Special Risks in Contracts of Building, Operation, and Transfer (BOT) Projects

Abstract

Infrastructure projects that have a major role in the financial development of countries have already been financed by governments but nowadays, governments due to budget deficits or spending on important issues such as health, education and social affairs does not have the ability to finance the project or for some reasons is not willing to finance the project. Thus, in this regard, they resorted to the domestic and foreign private sector capital including absorption of funds, exploitation of BOT (build, operate and transfer). However, the main BOT project's contract has been signed between the investee government and project company but the project company in order to implement the project signed several contracts with many project contractors, companies and banks, credit and financial institutions. If the number of parties and contracts are from different countries, it can result in different risks that in an overall classification divided risk into general risks and specific risks (special) of BOT projects. The specific risks of BOT are divided into  the risks of pre-building phase, building phase, financing operation phase each having different types.