PPP FINANCING ARRANGMENTS

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PPP FINANCING ARRANGMENTS STRUCTURING FINANCE
SUCCESSFULLYIMTIAZ HIZKIL ISLAMIC DEVELOPMENT
BANK
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Arrangement of Financing One of the most
challenging part of developing a PPP
Infrastructure Project

• Project has to be Bankable, needs adequate
  technical and financial resources for preparation
• Minimize risks and allocate to the right party
• Legal and Regulatory Environment
• The need for a track record the first PPP
  project is perhaps the most challenging project

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Attracting Sufficient Project Financing

• The Strength of Partnership
• Managerial
• Equity
• Projects Bankability
• Track Record for Projects in the Industry
• Appetite of Foreign and Local lenders

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Funding StructureNeed to Response to Project
Needs

• Optimum Debt Equity Ratio
• Equity
• Sponsors
• Capital Market
• Long Term Debt
• IFIs - Debt, Political Risk Guarantee
• ECAs
• Foreign Banks
• Local Banks
• Long Term Facilities Reflect Projects Cashflows
• Pricing of Debt Fixed, Variable, Hedging

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International Financing Institutions

• Brings Credibility, Enhanced Environmental and
  social Assessment
• Role of IFIs
• Where there is a major development impact
• Critical for Mega projects and First projects
  in terms of country, sector and technology.
• Help bring other funds - Commercial sources,
  Equity
• IFIs may participate through different windows
• Direct Funding
• Special purpose fund
• Guarantees

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Role of Islamic Finance in PPP Infrastructure
Projects

• Modes of Financing
• Installment Sale
• Leasing
• Istisnah
• Equity
• No fundamental limitation
• Project Finance transactions have combined
  Islamic Financing and Conventional Financing
  Issues have been Resolved

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Role of Islamic Development Bank in PPP Projects

• Aggressively pursuing Project Finance Based
  Transactions
• BOT Projects Guidelines Prepared
• Workshops on BOT projects in Member Countries
• Sukuk Resources Available to Fund PPP Projects in
  Infrastructure in Member Countries / MENA
  Countries

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• Working Closely with IFIs, Commercial Banks and
  Local Banks in large and medium scale
  transactions
• Intervention in Power, Oil, Gas, Transportation
• Committed to participate in Projects in other
  areas of Economy
• Fully Support Institutional Strengthening
• Cooperation with multi-laterals, bilateral and
  other institutions

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IDBs Participation in the first hydro-electric
IPP in Pakistan

• IDB providing US 37.2 million of financing on
  leasing mode
• Other participants - ADB and local commercial
  banks
• A PPP in hydro-sector is challenging and a good
  example of sharing of risks by the parties
• Success of this project will bring many other
  hydro power PPP type projects in the country

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• Thank you

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