Mianyang The Fujiang Fenggu Hydropower Station Based On Cost-effective Decision-making Research

Mianyang City Investment Holding (Group) Co., Ltd. (abbrev. as MT Investment Company) is Mianyang City's government investment and financing platform company, investing primarily in transportation, urban infrastructure and social public welfare projects, working as the owners of the government investment. MT Investment Company is a company with independent legal personality, operating and being managed in commercial and market manner. In 2009, MT bid with 50 million yuan to obtain 70 years'management rights of Fujiang Fenggu power station and sand and gravel resource extraction rights in the river valley.However, the auction building program is inconsistent with the original planning program that has been submitted, the station depends on the approval of the provincial administration. Therefore, from perspective from MT or the proceedures of the government for approval, it requires benefit analysis and appraisal of the proposed program.The purpose of this essay paper is: on the basis of project design data, using project evaluation theory and the proceedure to evaluate the original program and the new program for economic perspective and make program choices based on economic evaluation results.This essay makes a study in three aspects: economic benefit from the power plant projects, power plants and derivative economic benefits, the comprehensive economic benefits and from two perspectives fromo financial evaluation and national economic assessment. The study result provides decision reference for MT and the country.Selection decision based on direct benefits of the program: with electricity price of 0.3556 yuan / kwh, internal rate of return (before tax) of the orginal plan is less than benchmark rate of return, and financial net present value is less than zero, which shows poor profitability. IRR of new plan is greater than the benchmark rate of return; NPV is greater than zero, indicating the financial feasibility. The comparison shows that the new program is better than orginal program.Selection decision based on direct benefits and derivative benefits of the program: the benefits of the orginal program come from electrict generating. However, the new program has a large gravel mining and land proceeds, totally, the new program is favoured.Selection decision based on a comprehensive cost-effective decision-making: the new program is favored.Overall, all economic indicators of the orginal plan is worse and the orginal plan should be rejected. Although the new plan has ordinary prospects, but with sand and gravel mining, especially the huge land proceeds, therefore, it's feasible. In addition, although the financial benefits of the new plan is ordinary, the project can improve the water environment, the surrounding living environment, make facitate convenient transportation and other social benefits, so from the state's point of view, the new proposal was feasible.