Investment And Financing System Of Large-Scale Hydropower Project In China

Our country has the richest hydropower resource in the world, which has tremendous potential for development. The exploitation and utilization of water resources are also regarded as the key direction of the adjustment of the energy structure, development of clean energy and low-carbon economy development.Since the founding of The People's Republic of China, the development and utilization of water resources has made remarkable achievements, although China is in the high monopoly of the planned economy model in long-term. Nevertheless, in the State Grid, the proportion of the electricity and water accounts for only twenty four percent and a large number of hydropower resources need to be developed. To cover this project, the amount of funds is very great. The purpose and direction of this issue is how to break the investment and financing system of a single country in the planned economy model, strengthen the attractiveness of public endowment and foreign capital on the water conservancy and hydropower project, widen the investment and financing'channels, and innovate a large-sized hydropower project financing modes with Chinese characteristics.1. The advantages and problems of China's current investment and financing systems'1.1 The existing investment, financing systems and their . advantages.30 years before the reform and opening up, the single mode which was called "national investment fund, peasant put labor into the construction" was mainly adopted.Since the reform and opening up, the main project financing methods include "government subsidies, state-owned investment and bank loans". That is to say, it is based on the national investment.The advantages of the current system are as follows. Country's capital construction project on Water Conservancy and Hydropower have dual characteristics of "public welfare" and "quasi welfare" or" commercial quality ", and is often dominated by "public welfare".Therefore, in the particular historical period of an immature market economy, it is reasonable and inevitable for the mode arranged by the government or the state enterprises to be the main one. It has focused on the basis of limited power and widely mobilized the mass of millions of individuals'enthusiasm for China's water conservancy and hydropower projects, which lay a solid foundation and has made tremendous achievements.1.2 Drawbacks and problems of the current hydropower investment system1.2.1 Without a clear line between the functions of the government and enterprises, unclear property rights.Because the main investment of the large hydropower projects is arranged by state enterprise, whether they belong to State assets, or the enterprises' private assets is not clear. It will easily cause corruption loopholes, management chaos and even economic losses.1.2.2 To be detrimental to arouse investment enthusiasm of the social forces, bank and international capital.Water conservancy and hydropower projects often have the characteristics of huge investment, a long period of Construction and Investment Recovery, and a long time of capital.occupying. Besides, the price of water and electricity is strictly controlled by the country's ministry of finance. What's more, because of its "public welfare" function, there is no clear preferential policies and compensation mechanisms. Therefore, it is negative to attract international and private capital investment.1.2.3 A lack of complete laws and regulations2. Case analysis-the Jialing river mouth hydropower project.2.1 Basic informationThe Jialing river mouth hydropower project locats in the CangXi Guangyuan city, Sichuan province, approved by the National Development and Reform Commission and the Ministry of Water Resources in October 2009, and it has been completed. According to the two commissions' paper, the investment priorities should be:the static gross investment is 1.39116 milliard and the total gross investment is 1.5894 milliard. Among the gross investment the Center authorities budget offers 1.8 billion, and Sichuan finance 700 million and Guangyuan 200millin. The project entity input 3.76 billion, and the ICBC, Sichuan branch of China Bank and the Sichuan branch of CBC promised to provide a loan of 9.218 billion.2.2 Comprehensive economic evaluationAccording to the initial set report of "the Yangtze river design institute", this program will suffer 17 years' consecutive losses, "The project does not have ability to fully repay the loan ", the internal rate of the total investment is below the water and electricity standard rate in the industry2.3 Proposals for the project:2.3.1 Ascertain ownership and legal status of juridical person responsible for the project.2.3.2 Clarify bank's limited or complete right of recourse upon investors.2.3.3 Apply lowest quartile of annual operating cost and depreciation rate in corporate financial accounting.2.3.4 Implement price preference policy for hydropower enterprises on sold products. 3 Thought and advices about the investment and financing system of large-sized hydropower project.Mainly the Singleton Pattern by the state shall be broken in, and it is necessary to learn from foreign advanced experience about water and electricity fundamental construction. BOT, TOT, ABS, lease financing and funds financing can be adopted. Such financing modes of diversification, multilayer and multiform can perfect the compensation system for investors, laws and regulations, and increase financial investment, retain water conservancy fund system and accelerate the development and utilization of the hydropower resources in our country.