Research On Financing Capital Budget Of PROT Project For Operational Hydropower Stations

Purchase-Rehabilitate-Operate-Transfer model means the new project financing and developmentmodel for hydropower project.After experiencing the global financial crisis,the government of many countries tightened financing policies,the approval process is more complex and the bank loan cost is higher.The traditional hydropower financing model,such as BOT,TOT and PPP,doesn't solve the prevent problems of the hydropower project.The paper presents the PROT project financing model of innovation to solve the problems in small and medium-sized power stations.The middles and small-sized hydropower stations are the objects of the purchase in PROT.Management level of promotion becomesthe most important task.in the project.In the progresses of the investment and financing decisions,the reconstruction and the operation and the capital exit,management system as a guarantee are needed.Reasonable and accurate capital budgeting can be managementtools not only for the project valuation in the early stage,but also for the reconstruction and the operation and the capital exit.Experts at home and abroad to the research of the capital budget are limited to capital budget in project investment and financing decissions.The research of the capital budgetingsystem as the tooles,for project screening,capital planning,capital expenditure control,capital budget responsibility,capital operation,capital exit,is less.Firstly,this paper aims at the the characteristics and problems in the financingof small and medium-sized hydropower project,and presents the PROT project financing mode of innovation and the financing processs is outlined.In the project financing,the causes of the failure are strategic ambiguity,overpriced and integrate failure,so the management tool in the project financing is important.The PROT project investment is large and the payback period is longer.The investors must choose a reasonable objective pricing and evaluation systemto ensure the safety of the investment.Thecapital budgeting model based on contingency is the management tool and guarantee system,so as to reduce the risk of investment and operation.The capital budget can provide thepricing and investment decision basis for investors to buy PROT project ownership and operation rights,as well as it is the tools of the riskidentification,quantitative reflect of the project.Secondly the paper discusses the risks of the PROT project financing.At various stages of the PROT project,there are risks influencesto financial indicators,The traditional economic evaluation method in the project tend to ignores the risk in the financial analysis to the impact of the project,The monte carlo method is applied to the risk factors for taking into account the influence of projectfinancing and monitoring some important economic indicators.Thirdly,PROT operating hydropower project investmentis irreversible investment in kind.Capital budget reflects the investor's investment management level whether it is scientific and reasonable.This paper discusses the related basic concept of real options and pricing model,analyzes the real option characteristics of PROT project.Then introduces real option pricing theory in PROT capital budget of the project,to build a set of PROT project capital budget model based on real options.And adoptes black pricing model in PROT project to determine the growth of the real option value.Finally,in this paper,the PROT project of the Xihe hydropower station of Cambodia is introduced.The paper forecasts the cash flow of the Xihe project;Analyzes the risk types,and real option characteristics of the project according to the actual circumstance of the case.Uses the capital budgeting model based on the real option and the risks.And verifies the feasibility and effectiveness of the model.