In order to address factors unique to investing in northern Australia such as distance, remoteness and climate, NAIF has options to structure its financing terms and conditions very differently to other lenders. There are a range of loan concessions available to help a project proceed, including:
- Long loan tenors of up to the longest Commonwealth borrowing (which is 30 years)
- Lower interest rates than available from commercial lenders
- Absorbing an element of merchant or future user risk where there is an uncertain utilisation of pay-back period
- Subordination in security and/or cashflow to other lenders
- Extended period of capitalisation of interest, or highly tailored loan repayment schedules
The level of concessionality offered will be the minimum required for the project to proceed and will depend on the public benefit of the underlying project. The loan must also be able to be repaid.
NAIF does not offer equity, grants or funding for feasibility studies.
Examples of how concessionality may work to support infrastructure projects:
Interest capitalisation and interest only periods
To support new market entrants and better match revenue ramp up and life cycle of new projects – commercial financiers often require more certain revenues.
Absorbing an element of merchant or future user risk
To support projects who have not yet contracted all future users of the infrastructure.
These examples are for illustrative purposes only – actual concessions determined on a case by case basis.