Question

Over the years, Project Finance has shifted from being a wholly public venture into significantly involving the private sector. Using relevant data discuss factors that may account for the level of private sector involvement?

Answer 1

Project Financing refers to the funding (financing) of long-term infrastructure, industrial projects, and public services using a non-recourse or limited recourse financial structure. The debt and equity used to finance the project are paid back from the cash flow generated by the project.

The private partner is responsible for raising and providing the funds to develop the asset (that is, for design and construction through to completion of the asset) except to the extent that the government provides part of the finance if the PPP is a co-financed scheme

Factors influencing the increase of Public Private Partnership

1. More funds available in private sector

2. More privatization

3. Globalization

4. Lesser governmental control

5. Capitalist measures

6. Profit sharing and increasingly better delivery by the private sector.