A number of Islamic project finance transactions have
successfully closed over the last three years, attracting
interest from the regional project finance market, not least
for the structural innovation that each of these transactions
has introduced. But the contribution these deals have made to
the development of Islamic finance overall has been
overshadowed by the high-profile sukuk offerings that
seem to dominate the headlines.
Upon closer examination, a number of parallels can be drawn
between Islamic project financing techniques and some of the
sukuk structures in the market. One parallel is
evident in the use of musharaka (partnership)
principles. However, what distinguishes the Islamic project
finance market from sukuk is that a lot of these
transactions are multi-sourced financings, requiring the
Islamic tranche to be integrated within a wider, in most cases
pari passu, financing arrangement.
One of the more obvious examples of Islamic project finance
leading the way is...