Project finance for construction & infrastructure : principles & case studies

Project Finance For Construction & Infrastructure......Page 1
Contents......Page 5
Preface......Page 8
Acknowledgements......Page 11
About the Authors......Page 12
1 The Nature of Project Finance......Page 15
1.1 The world of projects today......Page 17
1.2 Corporations, finance and projects: important concepts......Page 19
1.3 The project company business model......Page 26
1.4 The project cycle......Page 35
1.5 System concepts and the project company......Page 43
1.6 Plan of the book......Page 53
Key concepts......Page 56
2 Complex Transactions......Page 57
2.1 Transactions, the cost of transactions, transaction cost economics, and projects......Page 58
2.2 A more formal approach to disaggregation of transactions......Page 65
2.3 The influence of agency on transaction costs – agency costs......Page 72
2.4 Corporate finance context......Page 78
2.5 Incentive conflicts in corporate finance......Page 83
2.6 Transaction costs and agency – theoretic logic of the project finance model......Page 89
Key concepts......Page 92
Appendix 2.1 Comparison of long-term debt instruments......Page 93
A2.1.1 Syndicated loans......Page 94
A2.1.2 International bonds......Page 100
3 Financial Evaluation......Page 107
3.1 Valuation and the project company......Page 108
3.2 Valuation and the project company as a single-asset business......Page 125
3.3 Capital budgeting decisions......Page 149
Key concepts......Page 163
4 Managing Risk in Project Finance Transactions......Page 164
4.1 The project cycle revisited......Page 166
4.2 Risk management approaches......Page 169
4.3 The project company and risk identification......Page 183
4.4 Risks in the construction phase......Page 202
4.5 The institutional environment and risk......Page 209
4.6 Risk management and project lenders......Page 217
Key concepts......Page 228
5.1 Introduction......Page 230
5.2 PFI origins......Page 233
5.3 Types of PFI......Page 235
5.4 PFI features......Page 237
5.5 Procurement process principles......Page 239
5.6 Contract and control structure......Page 245
5.7 The special purpose or project vehicle and financing......Page 246
5.8 PFI/PPP and rational privatisation......Page 247
5.9 Risk management......Page 248
5.11 Challenges for PFI and PPP and the responses......Page 253
5.12 The lessons......Page 256
Key concepts......Page 258
6.1 Infrastructure finance: the Sydney CrossCity Tunnel......Page 259
6.2 History of the CCT project......Page 260
6.3 Cheung Kong Infrastructure Holdings Limited......Page 266
6.4 The bidding process......Page 270
6.5 Valuing the project......Page 271
6.6 Assessing project risks......Page 275
6.7 Capital structure......Page 276
6.8 Completion of the deal......Page 280
6.9 Project outcomes......Page 6
7.1 Refinancing the Western Harbour Crossing, Hong Kong......Page 294
7.2 History of the Western Harbour Crossing......Page 295
7.3 Valuation of the project......Page 316
8 Institutional Risks and Infrastructure Project Finance: the Dabhol Power Project......Page 322
8.1 Dabhol Power Project......Page 323
8.2 Development of the Dabhol Power Project......Page 326
8.3 Power purchase agreement......Page 328
8.5 Analysis......Page 335
9.1 Public private partnership: London Underground......Page 338
9.2 Two countries, two systems......Page 339
9.3 Public private partnership......Page 342
9.4 Endnote......Page 360
References......Page 362
Index......Page 368