Most economists agree that functioning infrastructure is crucial
to economic development. A dollar invested in new roads, energy powers, water
system can generate not only more than a dollar in the money term but also non-monetary
social benefits. However, economists predict that current global infrastructure
investment portfolio cannot keep up with the rising investment demand in the
next decades. Therefore, engaging private sector through Public Private Partnerships
to provide infrastructure becomes indispensible.
Infrastructure projects are typically financed through project
finance mechanism rather than corporate finance one. As a result, one of the
major concerns is how to develop and structure infrastructure projects to be
bankable and financially appealing to lenders. Also, PPP projects involve numerous
project risks that might have a great impact on project bankability. If a
project is not bankable, then there is no project being built. Therefore, my
project is concerned with how to structure a project to achieve bankability and
how commercial banks assess different project risks.
As mentioned above, I certainly believe that PPP is the future of infrastructure
development. Therefore, I plan to become a PPP expert and to contribute my
efforts in finding solution to our investment gap problem. My project involves
a lot of readings about project finance, project case studies, and commercial
banks lending criteria. Typically, I read more than 500 pages per week. Once a
week, I have a 30-minute with my mentor who is the Director of Center for Transportation
Public Private Partnership Policy. This
week, I found a great case study book about project finance in highway
projects, which might help me compare and contrast different projects to draw
some potentially useful lessons.
