Concession Pricing Of PPP Waste-to-energy Incineration Projects Based On Risk Allocation

Due to the advantages of mass decrement,recycling and harmless for municipal solid waste(MSW)disposal,and at the same time,relieving financial pressure of government,and improving efficiency of projects operation,public-private partnership(PPP)waste-to-energy(WTE)incineration model has been popularized rapidly in China.Since the 13 th five-year plan,the government has issued a series of policies,aims to encourage social capitals to participate in the industry of MSW harmless disposal.However,due to the lack of scientific and reasonable concession pricing mechanism,there are many cases of fail projects because of improper concession pricing,which has caused wide public concern in the field of both practical and theoretical circles.For the concession pricing of PPP WTE Incineration Projects,there is lack of pricing mechanism to guarantee interests balance between governments and private sectors.A comprehensive Literature review about risk identification and evaluation,risk allocation and concession pricing has been conducted.The results show that the main limitations of existing researches are did not consider the connection between concession pricing and risk allocation,and ignored the risk influence to pricing.In order to develop a concession pricing mechanism for PPP WTE projects based on risk allocation,four key issues have been put forward in this paper,respectively,identification of critical risks influencing concession pricing,equitable risk allocation,determination of rate of return on investment that reflect the risk influence and establishment of concession pricing model.First of all,fourteen PPP WTE cases that met obstacles in construction or operation period have been selected.Multiple case studies are adopted,and a total of twelve key risks are identified for the projects,then explain the causes of risk occurring.Secondly,an risk carry capacity indicator system that include risk management ability,motivation mechanism and risk attitude has been established after the investigation of risk allocation preference,and using fuzzy synthetic evaluation to calculation the risk carry capacity quantitatively,then realize the quantitative risk allocation.Thirdly,a determination mechanism of rate of return on investment has been designed base on risk level of projects and risk allocation situation of private sectors,aim to reflect the risk influence to concession pricing.Besides,the methods of risk level assessment and criteria of risk allocation situation assessment were also proposed.Finally,building a concession pricing model for PPP WTE projects through system dynamics according to the rate of return on investment that reflect the risk influence and other pricing parameters.Then taken Yi-wu PPP WTE project as example,verified the validity of the pricing model and demonstrated the calculation process.The case calculation results show that the concession pricing model can produce satisfying prices that meet the target of benefit balance between governments and private sectors based on risk evaluation and reasonable allocation.