Economic Analysis: Theory and Practice
 

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

Vol. 17, Iss. 5, MAY 2018

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

Kosov M.E. Financial University under Government of Russian Federation, Moscow, Russian Federation
kosovme@mail.ru

ORCID id: not available

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

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