An Overview of Project Finance and Infrastructure Finance – 2009 Update

Posted: 23 Jun 2010

Date Written: June 21, 2010


This updated note – the fifth in a series – provides an introduction to the fields of project finance and infrastructure finance, and gives a statistical overview of project-financed investments over the past five years. Examples of project-financed investments include the $1.4 billion Mozal aluminum smelter in Mozambique, $4 billion Chad-Cameroon pipeline, $6 billion Iridium global satellite telecommunications system, €900 million A2 Toll Road in Poland, $20 billion Sakhalin II gas field in Russia, and the $28 billion Dabhol power project. Globally, firms financed $240 billion of capital expenditures using project finance in 2009, down from $409billion in 2008 as the financial crisis hit the capital markets.

This note focuses primarily on private sector investment in industrial and infrastructure projects, and contains four sections. The first section defines project finance and contrasts it with other well-known financing mechanisms such as secured debt and asset-backed securities. The second section describes the evolution of project finance from its beginnings in the natural resources industry in the 1970s, to the U.S. power industry in the 1980s, to a much wider range of industry applications and geographic locations in the 1990s, and most recently to infrastructure finance in the 2000s. The third section provides a statistical overview of project-financed investment over the last five years (2005 to 2009), and looks at industry, project, and participant specific data. The final section discusses current and likely future trends. This final section also provides recent data on infrastructure investments and public-private partnerships.

Keywords: Project Finance, Infrastructure, Capital Investments, Contracts, International Finance, Banking

JEL Classification: G32, G31, G2, L9

Suggested Citation

Esty, Benjamin C., An Overview of Project Finance and Infrastructure Finance – 2009 Update (June 21, 2010). Harvard Business School Case No. 210-061, Available at SSRN:

Benjamin C. Esty (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

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