The following graph shows the contractual structure of a typical BOT project or CONCESSION, including loan agreements, shareholder agreement between the project company`s shareholders, and subcontracts for the operating agreement and construction contract, which typically takes place between the project company and a member of the project company consortium. A BOT project is typically used to develop a discrete asset rather than an entire network, and is usually completely new or new (although a renovation may be required). In a BOT project, the project company or project operator typically generates its revenue through a fee charged to the utility/government, rather than through rates charged to consumers. A number of projects are called concessions, such as .B. Toll road projects that are new buildings and have a number of similarities to BOT. [4] Farmers would pay fees equivalent to pumping costs. Under a Build Transfer Operate (BTO) programme, the private sector will be responsible for the construction (including financing) of the project; Once completed, the infrastructure is transferred to the State and the operation of the infrastructure is delegated to the private sector. Examples of countries using BOT include Pakistan[1], Thailand, Turkey, Taiwan, Bahrain, Saudi Arabia[2], Israel, India, Iran, Croatia, Japan, China, Vietnam, Malaysia, the Philippines, Egypt, Myanmar, and some U.S. states (California, Florida, Indiana, Texas, and Virginia). However, in some countries such as Canada, Australia, New Zealand and Nepal[3], the term build-own-operate-transfer (BOOT) is used. The first BOT was for the China Hotel, built in 1979 by Hong Kong-listed conglomerate Hopewell Holdings Ltd (controlled by Sir Gordon Wu). A BUILD-Operate-Transfer (BOT) contract is a financing model for large projects, usually infrastructure projects, developed through public-private partnerships. Increasingly, however, dramatic reductions in the installation costs of solar panels and wind turbines, as well as the imminent phasing out of federal tax benefits on renewable energy, have led to a new opening to utility-owned electricity generation.

A wave of construction transfer transactions – in which the utility hires an external project developer to develop and build a project and transfers ownership to the utility at the end – creates new opportunities and challenges for developers, utilities and equipment suppliers. In such cases, the utility may attempt to protect its interests – and those of its payers – with cost caps or target price contracts, pre-agreed standards (or approval fees) for the remaining development tasks, and basic functional specifications for plant equipment and performance. These provisions apply in addition to the traditional features of a purchase contract or a construction contract, such as. B damage due to defect, performance checks, a comprehensive set of insurance and guarantees and detailed closing conditions. As part of a design-build-operate (BOD) project, the public sector owns and finances the construction of new assets. The private sector designs, builds and operates the assets necessary to deliver certain agreed services. Documenting a BOD is usually simpler than a BOT or concession because there are no financing documents and usually consists of a turnkey construction contract plus an operating contract or a section added to the turnkey contract that covers the operation. The operator assumes no financing risk or minimal risk for capital and generally receives an amount for the design and construction of the plant, which is payable in installments upon completion of the tree blocks, and then operating costs for the duration of operation. The operator is responsible for the design and construction as well as the operation, and therefore if parts need to be replaced during availability before the presumed service life, the operator is likely to be responsible for the replacement. These demands create back pressure from the utility, which must decide how much it can put at risk in order to meet the project schedule and how to mitigate these risks if the project is cancelled or if unexpected problems arise during development or construction.

The recent disapproval of a high-profile wind turbine and transportation construction project by state regulators has only highlighted these risks and the need for careful planning and risk mitigation for utilities and developers. A concession gives a concessionaire the long-term right to use all supplies transferred to the concessionaire, including responsibility for operations and certain investments. Ownership of assets remains in the hands of the authority, and the authority is usually responsible for replacing larger assets. Assets shall revert to the Authority at the end of the concession period, including assets acquired by the concessionaire. In a dealership, the dealer usually receives most of its income directly from the consumer and therefore has a direct relationship with the consumer. A concession covers an entire infrastructure system (i.e. it may also include the acquisition of existing assets by the concessionaire and the construction and operation of new assets). The concessionaire pays a concession fee to the authority, which is usually assigned and used for the replacement and expansion of assets. A concession is a specific term in civil law countries.

To be confusing, in common law countries, projects that are more closely described as BOT projects are called concessions. Under a build-operate-transfer (BOT) contract, a company – usually a government – grants a concession to a private company to finance, build and operate a project. The company operates the project for a period of time (perhaps 20 or 30 years) in order to recoup its investment, and then transfers control of the project to the government. Concessions, build-operate-transfer (BOT) projects, and design-build-operate (BOD) projects are types of production-oriented public-private partnerships. BOT and BOD projects typically include extensive planning and construction, as well as long-term operations for new buildings (greenfield) or projects with significant redevelopment and expansion (brownfields). Below are definitions of each type of agreement, as well as the main features and examples for each agreement. This page also contains links to sector-specific checklists, toolkits and PPP information. Theoretically, one of the advantages of this type of procurement route is that the contractor must consider the entire development lifecycle when making design and construction decisions. .