Principles of Project Finance

as projected for the rest of the loan) should be also used for this purpose. Once the

project is operating, the best way of projecting how it will operate in the future

is to look at how it has actually operated in the past, but in that case the actual

ADSCRs achieved are what should mainly concern lenders. Especially in a proj-

ect with a regular assured cash flow under a Project Agreement, it is difficult to

conceive why the projections of cash flow for the next year should be much lower

than those for the last year (predictable fluctuations, e.g., maintenance, should be

dealt with using Reserve Accounts). Therefore, although beloved by lenders, for-

ward looking ratios are largely a waste of time in this situation, and doing away

with them also eliminated ...