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Quasi-BOT 

In recent years government departments at various levels have entrusted some domestic organizations to invest and build many "BOT" projects. In essence, these "BOT" projects are different from the BOT projects that referred to in the international financing domain. Because these projects only have the process of build-operate-transfer but without the character of limited recourse, therefore are recommanded to be named "Quasi-BOT".

Such "Quasi-BOT" has greater denotation than BOT, in other words, it includes BOT. Objectively speaking, Quasi-BOT is a creativeness and suitable to the situation of China. In order to arrange for the right limited recourse, expense in the earlier phase of BOT project is relatively high, thus BOT is only suitable for large-scale projects. Quasi-BOT avoids the problem of limited recourse and simplifies project structure, so it is suitable for medium and small-scale project financing. Besides, most domestic banks have no experience and regulation on limited recourse financing, therefore it is one of the options to implement Quasi-BOT under current conditions of China’s capital market.

As quasi-BOT does not have the feature of limited recourse, the project loans of quasi-BOT are also the loans of shareholders and debt must be incorporated into their balance sheets, which limits the shareholders’ ability to finance other projects.

 


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