What is BOT financing?

5 1 experts from the Fund Project Network answer your questions:

BOT is the abbreviation of "Build-Operate-Transfer", which means "build-operate-transfer", and its essence is franchising. On the premise of reaching an agreement between the government and private institutions, the government grants concessions to private institutions, allowing them to raise funds to build a city's infrastructure, and manage and operate the facility and its corresponding products and services within a certain period of time in order to repay debts, recover investment and earn profits. At the end of the concession period, the private sector will hand over the facilities to the government as agreed, and the facilities will be operated and managed by the designated departments of the government.

It should be pointed out that the above is a narrow concept of BOT. BOT has experienced hundreds of years of development. In order to adapt to different conditions, many variants have been derived, such as: (1) BOOT (build-own-operate-transfer), that is, build-own-transfer U private partners or international consortia to finance infrastructure projects. After the project is completed, it will be owned and operated within the prescribed time limit, and the project will be handed over to the government after the expiration; (2) BOO(Build-Own-Operate), that is, establishing business. In this way, the contractor builds and operates some infrastructure according to the franchise granted by the government, but does not hand over this facility to the public sector; (3) BOLT (build-own-lease-transfer) and BRT (build-lease-transfer), both of which are infrastructure projects financed by private partners or international consortia. After the project is completed, it will be leased or leased within a certain period of time, and the cost will be recovered and a reasonable profit will be obtained, and then it will be handed over to the government. Although the above forms have different names, they all have the basic characteristics of the internationally recognized BOT model, such as privatization and franchise period. Therefore, it is collectively referred to as BOT mode in practice.