Introduction to BOOT

Provision of public infrastructure and services has normally been the domain of national or local governments. This has applied to the telecommunications, energy, transport infrastructure, water and wastewater, health sectors and to public buildings, ports, etc. Traditionally the government as the client has carried the responsibility for all stages of the procurement: development, planning, design, financing, construction and operation and maintenance. The investment costs and the operation and maintenance costs were borne by the public and not necessarily recoverable by the way of charges from the ultimate beneficiaries: the public. However, state budgets are, as they have often been, limited and the capacities of public agencies are insufficient to meet demand. However, governments have a responsibility toward the public to supply basic needs with regard to infrastructure. Simultaneously there may be substantial amounts of money available in the bank system. As a consequence, in many countries around the world the participation of the private sector in development and delivery of public infrastructure is encouraged. The private financing of public projects offers new challenges and roles for all parties involved: contractors, consulting engineers, operating companies, the financial sector, legal contract specialists, the international funding agencies and of course national and local governments. This paper discusses the development of the privatization concept and the basic principles for using the method where the contractor takes larger financing and operation responsibility for the project and in return gets a long-term engagement with guaranteed return on capital.