Commercial operation date (COD)

The commercial operation date (COD) is the date on which the construction phase of a project is successfully completed, typically determined by independent certification and testing, so that the asset is ready for regular commercial operation. Global Infrastructure Hub PPP risk-allocation guidance defines commercial operation date in those terms, and distinguishes the scheduled COD as the target date whose breach triggers commercial consequences such as delay liquidated damages or termination. The World Bank PPP Certification Guide Glossary describes commissioning as the testing process at construction completion that confirms the private partner has met preconditions for operations and can deliver services to output specifications.

Commercial operation date use on bank project finance desks

In project finance COD is the hinge between construction risk and operating cash-flow risk. Before COD, lenders rely on drawdown controls, EPC performance, contingency and sponsor completion guarantee support. After COD, repayment rests on operating revenues under the offtake agreement or user-pay regime, and construction support usually falls away once completion tests are met. The Phu My 2-2 appraisal links EPC obligations to COD: the turnkey contract provides fixed-price, date-certain completion consistent with the COD in the underlying power-purchase contract and incorporates plant-performance guarantees.

Model offtake documents treat COD as the start of contracted revenue periods, requiring the seller to construct and commission the plant to achieve COD by a target date and defining the first contract year by reference to it.

Tests, scheduled COD and longstop mechanics

Achieving COD usually requires:

• mechanical or substantial completion of works under the EPC contract
• successful performance and reliability tests under the project or offtake agreement
• interconnection or access readiness where output must be delivered
• issue of a completion or taking-over certificate by the independent engineer or certifier

GI Hub notes that failure to achieve scheduled COD typically attracts delay liquidated damages and, if delay continues, termination risk. PPP glossary materials likewise describe a longstop date by which services must commence, failing which the contract may terminate. Force majeure and employer-risk regimes can extend scheduled COD.

Distinctions from financial close and completion guarantees

Financial close makes construction funding available; COD marks operating readiness. A completion guarantee is sponsor support aimed at achieving completion and protecting lenders through the construction period; it is not itself the COD. Technical completion and commercial operation may be staged, with two-stage completion distinguishing technical completion from full service commencement. Desks therefore map EPC taking-over, offtake COD and financing completion tests carefully, because release of sponsor support and start of amortisation often turn on different certificates.