Infrastructure / Project Finance Law

Infrastructure is one of the important sectors recognised as the greatest facilitator of development in India. There are several sectors pertaining to infrastructure including Aviation, Ports, Road and Highways, Railways, Power and Oil & Gas. In most of these areas, the Central and the State Government concerned allow private participation in the form of build, own and operate (BOO), build, operate and transfer (BOT) or build, lease and transfer (BLT) basis. Financing of these projects also requires considerable financing arrangements. Besides, there are several regulatory issues that require compliance.

Project financing usually means the funding of a big infrastructure project - that is, banks lending money to pay for, say, the building of a power plant, a road, or, as with the Boleo project, the development of a mine.

We give legal advice to the companies, who need to raise money to develop a particular project or to the banks and financial institutions lending to them.

Our role while representing lenders is to make them comfortable with the risks they were taking on, and to put as many safeguards in the documents as we could to ensure, to the extent legally and commercially possible, that they would get repaid at the time and in the manner that they expect

Types of Projects:

Project financing in India is used for various sectors such as:

• Energy (Power Generation, Solar, Thermal, Wind, Hydro), Power Transmission and so on
• Construction
• Public Infrastructure (Roads, Airports, Metro Rail and Ports, among others).
• Manufacturing (Cement)
• Education
• Healthcare
• Telecommunication

There is no umbrella legislation governing project finance transactions in India. Different sets of law will apply, depending on the nature of project financing transaction.

No single government agency regulates project finance in India. There are government departments, authorities and regulatory commissions that govern different types of projects, depending on its sector. These authorities include the:

• National Highways Authority of India (NHAI) along with Ministry of Roads.
• Transport and Highways for road projects.
• Respective electricity regulatory commissions.
• Airports Authority of India.
• Maritime Boards of the respective states, port trust and the Port Tariff Authority along with any other authority that may be constituted by the state where the project is based.

Outside the general regulatory framework, there are a number of laws that must be taken into consideration in relation to project finance transactions, including the:

• Indian Contract Act 1872. This is the basic Indian legalisation that governs contracts, including loan agreements and security documents.
• Companies Act 2013. This regulates, among other matters, registration of charge on company`s assets, conversion of debt into equity and procedural compliances in relation to availing of loans and creation of security by companies.
• Transfer of Property Act 1882. This regulates creation and procedure for enforceability of security over immoveable property.
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI). This regulates enforceability of security to recover debts. The benefits under SARFAESI are not available to foreign creditors, with the exception of the Asian Development Bank and the International Finance Corporation.
• Insolvency and Bankruptcy Code 2016. This is the comprehensive insolvency and bankruptcy legislation in India that covers companies, partnerships as well as individuals.
• Code of Civil Procedure 1908 (CPC). This is the principal Indian legislation governing procedure for civil court proceedings in India, which can be used by the creditors for recovery proceedings and enforcement of security. This can also be used for dispute resolution under any other contractual proceedings.

The area of financing of infrastructure projects in India is core to the success of the project. A variety of financing arrangement exists for various projects and selection of the proper financing model is essential.

The other area of significance relates to project documentation, especially for preparation of bids, EPC contracts, drafting of joint development agreements and related agreements such as power purchase agreements. These project documentations require expertise and support to ensure success of the projects.

There are many regulatory issues that arise in such projects including compliance with sector specific regulatory laws apart from laws such as environment and labour. Knowledge of various issues arising in these areas of law and a practical and legally workable solution is necessary to ensure success of the projects.

The Infrastructure and Project Finance Team in Law Office Of K.S. Kohli has vast experience in drafting and negotiating various agreements in this area including preparation of project documentation and related agreements. Our Law Firm Lawyers have exhaustive knowledge of legal and regulatory frameworks. Our Law Firm team render advise to both borrowers and lenders in pertaining to various matters such as due diligence, drafting, negotiation and vetting of loan and security documentation. We help clients identify potential risks in financing projects and identify appropriate systems to set up structures of funding which not only mitigate those risks but also attract investments. With our experience in transaction support, project financing, strategising litigations and dispute resolution. Our Lawyers render valuable advise to clients in all stages of infrastructure development, from concept to final commissioning.

We advise our clients in a wide array of matters including tender documentation, bids, consortium arrangements, required clearances, licenses and permissions, EPC contacts and grant of concessions.

We ensure comprehensive legal services to our clients with our strengths in Dispute Resolution practice.