Americas Report 2008
Chile powers on alone: Chile, caught amid the worst drought in a century as well as three squabbling neighbours, has decided to increase its energy production to rely on itself.
Colombia is strategically located in the middle of the Western hemisphere, on the northern coast of the South American continent. By Carlos Albarracín, a partner in the Latin America practice of Chadbourne & Parke LLP, and Mauro Penteado and Agustín Cerda, visiting attorneys at the firm.
As the world reacts to regional downturns in numerous economies, investors have looked to alternative investment opportunities to diversify their portfolios and provide themselves with strong returns in safe environments. By Dino Barajas, a partner at Morgan Lewis & Bockius LLP.
Greenhouse gas emissions and corresponding global climate change concerns have been at the forefront of international environmental policy discussions for more than a decade. By Carolina Walther-Meade, partner, Lewis Putman, and Peter Hughes, associate, Milbank Tweed.
Gulf LNG Energy (GLE) closed a non-recourse financing of US$870m as well as the sale of a 50% interest in the company to El Paso Corporation in February 2008. By Chuck Zabriskie, a partner at Acquest Advisors, a Houston-based financial advisory firm.
Now attractive only to a handful of banks willing to take on equity-like risk, turbine loan syndications are seen to be on the way out as club financings appear to be the only option. By Deirdre Fretz.
When Public Service Company of Colorado (PSCo), a unit of Xcel Energy, issued an RFP for wind projects in February 2008, it included some requirements that haven’t been a part of the specifications for its previous wind projects. By Deirdre Fretz.
Despite the generally bad climate for ethanol deals and the tough market for selling project finance deals overall in the US, WestLB and Merrill Lynch pulled off the Arkalon Ethanol deal with a targeted approach to seeking investors. By Alison Healey.
For many industry participants, the increasing use of availability payment-based concession structures is a welcome relief from the traffic study projections that have formed the basis of the underwriting of several high-profile real toll US concessions. Joel H Moser, partner, Fulbright & Jaworski LLP.
Private investment in maritime assets in North America has witnessed a flurry of activity during the past 18 to 24 months. By Manju Chandrasekhar, vice-president Halcrow Inc, New York.
Asia Pacific Report 2008
DIAL Civil aviation in India: The Indian aviation industry has shown continued growth in recent years with the key drivers being high GDP growth, steady industrial performance, higher disposable incomes, growth in consumer spending and low air fares.
Developing China’s Central and Western provinces is a huge task – and the improvement of transport infrastructure is key. By Joe Yamagata, director of private sector infrastructure finance, Asian Development Bank and John Duffy, head of global infrastructure, HSH Nordbank.
Temasek Holdings of Singapore has put its first genco up for sale and the winning bidder was China Huaneng Group. Mark Yeo, vice-president, and Mark Lee, assistant vice-president, at Oversea-Chinese Banking Corporation discuss the process.
The construction of new IPPs in Indonesia is hardly seen gaining momentum, despite licences being awarded much earlier. The government is now looking at reviewing its IPP policy in order to encourage investments. By Minerva Lau.
Australia’s power generation sector is proving to be the bright spot in the project finance market, as originators and syndicators have an increasingly good story to tell to credit approval committees about quality assets, a regulated sector and secure cashflows. By John Arbouw.
The proposal for the development of a third coal loader for the Port of Newcastle (located approximately two hours north of Sydney on the Australian eastern coast) had a lengthy gestation period. By Phillip Cornwell, partner, Rob Watt, partner, Mary-Frances Murphy and Arv Sreedhar, Allens Arthur Robinson.
To alleviate traffic congestion, a partially elevated expressway was proposed along the eastern fringes of the city centre to connect the Johor Customs, Immigration & Quarantine (CIQ) facility with the North South Highway. Lau Mun Loong and Patrick Fung of HSBC discuss the project.
Independents are taking advantage of high hydrocarbon prices by increasing their production assets and by investing in exploration; and innovative financial solutions are needed. Matthias Schemuth, a partner at Ashurst in Tokyo, looks at the options.
Europe Report 2008
For the first time – certainly the first time for many years – traffic levels on the main inter-urban highways are falling.
Project finance and infrastructure loans have been viewed as an attractive asset class for structured finance transactions for several years now. By Matthew Job, counsel in Linklaters' Global Projects Group and Andrew Vickery, managing associate in Linklaters' Structured Finance Group.
The Tunnel 2K International is a 2km link operating with traffic well over its initially designed capacity. A second Tyne tunnel will now ease the congestion. By Kim Locherer of CIBC World Markets.
In June 2008, financial close was reached for the Second Coentunnel project, one of the largest Dutch PPP projects so far. By Daan van der Heijden, director PPP-infrastructure finance at Fortis Bank, and Matthew Jones and Tom Eldridge, partners at Denton Wilde Sapte.
This brief case study analyses the Hungarian recipe for fast-track PPP procurement and looks for lessons that could be exported to Western Europe. By Brett Forbes, managing director, ING infrastructure and advisory, and Bela Kilyenfalvi, ING Budapest.
Mammoth high speed rail projects in France and Portugal are leading Europe’s new wave of TGV financings but bankers are struggling to provide the long tenors and gigantic amounts of debt that bidders are seeking to clinch a concession. By Greg Roumeliotis.
The radiales real toll roads will soon be asking for refinancing after their mini perms expire, a difficult proposition given that recent traffic has seen a downturn. By Greg Roumeliotis.
This article looks at some challenges ahead for sponsors and lenders. By Victoria Westcott, a partner at White & Case LLP specialising in project and asset finance and based in its Paris office.
The biggest deals in Ireland’s PPP market continue to be rail projects, but sizeable deals can be found across the transport, leisure, prison, health, education and power sectors. By Mark Kolmar.
The PPP Centre is a structural unit of state corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank). By Alexander Bazhenov, director of PPP Centre, Vnesheconombank.
Global Energy Report 2008
YLNG goes the distance: Major energy projects take time to put together, and Yemen LNG has taken longer than most. To get to financial close, the scheme and its backers have had to overcome some very large hurdles. But the challenges have been met and Yemen has its deal.
A year ago, Australian oil and gas exploration and development company Petsec Energy’s share price was under pressure. But Petsec is now in a better position to take the next step into China both in terms of cashflows and its ability to secure new debt. By John Arbouw.
In the Southern Cone, one company wants to grow in tandem with one country. BPZ, a Houston-based oil and gas company, is developing an ambitious oil and gas and power project, all to capitalise on the strengthening Peruvian economy. BPZ’s financial ally in this endeavour is the IFC. By Alan Gersten.
The eight-year US$600m financing for Total Gabon was successfully closed on April 8. By Olivier Musset, managing director, energy project finance, Société Générale Corporate & Investment Banking, Axel Wintrebert, associate, energy project finance, Société Générale Corporate & Investment Banking, and Joël Cordier, financial co-ordinator, on behalf of Total Gabon.
Like the ugly duckling, coal seam gas (CSG) was until recently the neglected energy commodity as conventional offshore and onshore oil and gas projects took centre stage. By John Arbouw.
The European Union (EU) is seeing a rise in the number of new natural gas storage facilities being constructed. By Nick Dingemans, counsel in Clifford Chance's Global Energy and Infrastructure Group in Moscow.
Demand for power has never been so urgently needed in Asia, and even more so in Indonesia, where foreign investors remain cautious. State-owned utility group PLN, however, has launched a fast-track programme to meet this huge demand. By Minerva Lau.
As South Africa’s strangling power crisis tightens its grip, the country is struggling to make the sector viable for private sector investment. By Mark Kolmar.
Like a teenager outgrowing his clothes, Brazil is expanding so fast that it can’t install basic infrastructure such as transmission lines. These thin, but potent wires carry the country’s electrical lifeblood, but not enough of them exist in the country today. By Alan Gersten.
In its quest for energy diversification, Germany plans to build 27 coal-fired power stations by 2020. But a bitter cocktail of poor liquidity, high EPC costs, local opposition and environmental concerns may prove too much for financiers to stomach. By Greg Roumeliotis.
Global Infrastructure Report 2008
Bearing Russian infra risk: For infrastructure companies and banks that have been venturing eastwards in Europe in the last few years, Russia represents the last frontier. But making the right risk calculations is proving more challenging for financiers than they originally thought.
The infrastructure sector in India offers sizeable opportunities. But, as is to be expected, for a country this size the project issues can be complex. Sunreet K Maheshawari, CEO of L&T Infrastructure Co Ltd, takes a personal look at the market.
Like all growing economies in the region, Indonesia urgently needs investments in its infrastructure, such as the transportation system. After a slow growth in the past 10 years, the country is finally beginning to see a pick-up in toll road investments. Minerva Lau writes.
Deal flow from the UK waste private finance initiative (PFI) sector is well set with the allocation of £2bn of PFI credits for the next three years. Given that the credits cover 50% of capex, this means the market will total £4bn across 20-plus schemes. By Rod Morrison.
A survey of the toll road landscape in Italy reveals rich pickings but also painstakingly slow tenders that have tested the patience of many banks. By Greg Roumeliotis.
The development of motorways remains at the forefront of the infrastructure development programmes for most Central and Eastern Europe (CEE) countries. By Jonathan Simpson, partner, head of European projects and global infrastructure, Paul Hastings Janofsky & Walker (Europe) LLP.
US DOT’s Tyler Duvall says federal help is on the way to steer the P3 process that international bidders deride as sluggish and chaotic. By Deirdre Fretz.
Infrastructure as an asset class has commanded increasing attention from investors and the financial press over the past three years. By Martin Lawrence, an international analyst at RiskMetrics Group and the author of the report, 'Infrastructure Funds – Managing, Financing and Accounting'.
Infrastructure project sponsors have long hoped to entice some of the nation's US$9 trn in pension fund assets to participate in infrastructure projects as pension funds in Canada, Australia and some European nations have done. With the outlook for traditional assets sinking, US funds are finally listening. By Deirdre Fretz.
On the hottest day of the year in Tunisia in July 2007, the inaugural ceremony of the long-awaited new Enfidha Airport was held, concluding a process that started 3-1/2 years ago and marking the start of the first PPP in airport infrastructure in Tunisia, and more broadly in North Africa. By Yasser Charafi, Imane Akalay and Bertrand de La Borde, the IFC.
On March 27, financial close was achieved on the FSTA air-to-air refuelling project of the UK Ministry of Defence. Comprising up to £13bn of whole life payments, this represents the largest PFI project entered into by the MoD to date and possibly the only PFI project of its kind. By Bhaswar (Joy) Chatterjee, director, project and capital advisory, Deutsche Bank.
This month, tender documents have been released to bidders on the multi-billion euro Metro North PPP. The project has come through a carefully structured development on design and contract to allow integration with other aspects of Dublin’s ambitious Transport 21 scheme. By Mark Kolmar.
India Report 2008
Debt market - Huge demands: The momentum on India’s economic growth will continue this year and the bank market is gearing up to meet huge demand to fund much needed infrastructure development.
Rishabh Shroff of Amarchand Mangaldas discusses the expanding role of law firms in India to meet the demands of the growingly more complex world of project financing.
Following the successful US$1.95bn debt financing for the Guru Gobind Singh Refineries, the next phase for the two partners – HPCL and Mittal Energy – is to raise financing for the pipelines that will bring the crude oil to the refineries. Ramesh Tenjarla, deputy manager, project advisory and structured finance at SBI Capital, writes.
With the rapid growth of industrialisation, demand for power in India is rising considerably. Prawin Devchell, managing director and head of debt syndications and structured finance at IDFC SSKI, discusses the role of IPPs and merchant power plants such as that owned by Monnet Power Company.
The Indian power market has been considered unbankable by international institutions for some time. Jonathan Drew, S Balasubramanian and Khawar Iqbal of HSBC discuss a wind power project by Roaring 40s.
Strong wind sector growth in India has put the country fourth in the world for new capacity in 2007, and total installed capacity. With the potential for six times the current capacity, however, the country is primed for a flurry of further investment. By Mark Kolmar.
A fast growing metropolis, the garden city of Bangalore (the name has since been changed to Bangaluru) is the capital of the southern Indian state of Karnataka. By Manash Mitra, ICICI Bank Ltd.
GDP growth of about 8% per annum in recent years coupled with years of under-investment has left India with a critical infrastructure deficit. Will overseas investors fill the gap? By Mark Kolmar.
Indian companies seem to be avid IPO issuers. SPVs, sometimes with hardly any track record, are set up and listed for fundraising for future projects, the uniquely Indian way. Minerva Lau writes.
Middle East Report 2008
Welcome to the third annual Reuters International Financial Review (IFR) and Project Finance International (PFI) report on the Middle East capital markets. We publish the report at a time of unprecedented turbulence in the global markets. For much of this year the Middle East has shown a degree of isolation from the global problems, but the latest shocks to the system will have an impact even in this region.
If the financial world was asked to sum up 2008 in just two words, I’m sure you’d end up with a number of different options. In the Middle East, you would probably need a few more words. By David French.
Mining Report 2008
Mining finance on form: The mining finance market has recovered steadily from the depths of the earlier part of the decade. Rising commodity prices have, of course, been the driver but the growing needs of countries acquiring strategic recourses is part of the picture.
Long in the shadow of its showier neighbours, Brazil and Chile, Peru has become a focal point for current and future mining. Major and minor players – attracted by an abundance of minerals, soaring prices and a friendly environment – are building and staking claims in the nation's booming southern section. By Alan Gersten.
Renewables and Waste Report 2008
US financiers consider new world: As the US presidential election in November draws closer, project developers, advisers, and bankers are viewing the national regulation of greenhouse gases.
The scale of what the UK government is proposing for its offshore wind sector is truly immense. But the contrast with what has been achieved thus far is pretty wide too. Developers and financiers will be attracted, however, despite the record. By Rod Morrison.
Fortis and BBVA closed syndication on the loan financing for NedPower’s Mount Storm earlier this year, but relentless legal manoeuvring and turbine malfunctions keep the deal risky. By Alison Healey.
The winds are still blowing in northeastern Brazil, so windfarms – despite the sale of one major project – remain a strong energy alternative. Project finance capital is still available, though perhaps not for large deals. By Alan Gersten.
Despite considerable wind power capacity and the creation of policy and regulatory structures to support renewable energy, some major hurdles continue to limit foreign and private sector investment in the wind power market in China. By Jack Su of Lovells, Hong Kong, and James Webbe and Frédéric Delaffond of Lovells Lee & Lee, Singapore.
The South Korean PPP initiative is being used to build sewerage schemes. This article describes how and presents a specific case study. By Seil Kong, general manager project finance department, Korea Development Bank.
Due to regulatory changes and the increase in energy prices a large number of waste-to-energy facilities have been constructed in Germany and even more are in the planning phase. By Uwe Sager, partner and Mario Welle, consultant, SPF Partners.
There is more trash to go around than Italy can handle, yet waste-to-energy (WTE) deals in the country have been held back by the government’s reluctance to tackle incompetence, corruption, neglect and even violence. Greg Roumeliotis lifts the lid on some promising but troubled projects.
One year on from a European roadshow to pitch a €1bn global wind portfolio financing to banks, syndication close on an additional €430m marks another milestone for Babcock & Brown Wind Partners’s (BBW) rolling debt. By Mark Kolmar.