Throughput Arrangements

There’s not much discussion about it in the book other than saying it’s a type of OBS financing. eg. Energy corp. such as refiner use it to ensure future distribution or processing requirements. This ought to be part of its regular operations, why OBS though? What does the “Throughput” mean here? What are the two parties of this type of agreement, with bank? What are the main differences of throughput financing vs. normal financing? Impact on Balance Sheet? Thx mcuh.

It takes debt of the balance sheet - all the same consequences as a operating vs capital lease i believe. Thats how i was thinking of it anyway

Conceptually thats what I had in my mind as well… Agree with a counterparty to be transferee of the Debt and pay a premium for doing so. But the liability would still rest with the Transfering party I guess. (such as bad loans may be, before the other realizes…:slight_smile: