Long-Term Project Finance For Large Infrastructure
Long-term project finance is a method of financing large infrastructure and industrial projects based on the projected cash flow of the finished project. This is in contrast to other types of project financing that involve the investors’ own finances.
The structure of a project finance plan usually involves a number of equity investors as well as a syndicate of banks who will provide loans to the project.
The way large project is carried out varies between countries. In the UK for example, most project financings have been carried out under the Governments private finance initiative. This means that the private sector can obtain finance, usually from a bank, to design, build and operate a large infrastructure project.
In return, the public sector grants this private sector partner a long-term contract to run the facility which is usually for 25-30 years
Examples of some of the large projects that are commonly employed using this scheme involve, government buildings, transport systems, sports stadiums and natural gas development projects.