Research On Financial Risk Assessment And Response Of THS Expressway PPP Project

As an infrastructure financing management mode,PPP allows private capital to participate in the provision of public infrastructure and public services,which can effectively alleviate the debt problem of local governments,reduce the financial pressure of the local government,and enable social investors to obtain reasonable benefits in PPP.PPP has not been applied in China for a long time,and PPP has been promoted in the expressway field in China since 2015.Although the application of PPP in China has been continuously improved and matured in recent years,there are great financial risks in expressway PPP due to the problems of complex participants,large investment,long construction period and many uncertain factors in expressway PPP.If the financial risks of the projects cannot be effectively dealt with,it is easy for the projects to fail.Therefore,it is a common concern of the government and social capital on how to deal with these financial risks.Taking the THS Expressway PPP as an example,this paper studies the financial risks of this project.Firstly,it collects the related literature of PPP financial risk,and introduces the theoretical basis of this paper — stakeholder theory,risk sharing theory and public goods theory,and then starts to analyze the case on the basis of these theories.In the case analysis part,the implementation background of the project,PPP framework and project construction investment are briefly introduced,and then the financial risks of the project are studied according to the idea of "risk identification-risk assessment-risk response".The financial risks of the project are identified by using the relevant information obtained from the project company and combining with expert interview opinions and the financial risk theory.Then,the cash flow of the project during the operation period is predicted by existing financial data and reasonable assumptions accepted by the project company,and the cash flow system of the project is constructed.Qualitative analysis and quantitative analysis are combined,and sensitivity analysis is used to evaluate the identified important financial risk factors one by one.Finally,from the perspective of social investors,this paper puts forward risk coping methods and draws the enlightenment from this project,which can be used as a reference for social investors participating in similar expressway PPP projects.This paper finds that there are financial risks in THS Expressway PPP,such as financing,investment,capital recovery and cost overrun.Combined with qualitative analysis and financial data calculation,it is found that: First,the solvency and profitability of the project are weak,and the equity multiplier,financial net present value,financial internal return rate and payback period of the project have not reached the industry average level or the benchmark value expected by social investors.The investment of social investors is difficult to recover during the operation period of the project,and the project has great financial risks.Second,the project is sensitive to changes in interest rate,charging period and cost,and its ability to resist risks is relatively weak,especially to changes in interest rate.Once the interest rate rises,the project would face huge financial risks.In order to deal with financing risks,social investors need to optimize financing methods and broaden financing channels,as well as the capital structure and moderate liabilities.For dealing with investment risks,social investors should strengthen the overall budget management of projects and spread investment risks as much as possible.In order to cope with the risk of fund recovery,social investors can reach relevant income guarantee agreements with the government when signing contracts or subsequent negotiations,and broaden income channels and diversify operations.For handling the risk of cost overruns,social investors should not only reasonably design investment estimates and control construction costs,but also strengthen cost accounting management during operation period and control operating costs.It hopes that through the research on the financial risks of THS Expressway PPP,the social investors of expressway PPP can realize the financial risks of the project more comprehensively and provide scientific guidance for the decision-making of social investors.It also provides reference and inspiration for the social investors and relevant government departments.