10/19/2021
BOOT/BOO
The private provision of public services has emerged as one of the most innovative new developments for the distribution of public goods. There are many methods in which privately developed infrastructure projects can be financed. While there are many other arrangements, Build-Own Operate (BOO), and Build-Own-Operate-Transfer (BOOT) are the more common methods of financing.
These financing methods are immensely complex in financial and legal terms and require an extended period of time to develop and negotiate.
Both of them are used in projects that involve new facilities and require financing to construct them. The sponsoring consortium financing the project takes care of the construction and operations of the facilities as owners and is expected to transfer them (in BOOT case) back to the host government at some future date, normally at no cost.
The three main areas of infrastructure that BOO and BOOT methods are applied to are telecommunications, road transportation, and power generation.
Financing methods such as BOO and BOOT have great potential to reduce the cost of infrastructure development through capital and operating cost savings.
As these financing methods become better understood and standard solutions to problems are better accepted, BOO and BOOT, and other methods will be easier to negotiate and implement in the future.