China is actively investigating ways to introduce project financing, specifically through the build-operate-transfer (BOT) scheme to meet the needs for the country's infrastructure and to be attractive to foreign investors and lenders. The advent of concession agreements, backed by new BOT laws, will be a positive move forward to achieving project-financed infrastructure projects. There are thus opportunities especially in the power sector for foreign investors. However, it is important to identify and manage the unique or critical risks associated with China's BOT projects. This is especially so after policies were introduced in late 1996 when the first state-approved BOT project, the US$650 million 2 � 350 megawatt (MW) coal-fired Laibin B Power Plant (Laibin B), was awarded. They include a competitive tendering process and 100% foreign ownership of the operating company. This paper is based on the findings from an international survey on risk management of BOT projects in developing countries, with emphasis on power projects in China. It discusses specifically the criticality of foreign exchange and revenue risks which include exchange rate and convertibility risk, financial closing risk, dispatch constraint risk and tariff adjustment risk. The measures for mitigating each of these risks are discussed also.Build-operate-transfer Bot Project, Risk Management, Foreign Exchange, Currency Convertibility Risk,

The build‐operate‐transfer (BOT) arrangement is becoming one of the prevailing ways for infrastructure development in China to meet the needs of China's future economic growth and development. Despite tremendous opportunities, the undertaking of infrastructure business in China involves many risks and problems which are mainly caused by China's embryonic legal structure and immature economic market. Further strategies in risk allocation and management are especially important for successful investments in China. Choosing the right path for a BOT project investment is crucial since each project involves different legal rights, different obligations and different risk implications. The present paper describes the structuring and risk allocation, as well as the Government guarantees in a China BOT transport project, the Shanghai Yan'an Donglu Second Tunnel (YD2nd Tunnel). It is also the first BOT project implemented in Shanghai. The project features and the guarantees provided by the Government are described in the present paper.