Project Finance in the UAE

What project finance in the UAE covers

Project finance in the UAE is the funding of a single, ring-fenced asset (a solar park, a desalination plant, a waste-to-energy facility, a transmission line, a road, a hospital, a data centre) through a special purpose project company whose debt is repaid from the project's own revenues rather than from its sponsors' balance sheets. Lenders look to long-term offtake or concession contracts, a tight security package and a web of direct agreements rather than to corporate guarantees.

The UAE has one of the most established project finance markets in the Middle East. Abu Dhabi has procured power and water through independent producers for decades, and Dubai Electricity and Water Authority adopted the independent power producer model in 2014 for projects including the Mohammed bin Rashid Al Maktoum Solar Park and the Hassyan complex. Federal and emirate PPP laws now extend the model to transport, social infrastructure and public services.

Project finance in the UAE becomes a legal question long before financial close: at bid stage, when the procurement law, the concession or offtake terms and the lenders' requirements must be reconciled; at close, when security and direct agreements are put in place; and over a 20 to 30-year operating life, when change in law, disputes and refinancing arise.

The legal and regulatory framework

Federal and emirate PPP laws

Federal Law No. 12 of 2023 on the regulation of partnership between the public and private sectors came into force on 1 December 2023. It applies to projects wholly or partly funded by the private sector and tendered by a federal entity, and recognises build-operate-transfer, build-own-operate-transfer, build-own-operate, build-own-lease-transfer and management contract models. Payment can be through availability payments, transfer of revenue risk or a combination.

A federal entity may propose that a government guarantee support its obligations, and grievances against an award must be raised within ten days. More detail is left to a PPP guidebook; the UAE government's PPP page summarises the framework.

Dubai's Law No. 22 of 2015 regulating partnership between the public and private sectors applies to Dubai government entities. A partnership contract may not exceed 30 years unless the Supreme Fiscal Committee authorises a longer term (Article 27). A government entity may, in coordination with the Department of Finance, authorise the project company to enter into financing contracts with financial institutions, with the project company solely responsible for them (Article 36).

Partnership contracts may not refer disputes to arbitration outside the emirate. Electricity and water production projects are excluded, because Dubai Law No. 6 of 2011 governs private participation in that sector.

Abu Dhabi's PPP framework is set by Law No. 2 of 2019, alongside Law No. 1 of 2019 establishing the Abu Dhabi Investment Office (ADIO), which screens and supports PPP projects. Power and water procurement in Abu Dhabi runs through the emirate's sector regulation and Emirates Water and Electricity Company (EWEC) as offtaker.

Contract, security and insolvency law

The new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, in force from 1 June 2026, governs contracts onshore, including construction and operation contracts. The Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, regulates banking operations and Islamic finance contracts such as istisna'a and ijarah that are used in Islamic project tranches.

Security over plant, receivables and accounts is taken under Federal Law No. 4 of 2020 on movable security, and security over land interests under emirate law. Restructuring and bankruptcy fall under Federal Decree-Law No. 51 of 2023. Projects located in the DIFC or ADGM, or financed through their entities, also engage those centres' laws.

How a UAE project financing is structured

The project company sits at the centre. It signs the concession or offtake agreement with the procuring authority, an engineering, procurement and construction (EPC) contract, an operation and maintenance contract, fuel or input supply agreements where relevant, land rights and insurances. Sponsors fund equity, sometimes with a state-owned partner holding a significant stake, and lenders provide senior debt, often in conventional and Islamic tranches alongside export credit agency or development finance cover.

Lenders' protection comes from the contracts as much as the security. The offtake agreement must allocate demand, tariff, change-in-law and force majeure risk acceptably, and termination provisions must ensure that, if the authority ends the contract, senior debt is substantially repaid. The EPC contract should be fixed-price, date-certain and backed by liquidated damages and performance security. Direct agreements give lenders notice of defaults, cure periods and step-in rights under each key contract.

Key decisions for sponsors and lenders

Governing law and forum

Finance documents for project finance in the UAE are often governed by English law, with disputes in London, the DIFC or ADGM Courts or international arbitration. Project agreements with government entities, however, are usually governed by UAE law with onshore or locally seated arbitration, and Dubai's PPP law requires that. Security over onshore assets follows onshore law whatever the facility says. Check that termination payments and step-in rights under UAE-law project contracts actually work with English-law finance documents.

Security structure and the security agent

Onshore security usually includes a mortgage over the project company's land interest, pledges of accounts and receivables, assignment of project contracts and insurances, and a pledge of shares. Dubai's Mortgage Law requires a mortgagee to be a Central Bank-licensed bank or finance company, and allows mortgages over musataha rights, usufructs and long leases of 10 to 99 years for their term only. International lender groups therefore appoint a UAE-licensed bank as onshore security agent and align the land right's term with the loan tenor.

Islamic, export credit and commercial tranches

Mixing conventional, Islamic and export credit agency debt requires an intercreditor agreement covering voting, enforcement and the asset-based structures Islamic tranches use. Etihad Credit Insurance, the UAE's federal export credit company, lists project finance support among its products, and foreign agencies regularly support UAE projects that use their exporters' equipment. Each agency brings its own environmental, social and content requirements.

Government support and credit

The real credit behind project finance in the UAE is often the offtaker or procuring authority. Lenders analyse whether payment obligations are those of the entity or of the government, whether a guarantee or letter of support is available under the relevant PPP law, and what happens if the entity is restructured or merged. Public assets generally cannot be attached, so enforcement against a government counterparty depends on contractual payment mechanisms rather than execution.

Project finance in the UAE is won at the drafting stage: the termination payment, the step-in right and the land right's term matter more than any security registered at close.

Insurance, hedging and the operating phase

Insurance is a core part of the security package. Construction all-risks, delay in start-up, operational property damage and business interruption cover are standard, and lenders require to be named as co-insured or loss payee with non-vitiation protection. UAE insurance regulation generally requires risks located in the UAE to be placed with locally licensed insurers, with reinsurance placed internationally, so lenders often take an assignment of reinsurance proceeds through a cut-through arrangement. Check the insurance requirements in the project agreement and the finance documents against what the local market can actually provide.

Most UAE projects are financed in US dollars or dirhams, and the dirham's peg to the dollar reduces currency risk for many revenue streams. Interest rate risk is usually hedged for a large share of the debt, and hedging banks rank alongside senior lenders under the intercreditor agreement. Islamic hedging uses profit-rate swap structures.

Once operating, project finance in the UAE turns to compliance and value. Sponsors face lock-up periods on transferring shares, often until some years after commercial operation, and changes of control may need both lender and authority consent. Distributions are blocked unless cover ratios are met. Refinancing is common once construction risk falls away, but many project agreements require the authority's consent and a share of any refinancing gain, so build that into the economics from the start.

The project lifecycle step by step

1. Prequalify and bid. Form the consortium, review the request for proposals and draft project agreement, and obtain lenders' comments so the bid's risk allocation is financeable.
2. Negotiate and award. Agree the project agreement, EPC and O&M terms after preferred bidder selection, and lodge any grievance within the statutory window.
3. Arrange finance. Agree the term sheet, conduct lender due diligence (technical, legal, insurance, market and model audit) and negotiate the common terms, facility, intercreditor and hedging documents.
4. Put security in place. Incorporate the project company, secure land rights, sign direct agreements and register mortgages, movable security notices and share pledges.
5. Reach financial close. Satisfy conditions precedent, including permits, insurances, equity commitments and legal opinions, and make the first draw-down.
6. Construct and complete. Monitor progress through the lenders' technical adviser, manage variations and delay claims, and achieve commercial operation and lender completion tests.
7. Operate, refinance or restructure. Run the asset under the O&M contract, comply with covenants and reporting, and refinance once the risk profile improves, sharing any refinancing gain where the project agreement requires.

Documents and evidence to assemble

• project or concession agreement, offtake agreement and any government support letter or guarantee;
• EPC, O&M, supply and connection agreements, with performance bonds and parent guarantees;
• land lease, musataha or usufruct agreement and evidence of registration;
• permits and licences, including environmental approvals, generation or operating licences and building permits;
• financial model, model audit, and technical, insurance, market and environmental due diligence reports;
• common terms, facility, intercreditor, hedging and Islamic finance documents;
• security documents, direct agreements, registration confirmations and legal opinions;
• shareholders' agreement, equity contribution agreement and sponsor support documents.

Risks and common mistakes

Cross-border angle

UAE projects attract sponsors, contractors and lenders from across the world. Chinese contractors and banks are active in power and infrastructure, often with Chinese export credit support, and their documentation must be reconciled with UAE security and English-law finance terms. Japanese, Korean and European agencies support projects using their equipment. Saudi and GCC developers sponsor UAE projects and vice versa, bringing their own state-owned partners and Islamic finance practice.

UAE developers also take their expertise abroad, including to South Asia. Projects in Bangladesh involve Bangladeshi law on power purchase agreements, implementation agreements and sovereign guarantees, and lenders typically seek offshore accounts and English-law finance documents. India's renewable market raises similar questions. Our Dhaka and Chattogram offices help UAE sponsors and lenders coordinate those regimes with UAE-side holding and financing structures, and our Singapore and London teams assist with offshore finance documentation.

How TRW & Co helps with project finance in the UAE

We advise sponsors, lenders, contractors and public bodies on structuring, documenting and managing project finance in the UAE and on outbound projects. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.

Related work often includes PPP and concessions, renewable energy projects, power purchase agreements, infrastructure projects, construction contracts and secured lending. Our articles on project finance and PPPs and infrastructure concessions go further into specific structures.

Checklist for decision-makers

• Which procurement law applies, and what does it require on term, financing approval and dispute resolution?
• Do termination payments cover senior debt in every scenario?
• Does the land right outlast the debt, and can it be mortgaged and transferred on enforcement?
• Is a UAE-licensed security agent in place for onshore mortgages?
• Are EPC liability caps, security and relief events aligned with the project agreement?
• Are change-in-law and tax risks allocated clearly in light of recent reforms?
• Do conventional, Islamic and ECA tranches share a workable intercreditor regime?
• Is every security interest registered and every direct agreement signed before first draw-down?

To discuss project finance in the UAE, contact our team at info@trw.co, or browse all our practices.

Frequently asked questions

Sources and official materials

1. UAE Government: Public-private partnership — Overview of federal PPP framework
2. Dubai Law No. 22 of 2015 on public-private partnership — Term, financing approval and dispute rules for Dubai PPPs
3. Dubai Law No. 14 of 2008 concerning Mortgage — Mortgages over land, musataha and long-lease rights
4. Etihad Credit Insurance — UAE federal export credit company
5. Financial Restructuring and Bankruptcy Law — Federal Decree-Law No. 51 of 2023
6. Central Bank of the UAE — Licensing of banks acting as lenders and security agents

General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.