Evaluation and Competitive Tendering of BOT Power Plant Project in China

Abstract

The tremendous economic growth in China has resulted in an immense demand for basic infrastructure like roads, ports, and power generation facilities. There are thus many investment opportunities for foreign investors. At the same time, some innovations have also been introduced in procurement practices. For example, the build-operate-transfer (BOT) scheme, open competitive bidding, and fully foreign ownership were adopted at the end of 1996, when the concession of the first state-approved BOT project, the Laibin B power plant project in Guangxi Province, was awarded. It is important, therefore, for foreign investors to understand the current regulations, approval procedures, and evaluation and competitive tendering of privatized infrastructure projects by the government-approved BOT project agents in China, in order to secure concession contracts and manage the associated project risks well. This paper discusses these innovations, the roles of the BOT project agents, and the evaluation and competitive tendering of BOT projects in China based on the Laibin B power plant project. The lessons for investing in future similar BOT projects in China are also drawn.