|
In order to solve the problems such as continuously increasing governmental budget deficits and insufficient financial resources for infrastructure, the government begins to apply various kinds of private participation models to the construction of infrastructure, so as to mitigate the governments’ financial burdens, in addition to introducing private funds and enhancing service level. Therefore, the Private Participation Promotion Model and the Government Procurement Model have become the two main systems in our country.
As for the financial feasibility of Private Participation in Infrastructure Projects , the existing evaluation indicators in our country are mainly based on “Self-Liquidation Ratio (SLR)”, which also serves as the standard for whether the government has to provide funding to enhance the possibility of private participation. However, SLR only represents the threshold of “breakeven”, unable to measure whether a project has sufficient incentives for private investment. Consequently, because the reasonability of governmental funding amount can not be evaluated, due to lack of basis, the source of disputes tends to occur.
This study claimed that Project Internal Rate of Return (PIRR), Economic Internal Rate of Return (EIRR), and Debt Service Coverage Ratio (DSCR) should respectively represent the benefits to the three parties—government, private investor, and finance institution, which emphasized that the feasibility comes from the premise of tri-win, so as to substitute SLR and then serve as the evaluation indicators for projects’ financial feasibility. Therefore, the purpose of this study was to establish a set of Trial Balance based on the aforementioned indicators as the feasibility evaluation standard. As for the Private Participation Promotion Model with non-complete self-liquidation, the evaluation was made aimed at the best funding ratio of funded subsidies or investment models selected by governments in the aspect of non self-liquidation, to serve as the decision support instrument for governments to undertake financial feasibility evaluations of private participation promotion cases and decide governmental investment amount.
In this study, based on one Private Participation in Rail Construction Project as the example, the design of a financial trial balance was undertaken. In the primary project, the SLR of this case was evaluated to be 52.15% originally, while the government intended to provide funding of NT$ 48.56 hundred millions in one part of such construction. In this study, three kinds of governmental participation ways were hypothesized respectively, including: governmental subsidies for middle/long term loan interest, participation in funding private institutions’ capital stock, and combinative private participation promotion model (governmental participation in making investment in private institutions’ capital stock, plus subsidies for loan interest). Then, the PIRR, EIRR, and DSCR for each kind of funding way were calculated respectively.
According to the trial balance results of the aforementioned three models, the findings indicated: If the principle was that private vendors’ basic Rate of Return should be satisfied while payment risk in finance institutions should be guaranteed, the government might be unable to have the incentives for private participation in this case, due to the funding amount restrained by the existing laws and decrees. Under such a kind of situation, it is necessary to re-explore whether such a case is suitable for being undertaken by means of private participation model. This also showed: At present, only SLR is applied to the threshold for determining the feasibility of private participation, which is not enough for confirming the willingness of private investment. Instead, in the process of bid invitation, due to bid failure and the derivative needs such as modification of bid invitation conditions, many more purchasing and social costs will occur.
|