Alternative Finance Options
Financial concepts will no longer be presented from the utility executive’s perspective. This chapter presents financial concepts from the perspective of a government official whose responsibility it is to manage or administer a program to provide funds for municipal utility services. It discusses the concepts of project finance from the perspective of a government official who has funds, or whose job it is to seek funds for utility projects in his country. It is this official’s responsibility to provide the best quality of utility services to the largest amount of people, by providing funds to utility operators for projects, which improve that utility’s services to its users. The chapter contains information on the four ways to finance projects: grants, soft or subsidized loans, market rate loans, and loan guaranties. There is a fifth way to finance projects, but it is unique to the private sector. That way is called “equity”, or equity financing.