Banking project financing of public-private partnership and its role in ensuring public welfare

Abstract

The article reveals the peculiarities of the use of bank project financing in the field of PPP. It is substantiated that the peculiarity of the application of PPP project financing is the creation of a special project company, which is responsible for mobilizing financial resources for project implementation; the presence of a hierarchy of investment; more objective assessment of the borrower's solvency and reliability and evaluation of the project itself in terms of its efficiency, security and risk; significant transaction costs to settle the interests of all members of the partnership. It is proved that in modern conditions the role of project bank lending in the sources of project financing is growing rapidly, and the role of banks in this process is much wider than in traditional forms of lending. They not only provide financial support for the project, but also become direct participants in the implementation of the PPP project, performing management, settlement, consulting, guarantee and other functions. Given the specifics of PPP projects (large scale, long implementation time, cost), the participation of commercial banks in their financing is complicated. International development banks and international financial institutions play a leading role in the formation of project financing in the field of PPP, and the syndicated lending mechanism is also used in foreign practice. However, in Ukraine, bank project financing is practically underdeveloped, which is due to its institutional and legal irregularities. The use of syndicated lending mechanisms in Ukraine is unique, as well as the financing of PPP projects through credit and export agencies. PPP project financing with the support of international financial institutions, in particular the EBRD, has been the most developed, concentrating in such areas as infrastructure development, energy reform, and construction. In this regard, the problems of economic, legal and managerial nature, which hinder the development of bank project financing in the field of PPP in Ukraine in modern conditions, are outlined.