Infrastructure Financing through Islamic

Finance in the Islamic Countries

perform at the different stages of the development of a project as identified below (World

Bank 2017c: 6).

Design

: Preparing the developing project plan in terms of initial concept, input and output

requirements for construction. In this planning stage, the details of project assets and how they

will be financed will be delineated.

Build or Rehabilitate

: Greenfield projects would involve building new assets and brownfield

projects would rehabilitate existing assets.

Finance

: Depending on the contractual arrangements, the private sector has to finance all or

part of the costs of building or rehabilitating projects.

Maintain:

The infrastructure assets have long lives and have to be maintained. The role of the

private sector in the maintenance of the assets will be specified in the contract.

Operate:

Depending on the nature of infrastructure assets and the services produced, the

contracts will determine the role of the private sector in operating the infrastructure projects.

Types of contractual arrangements may involve the following: technical operation of the

project and the provision of services to a government-related off-taker; technical operation of

the project and the provision of services to direct users; and the provision of support services

for operations with the government offering services to the end-users.

Given the above, different types of contracts can be used to involve the private-sector in

infrastructure projects. Table 2.1 shows the contracts that can be used to engage the private

sector for developing and operating infrastructure projects covering different functions.

Table 2.1: Contract Types Used for Infrastructure Projects Involving Private Sector

Contract Type

Functions

Asset

Type

Design

Build

Rehabilitate

Finance

Maintain

Operate

Design-Build-Finance-

Operate-Maintain

(DBFOM)

Design-Build-Finance-

Operate (DBFO)

Design-Construct-

Manage-Finance

(DCMF)

Build-Operate-

Transfer (BOT)

Build-Own-Operate-

Transfer (BOOT)

Rehabilitate-Operate-

Transfer (ROT)

Concession

GF,BF

Private

Finance

Initiative (PFI)

Operations

and

Management (O&M)

a: GF-greenfield; BF-brownfield;

Source: Adapted from World Bank (2017c: 7)