Project Finance in Theory and Practice: Designing, Structuring, and Financing Private and Public Projects [4th edition]

Project Finance in Theory and Practice: Designing, Structuring, and Financing Private and Public Projects, Fourth Edition provides essential, core coverage of project finance, offering new insights about Sharia-compliant instruments and a comprehensive overview of the current state of the international regulation of banking post financial crisis. This updated edition includes new case studies and topics related to country risk, along with insights from project finance experts who share their specialized knowledge on legal issues and the role of advisors in project finance details. The book is useful for readers at all levels of education and experience who want to learn how to succeed in project finance. https://doi.org/10.1016/C2021-0-00351-5 DOI: 10.1016/C2021-0-00351-5 Project Finance in Theory and PracticeDesigning, Structuring, and Financing Private and Public ProjectsFourth EditionStefan ... Copyright Preface to the Fourth Edition Preface to the Third Edition Preface to the Second Edition Preface to the First Edition Foreword by William L. Megginson Foreword by Lilyana Pavlova Foreword by Alain Rauscher and Mark Crosbie Foreword by Dario Scannapieco About the Author and the Contributors 1---Introduction-to-the-Theory-and-Practice-_2024_Project-Finance-in-Theory- 1. Introduction to the Theory and Practice of Project Finance Introduction 1.1 What Is Project Finance? 1.2 Why Do Sponsors Use Project Finance? 1.3 Who Are the Sponsors of a Project Finance Deal? 1.3.1 Industrial Sponsors in Project Finance Initiatives Linked to a Core Business 1.3.2 Public Sponsors With Social Welfare Goals 1.3.2.1 How the public sector can intervene in project finance and PPP initiatives 1.3.3 Contractor/Sponsors Who Develop, Build, or Run the Plant 1.3.4 Financial Investors 1.3.4.1. Why is infrastructure an interesting asset class for financial investors?5 1.3.4.1. Who are the financial investors in infrastructure? 1.4 Overview of the Features of Project Finance 1.4.1 The Contractor and the Turnkey Construction Contract (TKCC) 1.4.2 Operations and Maintenance Contractor and the O&M Agreement 1.4.3 Purchasers and Sales Agreements 1.4.4 Suppliers and Raw Material Supply Agreements (RMSAs) 1.4.5 Project Finance as a Risk Management Technique 1.5 The Theory of Project Finance 1.5.1 Separate Incorporation and Avoidance of Contamination Risk 1.5.2 Conflicts of Interest Between Sponsors and Lenders and Wealth Expropriation 1.5.3 Project Finance in the Academic Literature 2. The Market for Project Finance: Applications and Sectors Introduction 2.1 Historical Evolution of Project Finance and Market Segments 2.2 The Global Project Finance Market 2.3 The Evolution of the PPP Market 2.3.1 The European Market 3. Project Characteristics, Risk Analysis, and Risk Management Introduction 3.1 Identifying Project Risks 3.1.1 Precompletion Phase Risks 3.1.1.1 Activity planning risk 3.1.1.2 Technological risk 3.1.1.3 Construction risk or completion risk 3.1.2 Postcompletion Phase Risks 3.1.3 Risks Found in Both the Pre- and Postcompletion Phases 3.1.3.1 Interest rate risk 3.1.3.2 Exchange rate risk 3.1.3.3 Derivatives contracts for managing interest rate risk and exchange risk 3.1.3.4 Inflation risk 3.1.3.5 Environmental Risk 3.1.3.6 Regulatory risk 3.1.3.7 Political risk and country risk 3.1.3.8 Legal risk 3.1.3.9 Credit risk or counterparty risk 3.1.3.10 Force majeure/Acts of God risk 3.2 Risk Allocation With Contracts Stipulated by the SPV 3.2.1 Allocation of Construction Risk: The Turnkey (or Engineering, Procurement, and Construction [EPC]) Agreement 3.2.2 Allocation of Supply Risk: Put-or-Pay Agreements 3.2.3 Allocation of Operational Risk: Operations and Maintenance (O&M) Agreements 3.2.4 Allocation of Market Risk 3.2.4.1 Offtake agreements 3.2.4.2 Offtake contracts in the power sector 3.2.4.3 Offtake agreements in PPP initiatives 3.3 Summary of the Risk Management Process 4. The Role of Advisors in Project Finance Deals Introduction 4.1 The Role of Legal Advisors in Project Finance Deals 4.1.1 Legal Advisor, Legal Advisors, and Law Firms: International and Local Legal Counsel(s) 4.1.2 Project Financing Development Stages and Impacts on the Role of Legal Advisors 4.1.2.1 Forming the group of sponsors 4.1.2.2 Industrial development of the project—the project documents 4.1.2.3 Project financing—the finance documents 4.1.2.4 The due diligence legal report 4.1.2.5 Legal opinions 4.1.2.6 Syndicating the financing 4.1.2.7 The operating period: maintenance of the project financing 4.2 The Role of the Independent Engineer in Project Finance Deals 4.2.1 Initial Due Diligence Reporting 4.2.1.1 Documents required for the due diligence activity 4.2.1.2 Accessory services 4.2.1.3 Documents produced during the due diligence activity phase 4.2.2 Monitoring Realization of the Project (Engineering and Construction) 4.2.2.1 Monitoring construction of the works 4.2.2.2 Issuing progress reports 4.2.2.3 Validation of mechanical completion (works completion certificate) 4.2.3 Assistance at the Time of Plant Acceptance 4.2.3.1 Validation of the Provisional Acceptance Certificate (PAC) 4.2.3.2 Monitoring the testing phase 4.2.3.3 Validation of the Final Acceptance Certificate (FAC) 4.2.4 Monitoring Operations Management 4.3 Role of Insurance Advisors and Insurance Companies in Project Finance Deals 4.3.1 Rationale for Using Insurance in Project Finance Deals 4.3.2 When Should Insurance Products Be Used? 4.3.3 Areas Where the Insurance Advisor Is Involved 4.3.3.1 Preliminary insurance report phase 4.3.3.2 Final insurance report phase—construction phase 4.3.3.3 Final insurance report phase—operations phase 4.3.3.4 The most problematic areas 4.3.4 Types of Unconventional and Applicable Insurance Products Available for Cross-Border Project Finance Deals 4.3.4.1 Insurance coverage during the construction phase 4.3.4.2 Insurance coverage during the operations phase 4.3.4.3 Bonding 4.3.5 Combined Insurance Solutions—Structure and Content 4.3.6 Classification of Insurance Underwriters 4.3.7. The Evolving Role of Risk Advisory in the Acquisition of Project Finance Assets 5. Valuing the Project and Project Cash Flow Analysis Introduction 5.1 Analysis of Operating Cash Flows and Their Behavior in Different Project Life-Cycle Phases 5.1.1 Inputs for Calculating Cash Flows 5.1.1.1 The timing of the investment 5.1.1.2 Initial investment cost 5.1.1.3 VAT—value-added tax 5.1.1.4 Public grants 5.1.1.5 Analysis of the sales contract, the supply contract, and operating expenses 5.1.1.6 Trends in working capital 5.1.1.7 Taxes 5.1.1.8 Macroeconomic variables 5.2 Defining the Optimal Capital Structure for the Deal 5.2.1 Equity 5.2.2 Senior Debt 5.2.3 VAT Facility 5.2.4 Standby Facility 5.2.5 Identifying Sustainable Debt/Equity Mixes for Sponsors and Lenders 5.2.5.1 Optimal capital structure for project sponsors 5.2.5.2 Optimal capital structure for lenders 5.3 Cover Ratios 5.3.1 What Cover Ratios Can Tell Us and What They Can’t 5.3.1.1 Debt service cover ratio (DSCR) 5.3.1.2 Loan life cover ratio (LLCR) 5.3.2 Cover Ratios as an Application of the Certainty Equivalents Method 5.3.3 Cover Ratios and Cash Sweep Mechanisms 5.4 Sensitivity Analysis and Scenario Analysis 5.4.1 Which Variables Should Be Tested in Sensitivity Analysis? 6. Financing the Deal Introduction 6.1 Advisory and Arranging Activities for Project Finance Funding 6.1.1 Advisory Services 6.1.2 Arranging Services 6.1.3 Integration of Advisory and Arranging Services 6.2 Other Roles in Syndicated Loans 6.2.1 Single-Stage Syndication, Two-Stage Syndication, and Club Deals 6.2.2 New Forms of Cooperation Between Banks and Institutional Investors 6.2.2.1 The partnership/coinvestment model 6.2.2.2 The securitization model 6.2.2.3 The debt fund model and direct origination of infrastructure loans by institutional investors 6.3 Fee Structure 6.3.1 Fees for Advisory Services 6.3.2 Fees for Arranging Services 6.3.3 Fees to Participants and the Agent Bank 6.3.4 Example of Fee Calculation 6.4 International Financial Institutions and Multilateral Banks 6.4.1 Multilateral Organizations 6.4.1.1 World Bank Group 6.4.2 Regional Development Banks 6.4.2.1 EIB (European Investment Bank) 6.4.2.2 AfDB (African Development Bank) 6.4.2.3 IDB (Islamic Development Bank) 6.4.2.4 ADB (Asian Development Bank) 6.4.2.5 European Bank for Reconstruction and Development (EBRD) 6.4.2.6 Inter-American Development Bank (IADB) 6.4.2.7 Asian Infrastructure Investment Bank (AIIB) 6.4.2.8 The New Development Bank (NDB) 6.5 Bilateral Agencies: Developmental Agencies and Export Credit Agencies (ECAs) 6.5.1 Developmental Agencies 6.5.2 Export Credit Agencies (ECAs) 6.5.2.1 Financing activity 6.5.2.2 Insurance activity 6.6 Other Financial Intermediaries Involved in Project Finance 6.7 Funding Options: Equity 6.7.1 Timing of the Equity Contribution, Stand-by Equity, and Equity Acceleration 6.7.2 Can Shares in an SPV Be Listed on a Stock Exchange? 6.8 Funding Options: Mezzanine Financing and Subordinated Debt 6.9 Funding Options: Senior Debt 6.9.1 The Base Facility 6.9.2 Working Capital Facility 6.9.3 Stand-by Facility 6.9.4 VAT Facility 6.9.5 Loan Remuneration 6.9.6 Loan Currency 6.9.7 Repayment Options 6.9.8 Refinancing Loans Already Granted to the SPV 6.9.8.1 Soft refinancing (waiver) 6.9.8.2 Hard refinancing 6.10 Project Leasing 6.10.1 Valuing the Convenience of Project Leasing 6.10.2 The Tax Effect 6.11 Project Bonds 6.11.1 Investors in Project Bonds 6.11.2 Various Categories of Project Bonds 6.11.2.1 Nationality of the issuer in terms of issue currency for securities and placement market 6.11.2.2 Target investors 6.11.2.3 Capital and interest payment guarantees 6.11.2.4 Subordination clauses 6.11.2.5 Interest calculation method 6.11.2.6 Capital repayment method 6.11.3 Municipal Bonds 6.11.4 When Should Project Bonds Be Used? 6.11.4.1 Investor target 6.11.4.2 Tenor of financing 6.11.4.3 Preservation of the sponsors’ financial flexibility 6.11.4.4 Inflation-linked bonds 6.11.4.5 Structure for utilization and repayment of funding 6.11.4.6 Credit policies and market sentiment 6.11.4.7 Fixing the financing terms and conditions 6.11.4.8 Confidentiality 6.11.4.9 Covenants and monitoring management of the project 6.11.4.10 Renegotiation of contractual conditions and refinancing 6.11.5 Procedure for Issuing Project Bonds 6.11.5.1 Rating agencies 6.11.5.2 Bond-paying agent and trustee 6.11.5.3 Choice of the project bond bookrunner 6.11.5.4 Setting up the syndicate: managers and selling group 6.11.5.5 The subscription agreement 6.11.5.6 The final bond prospectus 6.12 Islamic Finance for Infrastructure Financing31 6.12.1 Key principles of Islamic Finance 6.12.2 Key contracts of Islamic Finance 6.12.2.1 Debt-like contracts Murabaha Salam Istisnaa Ijara 6.12.2.2 Participation-like contracts Mudarabah Musharakah 6.12.3 Sukuk 6.12.3.1 The general structure of Sukuk 6.12.3.2 Sukuk based on partnership/participation contracts Sukuk al Mudarabah Sukuk al Musharakah 6.12.3.3 Sukuk based on sale and leasing contracts (Ijara, Salam, Istisnaa) Sukuk al Ijara Sukuk al Salam Sukuk al Istisnaa 7. Legal Aspects of Project Finance Introduction 7.1 The Project Company 7.1.1 Reasons for Incorporating the Project in a Project Company 7.1.1.1 Defensive/protective reasons 7.1.1.2 Positive reasons 7.1.2 The Project Company as a Joint Venture: Another Reason to Develop a Project in an SPV 7.1.3 The Project Company and Groups of Companies 7.1.4 Corporate Documentation: Articles of Incorporation 7.1.5 Outsourcing the Corporate Functions of the Project Company: How the Company/Project Is Actually Run 7.2 The Contract Structure 7.2.1 Before the Financing: The Due Diligence Report and the Term Sheet 7.2.1.1 The Legal Due Diligence Report 7.2.1.2 The term sheet 7.2.2 Classification of the Legal Documents Related to the Project 7.2.3 The Credit Agreement 7.2.3.1 Overview 7.2.3.2 Interpretation 7.2.3.3 The credit facilities 7.2.3.4 Conditions precedent: availability of drawdowns 7.2.3.5 Interest on drawdowns 7.2.3.6 Prepayment of the loans and cancellation of commitments 7.2.3.7 Credit agreement costs 7.2.3.8 Information flow from borrowers to lenders: financial ratios 7.2.3.9 Distributions 7.2.3.10 Representations 7.2.3.11 The project company’s covenants Positive Covenants Negative Covenants 7.2.3.12 Events of default and their consequences: crisis for the project 7.2.3.13 Role of the agent 7.2.3.14 The account bank: a brief description of the account structure and the monitoring of payments 7.2.3.15 Assignment/transfer of the credit agreement: assignment after syndication 7.2.3.16 Reserved discretions 7.2.4 Security Documents: Security Interests and What They Do 7.2.4.1 Introduction to the security package in project finance 7.2.4.2 Common provisions in the security documents 7.2.4.3 Pledge on project company shares 7.2.4.4 Security on the project company’s receivables 7.2.4.5 Security on the project company’s bank accounts 7.2.4.6 Security on the project’s property 7.2.4.7 Security on other project company assets 7.2.4.8 Direct agreements 7.2.4.9 Enforcing security interest and lenders’ step-in rights 7.2.5 Other Finance Documents 7.2.5.1 Equity contribution agreement 7.2.5.2 Intercreditor agreement 7.2.5.3 Hedging agreements 7.2.6 Project Agreements 7.2.6.1 Introduction. A bankability checklist 7.2.6.2 Construction contract 7.2.6.3 Operations and maintenance (O&M) agreement 7.2.6.4 Offtake agreement(s) 7.2.6.5 Host-country agreement 7.2.6.6 Other project agreements 7.2.6.7 Common features of project agreements 7.3 Project Finance Bonds 7.3.1 A Brief Introduction 7.3.2 Project Finance Bonds: Advantages and Disadvantages 7.3.2.1 The main advantages of project bonds 7.3.2.2. Main disadvantages of project bonds versus bank loans as a financing instrument 7.3.3 Use of Project Finance Bonds for Refinancing Outstanding Bank Loans 7.3.4 Legal Documentation Related to (Project) Bonds 7.3.4.1 The mandate letter 7.3.4.2 The offering circular, or prospectus 7.3.4.3 The subscription agreement 7.3.4.4 The trust deed 7.3.4.5 The fiscal/paying agent agreements 7.3.4.6 The global note 7.3.4.5 Intercreditor agreements 7.3.4.6 Security documents 7.3.4.7 Auditors, their contribution, and documents 7.3.4.8 Lawyers, their contribution, and documents 7.3.5 Brief Notes on Regulation, Listing, and Governing law 7.3.5.1 Securities regulation 7.3.5.2 Listing of project bonds 7.3.5.3 Governing law 7.4 Refinancing Project Finance Deals 8. Credit Risk in Project Finance Transactions∗ Introduction 8.1 The Basel Committee’s Position on Structured Finance Transactions (SL) 8.1.1 Classes of Transactions Included in SL 8.2 Rating Criteria for SL and Their Application to Project Finance 8.2.1 Financial Strength 8.2.2 Political and Legal Environment 8.2.3 Transaction Characteristics 8.2.4 Strength of Sponsors 8.2.5 Mitigants and Security Package 8.2.6 Summary of Grading Criteria. Assigning the Rating to a Project Finance Exposure 8.3 The Basel Accord and the Treatment of Credit Risk for Project Finance Loans: Is Project Finance More Risky Than Corporate L ... 8.4 Empirical Studies on Project Finance Defaults and Recovery Rates 8.4.1 Moody’s Study on Default and Recovery Rates (1983–2019) 8.4.2 Standard and Poor’s Reports on Project Finance Historical Performance 8.5 Introduction to the Concepts of Expected Loss, Unexpected Loss, and Value at Risk 8.6 Defining Default for Project Finance Deals 8.7 Modeling the Project Cash Flows 8.7.1 Defining a Risk Assessment Model 8.7.2 Identifying Project Variables and Key Drivers 8.7.3 Input Variables: Estimation and Data Collection 8.7.4 Estimating Project Cash Flow and Valuing Results 8.8 Estimating Value at Risk Through Simulations 8.9 Defining Project Value in the Event of Default 8.9.1 Deterministic Versus Stochastic LGD Estimates 8.9.2 LGD Drivers: The Value of Underlying Assets Versus Defaulted Project Cash Flows 8.9.3 Restructuring Versus Default Case-Study-1---Cogeneration-1_2024_Project-Finance-in-Theory-and-Practice Outline placeholder C1.1 The Situation C1.2 The Production Process C1.3 The Sponsors of the Operation C1.4 The Agreements at the Base of the Operation C1.4.1 Cogeneration 1 Construction Agreement C1.4.2 Deasphalting Plant Construction Agreement C1.4.3 Operation and Maintenance Agreement C1.4.4 Energy Sale/Power Purchase Agreement C1.4.5 Steam Purchase Agreement C1.4.6 Feedstock Supply Agreement C1.4.7 Oxygen Supply Agreement C1.5 The Financial Structure C1.6 Final: in the Office of Arrigoni Case-Study-2---Italy-Water-System_2024_Project-Finance-in-Theory-and-Practic Outline placeholder Case Study 2 Introduction C2.1 Business Plan of the Project C2.2 Assumptions C2.2.1 Timing C2.2.2 Inflation Index C2.2.3 Depreciation C2.2.4 Interest and Financial Costs C2.2.5 Interest on Positive Cash Balances C2.2.6 Value-Added Tax (VAT) C2.2.7 Taxes C2.2.7.1 IRES (corporate income tax) C2.2.7.2 IRAP (regional tax on productive activities) C2.2.8 Working Capital C2.2.9 Debt Service Reserve Account C2.3 Capital Expenditure C2.4 Financial Requirement and Sources of Financing C2.4.1 Financial Sources C2.4.1.1 Debt facility C2.4.1.2 VAT revolving facility C2.4.1.3 Guarantee facilities C2.4.1.4 Equity C2.4.1.5 Public grants C2.4.1.6 Cash flow during construction C2.5 Operational Period C2.5.1 Operation of the Existing Water System C2.5.2 Operation of the New Water Supply and Treatment Systems C2.5.3 Operation of the Two Hydroelectric Plants C2.6 Economic and Financial Ratios Case-Study-3---Odebrecht-Drilling-Norbe-VIII-IX--Pro_2024_Project-Finance-in Outline placeholder C3.1 Background of the Deal C3.2 Companies Involved C3.2.1 Odebrecht Drilling Norbe VIII LLC and Odebrecht Drilling Norbe IX LLC C3.2.2 Odebrecht Drilling Norbe VIII/IX Ltd. C3.2.3 Odebrecht Oil Services Ltd. (OOSL) C3.2.4 Odebrecht Oleo e Gas S.A. (OOG) C3.2.5 Petroleo Brasileiro S.A. (Petrobras) C3.2.6 Daewoo Shipbuilding and Marine Engineering (DSME) C3.3 Project Structure C3.4 Contractual Structure C3.4.1 Drillship Construction Contracts C3.4.2 KEXIM Refund Guarantees C3.4.3 Charter Agreements C3.4.4 Service Agreements C3.4.5 Technical Service Agreement C3.4.6 Specialized Oil Industry Service Agreement C3.4.7 Account Agreements C3.4.8 Equity Support Agreements C3.4.9 Insurance Policies C3.5 The Notes C3.5.1 Description C3.5.2 Redemption and Repurchase C3.5.3 Cash Flow Dynamics and Project Accounts C3.5.3.1 Bond issuance C3.5.3.2 Operating phase (cash waterfall structure)1212The accounts mentioned in this chapter are in the plural form, since each Pro ... C3.5.3.3 Cash waterfall shortage C3.5.3.4 Cash reserves C3.5.3.5 Breach of covenants and cash trapping mechanisms C3.5.3.6 Sponsor Remuneration C3.5.3.7 Maturity C3.5.4 Step-in Right C3.5.5 Default and Consequences C3.6 Financial Structure Case Study 3 Appendix 1—Project Timeline Case-Study-4---Watercraft-Capital-S-A---Refinancing-Project-Finance-T_2024_P Outline placeholder C4.1 Introduction C4.2 2020 Project Bond Initiative C4.2.1 Background C4.2.2 Project Bond Credit Enhancement (PBCE) C4.3 The Project and the Spanish Gas Market C4.3.1 Project Castor C4.3.1.1 The project C4.3.1.2 Construction and authorization C4.3.1.3 Sponsors C4.3.2 Spanish Gas Market C4.3.2.1 Overview C4.3.2.2 The remuneration system C4.4 Project Bond Issuance C4.4.1 Watercraft Capital S.A. C4.4.2 Cash Waterfall C4.5 Risk Factors and Investment Evaluation Case-Study-5---Viveracqua-Hydrobond--When-Infrast_2024_Project-Finance-in-Th Outline placeholder C5.1 Introduction C5.2 Viveracqua Hydrobond 1 C5.2.1 Phase 1—Minibonds C5.2.2 Phase 2—ABS C5.2.3 Pricing C5.2.4 Credit Enhancement C5.2.5 Cash Waterfall C5.3 The Parties C5.3.1 Finanziaria Internazionale Securitisation Group S.p.A C5.3.2 Viveracqua Consortium C5.3.3 European Investment Bank C5.3.3.1 Europe 2020 and the infrastructural gap C5.3.4 Veneto Sviluppo S.p.A C5.3.5 Securitisation Services S.p.A C5.3.6 BNP Paribas Securities Services C5.3.7 Finint Investments SGR S.p.A C5.3.8 SINLOC—Sistema Iniziative Locali C5.4 The Integrated Water System Market C5.4.1 Legal Framework C5.4.2 Functional Sectors C5.4.3 Tariff Regime C5.5 The Italian Market for Minibonds C5.5.1 Minibonds: A Brand New Market C5.5.2 The Market Environment C5.5.2.1 Investors C5.5.2.2 Arrangers C5.5.2.3 Rating C5.6 Risk Factors and Investment Evaluation Case-Study-6---Quezon-Power-Ltd--Co--Project-Finance_2024_Project-Finance-in Outline placeholder C6.1 The Project1The case study was prepared by the authors with the sole purpose of case discussion of a real project finance t ... C6.1.1 Project Sponsors, Ownership Structure, and Basic Terms of Financing C6.1.2 The Contractual Structure of the Quezon Power Project C6.1.2.1 Power purchase agreement (PPA) C6.1.2.2 Leases C6.1.2.3 Transmission line agreement C6.1.2.4 Engineering, procurement contract (EPC), and construction management C6.1.2.5 Management service C6.1.2.6 Operation and maintenance (O&M) C6.1.2.7 Coal supply agreement C6.1.2.8 Wheeling agreement C6.2 The Problem Case-Study-7---Murcia-Solar-Power-Pl_2024_Project-Finance-in-Theory-and-Prac Outline placeholder C7.1 Premise C7.2 The Growth of Renewables C7.2.1 European Market C7.2.2 The Spanish Market C7.2.2.1 Supply and demand C7.2.2.2 Market structure C7.2.2.3 Interconnections C7.2.2.4 Market regulation C7.2.2.5 Electricity prices C7.2.2.6 Market policies C7.3 The Background of the Deal C7.4 The Project C7.4.1 Location C7.4.2 Permits and Licensing C7.4.3 Construction C7.4.4 Operations C7.4.5 Transaction Structure C7.4.6 Key Parties C7.5 Power Purchase Agreement C7.6 Energy Yield C7.7 Key Risks and Mitigants C7.8 Financing Structure C7.8.1 Overview C7.8.2 Senior Facility C7.8.2.1 Key terms C7.8.2.2 Base Case (debt sizing criteria) C7.8.3 Covenants C7.8.4 Security Structure C7.8.5 Hedging Strategy C7.9 Financial Analysis C7.9.1 Operating Assumptions C7.9.2 Financial Assumptions C7.9.3 Main Financial Model Output C7.9.4 Scenario Analysis Appendix---The-Structure-and-Functioning-of-_2024_Project-Finance-in-Theory- Outline placeholder Appendix Introduction A1 Breakdown of the Financial Model A1.1 Assumptions A1.2 Capex Analysis A1.3 Sensitivities A1.4 Capex A1.5 Life Cycle Costs A1.6 VAT A1.7 Depreciation A1.8 Public Grant A1.9 Energy Revenues A1.10 Water Revenues A1.11 Opex A1.12 Profit and Loss, Cash Flow Statement, and Balance Sheet A1.13 IRES (Italian Corporate Income Tax) and Tax A1.14 Working Capital A1.15 Guarantee Facility A1.16 Financial Debt A1.17 Equity Sheet A1.18 Cash Flow Statement A1.19 IRR (Internal Return Rate) A1.20 Summary Glossary and Abbreviations References Index A B C D E F G H I J K L M N O P Q R S T U V W