STRUCTURING PROJECT FINANCE FOR ENERGY MEGAPROJECTS IN DEVELOPING COUNTRIES: EXPORT CREDIT AGENCIES, MULTILATERAL DEVELOPMENT BANKS AND LIMITED-RECOURSE RISK ALLOCATION

Energy megaprojects in developing countries increasingly reach capital costs of USD 30–50 billion, a scale at which conventional commercial lending capacity, single-jurisdiction legal protection and sponsor balance sheets cease to be sufficient. This paper examines how such projects are structured through the combined use of export credit agency (ECA) cover, multilateral development bank (MDB) participation and limited-recourse debt, and how these instruments reallocate risk between sponsors, lenders and host states. The study is conceptual and comparative: it builds an analytical risk-allocation framework from the project finance, development finance and credit-market literature, and applies it to three financing archetypes — commercially led, ECA-led and MDB-anchored structures. Five risk clusters are distinguished: completion and technology risk, market and offtake risk, political and regulatory risk, currency and macro-financial risk, and environmental, social and transition risk. The resulting allocation matrix is summarised in Table 1. The analysis shows that at megaproject scale the binding constraint is not the price of debt but the availability of long-tenor, contractually enforceable risk transfer, and that limited-recourse structures concentrate residual risk in the completion phase, where lender protection is weakest and where the empirical record of cost overrun is strongest. The paper identifies structural weaknesses: concentration of lending relationships, shallow local currency markets, misalignment between short commercial tenors and long asset lives, and the absence of credible mechanisms for allocating transition risk over 25–30 year horizons.