Comparative Study of BOT Projects

Abstract

When the concept build‐operate‐transfer or BOT was first introduced in Turkey as part of its privatization program, it immediately captured the interest of other developing countries. They saw BOT as a method to finance the construction of major infrastructure projects without the need for direct sovereign guarantee on the loans. Recent successes by the project sponsors in raising funds for the Channel Tunnel and Sydney Harbour tunnel show that the concept is viable even in large projects. The winning bids in six BOT projects illustrated that government incentives were vital to attract financing. For BOT projects to be successfully implemented, the project sponsors must make sure that the risks are properly allocated and that each participant has sufficient contractual incentives and securities to be committed to the projects. Each of the parties involved must be connected by appropriate contracts and agreements with the project company acting at the hub of the security package. This will foster understanding and cooperation among the parties throughout the concession period.

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