The basic elements of a private finance initiative (PFI) model are:-
- Formation of a special purpose vehicle (SPV) to undertake the new project;
- Purchase agreements with purchasers of the project output (e.g., a utility company buying electricity generated by the SPV’s assets);
- Supply agreements with suppliers of raw materials (e.g., gas or coal for a power plant);
- Investment agreements with equity investors;
- Loan agreements with lenders or ratings by rating agencies for the issuance of bonds.