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The build, operate, and transfer ("BOT") approach to infrastructure projects in developing countries

Author

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  • Augenblick, Mark
  • Custer, B. Scott

Abstract

Build, operate and transfer (BOT) projects are exceedingly complex from both a financial and a legal point of view. They require an extended period of time to develop and negotiate. If a country is not able to finance all of its needed infrastructure on the basis of budgetary resources or sovereign borrowings, the BOT approach is an option to be considered. A BOT project appears to provide some"additionality"in tapping sources of private sector financing which otherwise might not be available. The sponsors'commitment of substantial equity to a project assures that they will also remain committed to the project's successful operation over the concession period. Their investment provides a strong incentive to have the project perform above its minimum expectations. Likewise, having the design, implementation and operation of a BOT project largely in the hands of the private sector may provide economies and efficiencies that will balance out or even outweight the higher financing costs of non sovereign borrowing and equity investment. The BOT approach appears to be a useful possible alternative to the conventional financing and operation of infrastructure projects in developing countries.

Suggested Citation

  • Augenblick, Mark & Custer, B. Scott, 1990. "The build, operate, and transfer ("BOT") approach to infrastructure projects in developing countries," Policy Research Working Paper Series 498, The World Bank.
    • Handle: RePEc:wbk:wbrwps:498
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    Citations

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    Cited by:

    1. S. Ping Ho & Liang Liu, 2002. "An option pricing-based model for evaluating the financial viability of privatized infrastructure projects," Construction Management and Economics, Taylor & Francis Journals, vol. 20(2), pages 143-156.
    2. Schweitzer, Sylvia, 1998. "Finanzierung lokaler Infrastrukturmaßnahmen durch kostendeckende Tarife: Theoretische Analyse und empirische Untersuchung am Beispiel der Wasserversorgung im Jemen," IEE Working Papers 165, Ruhr University Bochum, Institute of Development Research and Development Policy (IEE).
    3. Olsson, Jerry, 2006. "Decentralization of Governance and Financing of Public Roads in the Philippines in the 1990s," Philippine Journal of Development PJD 2004 Vol. XXXI No. 2-, Philippine Institute for Development Studies.
    4. Olivier Debande, 1997. "Le rôle du secteur privé dans le financement des infrastructures : une mise en perspective historique," Revue Économique, Programme National Persée, vol. 48(2), pages 197-230.
    5. International Atomic Energy Agency IAEA, 2008. "Financing Arrangements for Nuclear Power Projects in Developing Countries A Reference Book," Working Papers id:1336, eSocialSciences.
    6. Llanto, Gilberto M., 2008. "A Review of Build-Operate-Transfer for Infrastructure Development: Some Lessons for Policy Reform," Discussion Papers DP 2008-25, Philippine Institute for Development Studies.

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