Home  Journals  Economic Analysis: Theory and Practice  5(476) - 2018 May

Evaluation of the energy sector's investment projects as a risk management instrument

Vol. 17, Iss. 5, MAY 2018

Article PDF Version

Received: 27 December 2017

Received in revised form: 8 February 2018

Accepted: 6 March 2018

Available online: 29 May 2018

Subject Heading: EVALUATION OF INVESTMENT PROJECTS

JEL Classification: E22, E27

Pages: 856-870

https://doi.org/10.24891/ea.17.5.856

Importance Realization of investment projects is one of the important factors of economic growth. However, models for investment projects evaluation that are implemented under the State support have a number of shortcomings.
Objectives The purpose of the study is to review methods to evaluate investment projects and identify the best ones.
Methods The study draws on the methods of systematization, comparison, and economic analysis.
Results The paper presents a choice of the most optimal model of investment project enabling to mitigate risks related to the probability of default, loss given default and their consequences for the State (in the event of compensation of damages caused by a breach of warranty), to reduce the likelihood of shortfall in tax revenues to appropriate budgets anticipated from the project. The findings may be applied for investment project evaluation to obtain the most accurate risk parameters.
Conclusions The proposed measures implementation implies the use of scenario and probabilistic approaches that make it possible to consider all feasible project alternatives. The State support to investment projects at the macro level allows increasing the country's GDP, as the competitiveness and contribution of each organization to the national economy increase.

Keywords: investment, tax, budget, coal extraction, coal production, budgetary financing

References:

1. Kuvshinov M.S., Komarova N.S. [Enhancing methodological tools for investment projects assessment]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2015, vol. 14, no. 5, pp. 2–14. URL: Link (In Russ.)
2. Janekova J.A. Monte Carlo Simulation – Risk Analysis Tool of Investment Project. Transfer inovácií, 2015, no. 32, pp. 261–263.
3. Panchenko A.V., Abrakhmanov A.A. [Methods for assessing the efficiency of innovative projects with use of real options]. Rossiiskoe predprinimatel'stvo = Russian Journal of Entrepreneurship, 2015, no. 10, pp. 48–56. (In Russ.)
4. Shtefan M.A., Ornatskii A.A. [Heuristic methods in investment project evaluation]. Finansy i kredit = Finance and Credit, 2015, vol. 21, no. 5, pp. 51–63. URL: Link (In Russ.)
5. Tsar'kov V.A. [New methods and models of analysis of investment projects]. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience, 2013, vol. 6, no. 47, pp. 33–43. URL: Link (In Russ.)
6. Kirillov Yu.V., Nazimko E.N. [Estimation of the payback period of investment projects: Economic and mathematical assessment of accuracy]. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience, 2016, vol. 9, no. 16, pp. 20–29. URL: Link (In Russ.)
7. Kogan A.B. [Ways of choice of the most advantageous object of expensive investments]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2013, vol. 12, no. 35, pp. 44–47. URL: Link (In Russ.)
8. Chekhonadskikh L.A. [Basic principles of uniform approach to economic justification of a model to determine the efficiency of investment projects]. Finansovaya analitika: problemy i resheniya = Financial Analytics: Science and Experience, 2008, vol. 1, no. 6, pp. 49–56. URL: Link (In Russ.)
9. Balynin I.V. [Assessing the effectiveness of investment projects: Rules, indicators and their calculation procedure]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2016, vol. 15, no. 6, pp. 26–41. URL: Link (In Russ.)
10. Sazonov A.A., Sazonova M.V. [Application of the Monte Carlo method for modeling economic risks in projects]. Nauka i sovremennost' = Science and Modernity, 2016, no. 43, pp. 228–232. (In Russ.)
11. Ahlin C., Pang J. Are Financial Development and Corruption Control Substitutes in Promoting Growth? Journal of Development Economics, 2008, vol. 86, iss. 2, pp. 414–433. URL: Link
12. Akhmadeev R.G. et al. Impact of Tax Burden on the Country's Investments. Journal of Applied Economic Sciences, 2016, vol. 11, iss. 5, pp. 992–1002.
13. Ailawadi K., Lehmann D., Neslin S. Revenue Premium as an Outcome Measure of Brand Equity. Journal of Marketing, 2003, vol. 67, iss. 4, pp. 1–17.
14. Freedman E., Neuzil M. (Eds) Environmental Crises in Central Asia: From Steppes to Seas, from Deserts to Glaciers. London, Routledge, 2015, 214 p.
15. Kosov M.E., Akhmadeev R.G., Bykanova O.A. et al. Economic Practicability Substantiation of Financial Instrument Choice. Journal of Applied Economic Sciences, 2016, vol. 11, iss. 8, pp. 1613–1623.
16. Maltseva S.V., Kotelnikova P.V. Model of an Optimal Public-Private Partnership Project in the Telecommunications Sector. Business Informatics, 2015, no. 4, pp. 24–31. URL: Link
17. Platon V.A., Constantinescu A.I. Monte Carlo Method in Risk Analysis for Investment Projects. Procedia Economics and Finance, 2014, vol. 15, pp. 393–400. URL: Link00463-8
18. Ram R. Government Size and Economic Growth: A New Framework and Some Evidence from Cross-Section and Time-Series Data. The American Economic Review, 1986, vol. 76, iss. 1, pp. 191–203.
19. Vladimirov S.A. [The nature and main towards effective State investment policy]. Voprosy innovatsionnoi ekonomiki = Russian Journal of Innovation Economics, 2016, vol. 6, no. 4, pp. 343–361. (In Russ.)
20. Baillie R.T., DeGennaro R.P. Stock Returns and Volatility. Journal of Financial and Quantitative Analysis, 1990, vol. 25, iss. 2, pp. 203–214. URL: Link

View all articles of issue

ISSN 2311-8725 (Online)
ISSN 2073-039X (Print)

Journal current issue

Vol. 23, Iss. 3 March 2024

Archive