Project Finance and Human Rights

As sovereign states seek to accomplish public purposes while drawing on private finance, they often use the methods of project finance (PF). This collaboration takes various forms, under the generic label of public-private partnerships. These partnerships have in common the fact that governments aim to avoid some of the expense, risk and administrative headache involved in building and operating projects themselves, as happens in the complex infrastructure development that is often a feature of road systems, oil and gas pipelines, health care facilities and many other examples. Project Finance helps governments to reduce direct use of taxpayers’ funds and also narrows and focuses the risks they face. As a lending technique designed to achieve these objectives, PF is both praised and feared. It is seen by some as an excellent tool for encouraging investment, since it provides a set of refined methods for the spreading and mitigating of risks between corporations, host governments, lenders and those contractors involved in building and operating a project.