The successful bank financing of 86 per cent of the cost of developing the 200MW second phase of Dubai’s Mohammed bin Rashid al-Maktoum solar park provides hope that perceptions have changed and new corporate finance stratagems are being developed.

“Part of the issue is that, in the past, many of the infrastructure projects in the GCC were funded by the government, so historically there has been less need for banks to get involved,” says Indraj Mangat, partner at the UK-based law firm Eversheds. “There is still a question mark in terms of project finance packages – we still haven’t gone back to the 2007 days where the same volume of banks are interested.”

Banks have been inclined to offer corporate lending rather than apply risk on the underlining asset. “There has been an issue of education in this regard,” says Mangat.

Yet with government revenues decreasing as a result of falling oil prices, it is expected that foreign and local banks will have to become more innovative when raising funds for major projects. More recently, the sukuk option has become attractive to banks due to its effectiveness in opening up the market to private investors. “Sukuk is going to be a big player in the market,” says Mangat.

It is expected that the project finance landscape will shift this year, and countries such as Oman and Bahrain may find that many projects that previously would have been fully funded by the governement require assistance from banks.

Oman is expected to be one of the key markets in the region for project finance in 2015. The Oman Power & Water Procurement Company (OPWP) is progressing with the Salalah 2 independent power project, with contractors submitting bids in 2014.

The projects market can be encouraged by the fact banks are beginning to conceptualise finance packages that encompass equity market investment, public-private partnership (PPP) funding and contractor financing; a recipe that will ensure the region’s expansion plans are sufficiently financed to materialise.