Research On The System Of Regulating Fund In Infrastructure BOT Projects

In most BOT projects, local government often provides guarantees for the projects by giving project investors concession, hardly giving them funds guarantee. Once the projects face financial risk, completion risk and market risk, the investors can't construct or operate the projects because of lack of funds. While increasing the risk of investors and banks, government may also suffer serious losses due to the projects discontinued. Not only that, the inadequate government guarantees may also lead to investors'reduced enthusiasm for investment in BOT projects, making the slower pace of infrastructure construction.As the largest developing country in the world, China has an increasing demand for infrastructure to develop its economy. Attracting private capital for infrastructure construction and giving full play of the advantages of private capital will become an urgent problem to local government. Then, the government can solve the problem by offering the attractive government guarantees. Therefore, this paper proposes the establishment of regulating fund of BOT projects, and then brings it into the scope of government guarantees. The local government can attract private capital into infrastructure projects by providing direct funds guarantee for the projects.The investors can avoid the project risks that may arise in the period of project development and production and operation as much as possible through the operation of the system of regulating fund about BOT projects. It can enable the government to raise large amounts of private capital for infrastructure construction, making up the financial gap, while improving the investors'enthusiasm by providing the attractive government guarantees for them, but also the investors can revitalize their idle funds and increase the value of assets through investment in infrastructure projects.The essay can be generally divided into six parts, the specific contents are as follows:The first chapter discusses the research background, significance, content and methods of the paper, and reviews existing achievements at home and abroad by using literature study, then proposes the purpose of this study; The second chapter defines the concepts of the research object and nails down the study that is regulating fund of infrastructure BOT projects based on transport facilities, water and electric power industries in which private capital invests;The third chapter analyzes the relationships between the government and the projects, between the investors and the projects, and between the government and the investors, shows that the project regulating fund is the important measure of maintenance of good relations between the two sides. On this basis, the paper discusses the necessity and feasibility of the establishment of the BOT project regulating fund;The forth chapter analyzes the role of the project regulating fund to the investors and government. The paper comparatively analyzes the changes of investors'project risk, project cost and project expected return before and after the establishment of the project regulating fund by constructing the models of project risk, cost and expected return.Analysis shows that the project regulating fund can maximum to avoid the project risks that investors encounter at different stages and different types of BOT projects, and ensure investors will not suffer the serious cost losses because of the project risks and will obtain the project benefits when the end of the concession period, and the regulating fund can stimulate the project investors; For the government, the establishment of the project regulating fund can ensure access to social benefits, but the regulating fund may bring the potential risks of government and this paper discusses them from net present value and risk factors;The fifth chapter discusses the raising, release, reimbursement and management of the project regulating fund, and then builds a relatively complete infrastructure BOT project regulating fund system. The paper suggests the governments raise the project regulating fund, and the investors make use of the construction regulating fund from the government budget in the project'development phase and make use of the price regulating fund from the pension fund in the project production and operation phase. The investors repay the two regulating fund when the project enters the normal production and operation phase, and the governments need to establish related organizations that manage the BOT project regulating fund with financial sector, audit department and national council for social security fund; In addition, the paper also discusses the reasons of the emerging risks for the regulating funds and the related measures of risk control from the perspective of investors and the government. In this chapter, the paper also shows the formula of the payment amount of the regulating fund;The last part is the conclusion, and it proposes that the government should establish the system of BOT project regulating fund on the basis of summing up the full text, and explains the relevant issues.