Structuring and financing international BOO/BOT desalination projects Original Research Article

There has been a recent increase in desalination projects in an effort to meet the growing demand for clean water. Desalination plants, like other large public service infrastructure, are capital intensive with long asset lives. This makes them prime vehicles to introduce private sector investment both equity and debt. Key to attracting the private sector, particularly International investors, is a well-developed commercial framework for the project following principles widely seen and understood by private investors. Desalination plants can easily fit into well-tested structures, which optimize the risk profile for each stakeholder, e.g. the consumer, the public sector authority, the equity investor/developer, the lenders; and reward each of them appropriately. This paper seeks to introduce a typical project financing structure and compare desalination to other infrastructure projects, which are also competing in the International arena for private investment. Given the success of recent private sector investment in desalination, and the growing demand for clean drinking water, it could be expected that this industry should continue to attract its fair share of the International investor community.