:::''In this example the annual cost of capital is averaging approximately US$ 100,000 per year with total commitment and interest payments over the period of approximately US$ 4,900,000. In order to be able to repay both the cost of capital and the original loan, the government has to plan for the total annual cash flow payments shown in Figure 1.''
<center> '''Figure 1. Yearly interest payments and principal repayment''' </center>
[[Image:CoC fg 1.jpg|thumb|center|600px|<center>Source: Franceys, Naafs, Pezon and Fonseca, 2011, 12</center>]]
As most water and sanitation infrastructure does not have a life span of more than 20 or 30 years. The financial burden of paying the cost of capital often surpasses the life span of the infrastructure it financed. In this example the government is paying the cost of capital for 50 years while the water or sanitations systems that were constructed with the loan probably need to be replaced or rehabilitated after 10 – 30 years.
==Key documents==
* Franceys, R., Naafs, A., Pezon, C. and Fonseca, C., 2011. [http://www.washcost.info/page/1490 The cost of capital : costs of financing capital expenditure for water and sanitation]. (WASHCost briefing note; no. 1c). The Hague, The Netherlands: IRC International Water and Sanitation Centre.
This 20-page briefing note investigates the cost of financing capital expenditure, usually referred to as the cost of capital. It explains why it is one of the life cycle cost components that make up the total costs of providing water and sanitation services that last.
* Naafs, A. and Rousseau, K., 2011. [http://www.washcost.info/page/1842 Finance and cost of capital: an additional cost made visible.] (WASHCost information sheet; MOZ F-01). [online] The Hague, The Netherlands: IRC International Water and Sanitation Centre.
This Information sheet opens the discussion on Cost of Capital. How much is the sector (indirectly) paying for interventions in the past and how much is the sector planning to pay in the future?
==Links==
* WASHCost was five-year action research programme, running from 2008 to 2012. The WASHCost team gathered information related to the costs of providing water, sanitation, and hygiene services for an entire life-cycle of a service - from implementation all the way to post-construction. The WASHCost programme was led by IRC International Water and Sanitation Centre with several partners to collect data in the rural and peri-urban areas of Burkina Faso, Ghana, India, and Mozambique. For more information see [http://www.washcost.info washcost.info]
* The Costing Sustainable Services online course was developed to assist governments, NGOs, donors and individuals to plan and budget for sustainable and equitable WASH services, using a life-cycle cost approach. The Life-cycle cost approach is a methodology for costing sustainable water, sanitation and hygiene service delivery and comparing the costs to the level of service received by users. For more information see [http://www.washcost.info/page/2448 washcost.info/page/2448]
* Triple-S (Sustainable Services at Scale) is a six-year, multi-country learning initiative to improve water supply to the rural poor. It is led by IRC International Water and Sanitation Centre. The initiative is currently operating in Ghana and Uganda. Lessons learned from work in countries feeds up to the international level where Triple-S is promoting a re-appraisal of how development assistance to the rural water supply sector is designed and implemented. For more information see [http://www.waterservicesthatlast.org/ waterservicesthatlast.org]