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

Mark Augenblick and B. Scott Custer

No 498, Policy Research Working Paper Series from The World Bank

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.

Keywords: Municipal Financial Management; Public Sector Economics&Finance; Housing Finance; Environmental Economics&Policies; Banks&Banking Reform (search for similar items in EconPapers)
Date: 1990-08-31
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Citations: View citations in EconPapers (6)

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