Knowra Project finance Project finance Project finance funds a specific project primarily through its expected cash flows and assets, with lenders relying mainly on project revenues for repayment rather than the sponsors’ general balance sheets.
Special-purpose vehicle : A legal entity created for a specific purpose, often to own a project and isolate its obligations. The project company holds assets and contracts while separating project liabilities from its sponsors.
Power purchase agreement : A contract in which a buyer agrees to purchase electricity from a generator under specified terms. For power projects, contracted sales can provide predictable revenue for debt repayment.
Public-private partnership : A long-term arrangement in which public and private parties share responsibilities for delivering a public asset or service. Many public infrastructure partnerships use project companies and project-finance debt.
Corporate finance : Financing and investment decisions made for a company as a whole, including its capital structure and funding needs. Unlike project finance, corporate borrowing commonly relies on the company’s overall assets and cash flows.
Nonrecourse debt : Debt repayable only from specified collateral or cash flows, without general claims against the borrower’s owners. Lenders generally depend on project assets and revenues rather than sponsors’ other assets.
Engineering, procurement, and construction contract : A contract assigning responsibility for a project’s engineering, equipment procurement, and construction. A fixed-price, date-certain arrangement can limit construction cost and delay risks.
Independent power producer : A privately owned company that generates electricity for sale to utilities, markets, or large customers. Its generating assets are often financed against contracted or forecast electricity revenues.
Recourse debt : Debt that allows a lender to seek repayment from a borrower’s assets beyond specified collateral. It contrasts with project debt that limits lender claims mainly to project assets and revenues.
Debt service coverage ratio : A measure comparing cash available for debt repayment with scheduled principal and interest payments. Lenders use projected coverage to test whether operating cash can meet debt obligations.
Offtake agreement : A contract requiring a buyer to purchase some or all of a project’s output. Committed buyers can make project revenues more predictable for lenders.
Show all 23