Project Finance
Autor: mo ber • March 28, 2017 • Course Note • 2,134 Words (9 Pages) • 666 Views
Project Finance
- Structure, players and contracts
In the case study, show the parties involved (name), their function in the transaction, the contract signed and the cash flows (exam 2014, 2016)
Parties involved | Contract signed | Cash flow |
Sponsor | Sponsor agreement | - SPV receives equity from sponsor - Sponsor receives dividends from SPV |
Lenders | Loan agreement | - SPV receives debt cash from lenders - Lenders receives interest + principal repayments from SPV |
Host country | Concession | |
Constructor | EPC contract | - Constructor receives cash from SPV |
O&M | O&M contract | - O&M receives cash from SPV |
Offtaker | Offtake contract | - SPV receives cash from offtaker |
When and why are offshore SPC used in Project Finance?
- An offshore SPC is when the SPC is located outside the country where the project takes place
- Reason: Tax optimisation
What is a PPP? (Exam 2016)
- Private sector partners (constructors, facilities management providers) join in a consortium and register the SPV. The SPV bears any costs overruns in respect of the construction and maintenance of the asset
- Public sector is the end-user / the tenant who pays a rent for using the infrastructure
What are the differences between a private concession and a PPP structure? (exam 2014, 2016)
Concession | PPP |
Offtaker | No offtaker |
The state will not be a tenant | The state is the end-user or tenant, paying for using the infrastructure |
Transfer to a third party who can be different from the State | Transfer to the State only |
Differences between ECA’s and MLA’s in (1) shareholding (2) mission (3) policy instruments (exam 2014, 2016)
ECA | MLA | |
Shareholding | Private or state owned | Always publicly sovereign held |
Mission | ||
Policy instruments |
|
|
What is Miga (function, mission, shareholding)? (exam 2014)
- MIGA (Multilateral Investment Guarantee Agency) is a member of the World Bank Group
- Its mission is to promote FDI into developing countries to help support economic growth, reduce poverty and improve people’s lives. It does this by providing political risk insurance (guarantees) to the private sector
- Policy instruments:
- Currency inconvertibility and transfer restriction
- Expropriation (from the foreign investor’s local assets) and nationalisation
- War, terrorism, civil disturbance
- Breach of contract
- Non-honoring of sovereign financial obligations
What is EBRD?
- EBRD (European Bank for Reconstruction and Development) is an international developmental investment bank
- Its mission is to provide PF for banks, industries and businesses, and supporting restructions and privatisations
- Policy instruments:
- Guarantees on political risk
- Direct loans
- Equity participations
- Leasing facilities and financing of projects
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