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Case Title:

Build Operate and Transfer (BOT): Is this Public Private Partnership (PPP) best suited for delivering public goods?

Publication Year : 2010

Authors: S Chaudhuri and S Nath

Industry: General Business

Region:India

Case Code: PPP0006IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
Many European countries were devastated after World War II and the colonies emerged as free sovereign states. The countries remained underdeveloped and were characterised by massive poverty. As a result, there was a need to reap the efficiencies of the private sector and concentrate government activities on regulatory and policy-making. This has led to the emergence of a new form of arrangement, the public private partnerships (PPPs), as the preferred mechanism to deliver infrastructure across the economic and social sectors. Over the years, several forms of PPP evolved. However, build operate transfer (BOT) was considered the best, as the government involvement was higher when compared to other forms of PPP. In PPP projects, the private sector was much more efficient, as it possessed a better management system and also had the capacity to innovate. This can lead to increased efficiency. This, in turn, should translate into a combination of better quality and lower cost services. On the other hand, the government had higher financial solvency and the cost of government sector capital was low. However, the success of the PPPs largely depended on the political and economic environment of the country, and also in the risk (endogenous and exogenous) of the project.

Pedagogical Objectives:

  • To have a brief idea of public private partnerships
  • To have an understanding of the build operate and transfer model of PPP and other forms of PPP.
  • To role of special purpose vehicles (SPV) in PPP projects
  • To risk and cost minimisation through public private partnership.

Keywords :  India, PPP (public private partnerships), PFI (public finance initiative), BOT (build operate transfer), BOOT (build own operate transfer), BLOT (built lease operate transfer), BOO (build own operate), DBFO (design build finance operate), LDO (lease develop operate), L / BROT (lease / buy renovate operate transfer), WAA (wrap around addition), Concessionaire, Shadow price, Exogenous risks, Endogenous risks, Infrastructure, Toll collection

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