Page 59 - Industrial plants

The basis to establish the EPC Company

through Project Finance & Method

With this article on the Best Practices in the EPC world,
we analyze the methodologies in the ever-growing needs
for project financing

Massimo Rebecchi, President and CEO
Xylem

rivate Investment in major infrastructure
projects is not unusual. Prior to World
War I, railways, roads, bridges, power
plants, ports, water works and gas-
distribution systems were being built all
Pover the world by private entrepreneurs.
These projects were largely financed by private capital,
provided by entrepreneurs willing to risk all in return for
high rewards. Fortunes were made and lost.

During the 19 Century ambitious projects such as the
th
Suez Canal and the Trans-Siberian Railway were
constructed, financed and owned by private companies.
However, the private-sector entrepreneur disappeared
after World War I and as colonial powers lost control,
new governments financed infrastructure projects Today, Project Finance is being
through public-sector borrowing. The state and public- introduced in both developed and
utility organisations became the main clients in the developing countries
commissioning of public works, which were then paid as an alternative way to finance
for out of general taxation. infrastructure and industrial projects,
both small and large
During this post-World War I period in Europe, states
invested in the reconstruction of war-damaged World Bank, the Asian Development Bank and the
infrastructure and new nationalised industries. After International Monetary Fund.
World War II most infrastructure projects in
industrialised countries were built under the
supervision of the state and were funded from their Development
respective budgetary resources of sovereign in the early 1980s
borrowings.
This traditional approach of government in identifying The convergence of a number of factors by the early
needs, setting policy and procuring infrastructure was 1980s led to the search for alternative ways to develop
by and large followed by developing countries, with the and finance infrastructure projects around the world.
public finance being supported by bond instruments or These factors include:
direct sovereign loans by such organisations as the • Continued population and economic growth

IndustrIal Plants - May 2023
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