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Project-infrastructure finance to play key role

February 5, 2014


The project and infrastructure finance will play a significant role this year, a top minister said. Finance Minister and Minister in charge of Oil and Gas Affairs Shaikh Ahmed bin Mohammed Al Khalifa was delivering the opening address at the Meed Project and Infrastructure Finance Conference , held under his patronage. The two-day event at the InterContinental Regency concludes today. The conference is discussing market-driven solutions to structuring and funding projects in the Middle East , Africa and Turkey . The minister stressed that the notion of development is not confined to economic development, but social development as well, reported the Gulf Daily News , our sister publication. "Schools, hospitals, social housing, roads and desalination plants have all featured strongly as successful projects over the last 20 years," Shaikh Ahmed said. "Infrastructure finance is very important because such projects all contribute to the strengthening of the social fabric of society," he added. He also stressed the crucial need for new social infrastructure in the Middle East , Africa and Turkey , which all have strongly growing and demographically young populations, in contrast to certain G20 countries such as Italy or Japan . Referring to the potential package of projects in the region over the next 10 years as "huge", he commended the role of the conference in providing suggestions and solutions to realising the many different projects that are on the table. The minister put good planning at the heart of project finance and formulated three golden rules for success in this sector. This includes: *You cannot eliminate risk. You can only manage it, monitor it, measure it and control it. *Nothing in life is free. No matter how much you outsource, there are still costs and responsibilities to be borne by the originator in project finance. Recognise those costs and responsibilities or the project will inevitably fail. *Be transparent. Tell everybody your concerns, your intentions, your constraints and ask others to do the same. He identified one area where the fundamentals have changed, which is the availability of debt financing from banks. Whereas tenors of up to 15 years were previously available, now it is difficult to obtain committed bank financing for periods beyond seven years, he said. Some previously major European players in the project finance field have simply disappeared, he added. He called for considering viable alternatives such as sukuk or equity participation if traditional syndicated term financing from the banking sector is not as freely available as before. Also cited were entities with good risk management cultures such as insurance companies or sovereign wealth funds. They also have greater patience than their colleagues the hedge funds, he said. "In project finance, patience is a virtue, since projects may run for 20 years or more," the minister added.- TradeArabia News Service ?

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Source: TradeArabia

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