INTERNATIONAL FUNDING COMPANY |
CHARACTERISTICS OF A FINANCEABLE PROJECT: |
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2. The contractor(s) responsible for design, engineering and construction
of the project should be financially sound and possess the required technical expertise. |
3. Government approvals as required for the project must be obtained. |
1. Forecasts of internally generated cash flows must be realistic and supported
by independent engineering and feasibility studies or through our technical-financial guideline. Cash flow must cover forecasted operating expenses, debt servicing, ordinary cash needs and a cushion for contingencies. |
4. The political environment should be stable as well as compatible with various
aspects of the project. |
7. Transportation costs both for materials and products for the projects must
meet financial projections. |
8. Demand for products/services of the project must be reasonably assured
at levels and prices consistent with forecasts. |
5. The process and equipment to be used should be reliable and reputable. |
6. Suppliers of materials and energy to operate the project must be reasonably
assured and at a cost consistent with forecasts. |
10. Insurance is required to protect against all necessary risks during both
construction and operation of the project. |
9. Management and technical expertise to successfully start up and operate
the project must be assured. |
12. Credit support for the project is often required either by the sponsor
or by a third party. |
13. A credit risk, not an equity risk, must be involved. Financial
institutions wish to take only the role of lender and therefore avoid taking equity in the project. |
11. The sponsors should have an equity position in the project in proportion
to their interest and risk. |