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.