Risk Assessment Studies About The Hydropower Project Loans For Commercial Banks

Hydropower projects has large investment-scale, long life cycle, difficult to constructing and operating features, which will not only take many uncertain factors for achieving the desired investment objectives but also bring the project investors and other participants huge risk. So it is required that take detailed construction assessment before project. Projects is needed to solve the funding probliem at first, at this stage, hydropower project funding sources except sponsor or project company’s equity capital, the acquisition of a large number of debt funds provided by commercial banks. Project Company take financing application to commercial banks, commercial banks based on their own perspective commenced an assessment of project and make decision weather inject capital or not.Commercial banks as a special enterprise that operate currency credit, the credit intermediary is one of the most basic functions of commercial banks. By the credit intermediary our social could achieve financial surpluses and shortfalls party financing, without changing the total amount of social capital. The credit intermediation of Commercial banks achieving the main way is through loans. Loan is one of the most traditional core business and important earning assets, but also riskier assets. Project financing as a commercial bank loan business, the loan funds has large-scale investment, long construction period, and risky characteristic. Commercial banks to prevent and control the project financing risk effectively, we must carry out the project from our own point of evaluation to ensure the bank credit assets safety.Since financing fund is large, loan repay ability is high, which could bring considerable benefits to commercial banks comprehensive. Therefore hydropower project became commercial banks asset business focus areas. Especially that has good economic and technical indicators, with a background of large enterprise groups’ hydropower loan market more competitive. Meanwhile developing the hydropower project finance blindly, it will ignore the hydropower project loans in some unique risks easily, and unreasonable project evaluation methods also will lead loans become risky level, causing a decline in the quality of credit assets. The methods about financing subject selection mechanism, hydroelectric project financing assessment have obvious shortcomings and limitations, which is unable to project financing for more accurate risk assessment and control. This article at the commercial banks point, elaborates project financing, risk assessment theories, methods, identify hydroelectric project financing important risk factors. At last, this paper gives some suggestions for commercial banks to improve hydroelectric project financing risk assessment.The main contents are as follows:The first chapter introduces hydroelectric project financing risk assessment background and significance of this research, and paper’s frameworks. Based on the project evaluation theoretical and literature summary, we chose suitable research methods and content arrangements.The second chapter analyzes the hydropower industry basics, outlining the development process of project evaluation at home and abroad, prepared for next chapter to interpret hydroelectric project financing risk assessment theory and case analysis.The third chapter mainly analyzes hydroelectric project financing risk assessment theory. On the perspective of commercial banks, elaborating financing project risk assessment theory basis; identifying hydroelectric projects general risk factors and proposing prevent and control risks measures. Finally, this paper introduced the project for the construction and commercial banks in project evaluation processes at operational levelChapter IV introduced hydroelectric project financing risk assessment case study, we take S hydropower project as an example, from project basic situation, the project borrowers and investors, product markets, financial evaluation and other aspects to analyze and evaluate hydropower project financing risk.Chapter V makes suggestions about Prevention and control hydropower project financing risk. Concluded on the foregoing, from customer selection, project selection, evaluation and management to give commercial banks suggestions, for commercial banks could carry out more scientific and reasonable credit policy, choice of projects proposals, ensure that commercial bank credit funds security.This paper discusses the specific industry project loans’risk assessment from perspective of commercial banks, combined with practical experience, in this paper; we try to give some improvement suggestions about preventing and controlling project financing proposed risk assessment. We hope it will be helpful for commercial banks when they are making trade credit policy, developing product, discussing customer access, and project selection, loan management, this research could provide some reference.