Project finance is one of the most innovative ways by which public projects can be financed...

Project finance is one of the most innovative ways by which public projects can be financed via the Public Private Partnership model. However, it has been noted that project finance is not the panacea for financing all public projects. Discuss.

Solutions

Expert Solution

Project finance is the financing of the project based upon the cash flows generated from long term projects rather than balance sheet adequacy of the borrowers.

It is a modern way of financing in which both debt as well as equity lenders of the company assess the risk associated with the cash flows from the project and after analysing the probability of different cash flows streams lend money to the borrower.

It involves a number of equity investors known as sponsor and a number of syndicate of banks lending debt to the Company.

However, it has been noted that project finance is not the panacea for financing all public projects because of following reasons-

1. It is a highly complex method which involves a lot of forecasting associated with the cash flows related to projects and it can't be predicted accurately.

2.It has a high level of compliance requirements and there is a strict level of regulations involved.

3.It requires continuous expert assistance because of the complexity involved.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Briefly explain four ways in which budget deficits can be financed.

1. A) What are the four ways in which G↑ can be financed? B) Of these...

1. A) What are the four ways in which G↑ can be financed? B) Of these four, which do you think will have the smallest effect on Z? The largest? Explain your reasoning. C) Give an example of a tax cut that lowers aggregate demand.

If projects are mutually exclusive, only one project can be chosen.

7. Understanding the NPV profile If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will _______ agree. Projects W and X are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. YearProject WProject X0-$1,000-$1,5001$200$3502$350$5003$400$6004$600$750If the required rate of return...

Discuss various ways to finance a project and the pros and cons.

One of ways an entrepreneur can finance his or her venture, is to use Venture Capital....

One of ways an entrepreneur can finance his or her venture, is to use Venture Capital. Dana Mead, a partner at Kleiner Perkins Caufield & Byers, supports entrepreneurs and innovators who are seeking to make major impacts in our society through their ventures. In these discussion videos, Mr. Mead provides insights about California's Silicon Valley and his life as a venture capitalist. consider the following questions to drive the discussion: Would you consider using Venture Capital in a venture that...

Private finance is not a panacea for the funding of all public projects’’ Discuss the statement...

Private finance is not a panacea for the funding of all public projects’’ Discuss the statement above and identify the various types of project s which would be better value for money if funded by the public sector alone

What are the different ways that you can value a company and which is most appropriate...

What are the different ways that you can value a company and which is most appropriate for a energy sector

Describe the various ways to close adeal. Which one is most likely to be used...

Describe the various ways to close a deal. Which one is most likely to be used by a seller of a house with a buyer who has made it clear that he or she is shopping around for other houses? Give a specific example of how the strategy might be used by the seller of the house to entice the buyer to make the purchase.

List and Explain 3 ways in which business can finance their fixed Assets. What are some...

List and Explain 3 ways in which business can finance their fixed Assets. What are some of the places where businesses can go for asset financing? Which source would you recommend and why?

Project Finance question: In the context of project finance, how can stakeholder engagement enhance project success?

Subjects