An istisna sukuk distributes cash flow like a fixed price manufacturing contract for goods. In this case, the sukuk certificate holders are in a position similar to the purchaser of goods that will, after payment, be manufactured and delivered on a stipulated date. On its own, an istisna sukuk does not generate returns for the certificate holders during construction. However, depending on the length of the construction period, this type of arrangement may be combined with a forward leasing arrangement to generate returns during construction. In this regard, solar panel projects, such as SGI-Mitabu’s Indonesian project, have an advantage due to their rapid installation phase. This means that income streams can start within a few months without utilising forward leasing arrangements.
First 20 years from completion - Ijara SukukAn ijara sukuk distributes cash flow like a lease agreement would. Under an ijara sukuk a sukuk certificate entitles the sukuk holders to a proportionate share of the returns generated by the underlying asset by way of a lease back to the issuer company. Generally, under an ijara sukuk, the lease payments will match the periodic payments due to the sukuk holders under the certificates.
20 years onwards - Musharaka SukukA musharaka sukuk distributes cash flow like a limited partnership. In this case, the sukuk certificate entitles the holder to returns from the underlying enterprise that are distributed between the issuer and certificate holders in accordance with a profit sharing ratio. The ratio is normally based on the initial capital contribution of each partner.