
Chapter 1
Introduction
1
Project finance is a method of raising long-term debt financing for major projects
through “financial engineering,” based on lending against the cash flow generated
by the project alone; it depends on a detailed evaluation of a project’s construc-
tion, operating and revenue risks, and their allocation between investors, lenders,
and other parties through contractual and other arrangements. Project finance is a
relatively new financial discipline that has developed rapidly over the last 20 years.
In 2001, some $190 billion of investments in projects around the world were
financed using project finance techniques (cf. §2.1).
“Project finance” ...