Interest during Construction

If a sum is borrowed to build any or all of the plant, then it is very likely that this loan will be called upon (or drawn down ) during the construction period. The moment any part of it is borrowed, then interest becomes due from that moment. 

In all cases of such borrowing, however, the company does not expect the interest to be paid by the project as it comes due, because the project has, as yet, no revenues from which to pay the interest. The lender will be paid its interest from other funds belonging to the company, and the interest due during construction is then turned into a capital sum (capitalised), which is then added to all of the other construction costs. The loan will normally be arranged at a fixed interest rate, so the extra sum can be calculated quite easily. 

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Such items as organization expense, unusual prestartup expenses, and interest during construction, not capi-... 

I would like to cite a few specifics of the situation today. Using the COGAS Process as an example, the most recent estimate of the total plant investment cost of the commercial COGAS plant is 1.4 billion in mid-1978 dollars (4). In addition, there will be costs for land, adminstration during construction, start-up, working capital requirement to 1.5 billion exclusive of interest during construction before the plant produces at design capacity. 

Interest during construction added 15% of facilities investment... 

The total installed capital cost for the SGP based hydrogen plant is estimated at 85 million, basis installation in mid-1979 on the U.S. Gulf Coast. No allowance is included for interest during construction. 

Neglect interest during construction period and value-of-land effects. Note Rate of return calculations for your company must be based on discounted-cash-flow procedures to account for the time value of money. 

The following represent some of the possible process applications. Capital costs incorporate engineering, profit, contingencies and interest during construction for a turnkey installation. Material handling, the gasifier and auxiliaries and tie-in to existing facilities are included where applicable. 

For the purpose of actual expenditure control, and to determine the funding requirements of the project, allowance had to be made for inflation during the construction period, capitalised pre-operating expenses and capitalised interest during construction. To this end the JEC developed a "dollars of the day" estimate of US 1475 million as shown in the second part of Table 1. 

TOTAL PROJECT COSTS IN 1980 DOLLARS Inflation through July 1985 Estimated interest during construction (capitalised) 886,000 305,860 283,140... 

The net effect of these differing area investments for the two processes is that the total direct investment for the spray dryer MgO process is about 6 lower ( 72.OM vs. 76.2M) than that for the conventional MgO process. This cost advantage for the spray dryer MgO process is further increased as a result of the premise-derived indirect investments (construction expense, contingency, etc.,) and other capital investments (allowance for startup and modification and interest during construction) even though the cost factors (i.e., percentages) for both processes are identical. 

Other Capital Investment Allowance for startup and modifications Interest during construction Royalties 10,325 16,739... 

The cost of Atomic Energy of Canada, Ltd. s 800 Mg/year plant at La Prade, item 21, Table 13.2, was predicted [H5] to be 300 million in 1974, for a unit investment cost of 375/(kg/year), exclusive of escalation and interest during construction. 

Interest during constructions Total Fixed Capital Investment... 

The Total Fixed Investment is the total capital cost of the plant. It includes land, the battery-limits costs, storage, utilities and general service facilities, spare parts, preoperational and startup cost, project management and interest during construction. The Total Depreciable Fixed Investment excludes the cost of land, which is not a depreciable cosfitem. . ... 

An SMR can be modularised more easily and constructed in a shorter time than larger plants, thus reducing constructions costs (including interest during construction) and generating earlier revenues. 

Component of the Cost Cost in Thousands of Fraction (%) of Total Cost Fraction (%) Total, Not Including Interest During Construction Cost in Thousands of Adjusted for Inflation, to 2013... 

Total interest during construction Net earnings on power sales during construction ( 972 million) 0 ( 380 million) 591 million... 

Because of the sheer magnitude of the capital needed and the time over which it is needed, the financing of a nuclear power plant project poses particular problems wherever it is to be constructed. Even a power plant in the 300 MW(e) range would require a total capital investment of some US 800 millions for a standardized plant in a serie including interest during construction the period of repayment would be some 15-20 years after the year of commissioning of the plant. These are conditions which go beyond normal export credits. 

Layout (see Fig. 3). The layout considers good accessibility to the several buildings for construction in order to achieve short construction periods, resulting In low Interests during construction time. 

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