Wang, S Q; Tiong, R L K; Ting, S K and Ashley, D (2000) Evaluation and management of foreign exchange and revenue risks in China's BOT projects. Construction Management and Economics, 18(2), pp. 197-207. ISSN 01446193
Abstract
China is actively investigating ways to introduce project financing, specifically through the build-operatetransfer (BOT) scheme to meet the needs for the country's infrastructure and to be attractive to foreign investors and lenders. The advent of concession agreements, backed by new BOT laws, will be a positive move forward to achieving project-financed infrastructure projects. There are thus opportunities especially in the power sector for foreign investors. However, it is important to identify and manage the unique or critical risks associated with China's BOT projects. This is especially so after policies were introduced in late 1996 when the first state-approved BOT project, the USS650 million 2 × 350 megawatt (MW) coalfired Laibin B Power Plant (Laibin B), was awarded. They include a competitive tendering process and 100% foreign ownership of the operating company. This paper is based on the findings from an international survey on risk management of BOT projects in developing countries, with emphasis on power projects in China. It discusses specifically the criticality of foreign exchange and revenue risks which include exchange rate and convertibility risk, financial closing risk, dispatch constraint risk and tariff adjustment risk. The measures for mitigating each of these risks are discussed also.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | build-operate-transfer project; currency convertibility risk; foreign exchange; risk management |
| Index terms: | financing, China, revenue, international survey, competitive tendering, developing country, agreements, infrastructure project, risk management, build-operate-transfer, ownership, power plant, investor |
| Subjects: | sociology, infrastructure and transport systems, economics, tendering, development economics, Geography, research products and data, contract formation, economic analysis, contractual arrangements, risk assessment |
| Topics: | Business Strategy, Engineering Principles, Geographical Context, Research Practice, Stakeholder Management, Risk Management, Procurement, International Construction, Organizational Design, Contract Administration |
| Descriptive scope: | 2 PC |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here