Presentation delivered at Greenwich University on October 16, 2010.

1. Muhammad KAMRAN – FCA.

2. Objectives To understand what project financing is and what steps are involved in securing and managing it.

5. Introduction – Why is it important to understand project finance ? The people involved in a project are used to find financing deal for major construction projects such as mining, transportation and public utility industries, that may result such risks and compensation for repayment of loan, insurance and assets in process. That’s why they need to learn about project finance in order to manage project cash flow for ensuring profits so it can be distributed among multiple parties, such as investors, lenders and other parties.

8. Introduction – 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 .

14. Stages in Project Financing – Risk Identification and Minimizing. Risk Solution Completion Risk Contractual guarantees from contractors, manufacturer, selecting vendors of repute. Price Risk hedging Resource Risk Keeping adequate cushion in assessment. Operating Risk Making provisions, insurance. Environmental Risk Insurance Technology Risk Expert evaluation and retention accounts. Interest Rate Risk Swaps and Hedging Insolvency Risk Credit Strength of Sponsor, Competence of management, good corporate governance

22. Stages in Project Financing – Financial Closure / Project Closure Financial closure is the process of completing all project-related financial transactions, finalizing and closing the project financial accounts, disposing of project assets and releasing the work site. Financial 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. Financial closure establishes final project costs for comparison against budgeted costs as part of the PIR. Financial closure also ensures that there is a proper disposition of all project assets including the work site. Project closure and commencement take place after financial closure.

25. Conclusion – A Typical Project Finance Structure.

28. Thank You.