1. Project Finance Overview
Definisi Project Finance PF
A simple cash-flow stream
Nilai dari PF tergantung dari pola arus yang dihasilkan dari proyek individu dan nilai kolateral dari aset. Sumber arus kas dapat berasalh
dari pembeli atau konsumen tunggal
Non- or limited-recourse
An independent SPE is created to hold the project assets and to integrate all legal contracts in an effective and efficient manner for
funding, building and operating a single purpose project. SPE is owned by one or a few sponsors and it is highly leveraged.
Alokasi Risiko
PF digunakan untuk proyek besar, kompleks, dan berbiaya mahal seperti yang terjadi pada sektor sumber daya alam dan infrastruktur,
yang didalamnya terdiri dari beberapa kontrak legal antara supplier dan pembeli
Based on: International Convergence of Capital Management and Capital Standards, BIS, 2006, para 221,222
Why PF Structure? Sponsors’ Motivation
Risk mitigationDebt capacity
By isolating the asset in a standalone project company, project finance reduces the possibility of risk contamination, the phenomenon whereby a
failing asset drags an otherwise healthy sponsoring firm into distress.
The sponsor can preserve corporate debt capacity.
To create asset specific governance structure
Separate legal incorporation, which assumes a specific project and few growth options, reduces both the cost of monitoring managerial actions
and assessing performance, and wasteful expenditures and sub-optimal reinvestment.
Deterrent against strategic behavior by the third parties
Sponsor can involve the critical parties for the project, including the public sector, as shareholders to prevent future conflict.
By involving international banks and multilateral agencies whose interest is solely in cash-flow maximization by the project, the sponsor may
prevent harmful action by the host government.
Based on: The Economic Motivations for Using Project Finance, Benjamin C. Esty, 2003
PF vs. Corporate Finance
Project Finance
Limited or non-recourse
Simple cash-flow structure produced from one
independent waste asset
High-leverage at beginning, but getting lower toward the
end of the debt repayment
Relatively a few layers of debt and equity structure
simple ownership
Applied to projects attaining a scale of economy
Corporate Finance
Full recourse
Complicated cash-flow structure produced from a
set of various, replaceable profit making projects
Leverage depends on a company’s target capital
structure
Various layers of debt and equity structure
complicated ownership
Applied to all profit making business types
Typical Structure of Conventional PF
Off-take purchaser
Input supplier
Operator Project
company SPE
Contractors Lenders
Sponsors Centrallocal
Government
Concession Authority
Insurers
Shareholders Agreement Equity
Loan Agreement Debt
Construction Agreement
Licensepermit
Concession Agreement
Insurance
Off-take agreement Supply
agreement
Operationmaintenance Agreement
Powerutility Multilateralb
ilateral agencies
Equipment suppliers
2. Credit Risks in Project
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