Financial Evaluation Of Rail Transit PPP Project

Given the slowed economic growth,low investment efficiency and high government debt under the New Normal,it is necessary to promote sustainable development of rail transit with Public-Private-Partnership(PPP)mode.As the finance of rail transit PPP project is distinctive with that of traditional projects,to balance investment efficiency and fairness,financial evaluation method should adopt investors' perspective,follow the market-directed principle and be modified according to the enterprises' characteristics.This study firstly summarizes the financial evaluation method and indicators of rail transit,locating the starting point of financial evaluation research,and figures out the key point of that by comparing with traditional project.Secondly,it introduces in investors perspective under the background of market-driven investment and finance,appraises the capital cost of rail transit PPP project with asset pricing theory system and its methodology.Thirdly,basing on the exploration of rail transit PPP mode,it analyses and scopes the differences in cash flow.Finally,it applies the analysis result to specific examples of rail transit financial evaluation and works out improvement.The amended method is supposed to figure the possible profit range of a rail transit project with PPP mode,and appraise opportunities and risks of the enterprise comparing with project with traditional mode.This study reveals that attention should be paid to the control of capital cost and cash flow when private investors are involved in rail transit project.Meanwhile,for rail transit PPP project in first tier cities,attractive investment return is achievable if :1)negotiation,management and risk control are effective;2)employ the business model “Rail + Property”;3)control strictly over costs of construction and operation;4)communicate fully on the ticket price and chartered final solution.This study can be reference for construction unit,competent authorities and institutional investors to evaluate the feasibility of rail transit PPP project,as well as strategize pertinence investing or financing arrangements and cooperative schemes.