Risk Analysis Of Investment And Financing Urban Water Supply PPP Project

Water affair industry is related to both national economy and people's livelihood.As the pace of urbanization in China is keeping accelerating,the number of investment projects and the investment amount in water affair constructions have increased sharply,resulting in the shortage of project funds and the inefficient use of funds.In order to solve the bottleneck problem in the development of urban water affair projects,public-private partnership(PPP)model has been widely concerned and recognized by the society.As the construction and operation of China's water affair projects are in the reform stage and the business model is confidential,it is hard for enterprises to make decisions on PPP-based investment and financing by following the existing benchmark cases.Based on the theory and practice on the risk management of investment and financing of PPP projects,Fu'an water affair PPP project is researched and analyzed in this thesis by using several indicators and technical methods,e.g.SOWT analysis,financial evaluation and risk evaluation.It is evaluated in the thesis whether the project is worth investing,as well as the risk management and control of project investment and financing.Besides,some useful suggestions are made to the decision makers of Zhongmin Water Investment Group,providing guidance for the future investment decision with the same type.This thesis mainly researches the risk management and control of investment and financing of PPP projects at home and abroad,analyzes the characteristics of Fu'an water PPP project,analyzes the advantages and disadvantages of merger and acquisition(M&A),and calculates the total investment amount as well as the cost related to operational management.According to the estimated investment amount and cost,the project's cash flow model is established under the PPP model and the financial evaluation index of Fu'an water PPP project is measured,including net present value,profit index and internal rate of return.Through the sensitivity analysis,the influencing factors and their sensitivity to the changes in the project are summarized and the corresponding preventive measures are put forward.In the end,the debt coverage of Fuan's water PPP project is analyzed to determine whether the project has a certain debt capacity.The conclusion is that the Fuan's water PPP project satisfies the minimum internal rate of return of 8%and the debt coverage of more than 1 when the water price is adjusted to 2.15 CNY/m3,which shows that the project is feasible and bankable.Through the analysis,the factors with the strong sensitivity are found out,e.g.water price,total investment and cost,etc.,and the relevant measures are proposed to prevent and avoid risks.Eventually,the enterprise,government and the public can achieve a "win-win" status.