2009

Infrastructure Financing in Emerging Markets:
Negotiations in the Post-Enron Era

SAH Final Paper, Class on International Strategic Commercial Transactions taught by Mark Vecchio, Columbia Law School 12/7/2009

Summary

I.

Introduction: Infrastructure in the Global Economy

II.

Infrastructure and Development in Emerging Markets   Trends Financing methods

III.

Legal Strategies for Infrastructure Financing in Emerging Markets   Specific Features Remedies

IV.

Enron or the Stumbling Blocks of the Project Finance Technique   The Enron cases Consequences

V.

Regulatory Schemes Adopted in the Aftermath of Enron    The Sarbanes-Oxley Act The Equator Principles The Basel II Regulation

VI.

Conclusion: Current Trends and the Effects of the Financial Crisis on Infrastructure Financings in Emerging Markets

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Introduction: Infrastructure in the Global Economy
In its public statement of November 30th, 2009, 28 months after its creation, the long arm of the Dubai government for construction and infrastructure development, Dubai World, publicly announced that it would not pay its $3.5 billion loan by the December deadline and asked its creditors for a grace period on its $59 billion debt. On the following day, oil prices tented by 7 % and the Dow Jones Industrial Average fell 1.7 %, followed by the S&P 500 listing of the 500 biggest publicly-held companies in the United States. As the company decided to lay off 90 % of its employees, the credit rating agency Standard & Poor downgraded Dubai investment companies to its junk category, as neither the Dubai government nor the United Arab Emirates are believed to be willing to infuse money in a close future for the recovery of those financial institutions1. In fact, it seems that the infrastructures developed for tourism, entertainment resorts and housing facilities have finally turned out to be more a burden than a tool for the takeoff of the emirate. Moreover, one need to question the whole model of development set up by the emirates, which put project finance and infrastructure construction at the core of their growth strategy. Indeed, critics had long warned against the Gulf real estate bubble. In the middle of the desert, the Babylonian dreams of a few visionary emirs have progressively been concretized, Dubaï Marina, the Islands, the new Metro, the Hotel Palm Jumeïra, Burj Al Arab & Sheikh Zayed Road, the American University; the rise of the grandiose called for respect and fear at the same time. Meanwhile, the hundreds of new void skyscrapers just remained a façade for hardly hidden vanities; it is therefore no surprise if the shock eventually came as expected.

In fact, studies tend to show that infrastructure construction has effects on the longterm growth and on GDP per capita in the host country, with rates of return up to 100 % in excess per annum 2 . Nonetheless, different factors come into play, such as the type of infrastructure – investments in transportation, telecommunication and electricity have clear
1 2

Nathan Becker, The Wall Street Journal, « S&P cuts Six Dubai entities to “Junk”», December 3 , 2009. David Canning and Peter Pedroni, “Infrastructure and Long Run Economic Growth”, Center for Analytic Economics, Cornell University, July 1999.

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Yet. the issue of law and contract negotiation for the purpose of infrastructure development is quintessential. I became particularly interested by the issue of contract negotiation in emerging markets as I was researching into the development of infrastructure funds in Sub-Saharan Africa. 1990). I had myself noticed an increasing number of such funds as I lived in Ghana and wondered how they worked and according to which mechanism they were gaining momentum throughout the continent. Researching into this field. where the rule-of-law is often an aspiration more than an actual realization and where government default is a constant threat. Thus.positive effects on economic growth (Esterly and Rebelo. 1993) – or the level of infrastructure expenses in the aggregate production function of the particular host country (Canning and Pedroni. In fact. In such a context. I discovered that such funds often had a much broader geographical base and that they were often developing projects simultaneously on different continents. Sure. especially in emerging countries (Pritchett 1996). More. prices for infrastructure capital vary widely from one country to another and government investment can sometimes be inefficient. such projects still generally have the same mechanisms and often encounter the same problems in all emerging markets. 1999). it even paved the way for numerous regulatory laws aimed at improving the practice of project financings in such contexts. Indeed. Yet the Enron 4|Page . a substantive part of the leverage effect actually depends on the model used to design the financing of the infrastructure project and on the general frame in which it is developed (Barro. so as to diversify their portfolio of investments and alleviate their systematic risk – this observation is all the more accurate since the financial crisis. with the shortage of funding abilities and the increased risk of financial defaults. As numerous studies show. This is why I chose to describe the difficulties that the Enron Company encountered throughout the design of its different project financings to try and draw lessons from its failures. we cannot determine with certainty that the fraudulent activities of Enron’s management were directly linked to its difficulties to raise cash flow on the field. the case of the notorious Texan company constitutes a perfect illustration of the challenges faced by international companies in emerging markets.

the topic of energy infrastructure is particularly interesting because of its political and geopolitical implications. Sept. In Part I of our paper. (The Future of IPPs. Second. WB Note No. as our Enron case studies will mainly illustrate our point4. the fall of President Suharto in Indonesia is intimately related to the power project disputes in the country. In Part II. 99. we will consider “emerging markets” as countries that fall as under the low. to what particular legal challenges it exposes project financiers and the solutions that are usually used to overcome them. we will determine how the specific context of emerging markets is approached. Nonetheless. China. In Part III. Brazil or Bolivia. prisons and government information technology) infrastructure types. Recent trends in Private Participation Infrastructure. Public Policy for the Private Sector. For example. heads of the list in terms of infrastructure investments3. we will go through the different difficulties that Enron Corporation had to face.and middle-income category in the World Bank’s country classification. December 19 . analyze them through the prism of project finance and study how they influenced companies’ practices in the field. Indon. we understand both economic (electricity. South Africa. 4 More. 196.) 5|Page . transportation and water) and social (education. but we will focus on energy infrastructure and more particularly on gas-related infrastructure investments. For the purpose of our analysis. we will particularly focus on countries like India. telecommunications. By “infrastructure”.scandal fostered a series of new behavior and practices in project finance that are crucial to analyze. we will analyze the consequences of the vague of liberalization that occurred in the financing of emerging markets’ infrastructure since the beginning of the 1990’s. 2000. First. hospitals. we will study the different solutions available for infrastructure financing in emerging countries. we will discuss the advantages and drawbacks linked to the two traditional methods of public financing on the one side and private (corporate) financing on the other side. as his family was involved in 14 national power projects. Russia. th Newsl.Com. 3 Neil Roger.

7 trillion will be spent in the sector in the next decade. Russia intending to acquire 20.In Part IV. Private Initiatives in Infrastructure: priorities. state Berg.jpmorganequityfunds. 6|Page . two thirds of humanity will be living in towns and cities by 2030.com 7 PPI Database. and in emerging countries especially under the pressure of multinational donors and the international financial organizations like the IMF and the World Bank. 2009. 8 UN Habitat.8 5 Sanford V. we will conclude by presenting an overview of the current trends at stake in infrastructure financings and the challenges posed by the current financial crisis.org. Pollitt. Housing Finance Mechanisms in Zimbabwe. 2008. since the beginning of the 1990’s. we will see what regulatory schemes have been adopted in the aftermath of Enron and how they changed the face of infrastructure finance and its legal management.1. Indeed. The Human Settlements Finance Systems Series. In Part V. INFRASTRUCTURE AND DEVELOPMENT 1. those countries welcomed nearly $755 billion in more than 2. According to JP Morgan Emerging Markets Infrastructure Equity Fund. Berg.000 megawatts of additional power capacity by 20126. 6 www. the need for infrastructure in emerging countries is enormous. a vague of liberalization spread out through the world economies. Nairobi.000 kilometers of new railway lines by 2030 and India needing 100. incentives and performance. thus representing more than 70 % of worldwide growth opportunities. with China planning to build 37 new airports by 2020. Masatsugu Tsuji. As a consequence. www.400 public-private partnerships (PPPs) in infrastructure7.worldbank. Michael G. The potential is thus enormous. 1. In fact. TRENDS “The hundreds of billions of dollars that will be invested in infrastructure sectors in coming decades represent a challenge and an opportunity for the global economy”. all the more since the phenomenon of urbanization spreads throughout the world at a gigantic path: according to UN Habitat. $21. Pollitt and Tsuji5.

Invesco Powershares etc. The third way is public-private partnerships. Emerging Market Investors and Operators: a New Breed of Infrastructure Investors. where both the tax base and public resources are restricted. like Macquarie Bank Ltd. Another way is traditional corporate finance.Different financial institutions operate on the field. Working Papers No. Georgina Dellacha. Most of those companies have departments specialized on infrastructure investment in emerging markets (JP Morgan. Veolia. 1. or through loans contracted with multilateral financial organizations like the World Bank or the regional development banks. FINANCING TECHNIQUES The classic way to finance infrastructure is public financing. involved either in funding like AIG Africa Fund Infrastructure Fund or in direct construction activities9. BT Global Telecom. Apurva Sanghi. Yet PPPs have given a big impulse on project finance since the technique has been spread out to many more projects and involve much more actors than before. In the last years.).. 9 Stephan von Klaudy. France Telecom and Deutsche Telecom. In emerging countries. One calculates the net present value of a project to see if it is more likely to bring about profitable cash flows. PPIAF Documents. The Suez Canal or the railways built for the Far West were already working on such a technique of syndicating loans and expecting future project earnings to finance the project itself and reimburse its equity partners. This type of financing still represents a majority of the infrastructure financings realized today. through taxes and public finances. Project finance has emerged a long time ago. Telefonica. Carlyle Group or the infrastructure funds of Goldman Sachs and JP Morgan.2. together with construction companies like Suez. we have even observed the development of many new local investors. infrastructure financings were usually made either through loans contracted within bilateral agreements.7 7|Page . for example with national development agencies.

as in the transport sector for example). operation and financing of the infrastructure over the contract’s length. is developed by the public authority but the public and private sectors join to design. called the Private Finance Initiative (PFI). finance and operate (DBFO) new or improved facilities and services to the general public. and the third one being based on private finance. In the concessive partnership. schools. Users are charged. 8|Page . Over a typical period of 25 to 30 years. In this system. maintenance. enabling the public authority to contract with a consortium bringing together all the competences necessary to all the aspects of the project. public authority entrusts the private partner with the construction. The third way. must remain in good state when handed over to the public authority. according to the contract. chosen after a competitive bid. the private sector provider. Thus. build or refurbish. The private partner does not support the commercial risk. holds a DBFO contract for facilities such as hospitals. Differently. The private partner in charge of operating the infrastructure supports the commercial risks and the contract length is established to the amortization of investments made by the private partner.We can distinguish PPPs according to three types of contractual arrangements. which at that time is owned by the PFI provider. The infrastructure. Public authorities commit to the private partner the responsibility and the risks of the investments and commercial operations for the duration of the concession. the non-concessive partnership is especially adapted to complex projects. the private sector provider is paid an agreed monthly or unitary fee by the relevant public entity for the use of the asset. the second one on a non-concessionary relation. The contract’s length is often linked to the level of annual rent that the public authority is ready to pay. the legal structure varies according to the project or the country’s specific laws. and public authorities give subsidies if necessary (in case of limitation of the price paid by users. In this system. and roads through a Special Purpose Vehicle (SPV). the first one based on a concessionary partnership.

they have certain advantages.com. April 2002. « Controverse sur la privatisation de l’eau dans les pays du Sud ». In Manille12: for example. since contracts often include partial indexation of the local currency on the dollar. since the 2000 Cochabamba Water 10 11 P. On can easily understand how analyses issued by those institutions can be biased. PPPs are deemed to offer a better mitigation of the risks since they allow the participation of many more actors than in the classic financing methods.org/etools/PPPIPortal/2008PPPI/doc/08Presentations/Day4%20Session3%20pr5. project managers have better incentives to improve quality and cost efficiency under this system. more precise financial structures and more accurate demand forecasts and construction cost projections 11. Sure. Sustainable Energy and Economy Network. www. http://info. Chronology of Enron’s Empire. 12 P. the PPP set up in the water sector provoked up to a 300 % increase in the liter price. and this cost-effectiveness can be effectively measured.com. since the very basis of their activity is precisely to incent to liberalization and since much of their revenues during the last decade come from the publicprivate partnerships in which they participated. Coupry. the change triggers conflicts with the population: the French group Suez finally had to withdraw from Manille and President Jorge Serrano finally had to flee Guatemala after declaring martial law and threatening in vain to dissolve Congress. many of those positive analyses have been made under the funding of institutions like the World Bank or governmental development banks. In each case. on the one hand. Many writers also consider that PPPs allow better economic analyses. March 2005. it led to a 100 % increase. fluctuations or in some cases devaluation lead to price appraisal. Nonetheless.worldbank.pdf. More. For them.This and other income enables the repayment of the senior debt over the concession length. criticism against the PPPs mainly comes from the fact that they often induce higher unitary costs. www.M. However. 9|Page . March 2005. PPP Club Medafrique. Indeed. As a matter of fact. « Controverse sur la privatisation de l’eau dans les pays du Sud ». 13 Daphne Wysham and Jim Vallette. Public-private partnerships have raised much criticism. Asset ownership usually returns to the public body at the end of the concession. In Guatemala13. advocators of the PPPs praise their effect on efficiency. Coupry.novethic. Indeed. especially in the sector of water10.M.novethic.

the two main issues of infrastructure financing in emerging markets are the ones of stability and predictability of the contracts. hence the fact that they are particularly attractive to pension and insurance funds. by Philippe Marin. the niche of infrastructure investment is less vulnerable to obsolescence or to competitive threats coming from changing technologies. Henceforth. 2. technological or political.1. SPECIFIC FEATURES The advantages of financing infrastructure projects in the context of emerging markets are numerous. Finally. such transactions are often highly expensive in 14 World Bank. grows steadily to the GDP rate. November 2006. to sum up this debate. Other critics state that the selection process of the concessionaires is often opaque and that emerging countries have inappropriate legislation and public regulators to welcome such financing structures. More. 2009. 24 countries have regained control over their public water system 14. 10 | P a g e . cash flows tend to be predictable because demand for infrastructure. If the role of each party is clearly determined. LEGAL STRATEGIES FOR INFRASTRUCTURE FINANCINGS IN EMERGING MARKETS 2. Public-Private Infrastructure Advisory Facility: Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries. 15 Annez P.Wars in Bolivia which showed that water privatization was a failure and a highly unpopular policy. Finally. Indeed. they allow long-term and steady cash flows for the operators in charge. the keys for the success of a public-private partnership in an emerging market is the fact that the regulatory rules are clear and that the risks. some analysts rather deplore that PPPs have mobilized insufficient finance for the requirements of urban infrastructure in the emerging countries 15. opportunistic behavior by government and private parties can be reduced and problems like the ones that arose in the Enron cases can be avoided. World Bank Policy Research Working Paper 4045. are effectively mitigated with crafter incentive systems. especially power. “Urban Infrastructure Finance from Private Operators: What have we learned from recent experience?”. Yet a series of legal threats can potentially hamper the project. First. water and transportation. commercial.. Yet.

Malinasky. Second. Euros. 16 Clive Harris et al. 11 | P a g e . or Japanese yen. “Emerging Market Infrastructure”. A review of canceled private projects. US dollars. they lack precise environmental laws and developed legislative systems to deal with foreign lenders and equity investors on subjects like ownership. This is all the more accurate since a vast majority of the citizens of those countries do not have the means to afford the foreseen price. Global Project Finance Yearbook 2007. 18 Peter Rigby. Third. 1996. all of them were located in emerging markets16. projects implemented in emerging countries must be financed in hard currencies. 252. emerging markets are often characterized by incomplete legislative systems. China. Frederic Marty witnesses that toll roads installed in such countries often bring about a decrease in the traffic rate (Marty. The differences that distinguish the emerging market approach from the one in more industrialized countries are of five kinds. and since they often induce higher returns so as to compensate risk assessment. even if some authors question the completeness of their provisions (Malinasky.order to reflect the complexity of risk allocation. constructors or equipment suppliers18.e. Many jurisdictions like Nigeria. the risk of failure is higher in emerging markets than in more industrialized economies. which poses threats on the conversion and on stability. Jan. To illustrate this fact. Fifth. 17 Laura A. Note No. and which obliges to have recourse to alternative mechanisms to pay for the imported products. Infrastructure Projects. Hoffman notes that emerging countries are often characterized by centralized infrastructure systems with no competition culture and where inefficiencies are more likely to be witnessed. but still many states have not adopted any such regulations yet17. 2007). Public Policy for the Private Sector. taxation or repatriation of profits. 2006).. on a financial level. 2003. 14 Berkeley Journal of International Law 438. the lack of political security induces higher insurance costs and higher equity or debt rates. Indeed. First. World Bank. “Rebuilding with Broken Tools: Build-Operate-Transfer Law in Vietnam”. Yet the project revenues will be earned in local currency. i. Fourth. Often. 48 infrastructure projects out of 2500 which reached financial closure have been cancelled from 1990 to 2001. or Latin American countries adopted such schemes in the mid 90’s. the economic security of the parties is often not fully ensured. Vietnam.

3. Scott. THE ENRON CASES Much has been said about the Enron case. since such guarantees only have a short-term and limited value. it could allow to circumvent the negative effects of a financial crisis – yet.2. 12 | P a g e . Enron has also marked its time 19 Clayton P. on the longterm. renegotiation might have advantages. for project owners. The Political Economy of International Sales Law. Yet. for host countries. Yet. It is actually a threat for every long-term contract. On the contrary.1.For all those reasons. Indeed. such a behavior causes uncertainty about the host government’s abilities to contract and impedes its credibility before other current or potential parties. Thus. this does not constitute a long-term solution. September 2005. the risk of renegotiation is extremely high. ENRON OR THE STUMBLING BLOCKS OF THE PROJECT FINANCE TECHNIQUE 3. International Review of Law and Economics. since any renegotiation process carries the risk that one of the parties will act in an opportunistic way and hold up the other party (Scott. other alternatives include securitization of project cash flows through bonds or mixes between project and corporate finance. Gillette and Robert E. REMEDIES To avoid those risks. transactional lawyers have different tools. the need for immediate and constant cash flows lessens their weight in the negotiation. For example. the issues of false accounting and shareholder manipulation have been widely discussed. The easiest way is to rely on government guarantees to cover payment and convertibility. the governments did not even provide guarantees. The Dabhol Power Project case herein exposed is a good example of this situation. In the case of Malaysia and Thailand. 2. 200819). as we will study herein.

UK. To recall the facts. Portugal and Germany. petrochemicals. after those of Worldcom and Lehman Brothers. Nicaragua. Argentina. Brazil. 20 Daniel Scotto. the company filed for the 3rd largest Chapter 11 bankruptcy in the history of world finance. it is now a unit of Warren Buffet’s Mid-American Energy Holding Corporation. On December 2nd. Enron Corporation was a company created in 1985 from the merger of Natural Gas Company and Houston Natural Gas and incorporated in Houston. telecommunications. the first report was issued to reveal the scandal 20. first because of its method of accounting and its heavily criticized method of fostering off-balancesheet partnerships (1).because of the recurrent mistakes that its executives made while dealing with several infrastructure financings either in India or in Bolivia. Enron claimed $101 billion in revenues. 3 paper-related businesses (USA and Canada). in August 2001. the downfall came at top speed. A year later. listed among the “100 Best Companies to work for in America” and named “America’s Most Innovative Company”. Jamaica. Philippines. Brazil. China. media. Italy. second because of its lack of due diligence and the case of the Cuiaba Pipeline (2). 11 pipelines (USA. In 2000. Dominican Republic. Venezuela). 6 natural gas industries (Puerto Rico. Panama. and third because of its renegotiation problems with the Indian State of Maharashtra and the case of the Dabhol Power Project (3). Spain. August 2001. Brazil. divided in more than 7 business units. a manufacturer of electronic devices located in Venezuela and a manufacturer of wind power turbines based in the USA. shipping and investment commodities. Venezuela. Poland. India). Enron has sadly illustrated the pitfalls of project finance on recurrent occasions. plus companies including an exploration company incorporated in the US. 13 | P a g e . Turkey. Brazil. Although Enron was praised by Fortune Magazine for six consecutive years until 2001. 3 electric distributors (USA. 2001. Guatemala. “All Stressed up and no place to go”. South Korea). Puerto Rico. Texas. Bolivia). Columbia. Its field of activity encompassed more than 30 different domains. This sprawling company. its activities ranging from electricity and natural gas to paper. possessed altogether 38 electric power plants located in a variety of countries throughout the world (USA.

“Enron Pipeline Leaves a Scar on South America”. Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. Enron’s stock value reached $90. Insider Trading and the Method of Off-Balance-Sheet Partnerships For the MD of Citigroup Jonathan Lindenberg and the MD of the Carlyle Group Barry Gold. which is not based on off-balance-sheet partnerships but on more consistent risk-shifting mechanisms and counterparty creditworthiness. Enron’s debts and losses were not reported in its financial statements and anticipated future revenues were tabulated as if currently real21. The false profits had been registered under Chief Financial Officer Andrew Fastow and CEO and Chief Operating Officer Jeffrey Skilling. Enron executives began to sell their stocks. For instance. Since most of its profits and revenue were the results of deals with special purpose entities created as off-shore entities. on August 2000. they reached $42. Enron’s executives committed the lastminute crime of “insider trading”. With the intention of saving their skin and yet in a final move to dig their own grave. investors were recurrently told that the stock would continue to 21 The accounting firm Arthur Andersen. 22 th James V. as opposed to “over-the-counter” (OTC) technique based on calculations intrinsic to the financial contracts signed between the buyer and the seller. The idea is that the value of the instrument is based on its current market price. Penguin Books. In the meanwhile. As a result. Accounting Procedures. Yet the “smartest guys in the room” did not stop there23. Yet Enron used and even misused this traditional and angelic vision of project finance to cook it its own way. responsible for Enron’s accounting. and fell to $15 in December. In fact. as they sold. 2003. Enron’s techniques had not much to do with classic project finance.1. London. 23 Bethany McLean and Peter Elkind. Enron primarily used the method for taxation contained in Internal Revenue Code Section 475 and called the “mark-to-market” accounting technique. or fair value accounting. In August 2001. This behavior was the first and direct cause for the fall of investors’ confidence in the company and its immediate cataclysm. Grimaldi. The Washington Post. 14 | P a g e . was dissolved in December 2001 for false accounting and found guilty of obstruction of justice in 2002 for destroying documents related to the Enron audit. the highest point of its whole history. which is part of the US Generally Accepted Accounting Practices (GAAP) since the early 1990s. 2006. May 6 . prices began to drop. The Washington Post revealed that Enron accountants recorded a $65 million profit for the Cuiaba gas pipeline before it actually came into service22.

rise up. Under Section 16 of the 1934 Securities Act.2 million. which might be themselves at the very origin of the catastrophe. the project was heavily criticized by different local groups and international organizations united behind WWF and Amazon Watch because it crossed the protected ecosystems of the Chiquano Dry Forest and the Pantanal Wetlands. On November 28th. Demonstrations ensued as the public opinion 24 www. Lay himself sold $90 million worth of stock in August.51 each. She sold them in July 2001 for $49. As a substitute. Germany and the United States.org 15 | P a g e .amazonwatch. his wife sold 5000. Enron offered a US $20 million fund to five conservation groups and proposed to implement an indigenous people’s development program. Enron’s stock was worth a few cents and thousands of equity stockholders were left over on the gambling table. for example. between 10 am and 10. Nonetheless. had bought 18. especially thanks to a $200 million loan from the Overseas Private Investment Corporation (OPIC). which had to be financed by the governments of Brazil.30 am. Bolivia.380 shares for $15. CEO Kenneth Lay made particularly noisy interventions to defend its company. 2001. The construction began in June 1999. The affair constituted the foundation stone and the most well-know manifestation of Enron’s unpleasant financial aftertastes. Indeed.77. at 10. The initial cost was of $475 million. The Problem of Due Diligence and the Case of the Cuiaba Pipeline The case of Enron in Cuiaba is especially illustrative. At the time. two “primary tropical forests” deemed to be protected under international law24. since the beginning. insider trading is heavily punished. while she knew that the company was on a downward curve. But this only came as the final step of a long walk through several misled project financings throughout the world. The Cuiaba Gas Pipeline was a 630 km installation to be built from Rio San Miguel (Bolivia) to Cuiaba (Brazil) for a concessionary contract of 40 years.000 shares for a value of $1. Executive Paula Rieker. 2. a series of trials followed the bankruptcy up to 2006. On this same day. when the company was bought back by Warren Buffet.20 am.

commercial banks including 25 The disposition was designed to pass on the effects of rupee devaluation and rises in international petroleum prices. The $1. a Memorandum of Understanding was signed between Enron and the Indian State of Maharashtra for a total cost of US $3 billion. the State of Maharashtra and the central government both signed a twelve-year counter-guarantee.87 billion project was to be based on 5 loans provided by Indian financial institutions including Bank of India. it already raised much criticism because of its haste. the Indian Central Electricity Authority (CEA) gave a “provisional clearance” in 1993. the project was stopped for 3 months. each time assorted with an immunity waiver25. thus engaging itself to pay an annual $220 million fee for 20 years. for the HBJ gas pipeline built between Turkmenistan and India (New Delhi). Under the Indian Electricity Supply Act. and the State was obligated to pay for electricity on a regular basis. Enron planned to create a terminal end in Dabhol. Indeed. At the beginning of the 90’s. Despite all those problems.The Problem of Renegotiation and the Case of the Dabhol Power Project The pitfalls of Enron in India are also very illustrative. The idea was to access the seaports of South Korea and Japan. no date was given to indicate the beginning of the 20-year contract. 16 | P a g e . no audit was planned to verify their adequacy to the actual cost of production and its evolution over time. as it was signed after a three days visit of Enron executives in India. the State of Maharashtra took this decision as final and immediately signed a Power Purchase Agreement with Enron. deemed the Memorandum too much in favor of Enron. the pre-contractual arrangement was based on high prices. At the height of the protest. and even the World Bank. in its 1995 Report of the Cabinet Sub-Committee to Review the Dabhol Power Project. Nonetheless. On June 20 th. 1992. a statutory clearance is needed to allow the foreign direct investment. Although the document was not legally binding. even if it was not actually available and even if the Dabhol Corporation was not itself bound to a minimum fuel delivery. In the meanwhile. the delay stretched for 3 years in total and costs finally soared up to $750 million. India.considered to have been fooled. the largest consumer of natural gas in the world. and because of the lack of bidding competition and hence transparency in the process. The Maharashtra government itself. 3. Furthermore.

In May 1995. later on. To carry the project’s debt. they added charges against human rights abuses including land resettlement. the agreement had been signed in the midst of local elections in Maharashtra which had opposed the party in power. the state of Maharashtra ordered the project to be altered. Citibank. local organizations. a Special Purpose Vehicle (SPV) was set up: the Dabhol Power Corporation. Bank of America. and governmental institutions including OPIC and the Japanese government.ABN AMRO. which has obviously never been assessed yet. Voices began to rise that Enron had paid $20 million as “educational gifts” and accused the company of bribery. the contracts were not publicized and even refused to disclosure before local organizations and opponents of the project. Human Rights Watch and Amnesty International charged the security forces guarding the site for human rights abuses and Enron for complicity. Crédit Lyonnais. for fear of retaliation. Bechtel Enterprise Holdings (10%) and General Electric Capital Structured Finance Group (10 %) and controlled through partner companies based in the tax haven of Mauritius. Treated as highly confidential. The entity was instituted as a 100 % foreign-owned private limited liability company incorporated in India by Enron (80%). The project was finally achieved in January 1996. The whole Dabhol project became a meeting point for opponents to the regime. 1995. as Enron could not restart construction until the 25 law suits brought by workers’ unions and environmentalists against the project were solved before the Indian courts. The project was suspended for five months. Yet. Enron became a symbol of anti-imperialist contestation in India. social workers and environmentalists. during the first year of its operation. lack of compensation to affected fisherman and lack of pollution control measures. including Janata Dal and the Peasants and Workers Party. They were severely brought into line by the police. which both had a severe anti-foreign investment agenda. In August 3rd. the Maharashtra State Electricity Board (MSEB) refused to honor its $220 million 17 | P a g e . thus increasing their future reputational risks. the Congress Party. to the Alliance partners. More. NGOs. Crédit Suisse. costs rose to $3 billion and the affair gave them extremely negative public exposure. riots exploded. Enron had already invested $300 million in the construction of the site. Furthermore.

5 billion. they offered to cut off the price of power by 20 % and the capital costs from $2. the MSEB finally refused to pay. while bound by the take-off contract that had been signed. for a value of $137 million. In May 1999. On the contrary.annual payment. they increased Dabhol’s output from 2. 18 | P a g e . First. the price of Enron’s power was double than the price of power bought to other suppliers in the state (Tony Allison. No competitive bidding had been undertaken prior to the implementation of the project. the lack of equity in the transaction process has had severe consequences on the future of the contract.atimes. 1996. a change of power had occurred and the Alliance partners got the majority in the Maharashtra state over the Congress Party. They invoked excessive prices 26 and accused the former government of having badly negotiated the contract.015 megawatts to 2. Enron consequently decided to renegotiate the Power Purchase Agreement 27 . Indeed. “Enron’s eight-year power struggle in India”. Meanwhile. By fixing up a price above the level of reasonableness. it entered into an agreement in a context surrounded by lack of transparency. the Maharashtra State had to spend half of its entire annual budget for the payment of the Dabhol project.184 megawatts and offered the Maharashtra State a 30 % equity interest in the Dabhol project. The lessons that we can draw from this case are threefold. A series of black-outs paralyzed the region and the plant was finally silenced for 6 years.com). Third. www. 28 They started operation in May 2006 but also encountered a series of problems because of lack of operational maintenance abilities and lack of supply. Enron did not proceed to due diligence on all aspects of the project. including local opinion groups and balance of interests. the case also raised the issue of renegotiation in project 26 According to the government. More. Enron created an unbearable situation that incited local officials to opportunistic behavior. Second. to preserve the contract. 27 They didn’t use the $28 million Letter of Credit guarantee given by Canara Bank as an immediate remedy to MSEB’s default. On February 23rd. the whole process was established in a very harmful haste. Enron’s share dropped to 50 % – ceteris paribus – while GE Capital and Bechtel Enterprises kept their 10 % interest.8 billion to $2. and not enough attention had been given to the set up. It is now the property of the Qatar based company Ratnagiri Gas and Power Private Limited since 200528.

this case is a perfect illustration that transactional lawyers should really rely on ex-ante rules to make public entities abide by the provisions of the contract in the pure tradition of the pacta sunt servanda theory. Cambridge University Press. Thus. Some observers also deplore the fact that the Clinton administration failed to condemn the Maharashtra State for its behavior31. and open up to foreign direct investment. in this case. Indeed. President Ronald Reagan announced that its administration would support the World Bank provided that policy prescriptions would focus on privatization and deregulation of oil. financiers feared that a dangerous message would be sent to emerging countries29. 1997.financings. as this behavior paved the way for justification of sovereign default. collusion between Enron. Enron’s CEO published an article in The Financial Times warning the State of Maharashtra that the United States would stop foreign aid if they were to expropriate the project. Mark Kantor. Hoffman. In 1981. for example. Enron could also have used the $23 million Letter of Credit provided by the Canara Bank. 32 Daphne Wisham and Jim Vallette. Indeed. 31 Danielle Mazzini. 1125 (2001). the World Bank pressured the Indian government in 1991 to deregulate.J. 24 Fordham Int’l L. Law and Business of International Project Finance. For others (Kantor. 2007). but this recourse would only have served as a temporary solution. it just illustrated the fact that arbitrability is often a fiction30. Enron was just a victim of a poorly planned governmental strategy. for some authors (Hoffman. as a matter of fact. as it is a low and difficult process. October 2007. id. In fact. the World Bank 29 30 Scott L. the World Bank and the American government has also been pointed at by some journalists32. 2001). Indeed. especially in the petroleum field. In India. Stable International Contracts in Emerging Markets: an Endangered Species?. 19 | P a g e . As a matter of fact. For ex-post resolutions are often deemed to fail. according to which agreements must be kept. Yet. In the year 2001. International Project Finance and Arbitration with Public Sector Entities: When is Arbitrability a Fiction?. analysts agree on the fact that litigation would have destroyed the project. Enron contracts with the Indian local State. gas and power markets. One year later. different cases have been revealed which question the relationships between the three institutions. In Columbia. 1122. 15 Boston University International Law Journal 343.

In December 2001. Enron acquired a 50 % ownership of a power plant financed by the World Bank in 1995. in 1994 and 1996. World Bank insist that the Dominican Republic should fully privatize its power distribution sector to benefit from additional loans. In 2000. In February 2006. 20 | P a g e . Enron even fought in the congressional corridors for the maintaining of the institution that some congressmen deemed unnecessary. In Panama finally. In fact. the International Financial Corporation (IFC) pressures the government to privatize its power sector in 1998. In the meanwhile.successively issued a $30 million and a $35 million loan. the World Bank delivers a loan to the Dominican government provided that they liberalize their power sector. The bidding process was soon followed by charges of fraud in the power purchase process. the US Embassy of India defends Enron against charges of fraud in the country. throughout the 90’s. CONSEQUENCES Besides the fact that the Houston Astros Baseball Club is no longer called the Enron Field but the Minute Maid Park. Immediately after the scandal 33 James V. the Enron case has had drastic consequences both on financial regulations and on project finance practices themselves. to the Promigas Pipeline Project where Enron was the operator.2. Without surprise. But the institution is still marred by the long relationship that it enjoyed with Enron and the “scar”33 it left on the South American soil. In the Dominican Republic. In 1999. the auditing company responsible for the valuation of the Dominican public assets was a local subsidiary of Arthur Andersen. thus making the energy company be its number one business partner. Grimaldi. OPIC received $3 billion from Enron. In June 2001. Id. and one year later Enron becomes the main shareholder of the Bahias Las Minas power plant. 3. the trials finally reveal that the price at which the Dominican public assets had been sold during the market privatization was about $1 billion lower than the actual value. OPIC cancelled the $200 million loan it had granted Enron for the Cuiaba pipeline. Columbia President Andres Pastrana meets with Texas Governor George Bush and Enron executives to discuss privatization of the industry.

36 Henry A. 37 Henry Davis. Gold.” As a consequence.exposure. “How Enron has affected Project Finance”. Id. Since the scandal. several companies have even made public vows not to use any off-balance-sheet structures and a constant effort has been done to delineate the difference between legitimate nonrecourse debt and the former Enron structures. from the Carlyle Group. Janovsky and Walker LLP. project sponsors together with their bankers and lawyers make special effort to explain the purpose of the entity and to show how it is exclusively focused on the achievement of the project itself. risk ratios for project financings skyrocketed in the aftermath of Enron as a result of the change in investors’ perceptions. Vol. they transferred many of their off-balance-sheet financings to their internal budget expenditures. The Journal of Structured Finance. “emerging-market IPP (Independent Power Producers) projects began to seem more like a danger than an opportunity. Similarly. the discourse changed considerably. Thus.36 Mr. On the other hand. the pace of project financings themselves drastically slowed 34 35 Jacob Worenklein. from US Power Generating Company. Dino Barajas. For Davis37. Davis. to force transparency and to reassure investors. 21 | P a g e . Spring 2002. from Hastings. the creation of Special Purpose Vehicles (SPVs) is specifically analyzed. Deeper attention is now given to project legitimization. even talks of an era of “conservatism”: he witnesses that conference room discussions aimed at drafting prospectuses for project finance deals are now focused on both the need to communicate about earnings and the desire to execute a clear and straight-forward strategy. Interviews with different CEOs34 and specialized lawyers35 right after the bankruptcy all confirm: project financiers generally feared a backlash on their capacity to attract investors and all fostered increased transparency and financial disclosure. the origin of the companies’ cash-flows is highly detailed and every change in the off-balance sheet arrangements is expressly justified. 8. several power companies decided to cancel their projects and sell their related assets. For fear of accusation. On the one hand indeed.

in Pakistan. 2000. In complement. Similarly. transactional lawyers involved in project financings should pay meticulous attention to due diligence. 2006. 2003). Fabozzi Series. th The Future of Independent Power Producers. Harris. December 19 . the nature of the liens and collaterals at stake has become more important in the deals. 19 projects under construction 38 39 Franck J. In particular.. Introduction to Structured Finance. Indon.down (Fabozzi. Henry A. many projects in the power sector are forced into suspension or renegotiation. while counterpart credit-risk and project legitimization talks gained momentum in the transactions deals. As far as ethics are concerned. 22 | P a g e . the Enron case has also affected the way security interests are dealt with (Feldman. 3. and others raised some interesting questions about collateral and security.3. Over the last decade for example. Davis.Newsl. Moorad Choudhry. counterparty arrangements and security in physical assets has become a prerequisite for the settlement of negotiations. Moreover.” Historically. Today. As Harris explains. The Enron case is also a good revelator of the challenge of dispute resolution within project financings. electricity.Com. Fabozzi. In fact. documents should be more widely disclosed and with increased transparency (Fabozzi. “Enron’s alleged tendency to set its own rules for making gas. This includes compliance reviews of the project contextual anchorage both on the environmental and social levels. LESSONS FOR LEGAL MANAGEMENT IN EMERGING COUNTRIES Lessons to be drawn for legal management of infrastructure financings in emerging markets both concern ethics and dispute resolution practices. security in power plants was established by mere contracts. 2006)38. 2006). 27 IPPs were obligated to suspend or renegotiate their contracts in Indonesia39.

Those should be of significant weight so as to matter in the negotiations and they should be located as much as possible outside of the realm of the local jurisdiction. litigation as a dispute resolution for project financings is not an easy way out.were harassed or cancelled by the government. In order for the US 40 Hill. the deal should be structured so as to compel the involvement of other public actors besides the host State. excluding lower than expected profits). public entities can waive their sovereign immunity either explicitly (through treaty or contract) or implicitly (if they agree on arbitration). since it is often a quick process. and termination for cause clauses (to list breaches that could justify default and termination of the contract. revision clauses (to force renegotiation of the deal in case future events occur. As for the potential answers to unilateral cancellations of infrastructure financing deals. Project Finance.40 Observers and practitioners advise different strategies. First. Different clauses can also be foreseen. if project owners deal with federate states. Indeed. In fact. they should always require that the federal government be an underwriter to the contractor (Kantor. unilateral change clauses (for minor contractual provisions that do not alter the contract in its entirety). under Section 1605. for example in the case of price increases in construction costs). 2003). the Enron case brings back into question the two everlasting recourses of litigation and arbitration. central governments should give direct assurances to the governmental organizations backing the infrastructure project. Foreign Sovereign Immunities Act (FSIA) to try and find an issue before their home jurisdictions. A military Coup doesn’t change the fact that Pakistan is under Contract to pay Western Power Producers for Electricity it can’t afford. November 1999. Thus.S. the Enron executives could for example have relied on the U. different devices are recommended. so as to be more efficiently enforceable (Id.). Another possibility is to expand the use of standby letters of credit. as it was the case in the Dabhol Power Project. In addition. To avoid the breach of contract. 23 | P a g e . As we saw in the Dabhol project. change clauses (to force renegotiation if events have created imbalance between the parties). Danielle Mazzini suggests the use of stabilization clauses (to prevent future events from altering the deal).

Dean. for Richard N. two requirements are needed: the object of litigation must be a “commercial activity” (Texas Trading. 41 42 Danielle Mazzini.43 of MIGA’s Regulations foresee that an assurance can be obtained to compensate against lack of recourse from judicial or arbitral proceedings and in cases where their financial decision could not be enforced or when they did not render a decision within a reasonable amount of time. since the project financier is often trapped if he did not foresee strong enough exante contractual mechanisms to remedy to the payment default (Kantor. Paragraph 1. Id. Yet this assurance is very expensive and not always assured but after a lengthy and uncertain process.courts to have jurisdiction. 2001). those two requirements would have been met in the Dabhol case since the weight of Enron was of significant impact on the US economy41. But often. For instance. In fact. v. 43 th Interview with Richard N. to obtain it. Weltover. In fact. 24 | P a g e . Then. Since the rule-of-law is often unstable. « International Project Finance and Arbitration with Public Sector Entities: When is Arbitrability a Fiction ?”. In other terms. neither is arbitration a quicker alternative to litigation. Dean. For Kantor. United World Trade Inc. 2000-2001. 24 Fordham International Law Journal. the ultimate solution and often the sole recourse in case of payment defaults in such contexts is “relationships”. his advice for transactional lawyers is to learn how to rely on relationships to renegotiate the deals and solve the issues. Enron executives did not beneficiate from a MIGA assurance. the process takes time and it does not always cover the total expenditures that the assured party has to face because of the default. it must provide an arbitral award to support that determination prior to making payment under the guarantee. Janini v. Indeed. Mangyshlakneft Oil Production Ass’n). and specialist of financial transactions in emerging countries and more particularly in Russia43. 1122. Partner lawyer for Baker and McKenzie LLP in Washington D. Walter Fuller) and it must have a “direct effect” in the United States (Republic of Argentina v. November 30 . Kuwait University. the assured party first needs to demonstrate that the project company’s payment default on its covered loan was directly caused by breach of contract on the part of the host State. As analysts show it. Mark Kantor. it is even a “fiction”42. 2009.C.

4. according to the American Shareholders Association. many companies have then decided to go private: the International Strategy and Investment Group show that 191 public companies have decided to change their registration strategies right after the enactment of the Act. regulatory costs increased from 4. 44 Feldman. the Equator Principles in 2003 and the Basel II Accord in 2004. 4. thus excluding all privately held companies. 2003. In particular. Indeed. Its aim was to get more effective control on the companies’ financial statements.9 % of the market capitalization rate. Section 404 notably provides that the company’s internal accounting should be the object of a detailed annual examination. especially for minor companies which have fewer resources to devote to compliance costs. THE SARBANES-OXLEY ACT The Sarbanes-Oxley Act was enacted on July 30th. a series of regulatory schemes was adopted to overcome the threats posed by the scandal and streamline a system which had proved its deficiencies. Thus. If the enactment of the act has been highly praised by many analysts for its efficiency and its positive effects on financial regulations. As a consequence. the opacity that surrounded the Enron cases revealed the inefficiency of the financial regulation mechanisms44. 25 | P a g e . REGULATORY SCHEMES ADOPTED IN THE AFTERMATH OF ENRON For Feldman. Interview by Harris. it is also criticized by many companies for its cost. three important rules were set up: the Sarbanes-Oxley Act in 2002. They aim in particular at punishing accounting fraud and refusal to disclose elements and at expanding CEOs’ responsibilities as regards the accuracy of their companies’ financial statements.8 % to 9.1. 2002. Its 11 titles apply to all the public companies registered in the United States. in the aftermath of Enron. the CEO of Andrews Kurth.

applicable social and environmental standards should be listed (use of renewable natural resources. project engineers. In consultation with project sponsors. different actions should be undertaken and documents handled. fire prevention. covenants. evidence of consultation with stakeholders. cultural properties. ABN AMRO. as provided by the 2006 extension. They were developed by a group of commercial banks led by Citigroup. from an independent expert. The purpose is to issue a number of environmental and social standards for the design of project financings. In order to do so. actions plans and agreements between banks and their clients on how to mitigate and monitor the risks. and non-governmental organizations (NGOs).2. projects are graded according to the significance of their social and/or environmental impact.com 26 | P a g e . involuntary settlement. etc. 67 financial institutions have decided to comply with those rules by November 2009. In addition.equator-principles. THE EQUATOR PRINCIPLES The Equator Principles were launched in June 2003 and extended in July 2006. use of dangerous substances. Finally.4. including social and environmental assessments for all projects categorized A or B.) and a grievance mechanism has to be foreseen. NGOs and project affected groups. 45 www. life safety. protection of human health. Then. including endangered species and sensitive ecosystems. should also be issued to the financial institution. The Principles have also been extended to expansions or upgrades of existing facilities and to project finance advisory activities: from then on. land acquisition and land use. member institutions commit to inform their clients about the Principles and request from them the explicit intention to adhere to the rules. annual disclosure reports. Barclays and West LB right in the aftermath of Enron to alleviate the negative externalities that the scandal had on their project finance activities45. to B (limited impacts) and C (minimal or no impacts). The Equator Principles only concern all new project financings of total capital costs of US$ 10 million or more. an independent review. impacts on indigenous people and communities. biodiversity. from A (significant impacts).

First. some observers have raised concern over their integrity. many banks publish summaries of their actions in favor of the Equator Principles and the list of projects that they refused because of noncompliance47. together with the IFC. the Dutch ABN AMRO bank. “Are the Equator Principles Sincere or Spin?”. the lack of enforceability of the Principles or the fact that banks might lobby the IFC to weaken the standards46. 4. They answered that their independent consultant had confirmed the fact that the Principles were respected. To answer those attacks. Sustainability Investment News.equator-principles. www. Those standards should be determined according to internal ratings including the credit volume of the bank issuing the loan. project finance transactions are now structured in order to minimize the regulatory capital 46 47 William Baue. connecting Azerbaijan. producing 1% of the total annual worldwide CO2 emissions. In this case. Others criticize the existence of free-riders and opportunistic members.Nonetheless. some NGOs deplore the fact that one of the Equator Principles members. The Accord was adopted after a series of deliberations from central and commercial banks united under the so-called Basel Committee on Banking Supervision. The idea is to ensure greater stability of the international financial system and avoid the occurrence of credit crunch situations. 2004.com th 27 | P a g e . Its purpose is to have international standards to determine the minimal capital and credit requirements necessary for the involvement of the credit institution in the project financings. Georgia and Turkey. June 4 .3. despite an NGO assessment alleging 127 breaches of the Principles. is the most climate-unfriendly bank in the Netherlands. According to Freshfields law firm. the Equator Principles have been criticized for several reasons. it was adopted between 2008 and 2009 by most of the world jurisdictions and their credit institutions. Similarly. 8 financial institutions registered as members of the Equator Principles list decided to finance the project in 2004. Some of them point at the highly controversial case of the Baku-Tbilisi-Ceyhan pipeline in the Caspian See. THE BASEL II ACCORD The last regulation adopted in the aftermath of Enron was the Basel II Accord. Published in June 2004.

As a result. the risk of hold-up is so high than serious ex-ante mechanisms should be foreseen to avoid reliance on mere ex-post relationships. February 2007. Briefing. banks have the incentive to use numerous sources of financing so as to broaden the number of participants and get greater leverage effect. is particularly interesting for different reasons. they insist on transparency and disclosure.”48 As a consequence. On a practical standpoint.requirements of the loan. First. Basel II: Capital Management Strategies for Project Finance Loans. This finding also contributed to elaborating new rules. the project contextual analysis and the 48 Freshfields Bruckhaus Deringer. that is to say not only the famous case of false accounting and insider trading but also the less famous issues of the company’s pitfalls in India or Bolivia. CONCLUSION: CURRENT TRENDS AND THE EFFECTS OF THE FINANCIAL CRISIS ON INFRASTRUCTURE FINANCINGS IN EMERGING MARKETS Studying the Enron cases. 5. Third. project financiers usually drew two lessons from Enron. “this may become more and more of a focus in negotiations. For Enron revealed several deficiencies in the sphere of project finance and the way it was approached. Second. the cases finally illustrate the difficulty of renegotiation of those long-term project financings. different mechanisms such as the mark-to-market accounting method or the offbalance-sheet financial strategy turned out to be misleading for investors: regulatory schemes were thus foreseen to remedy to the lack of legislation in the matter. 28 | P a g e . First. Enron showed that the lack of analysis of the contextual elements interacting with the project could result in quagmires for the parties. For them.

they require much more support from sponsors. 2009. Davide Tocchi. projects’ security and collateral have become key elements of the negotiations. 2009. companies increasingly use targeted risk coverage instead of the traditional general insurances49. either by focusing on more industrialized countries or by broadening their geographical scope so as to diversify their portfolio. the general context is one of deregulation and privatization. the Sarbanes-Oxley Act. Yet. As a consequence.e. Thesis. London. to invest in emerging markets.e. Now. even if their efficiency is still to be improved. More. especially since the Russian default of 1998 and the Brazilian devaluation of 1999. structuring the deal means involving a bigger number of actors and financiers so as to ensure a better mitigation. As a result and because of the financial crisis. which leads to a growth in the credit-rated project debt50. More. and the Basel II Regulation. for instance. In particular. observers witness the growing use of bonds and the broadening of the base of institutional investors. there is more and more a blending of project and corporate finance to mitigate the risk. and since the current scarcity of funding has drastically shortened the number of project financings worldwide. Furthermore. Bocconi Business School.due diligence processes gain more and more importance in the work of the transactional lawyer in charge of supervision on such projects. i. Thomson Reuters. give a new framework to legal management in this field. Second. In the specific case of insurance. This is all the more relevant since financial moroseness spread onto the markets. companies have stopped their expansion to new industries and locations and rather stay focus on less risky domains. project financiers began to give increased scrutiny to governmental actors and partners in emerging markets. the Equator Principles. i. export credit agencies and insurance companies. since there is higher risk. to go further and understand the current evolutions. the higher scarcity of funding resources and the decrease in risk tolerance. Finally. Since the skepticism that followed the Californian crisis of 2000-2001. 29 | P a g e . 49 50 The Future of Project Finance: The Crisis in Perspective. multilateral agencies. By Rod Morrison. “The Impact of the Financial Crisis on Project Finance”. different trends need to be witnessed in the planet of project finance. Ed. they actually use securitization more extensively. the new systems of regulation to comply with.

30 | P a g e . the genuine Keynesian method of the New Deal had effectively put new life into the post-1929 world. As there’s hope… 51 Jeffrey Sachs. The End of Poverty: Economic Possibilities for Our Future. Jeffrey Sachs51 noted that the focus on infrastructure.4 % and a GDP per capita of $40. as we saw. For the main quality of project finance is precisely to provide flexible and case-by-case solutions. to leverage its effects. In the sector of infrastructure financings for emerging countries in particular. Penguin Press. could be one way towards the “end of poverty”. 2008): when infrastructures have structured the superstructure. Quite the contrary.400 (CIA World. new tools and strategies can be imagined. or when the post-Enron era is one of the rise and fall of empires. 2005. Today.But the doldrums of the world economy do not sound the death knell of project finance. Dubai the anthill has record employment rates of 97. both social and economical. it appears as very suitable to answer the numerous needs of growing populations.

Hill. June 4th. 987. Thesis. 2003. 2009. Martin Stuart-Smith. “Enron Pipeline Leaves a Scar on South America”. Project Finance. The Journal of Structured Finance. Henry A. Introduction to Structured Finance. Cambridge University Press.Bibliography  General Literature on Project Finance Davide Tocchi. 2006. “Are the Equator Principles Sincere or Spin?”. Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. April 2002. Ed. 26 Law and Policy of International Business. James V. 2004. Davis. Daphne Wysham and Jim Vallette. Fabozzi. Franck J. By Rod Morrison. Sustainable Energy and Economy Network. Grimaldi. 2000. Freshfields Bruckhaus Deringer. Spring 2002. May 6th. The Future of Project Finance: The Crisis in Perspective. Penguin Books. William Baue. Henry A. October 2007. The Washington Post.  On Enron Bethany McLean and Peter Elkind. “Private Financing and Infrastructure Provision in Emerging Markets”. “A military Coup doesn’t change the fact that Pakistan is under Contract to pay Western Power Producers for Electricity it can’t afford”. Hoffman. Fabozzi Series. Basel II: Capital Management Strategies for Project Finance Loans. Law and Business of International Project Finance. 8. « The Impact of the Financial Crisis on Project Finance”. The Indonesian Commercial Newsletter. 2009.  On the energy industry The Future of Independent Power Producers. Bocconi Business School. 2006. London. 31 | P a g e . Chronology of Enron’s Empire. Vol. Moorad Choudhry. February 2007. London. Sustainability Investment News. Thomson Reuters. Davis. November 1999. Briefing. 1994-1995. Scott L. December 19th. “How Enron has affected Project Finance”.

Jan.. Groupe de recherche sur l’innovation municipale. Sanford V. 99. Neil Roger. Emerging Market Investors and Operators: a New Breed of Infrastructure Investors. Working Papers No.J. incentives and performance. 98. Philippe Marin. Private Initiatives in Infrastructure: priorities. 2009. Quel rôle pour le secteur privé dans l’accès à l’eau potable dans les pays en développement. OFCE.novethic.7  On Public-Private Partnerships Frédéric Marty. P. The End of Poverty: Economic Possibilities for Our Future. “Emerging Market Infrastructure”.com. Cornell University. World Bank. PPIAF Documents. R. 252. Apurva Sanghi. Juillet 2009. N°2007-26. Septembre 2007. INRS.M. Public-Private Infrastructure Advisory Facility: Public-Private Partnerships for Urban Water Utilities: A Review of Experiences in Developing Countries. 32 | P a g e . On emerging markets Clive Harris et al. “Infrastructure and Long Run Economic Growth”. Numéro 2. November 2006. Georgina Dellacha. by Philippe Marin. Global Project Finance Yearbook 2007. Center for Analytic Economics. Pollitt. Infrastructure Projects.. « Controverse sur la privatisation de l’eau dans les pays du Sud ». Stephan von Klaudy. “Recent trends in Private Participation Infrastructure”. Note No. “Urban Infrastructure Finance from Private Operators: What have we learned from recent experience?”. Les difficultés d’exécution des partenariats public-privés : le retour d’expérience des contrats de Private Finance Initiative. A review of canceled private projects. Peter Rigby. 2005. World Bank Policy Research Working Paper 4045. Masatsugu Tsuji. « Les partenariats publics-privés et les municipalités : au-delà des principes. www. Coupry. “Government Spending in a Simple Model of Endogenous Growth. Michael G. 196. Public Policy for the Private Sector. 1990. 2004. Pierre J. Journal of Political Economy. WB Note No. Sept. March 2005. 2008. Arnaud Voisin. Hamel. Public Policy for the Private Sector. July 1999. Canada. David Canning and Peter Pedroni. un bref survol des pratiques ». « L’efficacité réelle des partenariats public-privés pour les services d’eau urbains dans les pays en développement ». Berg. 2003. Jeffrey Sachs. World Bank.  On Infrastructure Annez P. Barro. Penguin Press.

com http://online. 14 Berkeley Journal of International Law 438. The Political Economy of International Sales Law. “Dispute Resolution in International Project Finance Transactions”. The Human Settlements Finance Systems Series. 24 Fordham International Law Journal.  Other Online Ressources www.worldbank. « International Project Finance and Arbitration with Public Sector Entities: When is Arbitrability a Fiction ?”. Malinasky. Mark Kantor. « S&P cuts Six Dubai entities to “Junk”». Laura A. www.org/etools/PPPIPortal/2008PPPI/doc/08Presentations/Day4%20Session3%20pr5.org http://info. The Wall Street Journal. 2009.org www.UN Habitat. Gillette and Robert E. 2000-2001.com : Nathan Becker.wsj. “Rebuilding with Broken Tools: Build-Operate-Transfer Law in Vietnam”. 1996. International Review of Law and Economics. Housing Finance Mechanisms in Zimbabwe. 1122. Fordham International Law Journal 1064. Nairobi.  On Dispute Resolution Clayton P.com 33 | P a g e .pdf (PPI Club Medafrique) www. September 2005.equator-principles.amazonwatch. December 3rd. Dugué Christophe.jpmorganequityfunds. Scott. 2000-2001. 2009.worldbank.

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