Abstract
Project finance (PF) is a relatively new concept in developing countries as opposed to developed countries. PF has been used in development of Infrastructure in Energy sector (oil and gas, mining, electricity generation), water sector, telecommunication, roads and highway, railway, Irrigation and public services. Different scholars and experts have worked on development on infrastructure projects in different sectors using PF concept, even though the PF concept has been used few studies have been done on Irrigation sector. The purpose of this paper is to analyze Influence of environmental factors on financing of irrigation projects; by critically looking at its use in other sectors in comparison to irrigation sector. In examining these aspects, an attempt is made to achieve four main objectives: to determine Key Commercial Risks involved, analyze Main contractual forms of PPPs in Irrigation, to determine Key Legal issues involved and to generate proposition for future empirical studies.
Highlights
This paper examines Influence of environmental factors on financing of irrigation projects
The article will be limited to a discussion of three aspects of Project finance (PF) these are: Extent to which key commercial risks influence financing of irrigation projects, Analyze the key legal issues in financing of irrigation projects and Impact of contractual forms of private partnership (PPP)
It is acknowledged that Key Commercial risks; main contractual forms of PPPs, and key legal issues moderated by guarantees is key to financing and irrigation project
Summary
The concept of infrastructure project finance has been used since beginning of 13th century and has attracted a number of studies from scholars over the world. The definition highlights the organizational aspects of project finance through the creation of a legally-independent entity that owns the project assets. According to Rajan & Zingales (2003) there should be a clear distinction between project finance and conventional direct finance They argue that in direct finance model, lenders look to the firm's entire asset portfolio to generate the cash. Main difference between corporate finance and project finance is that the assets are financed as stand-alone entities rather than as part of a corporate balance sheet This agrees with earlier argument by Drew (1995) that the project must be able to generate sufficient funds to cover all operating costs and debt service while still providing an acceptable return on the equity invested in the project. The article will be limited to a discussion of three aspects of PF these are: Extent to which key commercial risks influence financing of irrigation projects, Analyze the key legal issues in financing of irrigation projects and Impact of contractual forms of PPP
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