	PFI & PPP l Project Portfolio l News l Careers l CSR
	Search:

Home l Overview l Sectors l

PFI/PPP
Explained

A Project Explained

Financial Aspects
  Bid Costs
  Project Funding
  Financial Dynamics
  Financial Model
  Shareholder Returns
  Debt Ratios
  Refinancing

Accounting for PFI

Useful Links

PFI/PPP Glossary

Home > PFI/PPP > Financial Aspects > Financial Dynamics

Financial Dynamics

Share equity is typically injected at the start of construction in one lump sum, and senior debt throughout the construction phase via a series of draw-downs as expenditure is incurred. Reserve accounts usually fill at the end of construction (Debt Service Reserve Account, Major Maintenance Reserve Account and Change of Law Reserve Account), and repayments on the senior debt begin. The loan stock investment is made at the beginning of operations, with redemptions and/or interest payments beginning thereafter. Later in the project, when distributable reserves and cash levels are sufficient to allow it, equity distributions (dividends) are made to the shareholders. The equity sum itself is not repaid until the end of the concession.

Interest is paid from the project accounts on the senior debt and the shareholder loan stock. Interest is earned by the project from the cash in the reserve accounts.

A graphical representation of the project funding cashflows for a typical PFI scheme is displayed in the chart.

Project funding cashflows

Printable version