For any professional involved in Public-Private Partnerships (PPPs), a solid grasp of Project Finance Essentials for PPP Professionals is absolutely fundamental, as this specialized financing technique underpins the vast majority of complex infrastructure and public service projects, enabling governments to leverage private capital and expertise without recourse to their balance sheets. Unlike traditional corporate finance, project finance structures are built around the cash flows and assets of a single, ring-fenced project, requiring a nuanced understanding of risk allocation, debt and equity structuring, and the intricate web of contractual agreements that bind all parties together. This comprehensive training course is meticulously designed to equip public sector officials, project developers, financial advisors, and legal professionals with the core concepts, terminology, and practical applications of project finance, empowering them to confidently participate in the structuring, negotiation, and management of bankable PPP deals. Without a clear understanding of Project Finance Essentials for PPP Professionals, stakeholders risk misjudging project viability, failing to attract necessary funding, and ultimately hindering the successful delivery of critical infrastructure, underscoring the vital need for specialized expertise in this critical domain.

Duration: 10 Days

Target Audience

• Public Sector Officials from PPP Units, Ministries of Finance, and Sectoral Ministries
• Project Managers and Directors (public and private sector)
• Project Developers and Sponsors
• Financial Analysts and Modellers
• Legal Professionals (to understand financial implications)
• Commercial and Development Bank Professionals (non-finance specialists)
• Consultants providing advisory services on PPPs
• Procurement Specialists
• Engineers and Technical Experts involved in infrastructure projects
• Anyone seeking a foundational understanding of project finance in PPPs

Objectives

• Understand the fundamental principles and characteristics of project finance.
• Learn about the key benefits and risks of using project finance for PPPs.
• Acquire skills in identifying the core components of a project finance structure.
• Comprehend techniques for analyzing project cash flows and financial viability.
• Explore strategies for optimal risk allocation in project finance deals.
• Understand the importance of debt and equity structuring in PPPs.
• Gain insights into lenders' requirements and security packages.
• Develop a practical understanding of key financial ratios (e.g., DSCR, LLCR).
• Master the project finance documentation framework.
• Acquire skills in identifying and mitigating common project finance risks.
• Learn to apply international best practices in project finance for PPPs.
• Comprehend techniques for ensuring project bankability and financial close.
• Explore strategies for managing the relationship between public authority and lenders.
• Understand the importance of fiscal implications and contingent liabilities of project finance.
• Develop the ability to participate effectively in project finance discussions for PPPs.

Course Content

Module 1: Introduction to Project Finance

• Definition and distinguishing features of project finance.
• Key differences between project finance and corporate finance.
• Advantages of project finance for PPPs (e.g., limited recourse, off-balance sheet).
• Disadvantages and complexities of project finance.
• Overview of a typical project finance structure and its participants.

Module 2: The Special Purpose Vehicle (SPV)

• Role and legal structure of the Special Purpose Vehicle (SPV) in project finance.
• Ring-fencing and bankruptcy remoteness of the SPV.
• Relationship between the SPV, sponsors, and the public authority.
• Corporate governance of the SPV.
• Legal implications of the SPV structure.

Module 3: Project Cash Flow and Financial Viability

• Understanding the project cash flow waterfall.
• Key drivers of project revenues and costs.
• Basic financial viability assessment: NPV, IRR.
• Importance of robust financial modeling (conceptual).
• Cash flow analysis for debt service capacity.

Module 4: Risk Allocation in Project Finance

• Principles of optimal risk allocation: allocating risk to the party best able to manage it.
• Common project risks: construction, operational, demand, political, regulatory, financial.
• Contractual mechanisms for risk transfer and sharing.
• Impact of risk allocation on project bankability and cost of finance.
• Case studies of risk allocation in project finance.

Module 5: Debt Structuring and Sizing

• Types of debt in project finance (senior, subordinated, mezzanine).
• Debt sizing methodologies (e.g., debt service cover ratio driven).
• Loan repayment profiles (sculpted, annuity, equal principal).
• Interest rate mechanisms (fixed vs. floating).
• Role of debt service reserve accounts (DSRA) and other reserves.

Module 6: Equity Structuring and Returns

• Sources of equity in project finance (sponsors, infrastructure funds).
• Equity contributions and shareholder loans.
• Calculation of Equity Internal Rate of Return (Equity IRR).
• Dividend distribution policies and cash sweep mechanisms.
• Shareholder agreements and their key provisions.

Module 7: Key Financial Ratios and Metrics

• Debt Service Cover Ratio (DSCR): calculation and interpretation.
• Loan Life Cover Ratio (LLCR) and Project Life Cover Ratio (PLCR).
• Debt-to-Equity ratio and leverage.
• Other important financial metrics for project finance.
• Benchmarking financial ratios.

Module 8: Security Package for Lenders

• Purpose of the security package in project finance.
• Types of security interests (pledges, assignments, charges).
• Security over project assets, contracts, and revenues.
• Perfection of security interests.
• Importance of a comprehensive and enforceable security package.

Module 9: Lenders' Direct Agreements and Inter-Creditor Agreements

• Purpose and key provisions of direct agreements (Consent to Assignment, Step-in Rights).
• Legal relationship between lenders, public authority, and project company.
• Inter-creditor agreements: managing relationships among different lenders.
• Priority of payments and voting rights among creditors.
• Negotiating these critical agreements.

Module 10: Project Finance Documentation Framework

• Overview of the core project finance documents:
• Concession/PPP Agreement.
• Loan Agreements.
• Security Documents.
• Direct Agreements.
• Inter-Creditor Agreement.
• Shareholder Agreement.
• Construction and O&M Contracts.
• Interdependencies between the documents.
• Importance of consistency and enforceability.

Module 11: Government Support and Credit Enhancements

• Types of government support in project finance (e.g., VGF, guarantees).
• Role of Multilateral Development Banks (MDBs) and Export Credit Agencies (ECAs).
• Political risk insurance and other credit enhancement tools.
• Fiscal implications of government support and contingent liabilities.
• Structuring effective government support.

Module 12: Financial Close Process

• Definition and significance of financial close.
• Conditions precedent to financial close (CPs).
• Roles of various parties in achieving financial close.
• Managing the financial close checklist and timeline.
• Post-financial close obligations.

Module 13: Project Finance Risks and Mitigation

• Identification of key project finance risks (e.g., completion risk, operational risk, refinancing risk).
• Strategies for mitigating these risks through contractual provisions, insurance, and guarantees.
• Role of due diligence in risk identification.
• Case studies of project finance failures due to unmitigated risks.
• Risk management framework for project finance.

Module 14: Introduction to Debt Restructuring and Workout

• Triggers for debt restructuring in distressed project finance deals.
• Role of lenders and sponsors in a workout scenario.
• Legal and financial aspects of restructuring.
• Lessons learned from project finance workouts.
• Preserving value in challenging situations.

Module 15: Case Studies and Emerging Trends

• Analysis of successful project finance deals in various PPP sectors.
• Discussion of key challenges and innovative solutions in real-world projects.
• Emerging trends in project finance (e.g., green finance, blended finance, digitalization).
• The future of project finance for infrastructure development.
• Workshop: Analyzing a simplified project finance structure.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.