A basic PPP or PFI Model

The basic elements of a private finance initiative (PFI) model are:-

  1. Formation of a special purpose vehicle (SPV) to undertake the new project;
  2. Purchase agreements with purchasers of the project output (e.g., a utility company buying electricity generated by the SPV’s assets);
  3. Supply agreements with suppliers of raw materials (e.g., gas or coal for a power plant);
  4. Investment agreements with equity investors;
  5. Loan agreements with lenders or ratings by rating agencies for the issuance of bonds.

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