SLOVENIA Law and Practice Contributed by: Vid Kobe and Peter Gorše, Schoenherr Slovenia
8. Project Finance 8.1 Recent Project Finance Activity
are (thus) typically lengthy. Alternative credit provid- ers often rely on internationally established document templates, such as LMA-recommended forms. 8.2 Public-Private Partnership Transactions Slovenia has a relatively developed general legal framework for PPPs in place – the general Public- Private Partnership Act was adopted in 2007. Other key legislative pieces include the Act on Certain Con- cession Agreements (implementing an EU Conces- sion Directive – ie, Directive 2014/23/EU), the Public Procurement Act (implementing the Public Contracts Directive – ie, Directive 2014/24/EU) and several other laws and regulations. PPPs can generally take one of the two main forms: (i) a contractual PPP, where the private entity and public authority enter into a concession or a service agree- ment, or (ii) an institutional PPP, where a public author- ity and a private entity jointly establish a legal entity, contribute equity, share risk, and make decisions regarding the project’s operation and management. Irrespective of the relatively solid legal framework for PPPs, several challenges remain, and PPPs (in the sense of the participation of private capital in public infrastructure projects) are relatively rare in practice. Some of the key obstacles include: • complex approval procedures; • a lack of experience and expertise; • compliance challenges; • political risk; • limited access to finance (in particular for large- scale projects); and • environmental and social constraints. 8.3 Governing Law The parties are in principle free to agree on the law applicable to project agreements, whereby the general rules on the governing law and jurisdiction clauses/ agreements apply (see 6.2 Foreign Law and Juris- diction ). The parties therefore enjoy a degree of flex- ibility with respect to choosing the applicable law and may also agree to submit the contract to arbitration proceedings. That said, in particular when the rele- vant assets are located in Slovenia, it is customary to agree on the applicability of Slovenian law – in par-
Project finance (ie, the debt financing of specific pro- jects by means of structures limiting recourse to spon- sors and looking at the project’s future cash flows as the primary means of repayment) is generally regarded as still developing in Slovenia (and somewhat lagging behind the EU average) in terms of use frequency – in particular as regards public (infrastructure) projects. This is mostly due to the widespread practice of state funding/guarantees in respect of public infrastructure projects, and underdeveloped practice pertaining to public-private partnerships (PPPs) in Slovenia. How- ever, in recent times, the financing of public (infra- structure) projects has been increasing, with Europe- an Investment Bank (EIB) being one of the important players in the market. By way of example, in 2023, EIB signed EUR359 million in new commitments for projects in Slovenia, among other things, approv- ing the financing of a strategic railway project, the Divača-Koper Second Rail Track, with a EUR250 mil- lion loan, as well as financing to strengthen the elec- tricity grid with a EUR42 million loan to Elektro Primor- ska. In 2024, the EIB provided financing to upgrade regional electricity grids, including EUR36 million for Elektro Maribor, EUR50 million for Elektro Ljubljana and EUR58 million for Elektro Celje. In addition, the EIB extended a EUR120 million loan to DARS for the construction of the Novo Mesto eastern expressway. Local banks have also participated in similar projects – for instance, two Slovenian banks provided EUR77 million (in aggregate) loans to the state-owned Luka Koper to support the expansion of its northern pier. On the other hand, project financing in the private sector is somewhat more evolved and is particularly used in construction and energy projects. In addition to standard bank lending, certain alternative creditor providers are present on the market, whereby differ- ent financing structures are being deployed (includ- ing asset-light models entailing strategic co-operation with the financier). In terms of legal documentation, while most Slovenian banks have designated project finance teams with specialist knowledge and experience, market-stand- ard solutions are still developing, and negotiations
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