China's Power Industry Project Financing Mode Selection And Suggestions

In recent years, along with the sustained and vigorous development of Chinese national economy, the electric power industry faces crucial challenge. On one hand, the conflict between the demand and the supply of electric power becomes more and more prominent. On the other hand, China has tremendous storage of energy resources which have not been fully exploited and used. Although we have already put more investment into infrastructure and fundamental industries and alleviated the neck of economy development, the requirements of sustainable development have not been met yet. Only in electric power department, with an annual growth rate of 8%, there is a continuing need for 12-15 giga-watts of new installation capacity each year. To maintain the growth speed and meet the investment demand local resource is far from enough. It is estimated that the investment on this industry is over RMB 1,750 billion during the period of the 11th five years. In fact, the traditional financing model is no longer suitable to the large amount of investment. It is still necessary to utilize foreign capital actively, deepen the reform and explore other financing channels.Project financing is a new-type more flexible international fund -raising method, namely non-recourse or limited-recourse loan. The asset of the project is taken as the only mortgage, not including the credit of the project developer or their relative tangible assets. The repayment is ensured by capital flow of income, and the risk of it will be restricted to the assets and rights within the project. This fund-raising method guaranteed by income with little capital has an important practical meaning to the developing countries having a lot of projects with significant perspective but suffering from the lack of money.On the base of financing theories, This article make out system problems in projectfinancing, and construct a new model of project financing-improving the investmentstructure, financing structure, capital structure and insurance structure in BOT at present. In additions, this article put forward solutions and suggestions to improve the efficiency of financing operations, and make sure the profits of two parties.