2012 MENA Project and PPP Finance

1

Highlighting Crucial Factors in

MENA Project Finance Decisions

Loay Ghazaleh – Advisor - B. Sc. Civil Eng. , MBA

MENA PROJECT FINANCE & PPP – CAIRO, SEPTEMBER 2012

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CONTENTS

1. INTRODUCTION TO PROJECT FINANCE

2. MENA PROJECT FINANCE MARKET

3. 2011 GLOBAL PF LEAGUE PLAYERS

4. EMERGING SECTORS IN MENA PROJECT FINANCE

5. THE NEW PPP ENVIRONMENT

6. HIGHLIGHTS OF PF CHALLENGES

7. MINI PERMS ALTERNATIVE TO LONG TERM FINANCING

8. FULL AMORTIZATION ALTERNATIVE TO MINI PERMS

9. BONDS IN TODAY’S PROJECT FINANCE MARKET

10.THE ROAD AHEAD….

3PROJECT FINANCE

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*What is a Project?

*A Project is normally a long-term infrastructure, industrial or public services scheme, development or undertaking having:

*Large size,

* Intensive capital requirement.

*Finite and long Life.

*Few diversification opportunities i.e. assets specific.

*Standalone entity.

*High operating margins.

*Significant free cash flows.

*Such projects are usually government regulated and monitored which are allowed to a private entity on partnership basis B.O.O. or B.O.T. basis (PPP).

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*What is Project Financing?

International Project Finance Association (IPFA) defined project financing as:

*“The financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cash flows generated by the project.”

*Project finance is especially attractive to the private sector because they can fund major projects off balance sheet.

6*Where Is Project Finance Utilized?

* Transportation & Related Facilities (Roads, Rail, Light Rail) (Airports, Ports)

* Typically PPP transactions, incorporating availability based, shadow toll & real toll payment mechanisms

* Mix of regulated and commercial revenues

* Power (Power Plants, Transmission)

* Regulated revenues, typically set for a fixed period

* Long term power contracts focused on credit strength of off-taker

* PPP / PFI Social Accommodation (Hospitals, Prisons, Schools)

* Typically availability based payment based structures

* Long tenor concession

* Construction and maintenance risks vary

*Renewables (Wind Farms, Solar, Waste to Energy)

* Nature of tariff regime / subsidies

* Need a favorable regulatory environment to entice development of renewable sector

* Gas & Commodities (LNG, Exploration, Production, Pipelines, Petrochemicals)

* Strong preference for limited market risk exposure

* Focus on credit worthy off-takers and the strategic importance of the project for the country/region

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*Stages in Project Financing

*Pre Financing Stage

*Project identification

*Risk identification & minimizing

*Technical and financial feasibility

*Financing Stage

*Equity arrangement

*Negotiation and syndication

*Commitments and documentation

*Cash disbursement.

*Post Financing Stage

*Monitoring and review

*Financial Closure / Project Closure

*Repayments & Subsequent monitoring.

8*General Characteristics of PF

* Independent, single purpose company formed to build and operate the project (SPV)

* Extensive contracting

* As many as 15 parties in up to 1000 contracts.

* Contracts govern inputs, off take, construction and operation.

* Government contracts/concessions: one off or operate transfer.

* Ancillary contracts include financial hedges, insurance for Force Majeure, etc.

*Highly concentrated equity and debt ownership

*One to three equity sponsors.

* Syndicate of banks and/or financial institutions provides credit.

* Governing Board comprised of mainly affiliated directors from sponsoring firms.

* Extremely high debt levels

*Mean debt of 70% and as high as nearly 100%.

* Balance of capital provided by sponsors in the form of equity or quasi equity (subordinated debt).

*Debt is non-recourse to the sponsors.

*Debt service depends exclusively on project revenues.

*Has higher spreads than corporate debt.

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MENA PF MARKET TODAY (2011/12)

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*ME & the World PF Market

11*6 phrases of PF market in ME

* Pre 2000 (Phase 1 – PF Start Up)

* Plain vanilla, mortgage style / back-ended debt repayment profiles

* Short tenors and mid-level pricing and fee structures

* 2000 – 2004 (Phase 2 – Longer Tenors)

* Simple loan structures, mortgage style / back-ended debt repayment profiles

* Tenors of 15-20 years, start of pressure on pricing and fee structures

* 2004 – 2008 Pre-crisis (Phase 3 – Growth & Structured Complexity)

* Introduction of more complex structures such as bullet repayments

* Some form of Government risk - PPA risk introduced. E.g. Oman. PPA 15 years

* Low level pricing due to high competition from lenders on both margins & structure

* 2008 –2009 Crisis & Down Turn (Phase 4)

* Difficult closing in 2008 and 2009 (Shuweihat 2 UAE, Al Dur, Rabigh IPP)

* Scarcity of capital(USD Liquidity, Basel 3 focus for European banks…) , more involvement of Export Credit Agencies

* Necessity of Insurance covers and direct OIL funding

* Structural complexity no more favored. Perm structures with shorter tenors

* Margins volatility ,for example; committing to pricing over 30 -60 days were problematic.

* 2010 –2011 Slow Recovery (Phase 5)

* Slow departure from the mini-perms and lower stable pricing combined with better risk sharing / JV’s

* 2012 Onwards (Phase 6) – Uncertain PF Direction

* The PPP model may have been broken , refinancing , more equity , smaller tickets can become the norm

12*Significant Shift in PF Market Post 2008

*No. of banks in the PF market has substantially reduced since 2008

*No. of banks involved in PF market in ME has gone down from over 40 during peak times to only about 15

*Underwriting availability has dried up

*Margins are higher on account of liquidity costs

*European banks are fast receding from the region

*Ongoing crisis in Greece and Euro Zone

* Introduction of BASEL III: Longer tenors are no longer attractive to banks

*Regional Banks are playing a much more active role

*More than 50% of the loans raised in 2011 were from Regional Banks

* Increased use local currency tranches

*Export Credit Agencies becoming increasingly important in project finance

* 20-25% of the debt typically now either through direct funding or covered loans by ECAs

*Dominance of US – European – equipment manufacturers is on the decline – Japanese, Korean & Chinese gaining traction in market

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*2011 Peaked 2Q, 2Q 2012?

*Global Loan Volume

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*2011 Loans Refinancing Use Primarily

*Loans Use

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*2011 – 12% are Greater than 5 Years

*Global Loan Maturity Analysis

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*2010 - 2011 Nearly Stable PF Margins, 2012!

*Global Loan Margins Trends

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*2011 Peaked 2Q, 2012 2Q Recovery?

*EMEA PF Volume

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* IH 2012 Average Top 10 MLA Ticket 150 Mil USD

*EMEA Average Ticket / Deal (Top 10 MLA)

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* IH 2012 Deal Size Up, No. of Deals Down!

*EMEA Average Deal Size, Number of Deals

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2011 GLOBAL PF LEAGUE PLAYERS* League Data Source; Project Finance Magazine Web Site

21* 2011 Global PF League Players - Mandated Arrangers (MLA)

Pos. * Mandated Arrangers Amount

($m.)Trans-actions %share

1 State Bank of India 27,169 76 11.2

2 BNP Paribas SA 10,805 78 4.5

3 IDBI Bank Ltd 9,991 23 4.1

4 Axis Bank Ltd 9,301 29 3.8

5 Infrastructure Development Finance Co Ltd - IDFC

7,941 28 3.3

6 Credit Agricole SA 7,555 80 3.1

7Mitsubishi UFJ Financial Group Inc. 6,882 69 2.8

8 Banco Santander SA 6,108 80 2.5

9 Societe Generale 6,047 65 2.5

10 Korea Finance Corp 5,651 25 2.3

22* 2011 Global PF League Players - Providers

Pos. * Providers Amount



2 BNP Paribas SA 9,843 83 4.1



5Mitsubishi UFJ Financial Group Inc. 5,896 78 2.5

6 Banco Santander SA 5,412 83 2.3

7Infrastructure Development Finance Co Ltd - IDFC 4,734 38 2.0

8 BPCE SA 4,195 55 1.8

9 ING Group NV 4,011 56 1.7

10 HSBC Holdings plc. 3,878 39 1.6

23* 2011 Global PF League Players – Financial Advisors

Pos. * Financial Advisors Amount




3 IDBI Bank Ltd 7,463 16 4.2

4 Banque Saudi Fransi (BSF) 7,113 1 4.0


6Royal Bank of Scotland Group plc. 6,476 6 3.6

7 Credit Suisse Group 5,970 4 3.3

8 Citigroup Inc. 5,695 10 3.2

9 PricewaterhouseCoopers LLP 4,946 25 2.8

10 BPCE SA 4,692 5 2.6

24* 2011 Global PF League Players - Sponsors

Pos. * Sponsors Amount


1 Saudi Arabian Oil Co - Saudi Aramco 7,113 1 2.1

1 Total SA 7,113 1 2.1

3 Tata Group 5,185 7 1.5

4 BP plc. 4,750 2 1.4

5ACS Actividades de Construcción y Servicios SA

4,550 15 1.3

6 Essar Group 4,501 10 1.3

7 Jaiprakash Associates Ltd 4,220 2 1.2

8 Alcoa Inc. 4,160 4 1.2

9 Saudi Arabian Mining Co - Ma'aden 3,763 2 1.1

10 Aditya Birla Group 3,535 5 1.0

25* 2011 Global PF League Players – Legal Advisors

Pos. * Legal Advisors Amount


1 Linklaters 22,895 36 7.9

2 Luthra & Luthra 22,500 24 7.8

3 Allen & Overy 19,769 57 6.8

4 Clifford Chance LLP 16,285 53 5.6

5Amarchand & Mangaldas & Suresh A Shroff & Co

11,174 19 3.9

6 Milbank Tweed Hadley & McCloy 10,319 38 3.6

7 White & Case LLP 10,292 32 3.6

8 Latham & Watkins 8,767 38 3.0

9SJ Law Advocates & Solicitors (India)

7,470 22 2.6

10 Cuatrecasas Goncalves Pereira SLP 6,103 24 2.1

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*Summary 2011 Global PF League Players

Amount($m.)

Transactions % share

League Arrangers 97,450 553 40

Total Global Arrangers 242,149 816 100

League Providers 64,135 694 27

Total Global Provides 239,438 806 100

League Financial Advisers 86,021 124 48Total Global Financial Advisors 178,785 297 100

League Sponsors 48,889 49 14

Total Global Sponsors 340,774 839 100

League Legal Advisers 135,574 343 47

Total Global Legal Advisers 289,595 686 100

27* 2012 EMEA Loans Market Data

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EMERGING SECTORS IN MENA PF

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*Renewables on the Rise

*Renewable energy projects are beginning to emerge on the back of renewable energy targets proposed by many GCC member countries.

*Most GCC member countries have min 5% renewable energy procurement target by 2020.

*More than 9000 MW is either under construction or under planning stages in GCC – dominated by solar and wind.

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*New Developers in ME Power Sector

*Historically the ME Power market has been dominated by Multinational Utility Companies – GDP Suez, International Power, Marubeni, AES

*Over the last 1 years, a new homegrown set developers has begun to emerge – ACWA Power, TAQA, QWEC

*These developers initially focused on their home market but have grown increasingly international in their footprint and targets

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* Social & Infrastructure Projects

*Paris Sorbonne (UAE) – 2000 student green field campus in Abu Dhabi, financial close achieved in Dec 2008

*Zayed University (UAE) – 6000 student green field campus in Abu Dhabi, financial close achieved in Nov 2009

*Muharraq Waste Water Project (Bahrain) – 100,000 m3/day waste water treatment plant, financial close achieved in Sep 2011

*Medina Airport Scheme (Saudi Arabia) – A modern terminal capable of handling 8 MN passengers p.a. by 2015, first PPP in airports in the GCC

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THE NEW PPP ENVIRONMENT

33*Stakeholders New Roles

*Substantial involvement of sponsors in all phases and matters associated with financing. Sponsors performing large number of activities previously performed by the lead arranger: timelines, arrange meetings, distribute information & follow-up.

*Selection of advisors became a more relevant process as Advisors need to work in a coordinated manner for a long period under stress.

*Timing of project financing and development usually exceeds an election cycle of 4 years. Thus politics play a significant role and the project is likely to switch from desired to undesired depending on the political agenda.

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Multi - Laterals

EIB

EBRD

Islamic DB

IFC (WB)

AfDB

ECA’s

EKF (DN)

JBIC (Japan)

KEXIM (Korea)Ex-Im Bank (USA)ECGD (UK)

Regional Banks

KfW (Germany

)Green

Bank (UK)

JICA (Japan)

USAID (USA)

AusAID (Australia

)

Pension Funds / Insuran

cePension

(DN)

Alliance

Axa

Aviva

Munich Re

Guarantee

EIB

IBRD

IDA (WB)

IFC (WB)

MIGA ( Pol. Risk)

*Wider Fund Sources & Guarantees

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* Lesser Government’s Facilitation

* The role of governments, at all levels, changes with public opinion. Governments have weak positions especially after beginning of construction. Timing issues are important when obtaining any amendment in applicable laws, concessions or permits.

* Authorities especially elected ones are less willing to take risks, even if the law empowers them to make decisions. Governments can be expected to be a sidekick and not the driver.

* Incomplete and accurate property registries create a difficult scenario to obtain rights over third party land required by the project. The cost of obtaining rights to land for use by projects is becoming increasingly expensive and more complex.

* Although in paper easements and right of way can be imposed through a speedy administrative procedure, it does not happen in practice where procedures may take between 18 – 24 months.

36* Social & Environmental License

*Social and environmental matters have become increasingly relevant. Sponsors need community relations and social investment plan, even if it comprises acting in lieu of the Government.

*The media, whether national or local, has also taken an increasingly important role in the development of projects and needs to be incorporated in any development strategy.

*Local interests groups, NGO’s and other disenfranchised groups also need to be included in the analysis and any action plans.

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* Tight Syndication Documentation

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*The Underwriting Process

*Conditions To Underwriting Commitment

* “subject to contract”

*Due diligence

*Governmental consents

*No material adverse change

*Market flex

*Two Important Dates

*Expiry date for offer

*Expiry date of exclusivity

*Types of Underwriting

* “Fully underwritten”

* “Best efforts” / “best endeavors”

* “Partially underwritten”

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* General Documentations

*Common Term Agreement

*Loan Agreements including fixed & floating mix

*Inter-creditor Agreement

*Disbursement (or Accounts) Agreement

*Security Documents

*Assignments of contract rights and insurances

*Control over bank accounts

*Direct off take agreements

*Covenants / Terms

*Financial covenants - ratios

*Non financial covenants – negative pledge

*Cash sweeps

*Market disruption

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*Sponsor Support

*Types of direct sponsor support include:

* Repayment guarantees

* Completion (shortfall) guarantees

* Cash injection undertakings (e.g., for cost overruns)

*Working capital maintenance agreements

* Price underpinning (to assure “floor” price for product)

* Comfort letters

* Equity lock up / Reserve accounts

*Types of indirect sponsor support include:

* Take-or-pay contracts - throughput agreement - (Usually in oil & gas)

* Supply maintenance agreements

*Other types of support may include:

*Operation and maintenance agreement with one or more project sponsors

41*Host Government Support

*Types of host government support include:

*Concessions

*Licenses and approvals

*Expropriation guarantees

*Exchange availability undertakings

*Types of insurance support include:

*Commercial insurance

*Export credit guarantees

*Multilateral agency guarantee arrangements

*Multilateral “umbrella”

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*Inter-Creditor Agreements

*Multiple funding sources = complex inter-creditor issues..

*Common desire for control. Regulation for decision making.

*Disbursement conditions ( funds drawdown)

*Mismatch of currencies

* ECA disbursement requirements (“eligible goods”, OECD Guidelines)

*Voting rights with respect to waivers and consents

*Do ECAs taking only political risk have a right to vote?

*Once ECA’s take commercial risks, can they be treated equally?

*Right of Veto over issues that increase claims under ECA’s guarantees?

*Security sharing

*Subordination & ranking of payments.

*Acceleration rights / trigger events.

*Decisions regarding enforcement actions

43*Financial & Project Closure

* Financial closure is the process of completing all project-related financial requirements ( funds commitment & availability) and setting up the disbursement accounts. Project commencement take place after financial closure.

* Project closure is achieved when all project financial accounts are closed, the project assets are disposed and the work site is released.

* Accounting closure is a prerequisite to project closure and the Post Implementation Review (PIR).

* A project cannot be closed until all financial transactions are complete, otherwise there may not be funds or authority to pay outstanding invoices and charges.

* Accounting closure establishes final project costs for comparison against budgeted costs as part of the PIR.

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Shareholder funding

Subordinated Tranche

Senior Tranche –

Project BondOR

Senior Debt

Normal or elevated level of equity, shareholder,mezzanine debt

Size depends on the project

Target rating A/AA or Lower Interest on Senior Debt

HIGHLIGHTS OF PF CHALLENGES

45*2012 PF Challenges

* Time consuming. Limited capital makes larger deals are more difficult (e.g. increased equity contributions, tighter lending covenants, etc.). Project finance lending is struggling with more attractive corporate opportunities.

* Departure from the more conservative financing structures, namely in terms of debt to equity ratios, shorter tenor s(mini-perms), wide margins and safe ratios is still mid way.

* Club deals rather than syndication are still the norm. Banks are asking for and exercising flex clauses in syndication; Lender relationships, sponsor track record are critical.

* Availability of financing in the long-term bond market (both public and private) is still low.

* Extra-conservative approach by lenders on due diligence and financing structuring. Only stable and predictable cash flows are financeable.

* Fees and spreads are lower but still up; however, market feedback is not always consistent and capital markets are changing.

46*Addressing the Challenges

*Staggering & Sizing Projects

*Refinancing risk incentives to allow for mini-perm financing structures – 5 to 10 years. Banks will lend for long term either if there is a reduced overall Project’s debt dimension and where a long term legal tenor is coupled with strong refinancing incentives (mini-perm lending)

*Funding competition (i.e. pension funds, ECA’s), and participation of supranational lenders like ADB, Islamic Development Bank, EIB by lending or providing guarantees especially in the rum-up (early operations) period.

*Utilizing a mix of floating & fixed interest rates (e.g. 30% fixed),

*Increase in Government contributions after project completion

47*Risk Solutions in PPP / PF

Risk Financial SolutionConstruction Costs Fixed –price lump sum contractCompletion Risk Performance guarantees. Liquidated damagesPrice Long –Medium term credit spreads Stability of Financing

Senior Debt with 12 – 15 year tenors

Operating Risk Standby debt & equity (provisions), insurance.Environmental Risk InsuranceTechnology Risk Expert evaluation and retention accounts.Interest Rate Risk Swaps and Hedging (also Currency Risk)Insolvency Risk Take over proceedings, GuaranteesSovereign Risk - Forming the project company abroad

- External accounts for proceeds- Political risk insurance (Expensive)- Export Credit Guarantees- Contractual sharing of political risk

between lenders and external project sponsors

- Government or regulatory undertaking to cover policies on taxes, royalties, prices, monopolies.

- External guarantees or quasi guarantees

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MINI PERMS ALTERNATIVE

49

*Hard Mini-Perms

Bank loan has a short legal maturity (five or eight years) at which end:

*The major amount of the loan is still outstanding;

*The sponsors/grantors face an event of default if the refinancing does not occur;

*This could lead to a termination of the concession or financing contract.

50*Soft Mini-Perms

Legal maturity of the bank loan remains long term but two features are added:

* Cash sweep: triggered at a specific date, after which some or all free cash flow is used to prepay the debt outstanding instead of allowing distributions to shareholder;

* Loan is fully repaid shorter than its legal maturity;

* Shareholders are submitted to a long period of zero/limited distributions. The stronger impact on equity remuneration the bigger the refinancing pressure;

*Margin ratchet: margin step-ups at specific dates, which make the cost of borrowing more expensive if refinancing does not occur;

* Enables adequate remuneration of long term lending and partially covers the risk that liquidity costs increase;

* Creates incentives to refinance.

51*Risks in Soft Mini –Perms

* Refinancing risk is fully supported by the sponsors; however in the in the event refinancing does not occur:

* The public sector pays for the margin ratchet - as margin ratchets are included in base case, mini-perms will stress public sector financial constraints and could force projects scope redefinitions or use public capital contributions to fill the funding gap and Public sector will be demanding a greater share of future refinancing proceeds.

* The sponsors take the impact of deferred distributions and lower IRRs resulting from the cash sweep.

* Mini –Perm Grantors will try to achieve either the benefit of the refinancing included into the price or potential short term costs can provide value for money;

* Sponsors may take advantage within tender process in connection to refinancing risks associated with mini-perm structures; however, the issue remains as to how to hedge interest rate risk when you do not know the loan amortization profile?

52

FULL AMORTIZATION ALTERNATIVE

53*Which Offers Best Value?

Sponsors Grantor BanksFully Amortizing

Higher IRR Earlier

distributions

Match between asset life cycle and financing tenor

Long term liquidity uncertainty

Lock-up to potential unfavorable financial conditions

Mini-Perms

Lower IRR (or impact base case)

Limited & deferred distributions

Higher short term financing costs

Refinancing risk (or share)

Default risk

Higher short term financing costs;

Refinancing risk;

Default risk Affordability

issues

Decreased long term liquidity uncertainty

Ability to adequate financing terms and conditions to market practice

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* Shift Towards Fully Amortizing Financing Structures?

* The deals that have been financed using a mini-perm structure caused affordability concerns for the public sector and increased risk for the private sector.

*Although banks are willing to provide funds with shorter maturities in the project finance sector, there are banks still prepared to lend long term, consistent with PPP concession periods. When combined with adequate funding sources, most deals can still match their long-term assets with long-term funding. Additional banks are willing to lend on long tenors if there are considerable refinancing incentives.

* The Project Finance stakeholders should seek this opportunity to improve the context for traditional project finance and to keep safe Project Finance from the mini-perm trends.

55BONDS IN TODAY’S PF MARKET

Moody's S&P and Fitch… …A1 A+A2 AA3 A-

Baa1 BBB+Baa2 BBBBaa3 BBB-Ba1 BB+Ba2 BBBa3 BB-B1 B+… …

Corporate Ratings

56*Bonds Market

* Project Bonds Have Traditionally Been Overshadowed by the Bank Market. International Project Finance Volumes

* Between 1995 and 2010, the project finance market was worth $1.7 trillion with an average of $108bn raised per year

* On average, project bonds have accounted for 15% of this funding, used primarily in completed projects.

* A material proportion of this was historically ‘wrapped’ by the mono line insures which is now no longer a viable option

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*Where Can Project Bonds be Utilized?

* Project bonds can be incorporated into the majority of well-structured project financings before or after completion.

* Investors will take comfort from seeing a diverse bank syndicate ranking alongside them and will focus on many of the same fundamental credit issues

* However, they will often place additional emphasis on the following:

* Government support; strategic importance

* Geopolitical concerns

* Sponsor support; maintenance of ownership; distribution policy

* Construction risk; mitigation measures

* Quality of off-take; price and volume risk; tenor; off-taker profile

* Restrictions on leverage

* Future issuance and expansion plans

* Solid investment grade credit ratings

58*Advantages of Project Bonds

*For Issuers

* Important additional source of liquidity

*Long dated maturities and bullet structures available

*Proven deep investor demand (US, Europe and GCC)

*Well established structures, documentation and inter-creditor arrangements

*Sits alongside bank and ECA financing and processes can be run in parallel

*Competitive pricing

*For Investors

*Secured against real assets

*Solid and comprehensive security packages

*Portfolio diversification

* Incremental spread vs. like-rated corporate/sovereign debt

*Solid secondary trading performances

59*Bonds Considerations & Challenges

*For Issuers

*Market timing/volatility

* Increased up-front and ongoing disclosure

* Effective investor marketing / education

*Repayment profile (bullet vs. amortizing)

* Limited currencies (e.g. no EUR … yet)

* Inter-sponsor / creditor considerations

*Negative carry (pre-funding / sinking fund)

*Refinancing considerations

*For Investors

* Increased credit intensity

* Typically lower secondary market liquidity

*Ongoing investor relations and provision of information

*Relative value given lack of precedents

* Pre-construction risk (and migration)

* Amortizing structures less preferable

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*Bonds for the Future …

*Development of the Project Bond market is important … and possible. Considerations for the future:

*Importance of secondary market liquidity thru improved mechanic for providing appropriate levels of reporting .

*Change in projects road show promotion to address the credit nature.

*Worth paying an upfront fee to compensate for lower liquidity?

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*THE ROAD AHEAD….

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*MENA Projects Pipeline

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*Future for Renewables , Social and Infrastructure projects?* PPP or IWP, Metro Links, Hospitals

are on the agenda in Kuwait

* Saudi Arabia / UAE are pushing its Solar program

* PPP for Metro, Car Parks, Ports are potential developments in Abu Dhabi

* Similar plans in Egypt to start whenever possible

*Will Saudi Arabia / UAE programs for renewable projects and especially solar projects starts in 2012 and release the huge potential pipeline?

*Rising Sectors - Renewables, Infrastructure & Social Projects?

64*Revamping and Revitalizing PPP

Model

* Government, NEED;

* Sovereign guarantees

* Grantors’ refinancing risk share, fully-funded bids not mandatory

* Co-investment (construction period) or subsidy

* Flexibility in concession period and tariff definition

* Restructure procurement processes (downsizing, scope redefinition)

* Lenders, NEED;

* Infrastructure bond market, capital!

* Longer tenors, competitive rates

* Sponsors, NEED;

* Make partnerships with other equity investors

* Contribute to funding gap, increase borrowing!

* Partially underwrite refinancing risk

* Tap into Multilaterals Agencies (MLAs) / ECAs

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*What sources of funding and funding mix will prevail for MENA PF in the years to come? – Global War on Cash!

*What financing structures and pricing will be in the near future?

*Will Japanese, Korean and potentially Chinese liquidity continue playing a greater role in the MENA PF market?

*Will well-structured projects supported by quality sponsors continue attracting high interest of PF market banks, financial institutions, ECAs and equity funds?

* Is the PPP model still alive?

* What the Future Holds?

http://bh.linkedin.com/in/loayghazaleh

[email protected]

; [email protected]

00973-36711547

Loay Ghazaleh – Advisor –

Undersecretary office

THANK YOU

http://bh.linkedin.com/in/loayghazaleh

mailto:[email protected]




2012 MENA Project and PPP Finance

Economy & Finance

Transcript of 2012 MENA Project and PPP Finance