Loan Guarantees For Large Infrastructure Projects

Recoge: 1.The need for guarantees - 2.The issue of risk - 3.Experiences of loan guarantees.

The book considers when governments should give guarantees to private investors. After describing the history of guarantees, and the challenges the politics and psychology create for good decisions, the book sets out a principles for allocating risk (and therefore guarantees), techniques for valuing guarantees, and rules to encourage good decisions.

Bilateral and multilateral development agencies use guarantees in order to reduce investors’ exposure to risks and to attract private capital to developing countries. A guarantee is a legally-binding agreement under which the guarantor agrees to pay part or all of the amount due on a loan, or other financial instrument, in the event of non-payment. Across the developing world, there are places where having access to the right guarantee product will enable investments that would otherwise have been blocked—where the returns are there, but the risks involved simply exceed market tolerances, or where regulations limit investors’ ability to bear risk. These opportunities are waiting to be seized by bilateral development agencies and development finance institutions (DFIs), who have the flexibility to innovate. Multilateral development banks (MDBs) are the dominant providers of guarantees in certain market segments, where their ability to influence government behavior and to reduce (rather than merely reallocate) risks on the ground gives them a natural advantage. That said, their accounting practices, treatment by regulators, and business models can also constrain them. In other market segments, specialized guarantee providers or DFIs can create tailored guarantees, pricing them in a way that creates a commercially appealing proposition whilst still earning market rates of return on their capital. This report sets out to present the virtues and shortcomings of scaling the use of guarantees, with a special focus on opportunities for innovation by actors that operate outside the established MDB business model. Since guarantees are not a form of financial flow (unless circumstances require calling the guarantee, with the guarantor assuming the debt of the borrower), they differ from other development finance instruments in terms of structuring, costs, and objectives.

The potential development of any nuclear power programme should include a rigorous justification process reviewing the substantial regulatory, economic and technical information necessary for implementation, given the long term commitments involved in any new nuclear power project. Infrastructure and methodologies for the justification of nuclear power programmes reviews the fundamental issues and approaches to nuclear power justification in countries considering nuclear new build or redevelopment.Part one covers the infrastructure requirements for any new nuclear power programme, with chapters detailing the role and responsibilities of government, regulatory bodies and nuclear operator and the need for human resources and technical capability at the national level. Part two focuses on issues relevant to the justification process, including nuclear safety, radiation protection and emergency planning. Current designs and advanced reactors and radioactive waste management are also considered, along with the economic, social and environmental impacts of nuclear power development. Part three reviews the development of nuclear power programme, from nuclear power plant site selection and licensing, through construction and operation, and on to decommissioning. Finally, a series of valuable appendices detail the UK experience of justification, nuclear safety culture and training, and the multinational design evaluation programme (MDEP).With its distinguished editor and expert team of contributors, Infrastructure and methodologies for the justification of nuclear power programmes is an essential reference for international and national stakeholders in this field, particularly governmental, non-governmental and regulatory bodies, nuclear power operators and consultants. Offers a comprehensive analysis of the infrastructure and methodologies required to justify the creation of nuclear power programmes in any country Provides coverage of the main issues and potential benefit linked to nuclear power Reviews the implementation of a nuclear power programme with particular reference to the requirements and methods involved in construction