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PPP FINANCING ARRANGMENTS – STRUCTURING FINANCE SUCCESSFULLY IMTIAZ HIZKIL ISLAMIC DEVELOPMENT BANK

PPP FINANCING ARRANGMENTS – STRUCTURING FINANCE SUCCESSFULLY IMTIAZ HIZKIL ISLAMIC DEVELOPMENT BANK. Arrangement of Financing – One of the most challenging part of developing a PPP Infrastructure Project.

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PPP FINANCING ARRANGMENTS – STRUCTURING FINANCE SUCCESSFULLY IMTIAZ HIZKIL ISLAMIC DEVELOPMENT BANK

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  1. PPP FINANCING ARRANGMENTS – STRUCTURING FINANCE SUCCESSFULLYIMTIAZ HIZKILISLAMIC DEVELOPMENT BANK

  2. Arrangement of Financing – One of the most challenging part of developing a PPP Infrastructure Project • Project has to be Bankable, needs adequate technical and financial resources for preparation • Minimize risks and allocate to the right party • Legal and Regulatory Environment • The need for a track record – the first PPP project is perhaps the most challenging project

  3. Attracting Sufficient Project Financing The Strength of Partnership • Managerial • Equity • Project’s Bankability • Track Record for Projects in the Industry • Appetite of Foreign and Local lenders

  4. Funding StructureNeed to Response to Project Needs • Optimum Debt Equity Ratio • Equity • Sponsors • Capital Market • Long Term Debt • IFIs - Debt, Political Risk Guarantee • ECAs • Foreign Banks • Local Banks • Long Term Facilities – Reflect Projects Cashflows • Pricing of Debt – Fixed, Variable, Hedging

  5. International Financing Institutions • Brings Credibility, Enhanced Environmental and social Assessment • Role of IFI’s – • Where there is a major development impact • Critical for Mega projects and “First” projects in terms of country, sector and technology. • Help bring other funds - Commercial sources, Equity IFIs may participate through different windows • Direct Funding • Special purpose fund • Guarantees

  6. Role of Islamic Finance in PPP Infrastructure Projects • Modes of Financing • Installment Sale • Leasing • Istisnah • Equity • No fundamental limitation • Project Finance transactions have combined Islamic Financing and Conventional Financing – Issues have been Resolved

  7. Role of Islamic Development Bank in PPP Projects • Aggressively pursuing “Project Finance” Based Transactions • BOT Projects Guidelines Prepared • Workshops on BOT projects in Member Countries • Sukuk Resources Available to Fund PPP Projects in Infrastructure in Member Countries / MENA Countries

  8. Working Closely with IFIs, Commercial Banks and Local Banks in large and medium scale transactions • Intervention in Power, Oil, Gas, Transportation • Committed to participate in Projects in other areas of Economy • Fully Support Institutional Strengthening • Cooperation with multi-laterals, bilateral and other institutions

  9. IDB’s Participation in the first hydro-electric IPP in Pakistan • IDB providing US$ 37.2 million of financing on leasing mode • Other participants - ADB and local commercial banks • A PPP in hydro-sector is challenging and a good example of sharing of risks by the parties • Success of this project will bring many other hydro power PPP type projects in the country

  10. Thank you

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