Build–Operate–Transfer (BOT) Model
The need to re-adopt the “Build–Operate–Transfer (BOT)” model for highway projects has been recently emphasized by the Minister of Road Transport and Highways.
He said that the work of construction of road projects costing less than Rs 1,000 crore should be awarded through BOT model.
Under the BOT model, a private sector developer is given the right to build and operate an infrastructure facility/service for a fixed period or concession period (15 to 30 years).
At the end of the stipulated period, that facility/service is transferred to the government. Between 2007 and 2014, only the BOT model was used to construct highways. During the years 2018-19 and 2019-20, no highway construction work was awarded on BOT model.
Importance of BOT Model:
- It increases private sector participation, and promotes healthy competition among private actors.
- The fiscal burden of the government reduces.
- Helps in streamlining project implementation by completing quality work in less time.
- Employment opportunities increase and the quality of public services improves.
Other models related to private investment in road infrastructure:
- Engineering, Procurement, Construction (EPC) Model: Under this, the cost is completely borne by the government. The government invites bids from private companies for engineering expertise.
- Hybrid Annuity Model (HAM): HAM is a hybrid model. It is a mix of EPC (40 percent) and BOT (60 percent) models. In this, the government pays 40 percent of the project cost to private developers as construction assistance. The remaining 60 percent is arranged by the developers themselves.
Source – Financial Express
