Study On Decision-Making Of Government Regulation In Wastewater Treatment BOT Project Based On The Balance Of Risk And Return

There is a great shortage of funds in our countries' investment on infrastructure construction.The state encourages social capital to participate in the investment of infrastructure.However,government intervention and restriction is indispensable in infrastructure BOT project.Through rational decision making of the government regulation to achieve the balance of risk and return between government and social capital can promote the development of BOT project and ensure the smooth implementation of the project.This paper proposed minimum turnover guarantee combined with the charter price adjustment plan innovatively in view of the social capital undertake bigger risks to participate in wastewater treatment.This will realize the reasonable share of risk between government and social capital.Secondly,introduce the income cap and royalties to control the excess return of social capital and form two kinds of government regulation scheme that can realize the balance of risk and return We choose the government regulation scheme base on whether achieve the project's expected return and the stability of the NPV.Finally,according to the real option characteristics of minimum volume guarantee and income limit to quantify the costs and benefits of the government and improve the government's cost consciousness.Through the case analysis according to the designed government regulation scheme,this paper concluded that the government regulation scheme of 80% or 90% of volume guarantee level with franchise price adjusted to 3% every 2 years is more effective.In the government regulation schemes with the balancing of risk and return,90% guarantee level combined with 121% of upper limit has a more significant effect of reducing project NPV volatility.And it can be used as the government regulation decision-making of wastewater treatment BOT project.Also we can and calculated the costs and benefits of the government.Finally,through the reasonable government regulation decision-making,risks and benefits are reasonably allocated between the government and social capital.