Research On The Price Regulating Fund In Highway Bot Project

In highway BOT projects, the local government usually provides guarantees for project investors by giving them concession, but seldom offers them direct funds guarantee. Because of the long construction period and the large net inflow, highway projects often face many risks in the concession period. Once these risks occur, it would bring bad results to both investors and sponsors. Due to the lack of the funds, the investors wouldn’t construct and operate as usual, and the discontinued projects would lead to serious losses. Besides, the inadequate government guarantees would in turn reduce project investors’ enthusiasm for highway BOT projects construction. And this will slow down the pace of the infrastructure construction and the development of national economy.China is the largest developing country in the world, and the development of national economy has an increasing demand for highway construction and other infrastructure. However, the lack of the highway construction funds and the government’s traditional way of directly providing the infrastructure, has led to the result that the supplying of highway construction long lagged behind the development of national economy. Plus, as Reform and Opening up proceeds, a large amount of private capital accumulated rapidly, which becomes an important impetus to promote the economic development and adjust the industrial structure. In this case, attracting more private capital to invest highway construction and other infrastructure projects and making full use of its advantages, would be the best answer to improving the supplying level of the infrastructure for local government.Based on the research of regulating fund in BOT infrastructure projects, this paper focuses on the price regulating fund, which provides direct financial support for the highway BOT projects in the producing and operating period. This paper makes a further analysis on the price regulating fund by researching upper and lower limit in highway BOT projects. This paper also studies the project company’s conditions of choosing the price regulating fund, and how much amount the fund, as a form of government guarantee, can offer when the highway BOT project faces market risk. Meanwhile, the paper researches the reinvestment method of the fund which has accumulated thanks to the better operating of theBOT projects. The main purpose of this paper is to provide theoretical reference for the government and the project company in their highway BOT contract negotiations and actual decisions.