THE MILLAU BRIDGE 1

PROJECT FINANCING AND PPPs.

PROJECT FINANCING MAY BE DEFINED AS « THE RAISING OF FUNDS ON A LIMITED-RECOURSE BASIS TO FINANCE AN ECONOMICALLY SEPARABLE CAPITAL INVESTMENT PROJCT IN WHICH THE PROVIDERS FOR THE FUNDS LOOK PRIMARILY TO THE CASH FLOW FROM THE PROJECT AS THE SOURCE OF FUNDS TO SERVICE THEIR LOANS AND PROVIDE THE RETURN OF AND A RETURN ON THEIR EQUITY INVESTED IN THE PROJECT »*.

PUBLIC-PRIVATE PARTNERSHIPS ARE JOINT VENTURES IN WHICH BUSINESS AND GOVERNMENT COOPERATE EACH APPLYING ITS PARTICULAR STRENGTHS, TO DEVELOP A PROJECT MORE QUICKLY AND MORE EFFICIENTLY THAN THE GOVERNMENT COULD ACCOMPLISH ON ITS OWN.

 

VARIOUS STRUCTURES ARE AVAILABLE :

  1. BUILD-OPERATE-TRANSFER (BOT) MODEL.
  2. BUILD-TRANSFER-OPERATE (BTO) MODEL.
  3. BUY-BUILD-OPERATE (BBO) MODEL.
  4. LEASE-DEVELOP-OPERATE (LDO) MODEL.
  5. WRAPAROUND ADDITION.
  6. TEMPORARY PRIVATIZATION.
  7. SPECULATIVE DEVELOPMENT.
  8. VALUE CAPTURE.
  9. USE-REIMBURSEMENT MODEL.

THE FOLLOWING TABLE PROVIDES A DESCRIPTION OF THE FEATURES OF SOME OF THE ABOVE MENTIONED AGREEMENTS. 

 

SUCH PARTNERSHIPS ARE VIABLE ONLY IF THE RISKS AND RETURNS ARE PROPERLY ALLOCATED BETWEEN THE PUBLIC- SECTOR AND PRIVATE-SECTOR ENTITIES.

PROJECT FINANCING IS ALSO KNOWN A ASSET-BASED FINANCIAL ENGINEERING.

DESIGNING SECURITY ARRANGEMENTS AND FINANCIAL MODELING  ARE CRUCIAL WHEN IT COMES PROJECT EVALUATION.

* JOHN D. FINNERTY

PHLDUCX