chapter  6
27 Pages

Financial Feasibility

ByMichael Curley

This chapter illustrates which projects are financially feasible for a utility to undertake. It demonstrates both how the largest possible project could be undertaken at the lowest possible cost as well as how a utility’s excess operating income can be used to improve the system. The chapter discusses the relationship between the size of a project and the amount of Cash Available for Debt Service. It covers the following topics: the relationship between project size and annual payment, lengthening maturities, calculating project size using cash available for debt service and coverage ratios. In developing countries, few business enterprises keep financial books and records in accord with internationally accepted accounting standards. What few records businesses do keep, and are willing to share with lenders, may be wholly opaque. Lenders have come to expect few meaningful financial records and are suspicious of the ones they see.