Priorities in Security Interests and Project Finance in Nigeria: An Appraisal
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The Gravitas Review of Business & Property Law, Vol.10 No.3 (Sept 2019)
Adefolake Adewusi
Adefolake Adewusi, Doctoral Researcher, University of Lagos and Senior Associate at ǼLEX in her article, Priorities in Security Interests and Project Finance in Nigeria: An Appraisal, posits that security interests in project finance are made up of real and personal security, comprising a network of mortgages, charges, liens, assignments, guarantees, indemnities and comfort letters. The priority given to a security interest is relevant in determining whether it can be regarded as being reliable in liquidating indebtedness where there are competing lenders’ claims. Adefolake appraises the framework governing priority of security interests in project finance, finds that sustenance of priority interests in project finance requires additional intervention and suggests the development of a legal framework and the use of a one-stop shop for security registrations as part of the ways in which identified impediments to priority of security interests used in project finance may be addressed.
Product Description
The Gravitas Review of Business & Property Law, Vol.10 No.3 (Sept 2019)
Pages: 14
Priorities in Security Interests and Project Finance in Nigeria: An Appraisal
Adefolake Olachi Adewusi*
ABSTRACT
Project finance is a method of funding in which the lender looks primarily to the revenue streams and other assets of a borrower – typically a special purpose vehicle (SPV), both as the source of repayment and as security for the debt. Before operations commence, the lenders usually have some limited recourse to the sponsors of the borrower by way of guarantees, indemnities and comfort letters, to minimise losses in the event of failure of the project. Interests in project finance are made up of real and personal security, comprising a network of mortgages, charges, liens, assignments, guarantees, indemnities and comfort letters. The priority given to security interests is relevant in determining whether it can be regarded as being reliable in liquidating indebtedness where there are competing lenders’ claims. It is therefore useful to appraise the relationship between interests used in project finance in Nigeria and the principle of priority. This paper using the doctrinal approach, appraises the framework governing priority of these interests in project finance, finds that sustenance of the interests in project finance requires additional intervention and suggests amongst others, the development of a legal framework and the use of a one-stop shop for security registrations as part of the ways in which identified impediments to priority of security interests used in project finance may be addressed.
Keywords: Project finance, security interest, debt, security registration
* LLM, MCIArb, ACIS, ACTI. Doctoral Researcher, University of Lagos and Senior Associate, ǼLEX.
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