Identifying the General Risks in Build -Operate-Transfer Contracts

Infrastructures play a major role in the economic development of any country; however, governors cannot afford them due to their heavy costs, shortage of budgets, or lack of tendency by any reason. Hence, they appeal to local and foreign private sectors to financially afford the projects. BOT(building, operation and transfer) is among the ways of affording such projects by the private sector usually in a form of a consortium and on the basis of a contract with the government or State corporation; it undertakes to afford and build the infrastructure in a definite period of time .Instead of the investment, profit and risks, the private sector operates the project during a definite period of time, and at the end of the period delivers the project to the government or state corporation entrusted by contract. Although, the main BOT contract is between the government and the project corporation, the contractor would sign agreements with other secondary contractors, various corporations, financial institutions, and banks to implement the projects. The multiplicity of the partners, contractors, and the fact that they are from different countries results in various risks. The risks are divided into two types, namely general and specific ones. General risks include political, economic, and legal while specific risks consist of pre-construction, construction, operation, and funding ones, each of which is of different sorts.