The Role of Project Finance in Contemporary Financing: “Theoretical Perspective”

Abstract

Funding projects through Project Finance arrangements in contemporary Economic and Corporate and economic governance has become the catalyst for developing capital intensive projects in most Organizations and Nations. Unlike corporate finance, project finance is a non-recourse debt that is financed through cash generated from the project. This paper examined the increasing reliance on project finance in recent times by assessing its merits over traditional corporate financing and described the operation of a typical Project Finance Scheme. Using a Descriptive Analysis, the theoretical underpinnings of this subject matter were assessed. Historical data on project costs using project financing were evaluated. The study revealed that the successful completion of most capital intensive projects were initiated and completed through project finance schemes. However, the ultimate key to projects finance is the accurate estimation and evaluation of project viability.