Re-Financing at Different Stages of the Concession Period - Literature review Example

Financing a project, either infrastructure or industrial projects to completion is an extensive process that is determined by the cash flows of the project, rather than the financial position of the project financiers. Delmon (2010), project finance and refinancing encompass project financing structure of the sponsors, investors, and syndicate financial organization, investors in driving the project to completion. Credit and debentures are most usually non-recourse loans that its security is the project ownership and compensates wholly from project cash flow.

Financing is mainly guarded by all the assets of the project together with the income-producing contracts. Project creditors are sometimes offered a lien on all these properties in order to assume possession of a project in case the company is unable to comply with the loan conditions (Delmon 2010). The major undertakings of the concession contract by the promoter will include, but not limited to, organizing, recruitment, scheduling, risk management, directing coordinating and controlling. Rick et al. (2002) note that the main inputs required for project progress, completion, and subsequent commissioning activities, will range from raw material acquisition, workforce, equipment and machinery, operation space of the facility, and finally the finance or refinancing to fuel all the prior activities.

Each project undertaking goes through five main stages that are subject to financing and refinancing, and more significant in the final delivery of the project at the commissioning. The five different stages are briefing stage, designing stage, tendering/ bidding stage, construction stage, and commissioning (Australian Nuclear Science and Technology Organisation 2006). Commissioning has become the most fundamental part of any procurement cycle in the project contractions and establishments, between the principal and the promoter.

The system precedes the final delivery of the project from the principal to the promoter ensuring that it is operational. Refinancing is significant to fuel this process (Vislink news 2011). The commissioning stage makes it possible for the contracted company to prove to the principal of the project, that the project would meet anticipated performance specifications and capacities. Employing staff, screening, orientation, and training is a highly specialized and expensive activity that it becomes significant to refinance the commissioning stage so as to acquire competent staff.

, and further, to have a smooth operational project (Rick et al. 2002, p. 123).