Introduction

The basic research questions addressed in this case study are as follows: what are the links between project-financed foreign direct investment, and sustainable development and human rights issues? To what extent does the use of project finance (PF) accentuate the positive and negative impacts of foreign direct investment on sustainable development and human rights and how?

Two main sets of issues were analysed in relation to these research questions. A first set of issues refers to contractual arrangements that are an essential part of PF, and their possible effects on foreign investment in the host country and on sustainable development and human rights issues. Because the revenue flows of the projects are the main/only source for loan payments under PF, predictability of the project revenue is crucial to lenders. This creates incentives for project sponsors to enter into contractual arrangements to provide a framework for project viability and allocate risk between parties. The hypothesis of this chapter is that these contracts, as part of risk allocation between partners, may include financial and other arrangements that interfere with the achievement of sustainable development goals in the host country.