PUBLIC PRIVATE PARTNERSHIPS AND BUILD, OPERATE AND TRANSFER (BOT ...

BOT/ BOOT Schemes
15. The build, operate, transfer (BOT) approach has in recent years played a growing
role in the implementation of industrial and infrastructure projects such as toll roads,
water supply and treatment facilities in both industrialised and developing countries.
They are designed and implemented as Public-Private Partnership (PPP) arrangements.
16. In the FIC region, the need to develop and implement innovative project financing
methods such as BOT is more pronounced given the costs of providing infrastructure
services are naturally high. Small scale, dispersed populations, remoteness and
susceptibility to natural disasters mean that “[Pacific countries] don’t benefit from the
economies of scale infrastructure normally offers, services are often more costly to
produce and maintain, and it is costly to increase access to rural areas”. 4
What is BOT?
17. BOT is the terminology for a model or structure that uses private investment to
undertake the infrastructure development that has historically been undertaken by the
public sector. 5 In a BOT project, a private company is given a concession to build and
operate a facility that would normally be built and operated by the government. The
private company is also responsible for financing and designing the project. At the end of
the concession period, the private company returns ownership of the project to the
government (although this need not be the case). The concession period is determined
primarily by the length of time needed for the facility’s revenue stream to pay off the
company’s debt and provide a reasonable rate of return for its effort and risk.
Other types of BOT
18. The acronym BOT is often used interchangeably with BOOT or build-ownoperate-transfer.
Variants include BOO (build-own-operate without any obligation to
transfer); BT (build and transfer); BLT or BRT (build, rent or lease and transfer); BT
(build and transfer immediately), BTO (build, transfer and operate) 6 , DBFO (design,
build, finance and operate); and DCMF (design, construct, manage and finance); MOT
(modernize, own/ operate and transfer); ROO (rehabilitate, own and operate); and ROT
(rehabilitate, own and transfer).
19. The table provided below reviews the BOT option and its variants, describes
some characteristics of these different procurement arrangements and depicts the
relationship between these different procurement methods and the financing of the
project.
4 Castalia (2005)
5 UNIDO (1998)
6 Possibly subject to installment payments of the purchase price.
5