(b) the limited borrowing capacity of developing countries and decrease in their
capability to obtain loans from donor countries,
(c) given that many countries have over-borrowed, they have not been able to
reimburse in time, entailing a debt re-scheduling, and lesser replenishment of
the donor countries’ funds,
(d) a decrease in global infrastructure business has encouraged international contractors i.e. the private sector to participate in the projects by investing their own
money, share the inherent risks, and enter into Joint Ventures,
(e) given the general, and often poor, performance of the public sector, and its slow
procurement processes, the Government has welcomed private sector involvement in development projects,
(f) recognition of performance flaws, both in the public and private sectors.
18.3 The History of Build, Operate, Transfer
Although the term Build, Operate, Transfer (BOT) is relatively new, the practice of
authorising private concerns to develop and operate infrastructure projects has been
around for several centuries. In Europe, such projects were called “concessions”
whereby the government would establish the major objective of a particular project
and assume the role of defender of the public interest, but would allow a private
company or consortium to design, finance, construct, and operate the particular
project for a certain concessionary period. The concessionaire would assume responsibility for the completeness of design, any risks associated with construction, and
the control of operational costs, all of which would be reimbursed by the collection
of revenue from the public making use of the finished project. The concessionaire
would be granted a specific concessionary period, after which time the contract
might be renewed at the option of the government, or title would be transferred from
the concessionaire to a government agency.
18.3.1 The First BOT Project in the Modern World: The
Suez Canal
In 1834, a British engineer Galloway Bey proposed linking the Mediterranean Sea
with the Red Sea via a railroad line. The English, who at that time were world leaders
in railroad construction, found this scheme appealing. Over the next several years,
various French and English business officials, working with their respective government officials, discussed methods by which the two seas could be linked for
commercial exploitation, and both groups sought to enhance their respective positions with the Ottoman Empire that ruled the Middle East.
The Frenchman, Barthelemy Prosper Enfantin, formed the Société d’Etudes du
Canal de Suez in 1847, a tripartite group of French, British, and Austrian members
18.3 The History of Build, Operate, Transfer
501
capability to obtain loans from donor countries,
(c) given that many countries have over-borrowed, they have not been able to
reimburse in time, entailing a debt re-scheduling, and lesser replenishment of
the donor countries’ funds,
(d) a decrease in global infrastructure business has encouraged international contractors i.e. the private sector to participate in the projects by investing their own
money, share the inherent risks, and enter into Joint Ventures,
(e) given the general, and often poor, performance of the public sector, and its slow
procurement processes, the Government has welcomed private sector involvement in development projects,
(f) recognition of performance flaws, both in the public and private sectors.
18.3 The History of Build, Operate, Transfer
Although the term Build, Operate, Transfer (BOT) is relatively new, the practice of
authorising private concerns to develop and operate infrastructure projects has been
around for several centuries. In Europe, such projects were called “concessions”
whereby the government would establish the major objective of a particular project
and assume the role of defender of the public interest, but would allow a private
company or consortium to design, finance, construct, and operate the particular
project for a certain concessionary period. The concessionaire would assume responsibility for the completeness of design, any risks associated with construction, and
the control of operational costs, all of which would be reimbursed by the collection
of revenue from the public making use of the finished project. The concessionaire
would be granted a specific concessionary period, after which time the contract
might be renewed at the option of the government, or title would be transferred from
the concessionaire to a government agency.
18.3.1 The First BOT Project in the Modern World: The
Suez Canal
In 1834, a British engineer Galloway Bey proposed linking the Mediterranean Sea
with the Red Sea via a railroad line. The English, who at that time were world leaders
in railroad construction, found this scheme appealing. Over the next several years,
various French and English business officials, working with their respective government officials, discussed methods by which the two seas could be linked for
commercial exploitation, and both groups sought to enhance their respective positions with the Ottoman Empire that ruled the Middle East.
The Frenchman, Barthelemy Prosper Enfantin, formed the Société d’Etudes du
Canal de Suez in 1847, a tripartite group of French, British, and Austrian members
18.3 The History of Build, Operate, Transfer
501