Home       Top Rated       Submit Article     Advanced Search     FAQ       Contact Us       Lawyers in India       Law Forum     RSS Feeds     

Register your Copyright Online

We offer copyright registration right from your desktop click here for details.

Latest Articles | Articles 2013 | Articles 2012 | Articles 2011 | Articles 2010 | Articles 2009 | Articles 2008 | Articles 2007 | Articles 2006 | Articles 2000-05

Search On:Laws in IndiaLawyers Search

Mutual Consent Divorce in Delhi
We provide fast, cost effective and Hassle free solution.
Contact us at Ph no: 9650499965 (Divorce Law Firm Delhi)

   E-mail login                   Password
        

Free Email Sign Up

Main Categories
 Banking and Finance laws
 Case Laws
 Civil Laws
 Company Law
 Constitutional Law
 Consumer laws
 Contracts laws
 Criminal law
 Dubai laws
 Environmental Law
 family law
 Human Rights laws
 Immigration laws
 Insurance / Accident Claim
 Intellectual Property
 International Law
 Juvenile Laws
 Law - lawyers & legal Profession
 Legal outsourcing
 Media laws
 Medico legal
 Miscellaneous
 Real estate laws
 Tax Laws
 Torts Law
 Woman Issues
 Workplace Equality & Non-Discrimination
 Yet Another Category

More Options
 Most read articles
 Most rated articles

Subscription
Subscribe now and receive free articles and updates instantly.

Name
Email



Copyright Registration

To Copyright Your Books, Videos, Songs, Scripts etc
Call us at: 9891244487 / or email at: admin@legalserviceindia.com
Top Law Colleges

Law Updates:

# Income-Tax
# Family law
# Company Law
# Constitutional Law
# Partnership firms
# Immigration Law
# Cyber Law
# Lok Adalat, legal Aid & PIL
# Forms
# Trademarks
# Woman issues
# Medico Legal
# Consumer laws
# Criminal laws
# Supreme Court Judgments


Published : July 05, 2011 | Author : meghnabhaskar
Category : Company Law | Total Views : 3469 | Unrated

  
meghnabhaskar
Meghna Bhaskar Student BALLB
 

Infrastructure Project Financing
A special reference

Development of infrastructure is one of the most important aspects for economic growth of any country. Investors are likely to put their capital only in those countries and projects where the infrastructure is well developed.

Since the reform process began in 1991, and with the removal of the rigid licensing policy and various restrictions in industries in India, it was realized that the infrastructure sector also must be opened to private operators to meet the increasing investment needs of the country. Moreover the Government also realized that alternative financing mechanisms had to be developed to meet these needs. Thus development of infrastructure has become the central theme of the Government of India’s 11th Five Year Plan (2007-2012).

The availability of infrastructure facilities is a necessity for the overall development of our country. Today, there is a need to focus on enhancing the quantity as well as improving the quality of infrastructure services provided in India. The financing of infrastructure represents a major opportunity and challenge in India as the present scale of infrastructure development which is a result of traditional methods of financing infrastructure projects are no longer sufficient.

Project finance refers to the long term financing of infrastructure and industrial projects based on the projected cash flows of the project rather than the balance sheets of the project sponsors. The term "project finance" is generally used to refer to a non recourse or limited recourse financing structure in which debt, equity, and credit enhancement are combined for the construction and operation of a particular facility in a capital-intensive industry, in which lenders base credit appraisals on the projected revenues from the operation of the facility, rather than the general assets or the credit of the sponsor of the facility, and rely on the assets of the facility, including any revenue-producing contracts and other cash flow generated by the facility, as collateral for the debt.

Therefore, in project financing the debt terms are not based on the sponsor's credit support or on the value of the physical assets of the project. Rather it is based on project performance, both technical and economic.

In contrast to an ordinary borrowing for a new project situation, in a project financing the financier usually has little or no recourse to the non-project assets of the borrower or the sponsors of the project. Thus, the credit risk associated with the borrower is not as important as in an ordinary loan transaction; what are most important are the identification, analysis, allocation and management of every risk associated with the project.

The salient features of project finance are as follows:
1.
The lenders finance the project looking at the creditworthiness of the project, not the creditworthiness of the borrowing party. The repayment of the loans is made from the earnings of the project.
2. Project financing is also known as “limited recourse” financing as the borrower has a limited liability. The security taken by the lenders is largely confined to the project assets.

In a no recourse or limited recourse project financing, the risks for a financier are great. Since the loan can only be repaid when the project is operational, if a major part of the project fails, the financiers are likely to lose a substantial amount of money. The assets that remain are usually highly specialized and possibly in a remote location. If saleable, they may have little value outside the project.

The minimization of such risks involves a three step process. The first step requires the identification and analysis of all the risks that may bear upon the project. The second step is the allocation of those risks among the parties. The last step involves the creation of mechanisms to manage the risks. If a risk to the financiers cannot be minimised, the financiers will need to build it into the interest rate margin for the loan.

However, the problem of supply and demand brings an obstacle. While the demand for infrastructure investment is enormous, our economy has failed to attract a supply of private investment in infrastructure projects.

This lack of investment ventures in building adequate infrastructure can be attributed to weak tariff regulation, reluctance in honouring concession commitments, inconsistent enforcement of laws, corruption, poor governance practices, lack of availability of long-term local currency financing at fixed interest rates, weak accounting and disclosure norms, and weak securities legislation.

Realizing the importance of infrastructure as the backbone of India’s economy, India has opened up this sector to private sector participation and foreign investment. As Infrastructure requirements for developing countries like India are massive, funding for such projects is a problem for the Government and it was exactly for this reason that infrastructure sector in India has been thrown open to private sector and foreign investment.

Project financing structures in India are generally no different to those prevailing in other countries. Foreign sponsors may enter into joint venture agreements with an Indian Partner to form a Special Purpose Vehicle (SPV) which executes the project. The SPV may then enter into a concession agreement with an Indian Government entity; construction and operating agreements with various contractors; and financing agreements with lenders.

Much of the foreign investment in infrastructure has been by way of equity. The roads sector has attracted many international companies like Atlantia of Italy, Isolux Corsan of Spain and John Lang of the UK. Singapore's Sembcorp recently concluded a joint venture

agreement with an Indian infrastructure company to set up a 1,320 MW power plant at Krishnapatnam in the state of Andhra Pradesh.

Authors contact info - articles The  author can be reached at: meghnabhaskar@legalserviceindia.com




1 2 3 4 5
Rate this article!     Poor
Excellent    

Most viewed articles in Company Law category
Globalization & its impact on Indian Economy: Developments and Challenges
ADR Mechanism in India
Remuneration of Directors
Merging a company
Demerger under Company Law
Articles of Association & Alteration of Articles
Retrenchment under Industrial Dispute Act, 1947
Directors & Their Liabilities
Winding Up of a Company
Corporate Personality
Dissolution of partnership firm
Which employees do not fall under the ambit of Industrial Dispute Act, 1947
Corporate Social Responsibility
ISDA Master Agreement
Director
Prevention of oppression & mismanagement
Most recent articles in Company Law category
Corporate Social Responsibility
Duel Listing of Companies
VTB Capital PLC V. Nutritek International Corp & Ors
How Mediation Can Benefit The Business Community
Can mere fine compensate the wrongs done under the name of Corporations
Mergers and Acquisitions
IT Sectors Corporate Social Responsibility towards Public Infrastructre in India
Manufacturers Liability, Case Developments in UK, USA and India
Minority Rights on Oppression and Mismanagement Under Companies Act, 1956 And Companies Bill, 2011
IPO Scam: With Special Referance To NSDL V. SEBI Case
Squeeze out of minority shareholders
Appointment, Disqualification And Liabilities Of Directors of A Company: A Legal Perspective
changes in the national and international corporate environment
FDI in Retail Sector
Companies Act 1956 and Company Bill 2011
Implementation of Corporate E-Governance: Implementation of MCA 21 Model

Article Comments

there are no comments...

Post Your Comments
Name

Email

Your comments

Note : Your email address is only visible to admin, other members / users cannot see it.

You can use following FXCodes


BOLD : [b]
Italic : [i]

[b] Legal Services India [/b] is a [i]nice website[/i].
[url= http://www.legalservicesindia.com/article/ ]click here to visit.[/url]

Legal Services India is a nice website.
Click here to visit

 

Note : Currently, user comments are moderated and will be posted only after approval.



Welcome!
Please login or register a new free account.

Random Pick
This paper provides a brief overview about how the sui generis system called PPV@FR Act, 2001 in India is more convenient to Indian Farmers and Breeders and it also discusses on how this alternative method to Patent is simple and convenient to the breeder as well as farmers to registration their variety and exploit their rights in an effective manner...

Statistics
» Total Articles
934
» Total Authors
2450
» Total Views
5565132
» Total categories
29

Law Forum


Legal Articles

Lawyers in India- Click on a link below for legal Services

lawyers in Chennai
lawyers in Allahabad
lawyers in Ahmedabad
lawyers in Janjgir
lawyers in Ranchi
lawyers in Lucknow

lawyers in Bangalore
lawyers in Jodhpur
lawyers in Cochin
lawyers in Pondicherry
lawyers in Hyderabad
lawyers in Jaipur

For Mutual consent Divorce in Delhi
Click Here

Ph no: 9650499965
For online Copyright Registration
click here

Ph no: 9891244487
Law Articles

lawyers in Delhi - New Delhi
lawyers in Chandigarh
lawyers in Noida
lawyers in Nashik

lawyers in Kolkata
lawyers in Rajkot
lawyers in Surat
lawyers in Indore

lawyers in Mumbai
lawyers in Thane
lawyers in Pune
lawyers in Nagpur

TOP

India's Most Trusted Online law library
Legal Services India is Copyrighted under the Registrar of Copyright Act ( Govt of India) 2000-2014
 ISBN No: 978-81-928510-1-3