Project Finance is an innovative way of "off-balance sheet, non-recourse" financing.

Project finance can be defined as raising of funds to finance an economically separable capital investment project based upon a non-recourse or limited recourse financial structure, in which the providers of the funds look primarily to the cash flow from the project itself and to the assets of the economic unit as collateral for the loan, as the source of funds from which a loan will be repaid. It involves the creation of a legally and economically independent Project Company financed with non-recourse debt and equity from one or more corporate sponsors for the purpose of financing a single purpose, capital asset usually with a limited life. Project Company is a group of agreements and contracts between lenders, project sponsors, and other interested parties that creates a form of business organization that will issue a finite amount of debt on inception; will operate in a focused line of business; and will ask that lenders look only to a specific asset to generate cash flow as the sole source of principal and interest payments and collateral Project Financing discipline includes understanding the rationale for project financing, how to prepare the financial plan, assess the risks, design the financing mix, and raise the funds. In addition, one must understand the cogent analyses of why some project financing plans have succeeded while others have failed. A knowledge-base is required regarding the design of contractual arrangements to support project financing; issues for the host government legislative provisions, public/private infrastructure partnerships, public/private financing structures; credit requirements of lenders, and how to determine the project's borrowing capacity; how to prepare cash flow projections and use them to measure expected rates of return; tax and accounting considerations; and analytical techniques to validate the project's feasibility The Project Finance technique has been used on many projects. Employing a carefully engineered financing mix, it has long been used to fund large-scale natural resource projects, from pipelines and refineries to electric-generating facilities and hydro-electric projects. Increasingly, project financing is emerging as the preferred alternative to conventional methods of financing infrastructure and other large-scale projects worldwide.
tel. +(48) 22 425 57 35 fax. +(48) 22 853 01 64 e-mail: