Research On Risk Management For BOT Financing In Overseas Hydropower Plants

BOT is an important financing mode arisen in the 1970s. It is used in large and medium size projects such as infrastructure, energy resource, public facilities, oil and mine exploitation etc. and it is guaranteed by the project's output, so it could use less capital to earn more loans. Nowadays, BOT has gradually become a trend in international project contract and is widely used in the infrastructure construction in the developing country, including the large hydropower plant construction.The construction project under BOT financing is called"risk pool". Risk exists with opportunity. Properly distributing risk and management is the key point to the BOT financing project's success and it is also the core problem which should be paid attention to by all the parties in the execution of the project.The risk of the BOT project, especially the BOT financing hydropower plant abroad, has its particularity. It differs in the characters, effects and management modes with the domestic ordinary financing hydropower plant projects. Therefore, we should not only analyze its feasibility from the economic way, but also analyze its risks considering its environment. If we just be according to domestic risk estimate mode, the analysis would not be integrity and objectivity. This paper is based on the BOT financing theory and risk management theory. It is combined with the investment environment analysis and the project's industry analysis and also uses the example of Georgia hydropower plant where the writer used to work. It uses the Capital Asset Pricing Model theory and links the practices to analyze the risk management of BOT financing hydropower plant abroad comprehensively and thoroughly.This paper firstly states the situation of the BOT. BOT financing mode is widely used in the international project contract market and gradually becomes the necessary trend in the international competition. Meanwhile, it introduces the theory bases, including the concept, development course, financing process and the character of BOT financing, and it also expresses the study situation and the research meaning of BOT financing. After analyzing of the differences between BOT financing hydropower plant projects abroad and the ordinary domestic BOT financing hydropower plants, the paper pays attention to the risks of BOT financing hydropower plant project abroad, analyzing sources, characters and the influence factors of the risks. It differentiates the risks into investment environment risks and industry risks according to the hydropower plant's character. This chapter cites the example of Georgia Khadori hydropower plant which is invested by Sichuan Electric Power Import and Export Corporation, and this project is stranded by the political risks. Therefore the paper discusses the necessity of economic feasibility analysis and outside investment environment feasibility analysis.Based on the recognition and classification of risks, this paper qualitatively analyzes the environment risks and the industry risks of the investment. It emphasizes the political risks and the effects of government support according to the example of Khadori hydropower plant and it uses the Fland index analysis and the Delfi evaluation way. Then the paper quantitatively researches the economic intensity by using cash flow model. It analyzes the sensitivity of all the influence factors, and gives the quantitative index of the risk evaluation. In the whole process of risk evaluation, the data of Khadori hydropower plant is used as the base of case analysis.After the project investor makes sure the main risks, this paper puts award the investment environment risk and industry risk prevention strategies. It pays attention to the prevention of political risk, and also brings forward the strategies. Finally, this paper gives some advices to the policies of risk prevention.This paper not only analyzes the BOT financing mode risk from economic intensity, or analyzes hydropower plant project risk quantitatively, but also synthesizes the two aspects, combining qualitative and quantitative analysis. It considers both the project BOT financing mode and the investment environment and industry character. Additionally, it comprehensively analyzes different risks and puts award different management and prevention strategies to different risks.This paper studies the case of Georgia Khadori hydropower plant, combined with the paper's research achievements, and provides an empirical study based on theories and practice.