into the facility, or decline it altogether.
Grantors who weaken the direct agreement to protect their negotiating position end up paying for it in the cost of capital the project can attract.
Cure periods that match reality
A cure period that is technically present but too short for a lender syndicate to organise a substitute operator is a protection in name only. Aligning the cure timeline with realistic lender decision-making processes is what makes the clause bankable rather than cosmetic.
Getting both sides to a workable text
The productive negotiation treats the direct agreement as infrastructure for the deal’s financeability, not a concession to the sponsor — a well-drafted version protects the grantor’s ultimate interest in the project being completed, financed and operated, which is the whole reason the concession exists.
This note is general commentary on Nigerian legal practice and does not constitute legal advice or create a lawyer–client relationship. Outcomes depend on the specific facts and the applicable law at the time. For advice on a particular matter, speak with the firm.
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