BOT Contracts: Applicability in Pakistan for Infrastructure development

Abstract

Pakistan is a developing country. It is lacking infrastructure almost in every field, like rail and road, water supply, sewage, waste disposal and oil and gas transportation network. Infrastructures projects are usually mega-projects, which are normally owned and financed by federal/provincial governments. Due to lack of resources governments are unable to start such infrastructure project on a faster pace to meet the demands. To counter the paucity of funds in public sector, many governments have engaged the private sector to develop their infrastructure. These public-private partnerships have different forms of contracts i.e. Build-Own-Operate (BOO), Build-Operate-Transfer (BOT) and Build-Lease-Transfer (BLT). In developing countries like Pakistan these types of contracts can play important role in infrastructure development. Unfortunately this concept is not very popular in Pakistan. Apart from benefits, BOT contracts may be complicated due to its long term contractual obligations and multi party involvement. For that purpose legal, economical and technical framework needs to be developed on large scale for successful execution of BOT projects. Keeping in view the above requirements a model has been developed for successful implementation of BOT projects in Pakistan. To counter the associated risk in BOT projects a risk management model is also proposed.