COMPETITIVE ADVANTAGE OF EQUITY IN BOT TENDER

This paper addresses the role of equity and level of equity investment required in a build-operate-transfer (BOT) tender. In an era of decreasing public funds for infrastructure projects, the BOT concept is being used increasingly by governments to implement privately financed projects, such as toll roads. A high level of equity is necessary in BOT tender if it is specified in the request for proposal, the competition is fierce, and financing for the project is shaky. Governments are often concerned about the high financial charges that may overburden the cash flows of the project and that may subsequently affect the efficient running of the project. High equity, therefore, is viewed by governments as important and necessary. To proceed to final round negotiations, the threshold equity level proposed by the promoters must be between 20 and 30 percent. Otherwise, it is likely that those falling under the 20 percent mark would be dropped from further consideration.

Language

  • English

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Filing Info

  • Accession Number: 00711554
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Sep 19 1995 12:00AM