Build-Operate-Transfer (BOT) Contract: Definition, Risks, and Framework

A build-operate-transfer (BOT) contract is a model used to finance large projects, typically infrastructure projects developed through public-private partnerships. Under this contract, a public entity grants a concession to a private firm to both build and operate the project and after a set time frame, control of the project is returned to the public entity. These contracts have variations and examples, such as the Bangkok Mass Transit System (BTS) in Thailand. Risks of BOT contracts include financial loss if the project doesn't generate the expected returns. It's important to understand the differences between BOT contracts and public-private partnerships (PPP). While BOT contracts can make sense by transferring the cost and risk of infrastructure projects to private entities, there are potential downsides, particularly for the private company.
0da9