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INFRASTRUCTURE & RESOURCE

Other variants include BOOT (build, own, operate risk is placed as far as possible on the contrac-
and transfer) and BOO (build, own, operate). In tors. The contractor undertakes responsibility for
BOO projects the promoter fi nances, designs, con- constructing the asset and is expected to build the
structs, and operates a facility over a given period project on time, within budget and according to a
but it does not revert to the government as it would clear specifi cation and to warrant that the asset will
using the BOOT strategy. perform its design function. Typically this is done
Further extensions of the concept are BRT or BLT by way of a lump-sum turnkey contract.
(build, rent/lease and transfer) or simply BT (build
and transfer immediately, but possibly subject to O for own
instalment payments of the purchase price). The concession from the state provides for the con-
cessionaire to own, or at least possess, the assets
Another approach, BTO (build, transfer and that are to be built and to operate them for a period
operate), has become increasingly popular in the of time: the life of the concession. The concession
Far East and is particularly preferred by power and agreement between the state and the concessio-
telecommunications authorities. It is a simpler naire will defi ne the extent to which ownership, and
transaction or concept than BOT and BOOT that its associated attributes of possession and control,
can be implemented in a shorter time without the of the assets lies with the concessionaire.
need for the formation of a project company and
with the project assets being owned by the public O for Operate
sector. An operator is to assume responsibility for main-
taining the facility’s assets and operating them on
a basis that maximises profi t or minimises cost on
The Components of BOOT behalf of the concessionaire and, like the contrac-
tor undertaking construction of the project, the
B for build operator may provide funds to fi nance construction
This is probably the easiest part of the acronym to and be a shareholder in the project company. The
understand. The concession will grant the promo- operator is often an independent company appoin-
ter the right to design construct and fi nance the ted under an arm’s-length agreement. However,
project. A construction contract will be required in some cases the promoter operates the facility
between the promoter and a contractor. The directly through the promoter company.
contract is often among the most diffi cult to ne-
gotiate in a BOOT project because of the confl ict T for Transfers
that increasingly arises between the promoter, the This relates to a change in ownership of the
contractor responsible for building the facility and assets which occurs at the end of the concession
those fi nancing its construction. period, when the concession assets revert to the
Banks and other providers of funds will want to be government grantor. Transfer may be at book value
sure that the commercial terms of the construction or no value and may occur earlier in the event of
contract are reasonable and that the construction failure of the concessionaire.

78 78 Impiantistica Italiana - Marzo-Aprile 2022