BOT financing mode (that is, construction-operation-transfer-construction-operation-transfer) is one of the various ways of project financing, which is also called "franchise investment and financing mode" in China. Generally, the host government or local government grants the project to the project company specially established by the project sponsor through the concession agreement, and the project company is responsible for the investment, financing, construction, operation and maintenance of infrastructure (or basic industry) projects; Within the stipulated concession period, the project company has the ownership of the investment and construction facilities (but not in the full sense), and is allowed to charge appropriate fees from the users of the facilities to recover the investment, financing, construction, operation and maintenance costs of the project and repay the loans; After the concession expires, the project company will hand over the facilities to the host government free of charge.

Although BOT financing mode includes three processes: construction-operation-transfer, it is not a simple superposition of the construction-operation-transfer processes. Therefore, there are many "BOT-like" operation modes called BOT project financing in China, which do not have the characteristics of project financing because there is no financing process. This mode of operation does not necessarily require the direct participation of commercial banks, or even if commercial banks participate in the form of loans, they will use the asset mortgage or credit guarantee of investors (not the project company) to obtain loans instead of project financing, so it is not a limited recourse to the project. BOT financing has many advantages and has been widely used in both developed and developing countries. For developed countries, the government can:

Reduce government expenditure, thereby reducing government debt and deficit.

Give full play to the initiative and creativity of private institutions and improve efficiency.

For developing countries, BOT model can help the government to solve:

The demand for infrastructure construction driven by economic development is strong, which requires a lot of capital investment.

International capital investment opportunities driven by capital market

Accelerate the promotion of technology transfer and efficiency improvement.

Due to the above advantages of BOT financing, most major contractors in the world adopt BOT project financing to undertake overseas projects, and have achieved great success. For example, Japanese contractors, suppliers and banks actively provide export credit and use BOT to obtain many projects in the international contracting market. BOT has the typical characteristics of non-recourse project financing;

Creditors have no recourse to assets and income other than construction projects: BOT is a form of financing by using assets (mainly infrastructure), while creditors have no recourse to other assets of project sponsors. The cash flow generated by completed projects is the only source to repay loans and provide investment returns.

Financing does not mainly depend on the credibility of the project sponsor or the tangible assets involved. Creditors only consider whether the project itself is feasible, whether the cash flow and income of the project can repay the loan, and their loan income depends on the benefit of the project itself. Domestic institutions do not mortgage, pledge or repay debts with assets, rights and benefits other than construction projects. Domestic institutions do not provide any form of financing guarantee. "Simply put, it is a financing method to raise funds with the project's own assets and future income as collateral. The project financing debt ratio is generally high and the structure is complex; Most of them are medium and long-term financing, with large capital demand, high risk and correspondingly high financing cost; The funds obtained are earmarked for special purposes.

As an independent legal person, the project company is established, and the project company is the direct debtor of the project loan.

There are many contract documents and insurance to spread and avoid risks.