Research On Risk Management Of PROT Financing Model For Small And Medium Hydropower Project

The hydropower development is now a priority policy in many countries in the world.Because compared to the energy production from other fuel sources,the hydropower is still energy production having many advantages.The biggest benefit of hydropower is to limit fuel cost.The hydropower plant does not bear price increase in fossil fuels such as oil,natural gas or coal,and not bear fuel import.The hydropower plant has the greater longevity than thermal power plant longevity,some hydropower plants which are now operating were built 50 to 100 years ago.Labour costs are also lower because these plants are highly automated and have few staffs in site during normal operation.The dams built along with the hydropower plants are usually wonderful places to relax for water sports,and become tourist attractions.The multifunctional dams built for irrigation,flood control,or recreation,can build more hydropower plants with low cost,creating useful revenue in dams management.However,large hydropower projects’ construction will require more capital investment and the payback time is very long.Meanwhile,a majority of countries are seriously short of capital,especially underdeveloped countries and developing countries.Because any country also needs to develop its infrastructure evenly to ensure national economy’s stable development,so only focusing on capital investment in the power system development is not possible.Since it requests the strong development of power production system as well as it is a lack of investment capital,so in recent years many countries(e.g.China,the countries at the Mekong region,including Vietnam)have mobilized all economic sectors in their countries to participate in the power production projects development,especially“small and medium scale Hydropower Projects".Thanks to mass investment participation of multi-sectors in the society in the hydropower sector so far,apart from being impossible to deny its role,it has exposed many limitations.Many projects are due to hasty investment-investors who are not specialized in hydropower,hiring technical experts not advise thoroughly,in the design,construction process,they did not pay full attention to a survey,economic estimation,necessary techniques,etc.or in the operation process,the management qualifications are weak,the machine and equipment system is backward,so small and medium scale hydropower projects have not been exploited full potential hydropower,causing serious waste of resources.Besides,it also causes a major threat to the ecological system,adversely impacting people’s life in the projects’area.Before such real state,these projects require upgrading,improvement investment for more efficient management and exploitation.The improvement may be the initial investors implementing or is transferred to organizations and individuals who have management capacity,and better economic potentiality to perform.The business transfer of hydropower projects in general and small and medium scale hydropower projects in particular researched and proposed as model PROT(Procurement-Rehabilitate-Operate-Transfer)by professor Song Jiang Wang-Lecturer at Management and Economy Academy,Kunming University of Science and Technology.And when making any project,the investor must always deal with its internal potential risks.The success or failure of the PROT projects will depend on the extent that the project’s risks are well controlled or not.The main steps in the risk management of a project including:identify risk,assess risk impact,plan and response to the identified risks.The studies of risk identification,risk analysis and risk management have been performed by many experts in the world for hydropower projects,but for small and medium scale hydropower projects according to PROT model,they have been hardly interested in by researchers.Therefore,for the purpose of supplying investors a useful reference material for identifying and managing the risks before investing in small and medium scale hydropower projects according PROT model,the authors have decided to choose research topics“Study Risk Management of Small and Medium scale Hydropower Projects According to PROT Model-Apply Trung Son Hydropower Research."The main aim of the thesis is to focus on the risk identification of risk can occur in each stage:Procurement(P)-Rehabilitate(R)-Operate(O)-Transfer(T),thence suggest management measures and limit these risks.To perform the above-said purpose,the thesis applies Three-dimension Structure and ZOPP method to study,learn about small and medium scale hydropower’s problems according PROT model.Thence,build list of risk problems for the project,set up fault tree analysis of the problems for each stage.The thesis also applies fault tree analysis(FTA)to build qualitative analysis,quantitative analysis model of risks and input data for this model is fault tree analysis.The thesis result has surveyed and proposed the risks for small and medium scale hydropower project according to PROT model through 04 stages:Procurement(P)-Rehabilitate(R)-Operate(O)-Transfer(T)including 13 groups with 103 risk factors.Through this result,the thesis sets up the fault tree analysis for each stage as a basis for qualitative analysis,quantitative analysis of the risks when necessary.And to assess the effectiveness of qualitative analysis and quantitative analysis’s model,the author has selected a specific project in Vietnam to analyze the risks possible to occur during Rehabilitate(R).