Project and Infrastructure finance is the medium to long term lending window of the Bank. Under this window, loans are generally structured such that they rely primarily on the project’s cash flows for repayment and that the project’s assets, rights, and other interests are held as security or collateral. The tenor of project finance loans thus varies from as short a period as three years to as long a period as 10 years particularly for infrastructure projects.
In the case of PTA Bank, project finance loans have tenures ranging from three (3) to seven (7) years including a maximum grace period of three (3) years. Longer tenures can, however, be negotiated depeding on a project’s financial and operational requirements
Under the PIF window, loans are generally structures as non-recourse or limited recourse in which debt, equity and credit enhancement are combined for the construction, operation or the re-financing of a particular facility in a capital intensive industry. It is also a structure in which lenders base their credit appraisals on the projected revenues and cashflows from the operation of the facility and relying heavily on creditworthiness of the sponsor.
Infrastructure is a term used to refer to sectors such as; Power & energy, roads, bridges, sea ports, airports, rail system, water supply, sanitation & sewerage system, telecommunication, industrial parks, social housing, waste management plants, and other public facilities of a similar nature.
The outstanding feature in all of the above sectors is that the facilities are either wholly- or partially owned by national governments whose focus is to operate them sustainably and efficiently for the public benefit and not so much for profit. Generally, infrastructure projects and hence the finance required tends to be very long term up to 25 years and are carried out in the form of Public Private Partnership (PPP).
The emphasis of ‘’Infrastructure Finance’’ in the Bank is meant to highlight the importance that the Bank is placing on its intervention in infrastructure projects in the region.