Project Finance

Definition

A financing structure for large-scale infrastructure and industrial projects where the debt is repaid primarily from the project's cash flows, with the project's assets, rights, and interests serving as collateral — rather than the sponsors' balance sheets. This non-recourse or limited-recourse structure allows sponsors to isolate project risk from their corporate creditworthiness. Project finance is the dominant funding mechanism for GCC megaprojects: power plants, desalination facilities, petrochemical complexes, transport infrastructure, and renewable energy projects. The typical structure involves a Special Purpose Vehicle (SPV), senior secured project finance facilities (often with export credit agency support), equity from sponsors, and a comprehensive security package including assignment of project contracts, insurance proceeds, and revenue accounts.