Principles of Project Finance

exported equipment, or costs in one currency to be funded by loans in that

currency)

and having done so calculates:

• A drawdown schedule for both equity and debt;

Drawings on the debt give rise to interest payments (IDC), which also need to

be funded.

During the operating period the model takes into account:

• Priorities for allocation of net operating cash flow (cf. §13.5.1)

• Allocation of cash for debt repayment (cf. §13.2.4)

• Calculation of interest payments, allowing for hedging contracts (cf. §9.2)

§12.7 ACCOUNTING AND TAXATION ISSUES

Although the decision to invest in a project should be based primarily on cash

flow evaluation (cf. §12.8), the accounting results are important to the Sponsors,

who will not wish to show an accounting loss from investment ...