What is project finance?
Project finance is difficult to define, but rather easy to recognise. It generally involves lending significant amounts of money to a thinly capitalised company whose primary assets consist of contracts and licences, but that is where the simplicity ends. Notwithstanding the efforts of various governments to standardise private finance initiative (PFI) and similar documentation, the field defies the application of fixed rules. The range of assets financed, from underground mines to overhead cables, and the breadth of jurisdictions covered, from Canada to Mozambique, means that even the most basic rules must flex to meet the facts and issues in question. In the absence of clear market standards and agreed form documents, project finance lawyers must assess not only the legal, but also the economic, technical and political risks presented by each project and draw on experience to help the parties reach a workable consensus in the face of often unique challenges.