BUILD OPERATE TRANSFER ( BOT) ROUTE
WHY IN NEWS ?
- Recently Union road minister said that National Highways Authority of India (NHAI) may bid out a tenth of its road awards next fiscal year through the BOT (build, operate and transfer) route.
ABOUT BOT ROUTE:
- A build-operate-transfer (BOT) contract is a model used to finance large projects, typically infrastructure projects developed through public-private partnerships.
- The BOT scheme refers to the initial concession by a public entity such as a local government to a private firm to both build and operate the project in question.
- After a set time frame, typically two or three decades, control of the project is returned to the public entity.
- Under a build-operate-transfer (BOT) contract, an entity—usually a government—grants a concession to a private company to finance, build, and operate a project for a period of 20 to 30 years, hoping to earn a profit.
- After that period, the project is returned to the public entity that originally granted the concession.
BASIC FRAMEWORK OF BOT ROUTE:
- Build: A private company agrees to build a public infrastructure project for the government.
- Operate: It then proceeds to operate and manage the facility for an agreed-upon period, during which it should recoup its outlay and start making money.
- Transfer: After the concessionary period, the company transfers ownership back to the public entity.
ADVANTAGES OF BOT ROUTE:
- The BOT model can help in doing quality and maximum work in less time.
- More innovative models can be brought.
- This can help in multiplying the economy, reduction in logistics costs, employment generation and better public service.
- The adoption of innovative models like BOT is expected to streamline
- Project execution, encourage private sector participation and ultimately translate into more jobs and improved public services.
SYLLABUS: PRELIMS, CURRENT AFFAIRS
