Since the off-balance sheet crude inventory financing is a required cash outflow for your project, yes, you must include that initial cash outflow in your IRR calculation. Otherwise, who will provide that capital to kick start the project? However, good news is that you should be able to model a ret... Since the off-balance sheet crude inventory financing is a required cash outflow for your project, yes, you must include that initial cash outflow in your IRR calculation. Otherwise, who will provide that capital to kick start the project? However, good news is that you should be able to model a return of that working capital financing BACK to you once you have reached run rate, unless it is always locked up - if that's the case, upon exit, you would receive that WC financing back, whether as end of greenfield project or upon sale, the buyer needs to replenish that initial capital base to keep operations running. Read More

Thanks. I agree with you except that the capital provider of that inventory will still legally own the inventory and can trade with it. So we are just buying it on demand. The structure is that there will be a flash sale and buyback to the capital provider after refining. So we don't need to worry a... Thanks. I agree with you except that the capital provider of that inventory will still legally own the inventory and can trade with it. So we are just buying it on demand. The structure is that there will be a flash sale and buyback to the capital provider after refining. So we don't need to worry about the lock up of this inventory capital. Maybe it is not an interest but rather a premium on the product. with no balance sheet impact. Read More

That's very possible as well. We may need additional information on the specific situation at hand to come up a more accurate assessment. Of course, we understand that may not always be possible due a variety of reasons; however, any further details you can provide would be helpful.

Continuing on the discussion below, the supplier will legally and economically own those inventory. So its capital of the supplier and the repayment of the principal will not come from EBITDA / cash flow but from selling those inventory. So we will just pay interest but not the principal ever. So in... Continuing on the discussion below, the supplier will legally and economically own those inventory. So its capital of the supplier and the repayment of the principal will not come from EBITDA / cash flow but from selling those inventory. So we will just pay interest but not the principal ever. So in calculating Terminal Value of the Project IRR at year 10 for example, the principal liability is matched with inventory and not with cash flow. So it should be excluded from Project IRR calculation. right or wrong? Read More

Honestly, we don't have enough information about the project to further advise you properly.