Shari'ah-Compliant Project Finance : A Structural Overview

This article focuses on the development and implementation of modern Shari'ah-compliant project and infrastructure finance structures and techniques. The definition and history of project finance are summarized, as are some of the essential institutions, practices, premises, methodology and traditions of modern Shari'ah-compliant finance. The article then turns to explanations of some of the generic structures that are used in Shari'ah-compliant project and infrastructure financings. These include bifurcated ijara (lease) structures that incorporate both conventional interest-based financing and Shari`ah-compliant investments and operations, bifurcated istisna'a-ijara (construction-lease) structures, single Islamic tranche structures that are used in tandem with conventional financings, istisna'a-parallel istisna'a construction financing structures, sukuk al-ijara (lease securitization structures), mudaraba (service-capital partnership) stuctures and sukuk al-mudaraba, musharaka (partnership, particularly diminishing partnership) structures and sukuk al-musharaka, and other structures. The Bahrain Financial Harbour Sukuk is considered as an exemplary case study