PROJECT FINANCING OF DESALINATION FACILITIES

The term ''project financing'' means the financing of the construction or development of a project in which the lender looks principally to the revenues expected to be generated from the operation of the projec t for repayment of its loan, rather than to the general credit of the project sponsor. In evaluating the ability of the project to generate sufficient cash revenues, lenders will rely heavily upon the contractu al obligations of the sponsors of the project and other entities to ma ke payments to the project. Desalination facilities can be project fin anced provided that the contracts for the ownership, construction, ope ration, and sale of water from such facilities are sufficiently strong and regulatory issues regarding ownership and operation are appropria tely addressed. This paper discusses the issues that must be addressed for a successful project financing of a desalination facility.