Creative Financing Tools to Fund Water Infrastructure
A major restraint on the provision of access to safe drinking water and delivering projects is lack of funding. EximUK Limited has played a key role in developing a comprehensive and inclusive financing capability that has resulted in the delivery of many projects. Our international reputation enables us to access a wide range of financiers including commercial banks, export credit agencies, development banks and bilateral institutions. One main objective is to provide support to clients for obtaining the funds needed for the proposed water infrastructure investments. Water utility administrators are required to carefully examine the financial alternatives available to them and balance their advantages and disadvantages against the needs and priorities of their systems.
We can provide much more than merely financing; we also supply design, consulting, erection and O + M. This allows us to offer services that are tailored to the needs of the location and the customer.
EximUK Limited supplies and makes offers baked by various funding bodies such as the European Union (EuropeAid), KFW Development Bank, ÖKB (Austrian Control Bank), MCA/MCC (Millenium Challenge Cooperation – USA) and EIB (European Investment Bank) etc.
Some of our key reference contracts are:
- Sri Lanka
- Cabo Verde
- Morava Serbia
Governments provide official financing in support of national exporters through their Export Credit Agencies (ECAs), and they therefore tend to be limited to the financing of equipment. The credits made available to foreign buyers are either sourced directly from the ECA concerned, or indirectly from commercial banks backed by guarantees provided by the agency. The ECAs themselves are strictly governed by international agreements. The advantage of ECA financing is that it is relatively cheap and accessible.
Commercial lending generally takes the form of loans from private commercial banks or publicly owned international financing institutions. The most common form of commercial borrowing for projects is through international bank loans, which are normally syndicated amongst a number of participating banks.
Public-Private Partnerships involve the sharing of risks and responsibilities between the two sectors. It is important to emphasise that the term does not imply any specific financing model, and the actual arrangements have to be developed on a project-by-project basis.
Credit Enhancement Facilities
- Partial Credit Guarantees, which provide cover against all risks for a specified portion of the commercial debt, so that repayments in respect of that portion are assured whatever the cause. These guarantees have been used to encourage extensions of maturity by covering the debt service obligations in the period of the extension beyond what is normally attainable in the market.
- Partial or Political Risk Guarantees, which cover debt service defaults on loans to private sector projects arising as a result of the failure of the government (or any State entity) to honour its obligations under the project agreements. These guarantees usually cover direct sovereign risks such as expropriation, changes in law, war and civil strife.