Financing Mechanisms

A number of financing mechanisms are available for infrastructure projects, and for public-private partnership (PPP) projects in particular. 

A successful PPP relies not only on sound project preparation but also on innovative and sustainable financing. This section explores a range of financing mechanisms available for infrastructure PPPs, including asset recycling through concession and lease models. It also highlights emerging approaches such as Islamic finance, project-financed transactions, and the role of tariff setting in addressing funding constraints.

In addition, this section introduces commercial value capture strategies—such as land value capture and joint development—that allow governments to harness the increase in land or property value generated by infrastructure investments. These mechanisms can significantly enhance project revenues and reduce reliance on public funding.

Climate finance is also featured as a critical enabler of sustainable infrastructure. By leveraging concessional funding, green bonds, and carbon credit markets, climate finance helps align PPPs with environmental goals while attracting private capital to climate-resilient and low-carbon projects.

Whether you're structuring a new deal or refining an existing model, these tools can help unlock new opportunities and ensure long-term project sustainability.

Key Resources Include:

Asset Recycling
Guidelines for implementing asset recycling transactions, particularly through concession and lease models, to unlock capital from existing public assets and reinvest in new infrastructure.

Innovative Revenues for Infrastructure
Exploration of non-traditional revenue streams such as land value capture, advertising rights, and user fees that can enhance project bankability and reduce reliance on public funding.

Commercial Value Capture
Mechanisms that allow public entities to capture a portion of the increased economic value generated by infrastructure investments, including land value capture, tax increment financing, and joint development.

Climate Finance
Tools and strategies to access climate-aligned funding sources, such as green bonds, blended finance, and carbon markets, to support low-carbon and climate-resilient infrastructure.

Local Currency Financing
Approaches to reduce currency risk and improve project affordability by sourcing debt in local currency, often through domestic capital markets or development finance institutions.

Islamic Finance
Sharia-compliant financing structures such as sukuk (Islamic bonds) and ijara (leasing), which offer alternative capital sources for infrastructure investment in relevant markets.

Project-Financed Transactions
Approaches to structuring projects where repayment is primarily based on the cash flow generated by the project itself, rather than the balance sheet of the sponsors.

Tariff Setting and Funding Constraints
Guidance on designing tariff structures that balance cost recovery, affordability, and financial sustainability, while addressing common funding gaps in infrastructure delivery.