道桥外文翻译发展中国家公路BOT方案的经济评价.docx

道桥外文翻译发展中国家公路BOT方案的经济评价.docx

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道桥外文翻译发展中国家公路BOT方案的经济评价

附录1英语翻译

FINANCIALEVALUATIONOFROADPROJECTSUNDERBOTSCHEMEINDEVELOPINGCOUNTRIES

ABSTRACT

Thepastdecadehaswitnessedmanydevelopingcountriesopeninguptheireconomyresultingingreaterprivatesectorparticipationinroadinfrastructureprojects.Thesecountriestraditionallyfollowedeconomicevaluationfortheprojectappraisal.Theeconomicevaluationincludesintangiblecostsandbenefitsoftheprojectwhichdonotappearincashflowstatement.Hencetheeconomicevaluationcannotindicatethefinancialperformanceofaproject.Therefore,financialevaluationisimportantinthecontextofprivatizationandcommercializationofroadprojectsunderBOTscheme.Eventhoughsuchapproachesareverycommonindevelopedcountries,thefinancingmethods,taxratesandaccountingtechniquesarequitedifferentindevelopingcountries.Therefore,toexaminethefinancialperformanceoftheprojectandtodeterminetherisksinvolved,soundfinancialmodelarenecessary.ThispaperpresentsasimulationbasedfinancialmodelforBOTprojects.Themodeltakesthelengthofroad,costofconstructionvolumeoftraffic,modewisetollratesandotherprojectspecificdetailsasinput,performsfinancialevaluation,andcalculatesIRRandNPVforprojectandequityseparately.Inaddition,themodelalsoperformssensitivityanalysisandscenarioanalysisoncriticalprojectparameters.Acasestudyofa40kmroadexpansionprojectfromPune（India）hasbeentakentodemonstratetheworkingofthesimulationmodel.ThemodelgavefinanciallysoundprojectandequityIRR.Thesensitivityanalysisshowedvolumeoftrafficandtollratesasthemostsensitiveparameterstofinancialperformanceforthegivenproject.

INTRODUCTION

Studiesshowthattransportgeneratesgrowthbyfacilitatingtrade,bothnationallyandinternationally,andbyincreasingaccesstohealthandeducationfacilitiesaswellaslocalandnationalamenities.Atthemacroeconomiclevel,cross-countrystudieshaveconfirmedthatinvestmentintransportraisesgrowthbyincreasingthesocialreturntoprivateinvestment.Ontheotherhand,atthemicroeconomiclevel,transportimprovementsdirectlyloweragriculturalinputpricesandhenceproductioncosts,increaseaccesstomarketsandhencediversificationofoutputs,andindirectlyfacilitatethedevelopmentofthenonagriculturalruraleconomy1.Theimportanceoftransportdoesnotdiminishascountriesindustrialize.Internationaltradeinmerchandise,andbyimplicationthemovementofgoods,grewonaveragethroughouttheworldby4.9%perannumbetween1980and19922.Untilthe1980s,transportinfrastructureindevelopingcountrieswasprimarilyprovidedbythepublicsector,forallmodesoftransportation.Intransportserviceprovision,railwayswereusuallyapublicsectormonopoly;whiletheairandmaritimetransport,werealsousuallyinthepublicsector.Incontrast,intrucking,busandinlandwaterwaytransporttheprivatesectorwaspredominant3.

Sincetheamountofresources,goingintothetransportationprojectsisveryhigh;theseprojectsneedtobeevaluatedincomparisonwithotherinfrastructureprojectsaswellasamongthemselves.Thewholeprocessofprojectevaluationisknownasprojectappraisal.Oneoftheimportantparts,ofprojectappraisalreportistheeconomicevaluation.Theeconomicanalysiscomparesalternatives,which,helpsplannerschoosethebestwaytoaccomplishtheirobjectives4.ThemostwidelyacceptedparametersdescribingtheeconomicperformanceoftheprojectareBenefit-CostratioandNetPresentValue5.However,engineering-economicanalysisisanadvancedtooldevelopedbyWorldBankkeepinginconsiderationthefactorsthatarerelevantbutnotcapturedinbenefit-costratio6.Sincecommercializationoftransportprojectsisbeingdone,thefinancialevaluationisalsoanimportantaspectofappraisalreport.

FinancialEvaluationinContextofDevelopingCountries

Thetransportinfrastructureprojectsformsthebasisofcountry'seconomicgrowthandhencegovernmentneedstoexercisecontroloverthem,buttheinvestmentrequirementstofulfillthedemandisfartoolargecomparedtowhatgovernmentscouldprovide.Duetothis,thetransportationsectorhadseencommercializationsincelastfewdecades.Since,theincentiveforprivateplayerstostepintotheroadsectoristhereturnoninvestment;thefinancialanalysisbecomesextremelyimportant.Thefinancialanalysisoverthelifeoftheprojectenablesthedevelopertomeasuretheriskonreturnsandprovidesaninsightintothefinancialviabilityoftheproject.

Theanalysisofprojectsisnecessarilybasedonuncertainfutureeventsandinvolvesimplicitorexplicitprobabilityjudgments.Thereisconsiderableuncertaintyinthecapitalcostestimates.Itisnotunusualthatroaddesigns,onwhichthecostestimatesarebased,maybechangedduringconstruction.Thisnecessitatessensitivityorswitchingvalueanalysistominimizerisk7.Theriskanalysisgivescriticalvariablesandassesseshowlikelydeviationsare,andidentifiesthefactorsthatarelikelytocreatethegreatestrisksfor

theproject.

Indevelopednations,themodelstoevaluatethefinancialperformanceofBuildOperateandTransfer（BOT）projectsalreadyexist.InUKNetPresentValue（NPV）ofthecashflowsiscalculatedunderdifferentscenariosasameasureoffinancialperformanceoftheBOTprojects8.However,inFranceInternalRateofReturn（IRR）isalsousedalongwithNPVforfinancialanalysisoftheproject9.Since,infrastructureprojectsarequitedifferentfromindustrialprojects;thegovernmentlawsrelatedtoissueslikedepreciation

andtaxarealsodifferent.Suchmodelshavetobedevelopedkeepinginviewthelawsaffectingthecashflowsoftheproject.ButindevelopingcountrieslikeIndia,useofsuchmodelsisveryrare.ThepaperdiscussesfinancialevaluationofBOTprojectsindevelopingcountriesespeciallyIndiawherepublicsectorisslowlyopeningupforprivateplayers.Overtheyears,thegovernmentpoliciesindevelopingcountrieslikeIndiahavechangedtopromoteprivatesectorinvolvement.Forexample,inIndiaroadsectorBOT

projectsgettaxbenefitundersection80（IA）foreightyearsinarow.Theyarealsoallowedtoprovidedepreciationusing“sinkingfund”methodandcarryforwardtheiroperatinglossesduringfirsteightyearsofoperation.AnotherimportantissuepertainingtoBOTprojectisestimationoftrafficandtollrates.Forinstance,inIndia,twowheelersaretollfreeinmostoftheBOTprojects.However;theyconstitutenearly

50%ofthetotaltrafficvolumeinmanyinstances.Thisbecomesevenmorecriticalkeepinginconsiderationthelimiteddataavailablefortrafficprojectionsandstandardof“willingnesstopay”indevelopingcountries.Thisnecessitatesthesensitivityandscenarioanalysisofvolumeoftrafficandtollrates.Thispaperpresentsafinancialevaluationmodelusingsimulationmethodologyaddressingtheabovementionedissues.Theworkingofthemodelisdemonstratedthroughacasestudy.

THEBOTSCHEME

Numerousformsofprivateparticipationhavebeenexperimentedwithanunequalrecordofsuccess10.TheBuildOperateandTransfer（BOT）,isthemostfamiliarform,wherebytheprojectisdevelopedbytheprivatesector.Ittakestheresponsibilityforfunding,designing,buildingandoperatingthefacilityforsufficientperiod,toserviceandrepaythedebtraised,thencontrolistransferredbacktopublicsector11.

ThemainpartiesinvolvedinBOTprojectcanbebroadlydividedintofivecategories:

Grantingagency,ConcessionaireorPromoterorSPV（specialpurposevehicle）,Financiers,Consultants&ContractorsandRoadusers.Thegrantingagencyprovidesthecontracttotheconcessionairetodesign,builtandoperatethefacility.Inreturn,theconcessionairecollectsthetollfromroadusersforaspecifiedtimecalledconcessionperiod.Therevenuesproducedareusedtopaybackthefinanciers.

Since,infrastructureprojectsarecapitalintensive,financingoffundsisoneoftheimportantissues.Privatefinancingandraisingresourcesforsuchprojectsisachallengingtaskfortheprivatesector.ThetraditionalsourcesoffundsforBOTprojectsareDebtandEquity12.FinancialinstitutionsinIndiafavorlowDebt/Equityratio,andforBOTprojectsinIndia,thisratiousuallyvariesintherangeof1.5to2.3.Animportantfeatureistheconstructionperiodsince,inpublicsectorprojects,timeoverrunisausualphenomenon.HoweverinBOTprojectstheconcessionairepaysspecialcaretothisasanytimeoverrun

wouldreducetheprofitabilityoftheprojectandincreasetheinterestcommitmentondebt.Inaddition,thereisanincentivetofinishconstructionaheadoftimeandavailthemaximumbenefitbyoperatingandcollectingtollsforalongerdurationoftime12.AnotherrelevantissuepertainingtoBOTprojectsistollchargessince,userchargesformsthemajorpartofrevenuescollected.Thedeterminationofthetollratesdemandsdueconsiderationfromgrantingagencyaswellasfromconcessionaire.Levyofminimumtollsisadesirablesocialobjectiveofthegovernment13.Averyhightollratemayalsodivertthetraffictoothertoll-freeroadsespecially,incasedevelopingcountries,wherethewillingnesstopayisveryless.

FinancialEvaluation

Thefinancialanalysisconsistsincomparingrevenueandexpensesrecordedbytheconcernedeconomicagentsineachprojectalternative（ifrelevant）andinworkingoutthecorrespondingfinancialreturnratios.Theprocessoffinancialevaluationconsistsofestimationofcashflowandcalculationofperformancemeasuringfactors.

Thecashflowstatementpresentscashinflowsandoutflowsfor