Click here for Pulp & Paper Radio International
The Paperitalo Library
Free Downloads
My Profile
"Country Risk" takes on a whole new meaning
Comment Print

In the decades I have been working on project finance in the pulp and paper industry, the investment community has often bifurcated risks into "Project Risk" and "Country Risk." These are fairly self-explanatory. "Project Risk" are, of course, the risks that the project itself may incur--construction completion on time and budget, market conditions (raw materials and finished products) and so forth and so on. "Country Risk" has had a separate consideration. This has to do with government stability, currency exchange risks and so forth.

With current conditions in California, it is now in order to consider "country risk" in California. California clearly cannot assure a stable supply of electricity. Further, it cannot assure a stable environment--wildfires seem uncontrollable there. In recent years, I have heard a lot of grumbling about excessive regulations in California discouraging investment, but these new conditions take the concern to a whole new, and unpredictable, level. I don't think investors will have much interest in stepping into these conditions.

If you are considering siting a new facility in California, proceed with caution. Conditions in California are clearly not as stable as we normally expect in the United States.

Jim Thompson is CEO of Paperitalo Publications.

Advertisement--listen to Pulp and Paper Radio International

Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: