Financial and technical assistance of a project

1. FINANCIAL AND TECHNICAL
ASSISTANCE OF A PROJECT
ANUJA CHAVAN

2. PROJECT
• A project consist of a combination
of organizational resources pulled
together to create something that
did not previously exist and that
will provide a performance
capability in the design and
execution of organizational
strategies.

3. PROJECT FINANCE
• Project finance is a method of financing
very large capital intensive projects, with
long gestation period, where the lenders
rely on the assets created for the project
as security and the cash flow generated
by the project as source of fund for
repairing their dues.

4. What does it cover?
• Project finance generally covers green-field
industrial projects, capacity expansion at existing
manufacturing units, construction ventures or
other infrastructural projects.
• Capital intensive business expansion and
diversification as well as replacement of
equipment may also be covered under project
finance.
• Project finance is quite often channeled through
a project company known as special purpose
vehicle or project development vehicle.

5. PROJECT FINANCING PARTICIPANTS AND AGREEMENTS
• Sponsor/Developer
• Additional equity investors
• Construction Contractor
• Operator
• Feedstock supplier
• Product off taker
• Lender

6. ADVANTAGES OF PROJECT FINANCING
• Non-Recourse
• Maximize leverage
• Off balance sheet treatment
• Maximize tax benefit

7. DISADVANTAGES
• Project financing are extremely complex.
• Take much longer period of time to structure,
negotiate and document.
• The legal fees and related costs associated can
be very high.

8. Stages in project financing
1) Project identification
2) Risk identification and minimizing
3) Technical and financial feasibility
4) Equity arrangement
5) Negotiation and syndication
6) Commitments and documentation
7) Disbursement
8) Monitoring and review
9) Financial closure / Project closure
10) Repayments & subsequent monitoring

9. Financial assistance for a project
• Term loan
• Deferred payment guarantee
• Soft loan
• Supplier’s line of credit
• Buyer’s credit
• Debentures
• Leasing
• Public deposits
• Own fund-equity, preference share, retained earnings, unsecured
loans
• Bridge loan
• Seed capital
• Government subsidies

10. Who is eligible for technical
assistance?
• The beneficiaries of technical assistance are
Bank borrowers including:
the governments of partner countries;
public utilities in the fields of infrastructure,
water, energy, etc.;
operators in the financial sector and private
promoters.

11. Technical Assistance services may include
support to beneficiaries for carrying out:
• identification,
•studies,
• environmental and social impact
assessment,
• financial affordability analysis
• budgetary planning,
• complete design,
• assistance to tendering process, and,
• supervision of implementation works.

12. conclusion
• The key to any project finance is to use a right
mix of debt and equity.
• Further there should be right mix of foreign
currency and rupee loans.
• Its is also important that due care is taken in
drafting the documents concerning the
financing of the project.

13. • The companies should adopt the project
financing structures so that the objective
shareholders wealth maximization can be
achieved.
• As the world is heading towards a global
integrated market and the failure of governments
as well as the demand for private capital in
infrastructure assets is increasing, project finance
will continue to play important role in both
developed & developing markets.

14. Thank you