Literature Review Project Financing Model

Abstract: In the current economic situation, the financial crisis, the financing of many projects is even more difficult project financing, there are many models, each with its own characteristics and scope of use. The choice of financing to expand sources of funding, the investment diversification, and improve investment efficiency, speed to become the only way for China's infrastructure construction in recent years many scholars are concerned in this area, and the formation of a number of valuable Research results. to sort out these documents, and a detailed analysis in order to solve the BOT model The current infrastructure financing problem.

Keywords: project financing, BOT model, infrastructure

1 model overview

1.1 TOT mode (Transfer-Operate-Transfer)
TOT model (Transfer-Operate-Transfer) is a "transfer - operate - transfer" for short, specifically refers to the host country and foreign investors to sign a franchise agreement, the operation has been put into infrastructure projects to foreign investors to transfer, With the facility's revenue in the next few years, one-time financing from foreign investors who have funds for the construction of new infrastructure projects, franchise expires, then the infrastructure to foreign investors free of charge transferred to the host country.


1.2 ABS mode (Asset-Backed-Securitization)
ABS mode (Asset-Backed-Securitization) that "asset securitization" for short, which in recent years the emergence of a new infrastructure project financing, and its basic form is based on the project assets to ensure future earnings, by country lower cost capital markets issuance of bonds to raise finance in the West, ABS model is widely used in sewage, environmental protection, electric power, telecommunications and other large-scale investment, long payback period of infrastructure and utilities projects.


1.3 IIF mode (Infrastructure-Investing-Fund)
IIF mode (Infrastructure-Investing-Fund) that infrastructure investment fund industry, the specific process is to set up fund management companies, investors, issued to specific units or non-specific fund, will invest in different funds for infrastructure projects, After the completion of the project to be invested to achieve capital appreciation through equity transfer, the benefits and risks shared by investors, sharing. IIF model has the advantage of the accumulation of funds for decentralized community infrastructure projects.


1.4 UEC mode (Using-Equipment-Contract)
UEC mode (Using-Equipment-Contract) that the use of equipment protocol model, investors with project users of the facility in advance to sign "Facilities Use Agreement" and was committed to pay, and then set up the project company, the project company to use the protocol as a carrier to arrange financing financing its primary credit guarantee from the "Facilities Use Agreement" in the user's unconditional commitment to pay, in the specific financing structure design is often made of a protocol to use debt financing for the project actually guarantees or credit enhancement means. UEC model is more suitable for capital-intensive, lower-yielding but relatively stable infrastructure projects, such as oil, natural gas pipelines, port facilities and so on.


1.5 PFI mode (Private-Finance-Initiative)
PFI mode (Private-Finance-Initiative) that private financing initiative for infrastructure projects and utilities, project tender by the government to determine the private investors, and to authorize the latter is responsible for project financing, construction and operation, as The return of private investors, the Government within the period authorized for fiscal year funds to pay him some royalties or lease fees, authorized to operate in the end, the private investors the free transfer of the project to the government. PFI model is mainly used Some do not charge to the public in the projects, such as free bridges, tunnels and so on.


1.6 URM mode (User-Reimbursement-Model)
URM mode (User-Reimbursement-Model) that the user pays model, means that the Government tender selected the appropriate subject of private investment in infrastructure projects, while the beneficiary designated by the government a reasonable fee system and through certain technical means to The cost of transfer payments to private investors in the project, as purchases of services funds.


1.7 ST model (Shadow-Tolling)
ST mode (Shadow-Tolling) that the shadow toll model, is for infrastructure and utilities projects, the Government identified by way of tender private investors, and to authorize the latter is responsible for project financing, construction and operation, as the main body of the civil return, the Government authorized period of fiscal year to fund capital or other forms of compensation paid to certain fees, compensation for its services free of charge to the public interest should be obtained to authorize the close of business, private investors free transfer of the project to government.


1.8 PPP mode (Private - Public-partnership)
PPP mode (Private-Public-partnership) or "partner" system, referring to the public sector through partnerships with the private sector to provide public goods or services in a way. PPP includes BOT, TOT and other models, with emphasis on the process of cooperation The risk-sharing mechanism and the monetary value of the project (value for money) principle. PPP model in infrastructure and utilities projects in developed and an optimized project financing and implementation model is a kind of participants' win-win "or" win-win "for the modern concept of co-financing model.


1.9 BOT model and its variants (Build-Operate-Transfer)
BOT model (Build-Operate-Transfer) "build - operate - transfer," the abbreviation, referring to the government or government-authorized company will be building an infrastructure project, and authorized by the contract to finance another investment company , investment, construction, operation, maintenance, the investment company within the period stipulated in the agreement to earn money through business, and take risks. the government or government-authorized companies in the second period to retain the right to regulate the supervision of the project. agreement expires, According to the agreement by the authorized investment companies transferred the project to the Government or government-authorized company. BOT for now is not profitable and there is a good or a certain future earnings potential of the project.

On the basis of the BOT model, and derived from the BOOT, BOO and other similar models, these are generally regarded as a variant of BOT model, the main difference between them lies in the integrity of property investors have different levels of the project: the BOT mode, the investor has a project in a temporary concession period property, but not complete, in BOOT mode, investors in the franchise during the temporary ownership of the project property, and the more complete and investors participation in higher than the BOT model, the BOO mode, the long-term investors with a complete project ownership, similar to a permanent franchise.


1.10 BT mode (Build-Transfer)
BT model (Build-Transfer) that "the construction of a transfer" for short, is the practical application of the PPP model in the specific evolution, which is characterized by an agreement authorized by the investor is only responsible for the project investment and financing and construction, project completion experience, income eligibility later, by the government or its authorized redemption of units under the contract. BT model is mainly applied after completion of the project can not be directly available to the public products and charge the case, we can only direct government payments to the sponsors of the project funds make the project serve the public. BT model is an innovative financing models, in recent years in infrastructure and utilities projects has been widely used.


1.11 to "leveraged lease" model based on project financing Share Research Papers Download http://www.hi138.com in sheets very well in the <<Project Financing>> (2003) discussion of the model as: leveraged lease-based financing model to organize the project. refers to the investors in the project requirements and arrangements, the structure of the leveraged lease financing of purchases of assets, the assets of the lessor and leased to the lessee (project investor) a financing structure. lessors and asset finance lending banks and credit guarantee of income mainly from the structure of the tax benefits, lease costs, the project assets and cash flows of the project's control. Yang Kaiming <<Corporate Finance>> (2004) leveraged lease that Syria do more complicated because, generally apply only to large-scale equipment leasing programs, such as aircraft, ships, containers, pipelines, etc.

These are the several typical modes of financing a brief introduction and summary. Jiangxian Ling in the <<Project Financing>> (2004), Lu instrument in the <<Project Financing>> (1998), MA Xiu-Yan, Lu Hongsheng in the <<Project Financing> > in the above modes of financing are more or less the introduction, there are a lot of project finance model is worthy of us to explore and study, not to get to the bottom and set out in this.


2 specific analysis: BOT model

2.1 BOT features
Xu Li <<Project Financing>> (2006) made some note of its features: contemporary capitalist countries in a market economy based on the introduction of a strong state intervention, while economics, in theory, also affirmed the "look able to see the hand "effect, the market economy gradually evolved into a combination of market and planned mixed economy. BOT precisely with this government intervention in market mechanisms and the combination of the characteristics of mixed economy the one hand, BOT to maintain the market mechanism to play a role On the other hand, BOT for government intervention to provide an effective way, this is the private sector and the agreement reached by the BOT.


2.2 The steps to implement BOT
(1) project initiated by the project have formed a dedicated company (project company), a dedicated company with the host government or the relevant government departments to achieve the project concession agreement.

(2) the project company and construction contractor to sign the construction contract, and get builders and equipment suppliers insurance company guarantees a dedicated company with the operation of the project management contractor to sign the project agreement.

(3) the project company entered into loan agreements with commercial banks or export credit bank signed a buyer's credit agreement.

(4) into the operation phase, the project company to project a guaranteed income transfers to the trust. Then this part of the trust income guarantee for repayment of bank loans.


2.3 BOT financing advantages
Yang Kaiming <<Corporate Finance - Theory, Practice and Risk Management>> (8004) considered that: BOT government and private capital financing is a partnership, both partners proved both its positive side, there are also some disadvantages .

(1) BOT financing the government's impact on the government Laishui. BOT financing the positive role mainly in the following aspects: First, to reduce the project's impact on the government budget, the Government can the absence of sufficient financial resources still be able to schedule some public construction projects, and the second, project financing do not need any government to come forward, will not constitute government debt, third, the introduction of foreign management of infrastructure development and construction of the new technology, improve and enhance the domestic project management level.

(2) BOT financing for private capital impact of private capital is, BOT financing attraction is: First, can guarantee a higher and more stable return on investment, because the BOT project in the business has certain advantages, the first Second, for private capital, particularly foreign private capital to enter a new market and lay a good foundation, and the third, can increase social awareness of private capital, private capital investment in public projects in the community will have a positive profound impact.

Of course, BOT project financing, there are certain risks, these risks include political risk, currency risk and interest rate risk, we can reduce the risk to a reasonable use of the advantages of financing, infrastructure project financing to achieve success.


3 Conclusion

BOT model to date there is still a short time a new project financing structure, the international financial community's view is more consistent, BOT model in project financing in the performance of infinite potential, but much work needs to be done to it truly portable to different projects going. BOT model in China in recent years has attracted wide attention, and in a number of large infrastructure project financing has been used and achieved good results in the current economic situation, take advantage of favorable advantage of BOT model can effectively solve some of the infrastructure project financing problem, speeding up China's infrastructure construction, promote the healthy and orderly development of the current economy. Links to free download http://www.hi138.com