1. PPP FINANCING ARRANGMENTS – STRUCTURING FINANCE SUCCESSFULLY IMTIAZ HIZKIL ISLAMIC DEVELOPMENT BANK

2. 2 Arrangement of Financing – One of the most challenging part of developing a PPP Infrastructure Project –Project has to be Bankable, needs adequate technical and financial resources for preparation –Minimize risks and allocate to the right party –Legal and Regulatory Environment –The need for a track record – the first PPP project is perhaps the most challenging project

3. 3 Attracting Sufficient Project Financing The Strength of Partnership  Managerial  Equity –Project’s Bankability –Track Record for Projects in the Industry – Appetite of Foreign and Local lenders

4. 4 Funding Structure Need to Response to Project Needs –Optimum Debt Equity Ratio –Equity  Sponsors  Capital Market –Long Term Debt  IFIs - Debt, Political Risk Guarantee  ECAs  Foreign Banks  Local Banks –Long Term Facilities – Reflect Projects Cashflows –Pricing of Debt – Fixed, Variable, Hedging

5. 5 International Financing Institutions –Brings Credibility, Enhanced Environmental and social Assessment –Role of IFI’s –  Where there is a major development impact  Critical for Mega projects and “First” projects in terms of country, sector and technology. –Help bring other funds - Commercial sources, Equity IFIs may participate through different windows  Direct Funding  Special purpose fund  Guarantees

6. 6 Role of Islamic Finance in PPP Infrastructure Projects  Modes of Financing –Installment Sale –Leasing –Istisnah –Equity  No fundamental limitation  Project Finance transactions have combined Islamic Financing and Conventional Financing – Issues have been Resolved

7. 7 Role of Islamic Development Bank in PPP Projects  Aggressively pursuing “Project Finance” Based Transactions  BOT Projects Guidelines Prepared  Workshops on BOT projects in Member Countries  Sukuk Resources Available to Fund PPP Projects in Infrastructure in Member Countries / MENA Countries

8. 8  Working Closely with IFIs, Commercial Banks and Local Banks in large and medium scale transactions  Intervention in Power, Oil, Gas, Transportation  Committed to participate in Projects in other areas of Economy  Fully Support Institutional Strengthening  Cooperation with multi-laterals, bilateral and other institutions

9. 9 IDB’s Participation in the first hydro- electric IPP in Pakistan  IDB providing US$ 37.2 million of financing on leasing mode  Other participants - ADB and local commercial banks  A PPP in hydro-sector is challenging and a good example of sharing of risks by the parties  Success of this project will bring many other hydro power PPP type projects in the country

10. Thank you