Build-Operate-Transfer (BOT) Financing is a project delivery method commonly used in large-scale infrastructure projects. In this model, a private investor or contractor is responsible for the construction and operation of a facility for a specific period, after which ownership is transferred to the government or another entity.
The BOT structure typically involves three phases: the build phase, where the project is designed and constructed; the operate phase, during which the contractor manages the facility and generates revenue; and the transfer phase, when ownership is handed over to the public sector. This arrangement allows for private sector efficiency in construction and operations while mitigating initial capital expenditure burdens on the public sector.
In finance, BOT financing facilitates investment in essential services like transportation, utilities, or public infrastructure without immediate public funding. It also aligns incentives, as the contractor’s revenue often depends on the successful operation and maintenance of the facility, ensuring long-term performance and sustainability. This model is relevant in shaping public-private partnerships and attracting investment in critical projects worldwide.
