The ROI Model Regarding the Sino-Foreign cooperation of Construction and Operation of the Water Plant and the Sewage Plant

摘要

In order to improve management and advance technology, Chinese water companies need to promote cooperation with international leader in the industry. The mode of Cooperation has been changed from BOT to joint venture. But fixed return on investment (ROI) is not allowable since 2002, under this circumstance, how to estimate the ROI and appraise the value of investment for foreign investors are pivotal to success of cooperation. In this paper, a new ROI model is founded on the basis of integrating following works: Characteristics analysis of water company, the cost structure analysis, water price adjusting mechanism study and modeling, determination of base water supply, determination of the discount rate, analysis of influence on the value of inflation rate and the risk analysis. The model has been applied successfully to calculate the ROI and estimate the risk of investment in actual Sino-foreign cooperation.