Project Financing Introduction

Project financing involves mobilizing debt, equity, hedges and guarantees through a newly organized company or partnership to fund a project. It has benefits like minimizing equity commitment, negotiating risk sharing, and separating project liabilities from corporate balance sheets. However, it also has disadvantages like delays in closing financing, higher risk premiums, and lenders requiring greater oversight. Major participants typically include sponsors, a project vehicle, construction contractors, lenders, insurance providers, off-takers, operators, and sometimes resource suppliers or government entities.