Financial Risks Of PPP Projects In Private Enterprises

In recent years,in order to improve the efficiency and quality of government public services and stimulate the vitality of Private capital,the state council and various ministries and commissions have successively introduced a series of policies and measures to promote Public-Private Partnership(PPP)in the field of Public services.The implementation of PPP projects helps local governments alleviate the pressure of debt and allows social capital to gain more development space.Therefore,social capital actively participates in project construction.As social capital,private enterprises have been playing an increasingly important role in PPP projects in recent years.However,due to the large investment scale,long construction period,slow payment collection and continuous capital input of PPP projects,private enterprises face great financial risks in participating in the construction of PPP projects.How to prevent and control the financial risks of private enterprises participating in PPP projects is of great significance to the development of private enterprises and the promotion of PPP model.Orient Landscape Environment Co.,Ltd.,as an outstanding private enterprise.Since 2015,with the help of the state to promote the PPP model,Beijing Orient Landscape Environment Co.,Ltd.has rapidly entered the PPP field and frequently obtained orders for PPP projects.However,since 2018,in the context of deleveraging under the central financial policy,the company has been faced with serious financial risks and has suspended some PPP projects,which is representative to some extent.Therefore,the case study method will be adopted in this paper.The project of Liulihe wetland park in Beijing,an important project of Oriental garden,will be selected as the object of the case study.By analyzing the financial risk of PPP project of Oriental garden,corresponding countermeasures will be proposed.Since PPP projects have a certain life cycle,this paper is divided into four parts according to the life cycle of the project,including project identification period,project construction period,project operation period and project handover period.Through the specific analysis of the financial risks that may exist in each stage of the project,this paper found that during the project identification period,there are investment risks caused by low investment return and force majeure during the project operation and imperfect risk sharing mechanism.During the project construction period,there are financing risks caused by single financing channel,unstable source of project revenue company and changes in financial and industrial policies.During the project operation period,there exists the risk of capital recovery caused by low government service fee guarantee and long project duration.During the project handover period,there exists and the risk of income distribution caused by the unclear income distribution mechanism.Therefore this paper puts forward the corresponding countermeasures.For the financial risk of the project identification period,enterprises should do a good job in self-evaluation and positioning and reasonably control the scale of investment,they should establish a sound financial index system and make a full warning of financial risks,they also should improve the risk-sharing mechanism to properly avoid investment risks.During the project construction period,enterprises should expand the financing channels and reduce the risk,they should make an appropriate subcontracting of the project to share risks,they also should pay attention to financial policies and regulations to adjust financing methods.For the financial risk during the project operation period,the enterprise should set up a special organization to take charge of the receivables collection,and actively communicate with relevant departments to accelerate the pace of settlement.In view of the financial risk in the project handover period,the income distribution mechanism should be clarified to reduce the risk of too little return.Based on the above solutions to the financial risks of PPP projects,it is expected to provide reference for private enterprises to participate in the financial risk control of PPP projects in the future.The research results of this paper will enrich the research literature and cases in the field of financial risk of PPP projects of private enterprises.Through case analysis,this paper study the financial risk of Liulihe wetland park in Beijing,and puts forward corresponding proposals,to arouse the enthusiasm of private enterprises to participate in the PPP projects,and remove private enterprises under the background of the current in the plight of the PPP projects,to maintain the vitality of folk capital,and remind wary in private enterprises in the subsequent project construction,also reduce the blind expansion,in order to “quality” instead of “quantity”,so as to reduce the financial risk of the enterprise,to promote the sustainable development of enterprises.The main innovations of this paper are as follows :(1)The existing literature focuses on the research of state-owned enterprises’ participation in PPP projects.Taking private enterprises’ participation in PPP projects as the entry point,this paper makes a case study of Orient Landscape Environment Co.,Ltd.to enrich the research on private enterprises’ participation in PPP projects,and provides reference for private enterprises to participate in PPP projects in the future.(2)Few existing studies have involved the financial risk of PPP projects.This paper enriched the research on the financial risk of private enterprises participating in PPP projects by specifically studying the financial risk of PPP projects.