Research of Financial Leasing Within the Financing of M Bank Energy Management Contracting Project
|Keywords||Energy Management Contracting Financial Leasing Energy Management Company Financing Mode|
At present time, China is one of the countries that consumed the most coal, steel, iron ore, alumina, copper, and cement in the world; the second largest consumer of energy products; however also one of the countries that has low energy efficiency and large energy waste.China has introduced the Energy Management Contracting Mechanism by late 1990s, after demonstration, guidance and publicize, the Energy Management industry has grown rapidly, more and more specialized Energy Management companies continue to emerge; the scope of the service has extended to metallurgy, building materials, petrochemical, electric power, construction, transportation, public institution and many other fields. During China’s 11th Five-Year Plan (5YP) period, the average growth rate of the EM (Abbreviation of Energy Management) industry’s total output is above 60%, total capital invested in the Energy Management Contracting project has amounted to 68.395 Billion, Energy-Saving capacity is around 22.4268 million Standard Coal, and the annual CO2 Carbon Emission reduction has been decreased to 61.067 million tons, total investment in Energy Management Contracting is 15 times more than the 10th 5YP period, the EM industry has contributed more than 180 Billion to the entire social capital investment. Total value of output of the EM industry added up to 83.629 Billion by the end of the 11th 5YP period, there are now 782 companies around the country whom have employed Energy Management Contracting Mechanism for executing EM project, Energy Management companies have became the main force within the market for driving the National Energy-Saving and Carbon emission reduction.China’s 12th 5YP (2011-2015) has clearly layout the need to accelerate Energy Management Contracting, promoting EMC (abbreviation for Energy Management Contracting) is the key point among proceeding Energy Conservation. Lately, the Government has introduced a series of supporting policies in order to improve the Energy Management Contracting Mechanism, the Energy Management industry in China has arrived at an unprecedented developing era. Nevertheless, China’s Energy Management Industry is still facing many outstanding difficulties such as the difficulties of effectuating the Monetary and Taxation supporting policies, financing difficulties, as well as the relatively small scale and unregulated development of the industry; the Energy Management Contracting projects particularly lacked of the support from Financial Institutions. Therefore, according to the industry’s features and under certain risk control; the Energy Management Companies together with the Financial Institutions, should speed up for launching the suitable financial instruments; thereby fulfill the financial needs of broadening the EM industry.The incompatible capital investment recovery period is the choke point for implementing Energy Management Contracting project; traditional financing methods cannot wholly satisfy the financial requirements of the Energy Management Company. Financial Leasing is widely accepted as the Resources Allocation Mechanism that’s financed though Asset Leasing instead of Fund Leasing, apply this feature to the financing needs of the EMC projects and consequently, Financial Leasing transactions linked the Financial Institutions, Energy Management Company and Energy Consuming company together, providing new ways and means for implementing the EMC projects, which has significantly contributed to solving the financing difficulties.This thesis is based on the analysis of the current status of financing Energy Management Contracting project, through the real case demonstration of SW Company on implementing EMC project, mainly focused on solving the financing needs of EMC project, and finally reviewed the feasibility and economic efficiency of such application, from the perspective of M Bank as the fund supplier; thus established the application mode and operation flow of Financial Leasing in the process of financing the M Bank Energy Management Contracting project, and hopefully could offer some inspirations for the EMC participants when making financing choices.