Project financing under Colombian Private Law

Project Finance is always presented as a financial technique which allows to carry out works of great scale. It is a suitable solution for projects which require considerable funds in order to be accomplished and which can be outsourced avoiding the weight of the debt weighing on the balance sheet of the sponsor of the project. It can be defined as an operation in which there is a provision of the required funds for the realization of a specific project by an intermediate entity, known as the "ad hoc project entity". In such operation the lenders agree to limit, totally or partly, the reimbursement of their loans to the incomes generated by the exploitation of the project as well as to the other assets of such project. This kind of financing reveals the existence of an adequate "contractual unit" which allows, at the same time, to control the risks of the project and which implies its own legal regime.