Risk analysis of BT project investment
1, risk analysis in decision-making stage
(1) Feasibility study demonstrates risks. Before making an investment decision, investors need to conduct an investment feasibility study on the project, and the conclusion of the feasibility study report directly affects the judgment of investors and their decision makers. When the owner adopts open bidding, only an interval of interest rate and repurchase period is given before bidding, and there will be multiple investors bidding to choose the most favorable conditions for the owner. The subtle changes of these uncertain BT conditions will cause great changes in the final income of the project. The judgment of the feasibility study on the government's repurchase ability mainly comes from the mastery of the local government's fiscal revenue and expenditure, the owner's assets and liabilities, and the judgment on the sustainable development of the local economy. Incomplete and inaccurate grasp of the above information will lead to the wrong judgment of BT investors.
(2) Engineering risk measurement. When the cost of construction and installation works is priced by bill, the owners will require that the cost of measures be used by investors. If the investor does not consider the measure fee or omission, it will cause the actual project cost to increase substantially, and it will be difficult to claim compensation from the owner.
(3) Contract risk. BT model involves owners, investors, project companies, survey and design, subcontractors, supervision units, financing institutions and many other subjects, and the rights and obligations of all parties will be stipulated through a series of contracts. For BT investors, the most important thing is the BT investment and financing construction contract signed with the owner, which basically locks in the investors' income and risks. However, unclear understanding of contract terms and inaccurate grasp of key nodes will bring troubles and economic losses to investors.
2. Risk analysis in the construction stage
(1) Financing risk. Financing is the key to the successful operation of BT project. If the investor's financing work is not fully prepared, the repurchase guarantee provided by the owner does not meet the requirements of bank loans, and the state's macro-control over finance is strengthened, it may cause difficulties in project financing.
(2) Construction risk. Due to the complex engineering technology, high technological requirements, difficult construction and other factors, the potential risks of engineering construction will affect the safety, quality, construction period and cost of the project.
(3) Change risk. In the process of construction, when design errors, design defects and omissions are found, or it is necessary to speed up the construction progress, improve the project quality, reduce the operation and maintenance cost of the project, or geological changes or force majeure occur, the owner or construction enterprise will make changes to the construction drawing design. Engineering change is inevitable in the process of project construction, which has a great impact on project construction, often leading to project construction delay, out-of-control investment, increased rework and inefficient loss of labor and machinery.
(4) Risk of price increase. First, the construction cost increases due to the rising prices of materials, labor and mechanical equipment, and second, the project financing cost increases due to the increase of loan interest rate.
(5) Collecting the risk of demolition. Land acquisition and demolition work is generally carried out by the government. With the financing of government platform companies becoming more and more difficult, most owners require that the funds for expropriation and demolition be packaged into BT projects to be raised by investors, but the government is still responsible for the expropriation and demolition work. If the actual collection fee exceeds the budget, it will affect investors' financing arrangements and overall investment income. At the same time, if the government's land acquisition and demolition lag affects the construction progress, it will also cause idle personnel and machinery and equipment, increase costs and delay the construction period.
(6) Legal risks. BT mode has been developed in China for a short time, and there are no special laws and regulations to clarify and standardize it in China. There is nothing to follow. State, so that in practice, different places, different projects, different investors and investors have their own contract text and operation mode. Because there is no relevant legal environment and regulatory constraints, it will greatly increase the risks of all links.
3. Risk analysis in the repurchase stage
(1) Government credit risk. The premise of the application of BT mode is the real growth of local government's disposable financial resources. Because the BT model is based on the expectation of the reasonable growth of local government's future fiscal revenue, if the growth of local fiscal revenue cannot be fully guaranteed, there will be government credit risk during the repurchase period, and the government will not be able to pay the repurchase money on time, resulting in investors' economic losses and even survival crisis, which will also destroy the market order and environment.
(2) Tax risk. At present, there are no BT tax laws and regulations in China, and there is also a lack of clear tax regulations in practice. In BT mode, the project is handed over to the owner after completion and acceptance. If it is identified as asset transfer, according to the current tax law, when the owner pays the repurchase price of the project to the investor, the investor needs to pay the asset transfer business tax. However, in the project construction, the investor has paid the construction business tax in one lump sum. If the business tax is paid at the time of asset transfer, it is equivalent to repeated taxation, which will increase the cost of investors.
(3) Audit risk. After the completion of the project, the government audit department will conduct a final audit of the project cost and use it as the basis for the owner to pay the repurchase money. This kind of audit belongs to the category of post-event audit, which does not run through the whole process of construction projects. The audit results often deviate from the real situation and will cause economic losses to investors.