| Developing construction project needs financial support. But because of all sorts of reasons, initiator may not have the according economic power to complete the construction project independently. For this case, project loans are essential to support the project, which can be thought simply as Project Financing.There are many methods for project financing, but as far as electric power projects are concerned, the most commonly used is BOT (and its outspread methods, for example BOO), that is creditors are responsible for the construction and basic operation, at last transfer the project to the issuer (owner) to complete the project financing process.The process of BOO is quite complicated, because it emphasizes not only borrower's financial credit but also the project's economic intensity, which is its financial value and developing latent. In the financing process, all kinds of things concerned with the project are to be considered by the loaner, which includes: developing trend, economic power, repayment ability, law, insurance and government's support etc. But compared with direct financing, item financing has its great advantages in economic profit brought by independent operation (independent principal, independent capital flow) and investor's stronger power to control the capital flow and limited right of recourse, it will play a more and more important role in China's economic construction, especially for its infrastructure.China will be related to the world more closely after its entry for WTO, especially relevant law and rules need to conform to international standards. So proper, efficient application of BOO project financing will greatly promote China's economic development and will be more and more accepted and applied.
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