There have been instances of project failures due to cash flow and liquidity challenges, largely driven by slow ramp-up of demand or traffic flow. Examples include the pre-IPO greenfield construction of the BTS Sky Train project in Thailand, as well as the Brisbane Airport Link.
In instances where there are no minimum revenue guarantees or availability payouts, financing repayment should be structured to allow for flexibility in the payment amortization schedule (or even use of deferred interest or Payment in Kind structures), while additional financial headroom should be allowed for if the private player takes on significant volume risks, with the government entity also potentially undertaking a "first loss" guarantee on behalf of the SPV.
In other sectors, where there could be a single offtake agreement, the financiers should also expect the project entity to take on some form of non-payment insurance which is covered next in "presence of legal and economic recourse".