Everyone has much to gain from project financing

A project such as in Takoradi is very capital-intensive. Governments may well have the vision to expand their ports, often their budgets are inadequate. Mathias Van De Vijver, Financial Manager, explains how Jan De Nul can still realise these projects by providing funds itself. To execute the project in Takoradi, a total sum of 357 million Euro was needed. For financing such amounts of money, Jan De Nul must often engage a consortium of banks with the lead bank structuring the credit. All credit documentation must be drawn up by an independent party appointed by the bank consortium. These banks can offer favourable financing conditions because together they would ultimately bear only 2 to 5% of the risk of default. The remaining 98 to 95% of the risk is borne by the state through its credit insurer Credendo. The insurance premium is usually co-financed by the banks, with these arrangements in place, Jan De Nul is sure that it will be paid for its works.

Mathias Van De Vijver: “Everyone gains from this approach: Ghana Ports Authority can have its port modernised and borrow at favourable European rates with banks are backed by Credendo; local market interests would be 2 to 3 times higher. We can rest assured that we will be paid for the work that we deliver.”

“We also observe an increasing trend towards project financing schedules in which also the contractor is asked to bring in part of its own capital. Such project financing arrangements are becoming increasingly complex but also enable us to offer big, integrated projects, win new orders and face the increasing competition worldwide.”

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