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sion financing is therefore similar to limited-or non-
resource project finance, except that the revenues
are received under the terms of a concession agre-
ement. The project will be approached in a similar
way to limited-resource project financing in which
the risks are isolated and allocated to those most
qualified to bear them.
Each structure created is unique to the project, but
generally BOOT/PPP is essentially a concession or
global-service contract offered by a government
and financed and undertaken by the private sector.
A BOOT project often requires a promoter to enter
into a number of contracts with a variety of parties.
It is possible, however, for any particular project to
have all, some or none of these contracts. A typical
simple structure created between the various par-
ties is outlined in Figure 1. A more complex struc-
ture is necessary where the mending is sourced
offshore in the international markets and is set out
in Figure 2.
Figure 1 - Example of a simple BOOT/PPP Structure
The allocation of risks between the typical parties
to a BOOT structure, as shown in the diagram, is
regulated by the various agreements which the
parties enter into.

• The concession company promotes the
project and has the ultimate liability to the go-
vernment under the concession agreement.

• The concession agreement (sometimes
referred to as the implementation or project
agreement) is the primary contract between
the government and the concession company
and forms the contractual basis from which
the other contracts are developed. It entitles
the concession company to build, finance and
operate the facility and imposes conditions
as to design, construction, operation, of the
project and establishes the concession or
operation period.
• The equity investors’ and lenders’ secu-
rity for their loans and investment is limited to
the revenues to be received by the concession
company. They will therefore have considera-
ble interest in the revenue forecasts produced Figure 2 - Example of an international BOOT/PPP Structure
by the concession company. Likewise the
two areas that place the concession company offer some protection against time-and-cost
and equity investors and lenders at risk are the overruns.
construction contract and the operating con-
tract. • The operating contract: The lenders have to
be assured that an experienced operator will
• The construction contract: The parties be available on completion of construction.
would prefer a contractor to give a fixed
price for completion by a fixed date without • The offtake contract. This is one of the
exclusions. This is rarely possible in projects key contracts. As limited-resource projects
of this nature. Finance providers are therefore are, by definition, funded on the security of
only prepared to commit themselves to a the future cash flow, there has to be some
fixed amount because if the project costs form of buyer. Projects fall into two catego-
more their funds will be in jeopardy due to ries: those where the identity of the buyer
the interest burden. Lenders will not accept is obvious, for example toll roads and some
the risk of delay to completion, although they power stations and those where there is
will normally provide a standby facility to physical product which has to be sold, of-

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