Principles of Project Finance

(under the lenders’ control) builds up a cash reserve for major maintenance on a

level basis during the maintenance cycle period (cf. §13.5.2).

If, however, this cycle is very long—as would be the case in a road project—

lenders may agree that the Maintenance Reserve Account only needs to be built

up in the latter part of this period.

However, the more a project is used (e.g., by operating a plant or by traffic us-

ing a road) the more frequently it is likely to require maintenance. If the Project

Company’s revenue increases as usage increases, more frequent maintenance may

not cause any problems, but this is not always the case. For example, in road proj-

ects where “shadow” tolls are being paid, the level of toll per vehicle may decline

as usage increases, ...