The Application Of Financial Leasing In EPC Projects

Financial leasing is a kind of financing method that provides the essence of financing in the form of leasing goods.Compared with the traditional financing modes,financial leasing has the advantages of lower threshold,more flexible scheme,activating assets and saving taxes.It is especially suitable for some small and medium-sized enterprises that can not achieve financing through bank loans or other channels.EPC general contract is a kind of contract construction mode currently used in the construction of engineering projects,which has the advantages of improving construction efficiency,controlling project cost and improving project quality.However,due to various factors,the financing of EPC general contract project is not smooth,and it is easy to form the situation that the general contractors advance funds.Xuanhan EPC project is a natural gas liquefaction and treatment project constructed in EPC mode,with strong market-oriented characteristics.Xuanhan project lacks effective financing channels.In fact,the general contractor provides project financing with advancing funds in the whole process.Financial leasing has not been applied in the project.Advancing money increases the capital occupation and risk of the general contractor,and also increases the capital cost of the SPV.This paper mainly studies how to successfully apply financial leasing into Xuanhan EPC project.The main process of this paper is as follows:firstly,collect and sort out the relevant theories of financial leasing and EPC through library collection,HowNet,Internet,etc.,form the theoretical basis of this paper,and initially find out the mismatch between financial leasing and EPC project;then,based on the theoretical basis,combined with the case study of Xuanhan EPC project,find out the specific problems of applying financial leasing into Xuanhan project are as fllow.The economic strength of the project and the lessee's credit does not meet the requirements;There is no appropriate lease items during the construction period of the project;The general contractor's advancing fund is simple and rough,and the SPV lacks the refinancing power,etc.Using the idea of " Financial Leasing of Projects",this paper finds out the key points to solve the above problems:select the completion of the project as the time point of financial leasing,take the whole fixed assets formed by the project construction as the lease,select the mode of direct leasing,handle the problem of the general contractor's advance funds,and design a reasonable repayment schedule of rents.From points to plane,in the fourth chapter,those above key points are connected in line,and the specific financial leasing scheme of Xuanhan project is proposed.In the fifth chapter,the specific implementation of the scheme is discussed from the overall level of business operation and the effect evaluation is carried out.The”Financial Leasing of Projects”mode can solve the difficulties in the application of financial leasing into EPC project,and effectively reduce the subsequent financing cost of the project company.At the same time,the two-stage financing structure formed by the combination of project financial leasing and EPC general contractor's advancing funds,enables the general contractor to recover the project funds in advance after the completion and delivery of the project,which to a certain extent solves the problem of the general contractor's advancing funds.If this model is widely adopted by financial leasing companies in the future,it can open up business market for financial leasing companies and stimulate new profit growth points.