Project financing is a method of attracting borrowed long-term capital through the implementation of the principles of financial engineering. In other words, a cash flow loan is formed by the project itself, without recourse to the borrower’s recourse. The success of project financing is determined by a professional assessment of the comparison of operational risks with income risks, their distribution among all project participants (investors, lenders, other participants in contracts and agreements).
What difficulties may arise
Project financing is one of the most popular options for implementing large–scale projects for the reconstruction, construction and overhaul of industrial and other property facilities. Its complexity is due to a significant number of participants: in addition to the initiator, a designer, a bank, a general contractor, suppliers of materials and equipment, an insurance company, etc. are involved in such financing. Each of these persons pursues their own goals and has their own interests, while simultaneously wishing to maximize economic benefits with limited liability. The technical customer is called upon to find a balance and balance the interests of all participants.
The functions of the technical customer at the stage when construction has not yet begun
The technical customer, who is connected at the stage of project financing, performs the following functions:
- interaction with the bank and other project participants;
- provision of consulting services to assess the timing and volume of attracted investments;
- agreement of contractual documentation;
- advising the customer at the stage of issuing bonds to finance the project;
- search for performers and highly specialized consultants;
- assistance in assessing the overall scope of work and deadlines, assistance in optimizing technical and economic indicators, etc.
The most important risk of project activity is the loss of money at the pre–investment stage. A qualified technical customer who joins the project at the stage of its financing can protect investments from the most likely tax, legal, administrative and other risks.
Activities of Ecotech LLC
Currently, the company performs the functions of a technical customer on projects related to the construction of automated waste sorting complexes with a landfill (Yamalo-Nenets Autonomous District: Salekhard, Novy Urengoy and Muravlinka). The responsibilities of Ecotech specialists in the framework of the support of these projects are reduced to the following functionality:
- support and execution of design and survey works;
- organization and construction of the facility;
- carrying out engineering and technical support of construction;
- interaction on behalf of the customer with public authorities (including supervisory and control authorities).
In addition, the company’s employees provide support at the stage of opening financing:
1)participate in working meetings with representatives of PPKREO (Public Law Company (public joint Stock Company) “Russian Environmental Operator”);
2) advise the customer at the stage of issuing bonds by the issuer for the organization of project financing;
3) ensure interaction with the issuer of securities and the lending institution on the issues of coordination of contractual documentation for the opening of financing for the implementation of the project;
4) provide consulting services to assess the structure and timing of financing.
According to the results of this work on three objects of the Yamalo–Nenets Autonomous District, the opening of financing is scheduled for January, and the start of work is the 2nd quarter of 2025.
In addition, Ecotech provides assistance with the implementation of promising projects that are planned for the beginning of next year. We are talking about new construction: in Bashkiria (3 facilities), in KhMAO (1 facility) and in the Samara region (3 facilities). The company joined the listed projects at a stage when financing has not yet been opened. Specialists ensure the investor’s interaction with the rest of the project participants, with government authorities and other authorities.
Joining the project at the pre–investment stage protects the investor, who is most often the general contractor, from a number of risks, the main of which is the risk of losing time, effort and money.
P.S.: Ecotech has been accredited in PPKREO (Public Law Company (public joint Stock Company) “Russian Environmental Operator”)as a qualified Supporter of consultants-organizations performing the functions of a technical customer.
