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What differentiates PAYS from a leasing model?

For an extended discussion of the differences between PAYS and leasing models, please refer to the instrument analysis by the Global Innovation Lab for Climate Finance (Annex 7.3).

In summary:

  • Additional liabilities: Leasing agreements require the bus service provider to accept a long-term future liability on their balance sheet. By contrast, a PAYS transaction does not impose additional liabilities on a bus service provider’s balance sheet.

Cost recovery: Leases depend on the creditworthiness of the bus service provider. With PAYS, utilities rely upon disconnection for non-payment, which is an effective form of security.

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