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Like a basic principle, the upper the gearing of a project, the greater cost-effective it is likely to be to the public sector.[1] This is because official source senior credit card debt is cheaper than other varieties of funding (besides grants). Other points being equivalent, project gearing (i.e. the level of debt senior lenders will offer relative to the extent of equity) might be determined by the variability of a project’s hard cash stream. The larger the diploma of riskiness while in the dollars flows, the higher the “cushion” lenders will need while in the forecast of accessible dollars stream past what will be necessary for debt support.

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