| In 1980's infrastructure construction demand was increasing rapidly in many countries especially in the developing countries. Loan provided only by the government and the international financial organization could not meet the satisfaction. Debt crisis also resulted in the declining capacity for extending credit. As a result, it was difficult for the government to put more money in infrastructure project. Under such condition, s new method of collecting funds for infrastructure construction was keenly required.In the past 20 years there has been a wave of worldwide interest in project finance as a tool for economic investment. As one kind of typical finance methods. BOT project finance has been widely put into application since it was originated in 1984. Furthermore, BOT is envisaged to be with vast potential development capability and good prospects in the future. BOT is the short form of "BUILD-OPERATE-TRANSFER" .Its main point stated that the host government or its authorized administration provides the concession agreement to the foreign or the domestic project sponsors. The latter specially organized a project company to undertake the implementation and management of BOT project. BOT is a kind of limited-recourse project finance approach, that is to say, as long as it is restricted in the concession period, the project company bears the repayment responsibility of all debt. When the concession period is expired all capitals and properties of project are unconditionally transferred to the host country.Since the 20 years' s reform and open up our country has achieved a steady and stable national economy development, however, infrastructure and service trades lag behind. On the other hand the supply of electric power is poor, and the transportation capacity does not cater to the social development. To change such situation our government has invested millions of money in many sectors such as energy and transportation. Improvement in marine, road and air transportation is great but not enough to satisfy the economic growth. Infrastructure, as a result, has become a bottleneck in economic development. Now our national economy is in the booming period. Therefore, infrastructure requirement is raised to a higher level. Not only the present infrastructures need to be reformed but also new ones are required. However, there is a shortage of funds which is a wide gap. Facing the problem of funding shortage, the traditional method of depending only on in-frastructure investment is ineffective.BOT finance project technique is generally used in the infrastructure projects that are with large investment scale, long operating cycle and relative stable return and profit. To the benefit of sponsors and investors, BOT structure is able to alleviate investment risk and raise finance at a relatively low cost. For the host government, the major advantages of BOT could be concluded as follows: Solving the problem of infrastructure funding shortage to a certain degree. Helping to lighten the financial burden of the government. Allocating project investment risks and avoid government's debt crisis. Contributing to the absorption of foreign advanced skills in design, construction and management. Improving the project implementation efficiency.In recent years, China has achieved great growth in economy development, and infrastructure construction demand is increasing dramatically. However, the vast investment requirement could not be met relying only on the government fund. Under such circumstances , it is very necessary take BOT project finance as a new methods of utilizing foreign finance or capital especially in infrastructure projects. It will contribute a lot to Chinese investment system reform. The planning of utilization of BOT project finance was put forward early in "the Eight-Five Year-Plan"of China, and Shajiao C Power Plant in Guangdong was the first BOT project in China. Afterwards, China has made successful use of BOT project in many sectors. |
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