PRIVATE-SECTOR DEVELOPMENT OF DESALINATION FACILITIES

In both advanced and less developed countries, government development and ownership of infrastructure projects is diminishing as budgetary c onstraints, changes in export credit agency and multilateral developme nt institution policies and increased reliance on free market economic s lead to private ownership. Following the structural model that has s uccessfully promoted extensive worldwide development of privately owne d and financed power, pipelines and natural resource projects, non-rec ourse ''project financing'' can be used to provide significant capital for desalting projects. In addition, private sector projects can incr easingly obtain a variety of financial assistance from multilateral de velopment institutions and export credit agencies. These agencies also provide insurance against political risks such as expropriation and i nconvertibility of local currency, which is needed to facilitate parti cipation by private financial institutions in infrastructure projects in developing countries. This paper presents the core issues to be con fronted for the project financing of a desalination or joint electric power/desalination facility and discusses the project finance programs of various U.S. and foreign export credit agencies.