PF Archive

Before the law

01 11 1999

The new law on project financing was introduced by Law 415/98 on November 18, 1998 by way of an amendment to the Public Works Act of 1994 (Law 109/94), better known as the "Merloni Law" and renamed "Merloni ter" after the 1998 amendment. The project finance bill had no easy Parliamentary course because its innovative content departed from the traditional Civil Law approach and introduced typical Common law institutes such as the floating charge and the step-in right of the lenders. It took more than three years of drafting and lobbying by the Bankers' Association and CNEL (the National Council for Economy and Labour). In the end, following... (i) the success of big power projects (such as Sarlux, Isab Energy, Api Energia, Rosen, Serene and Centro Energia), (ii) the enactment of new regulations in the energy, water, waste and transport sectors which take into account the needs of limited recourse lenders, (iii) new projects in progress in all such sectors, and (iv) the Government and Regional plans for the development of new infrastructures, a general consensus developed within the Government and the majority coalition about the need to support infrastructure financing. The legislation concerning project financing is contained in five new articles of Law 109/94 (Articles 37 quinquies to nonies and Article 19 bis). The main features are: (a) the right to use a special purpose...